The Qatar Financial Centre Civil and Commercial Court (the “QFC Court”) was recently invited to do just that in the recent case of B v C [2024] QIC (F) 20. Rather than setting aside the arbitral award, however, the QFC Court instead reinforced Qatar's reputation as a modern, arbitration-friendly jurisdiction which is committed to international standards in dispute resolution. The QFC Court firmly upheld the concepts of party autonomy, certainty, and of the finality of arbitration as a dispute resolution procedure, asserting that it is not the role of the QFC Court to "sit on appeal from a tribunal's findings whether of fact or law".
In view of the QFC Court’s decidedly pro-arbitration and enforcement stance, this ruling will reassure claimants in arbitrations subject to the Court's jurisdiction that their awards will be upheld with limited court intervention.
Factual Background
B and C were partners in a joint venture which was established to enter into road construction contracts in Qatar. The Shareholders’ Agreement between the parties became subject to a dispute which was ultimately arbitrated under the Rules of the International Court of Arbitration of the International Chamber of Commerce (the “ICC Rules”). The seat of the arbitration was the Qatar Financial Centre and the substantive law of the arbitration was the law of Qatar.
The Arbitral Tribunal issued its award in favour of C in April 2023, ordering B to pay C around QAR 24.5 million in respect of lost profits as well as costs and interest. Seeking to resist enforcement, however, B unsuccessfully applied to the QFC Court to set aside the award.
The QFC Court refused to do so on the basis that the grounds advanced by B for doing so were both factually and legally misconceived. The resulting judgment provides interesting insight into the QFC Court's interpretation of the grounds for setting aside awards.
Context: The Supervisory Jurisdiction of the QFC Court
All arbitrations in Qatar are governed by the Civil and Commercial Arbitration Law, Law No. 2 of 2017 (the “Arbitration Law”), which is broadly consistent with the UNCITRAL Model Law on International Commercial Arbitration 1985. The Arbitration Law formally recognises the status of the QFC Court as a "Competent Court" in respect of Qatar-seated arbitrations, meaning that parties can – by agreement – submit their arbitrations to the supervisory jurisdiction of the QFC Court. That supervisory jurisdiction, as confirmed by the circumstances of B v C, can be opted for by the Parties of any Qatar-seated arbitration, irrespective of whether either party is a QFC-registered entity (contrary to the general rule of the QFC Court which requires at least one of the parties to be a QFC entity).
In terms of procedural law, QFC-seated arbitrations, such as that in B v C, are governed by the QFC's Arbitration Regulations. Article 41 of the QFC Arbitration Regulations exhaustively sets out the limited grounds available to parties seeking to set aside arbitral awards which are largely consistent with those at Article 33 of the Qatar Arbitration Law (mirroring Article 34 of the UNCITRAL Model Law).
In the present case, B advanced four arguments to set aside the arbitral award all of which were grounded in Article 41 of the QFC Regulations, explored further below.
‘Not in the Interest of the QFC' (Public Policy)
The first three grounds of B’s application to set aside were founded on the basis that the arbitral award was "not in the interest of the QFC" (Article 41(2)(B)(i)) because:
- (Ground 1) The Arbitral Tribunal had failed to give effect to mandatory provisions of Qatari law which B alleged precluded C from recovering lost profits from B;
- (Ground 2) The Arbitral Tribunal had failed to give reasons for favouring the reliability of C's primary fact witness over B's primary fact witness, and;
- (Ground 3) The awarding of interest by the Arbitral Tribunal was contrary to the law of Qatar, the substantive law of the arbitration.
In tackling these grounds, the QFC Court helpfully explored the meaning of "in the interest of the QFC". In doing so, the Court confirmed firstly that there is no material difference between the meaning of "interest of the QFC" and the meaning of "public policy of the QFC" (Article 34 of the UNCITRAL Model Law). The intention of both phrases is (as per the judgment) to prevent the enforcement of awards which "engage the interest of the QFC, and this interest is the same as public policy".
The QFC Court also confirmed that the QFC Arbitration Regulations does make a distinction between the QFC and the State of Qatar. However, the Court held this is a distinction that does not have any practical effect because it is difficult to think of a case where the interest of the QFC and that of the State of Qatar are divergent.
The QFC Court stopped short of outlining the full scope of the QFC's interest, although the obvious examples of money laundering and terrorism financing were provided. Instead, the Court clarified that "the public policy exception is to be narrowly construed" and the policies which underline the enforcement of arbitral awards are those of finality and pro-enforcement. Indeed, that narrow construction of the grounds was borne out in the Court’s reasoning for rejecting B’s grounds of challenge:
Ground 1 - The QFC Court found that the substance of B’s argument (of an alleged failure to give effect to mandatory provisions of Qatari law) was that the Arbitral Tribunal was wrong on the law and the facts. The QFC Court held that this is not a valid ground of challenge under the QFC Arbitration Regulations, even if mandatory national law is in play. The Court cited Gary Born's International Commercial Arbitration (3rd Ed.), suggesting that the Court's position is that “only very clear and serious" misapplications of mandatory law (i.e. only misapplication "that produces a result that conflicts directly with fundamental notions of what is decent and just") may lead to the Court to consider setting aside an award.
Ground 2 - The Court rejected B’s proposition that a lack of reasoning in an award renders it contrary to the interest of the QFC, clearly holding that issues relating to the assessment of evidence or a lack of reasons were matters for the Arbitral Tribunal and not the Court: ”How a tribunal expresses its reasons is a matter on which the Court cannot or should not interfere. Moreover, a deficiency in reasons is not a ground for challenging a decision.”
This, the Court held, is reinforced by the fact that under Article 37(2) of the QFC Arbitration Regulations the parties can contract out of the requirement for a tribunal to give reasons - indicating that reasoning in an award cannot reasonably be held to engage the interest of the QFC / be considered a matter of public policy (as it can be contractually excluded by the parties). In any event, contrary to B’s submission, the Court found that the Arbitral Tribunal did in fact explain why C’s witness evidence was reliable.
Ground 3 - The Court also rejected outright B’s argument that the recoverability of interest is contrary to the interest of the QFC. Referring to the Practice Directions of the QFC Court and Article 38(3) of the QFC Arbitration Regulations, as well as several decisions of the QFC Court which indicate that both pre- and post- award interest can be awarded, the Court affirmed that interest is expressly recoverable under QFC law. As such, no public policy of Qatar is engaged by the awarding of interest. In any event, the Court also held that the awarding of interest is not a matter of public policy under Qatari law either, as confirmed in several judgments of the Qatari Court of Cassation.
‘Contrary to the Parties' Agreement’
Ground 4 - B’s fourth and final argument was again founded in the Arbitral Tribunal's alleged failure to provide proper reasons for favouring C's primary fact witness over B’s primary fact witness. B asserted that in so doing the Tribunal had failed to act in accordance with the ICC Rules and, accordingly, not in accordance with the agreement of the parties (Article 41(2)(A)(iv)). This ground was swiftly rejected by the QFC Court, which insisted that Ground 4 did not add anything to Ground 2 which the Court had already rejected. The Court found that B had failed to establish that there had been any deviation from the parties’ agreed procedure.
The Court helpfully clarified that tribunals have a significant degree of discretion in how they conduct proceedings and that it is not for the Court to ‘review or second guess’ procedural decisions of a tribunal and that “this includes questions of how a tribunal goes about drafting the award.”
Conclusion
The QFC's judgment in B v C sends a clear message to potential claimants in Qatar - that the QFC Court will respect the integrity of the arbitral process and the principles of party autonomy. The clear takeaway is that the QFC Court will only intervene to set aside arbitral awards in extremely limited and narrow circumstances. This should assure potential claimants that the time and cost expended in arbitration to achieve a satisfactory outcome will not subsequently be undermined by unfounded challenges in the QFC Court.
