Arbitration

Key Concepts of Arbitration Agreement

What is Arbitration?
Arbitration is a method of resolving disputes amicably. An arbitration agreement is defined as an agreement between two or more parties to refer to all or part of the disputes that have arisen or may arise concerning a specific legal relationship, whether contractual or non-contractual, to arbitration. The arbitration agreement can be in the form of a clause included in a contract or a separate agreement.

Arbitration

Arbitration Agreement Conditions

To resort to arbitration as a means of litigation to recover rights, certain conditions must be met, some of which are formal and others substantive. These conditions will be simplified as follows:

Formal Conditions

Writing is an essential requirement for the arbitration clause. It is a condition of validity, not merely proof, as stated in Article 7, paragraph 3 of the Qatari Arbitration Law of 2017: "The arbitration agreement must be in writing, otherwise it shall be void." This means that if the agreement is not in writing, the arbitration does not exist. However, the writing does not need to be formal; it can be in the form of an official or unofficial document or be included as a clause in the contested contract. Failure to have a written arbitration agreement results in its nullity. Arbitration is consensual, meaning both parties must agree to resolve their disputes through arbitration. Therefore, the formal condition of writing is crucial, and without it, arbitration loses its validity and existence. A written arbitration clause forms the foundation of a valid arbitration process, leading to a binding and error-free arbitral decision.

Substantive Conditions

Substantive conditions refer to the essential elements required for any contract between two parties, as follows:

Capacity: Both parties to the arbitration agreement must have the legal capacity to dispose of their rights. Therefore, a person lacking or with diminished capacity cannot enter into an arbitration agreement.
Consent: The parties’ wills must align with an offer and acceptance free from any defects such as error, fraud, or coercion, otherwise, the agreement can be annulled.
Subject Matter: The subject of arbitration must be a dispute between the parties regarding a specific legal relationship, and the matter must be arbitrable, meaning it can be resolved through arbitration. The subject matter must not violate public order or the law, otherwise, the agreement would be void.
Cause: The cause must be legitimate, real, and the actual reason for entering into the arbitration agreement.

Types of Arbitration Agreements

The law outlines different types of arbitration, which can be classified as follows:

Voluntary and Mandatory Arbitration

Voluntary arbitration is based on the parties' agreement to submit their dispute to arbitration. No dispute can be referred to arbitration without a clear and explicit agreement to do so, making voluntary arbitration the default. Mandatory arbitration, on the other hand, is imposed by law, requiring the parties to submit their dispute to arbitration, even without their consent. Although this may seem unconstitutional due to the absence of the parties' consent, the legislator may deem it necessary to resolve certain types of disputes quickly and efficiently, such as in collective labor disputes, where arbitration is seen as more effective than litigation.

Ad Hoc and Institutional Arbitration

In Ad Hoc arbitration, the parties have the freedom to choose the arbitrator(s), the procedure, and other elements related to the arbitration process. In institutional arbitration, the parties refer their dispute to an established arbitration institution that follows pre-determined rules and procedures.

National and International Arbitration

National arbitration deals with disputes within a single country, with local arbitrators following national laws. International arbitration involves parties from different countries, leading to potential complexities related to the applicable law, the arbitrators’ nationalities, and the arbitration venue. It might be interesting to mention the international convention (New York Convention) related to the recognition and enforcement of foreign arbitral awards and the referral by a court to arbitration. (Qatar ratified this convention in 2002)

Arbitration with or without Conciliation Powers

In arbitration with conciliation powers, the arbitrator has the authority to offer a settlement to the parties, without affecting the validity of the award if no settlement is reached. In arbitration without conciliation powers, the arbitrator resolves the dispute strictly based on legal rules, unless the parties specifically grant conciliation powers, allowing the arbitrator to decide based on fairness and equity.

Arbitration Tribunal

According to Article 10 of the Qatari Arbitration Law No. 2 of 2017, the arbitration tribunal may consist of one or more arbitrators, as agreed by the parties. If the parties do not specify the number of arbitrators, the default is three. The number of arbitrators must always be odd; otherwise, the arbitration is void.

Conclusion

Arbitration is one of the most effective and efficient methods of resolving disputes, particularly in commercial and engineering contracts. Its advantages include the speed of resolution and the fact that the arbitrators are often experts in the relevant field, resulting in accurate and informed decisions based on specialized knowledge.