The Saudi Arabia Civil Transaction Law (the "KSA Civil Law")
The newly implemented KSA Civil Law, is having a nuanced impact on the construction industry across the region, including in Qatar in different manners, but the biggest impact comes in the following forms:
Contractual certainty and risk allocation: The KSA Civil Law aims to provide greater contractual certainty which could influence construction contracts involving Saudi entities or projects. It codifies the principle of good faith from Sharia (Article 95), it introduces clearer rules on the interpretation of contracts (Article 104), the enforcement of liquidated damages (Article 178), and limitation of liability clauses (Article 173). This increased certainty and legal consistency might appeal to Qatari companies involved in cross-border projects with Saudi entities, potentially reducing the perceived legal risks of such engagements.
Subcontracting and project delivery: The KSA Civil Law touches on aspects relevant to subcontracting and project delivery (for instance Articles 70-75; 473-478 of the Law dealing with specific provisions for construction contracts). These provisions might influence Qatari companies that engage in projects requiring collaboration with Saudi firms, impacting how they plan project delivery and manage subcontractor relationships.
Force majeure and contractual obligations: The law includes provisions that could impact how force majeure events are dealt in construction contracts (Article 110). This is particularly relevant for contracts that might be subject to Saudi law or involve Saudi-based companies. The KSA Civil Law does not provide detailed guidance on force majeure but adheres to principles that could allow for contract renegotiation or termination under extraordinary circumstances.
Overall, the KSA Civil Law provisions potentially reduce legal uncertainties and foster a more predictable environment for large-scale construction and infrastructure projects. This alignment might encourage Qatari construction firms to explore more opportunities in Saudi Arabia, knowing that the legal landscape has become more structured and transparent.
The Abu Dhabi International Arbitration Centre (the "arbitrateAD")
The arbitrateAD is a newly established institution, officially commencing operations on 1 February 2024 and lead by Maria Chedid serving as the inaugural President of the Court of Arbitration, making her the first woman to hold such a position in the Middle East.
The arbitrateAD was launched to enhance Abu Dhabi's reputation as a global hub for impartial and efficient dispute resolution. The Center is designed to handle both regional and international arbitration cases, emphasizing independence, transparency, and impartiality in its proceedings. The Center is set to replace the Abu Dhabi Commercial Conciliation and Arbitration Centre (ADCCAC) and its governance structure and arbitration rules from its inception date.
To date, there are not many visible implications for Qatar, but the following could be a valid prediction:
Enhanced regional arbitration options: The establishment of arbitrateAD adds a significant new venue for arbitration in the region. For Qatari businesses and international companies operating in Qatar, this provides an additional choice for neutral, efficient, and transparent dispute resolution outside their jurisdiction. This could be particularly appealing for disputes involving parties from different GCC countries.
Competition within the region: The emergence of arbitrateAD may spur regional competition among arbitration centers, potentially leading to higher standards and innovative practices in arbitration. This competition could benefit Qatari entities by providing more options for effective dispute resolution mechanisms, which are crucial for international trade and investment activities.
Legal and commercial implications: For Qatari companies involved in cross-border transactions, the choice of arbitrateAD as a forum for dispute resolution could influence contract negotiations, especially concerning the selection of arbitration venues. This could lead to more diversified arbitration agreements that include Abu Dhabi as a preferred venue, alongside other prominent centers.
Comparing the arbitration rules of arbitrateAD with those of the Qatar International Centre for Conciliation and Arbitration (QICCA) reveals distinct approaches tailored to their respective regional and international client bases. The main differences are the following:
Technological integration: arbitrateAD has integrated more advanced technological provisions compared to QICCA, reflecting a broader trend towards digital arbitration practices.
Procedural stringency: arbitrateAD imposes more stringent procedural rules with clear timelines and early dismissal options to ensure efficiency and reduce the duration of arbitration proceedings.
Local vs. global focus: While both institutions cater to international disputes, arbitrateAD’s rules reflect a more pronounced alignment with global arbitration practices, whereas QICCA maintains a strong alignment with local and regional needs, reflecting the specifics of Qatari law and business practices.
Both sets of rules demonstrate an understanding of the needs of their respective business communities and legal environments, yet they emphasize different aspects of arbitration practice - arbitrateAD with a focus on efficiency and modernization, and QICCA with a focus on flexibility and local relevance.
