The World Trade Organization recognizes Qatar’s legal framework as conducive to private investment and entrepreneurship and enabling of the development of an independent judiciary system. Qatar is an advocate of the free market economy and has taken measures to protect competition and ensure a free and efficient economy.
Law 19/2006 for the Protection of Competition and Prevention of Monopolistic Practice mandates the formation of the Competition Protection and Antimonopoly Committee which is in charge of receiving complaints about anti-competition violations. The committee’s values include impartiality, confidentiality, transparency, and competence, which it must carry in its judgments, according to the legislation. This law, however, exempts state institutions and government-owned companies. There are also regulatory authorities for most sectors in the economy that are mandated to monitor economic activity and ensure fair practices.
According to the World Bank’s Global Indicators of Regulatory Governance, Qatar does not have a transparent system of rulemaking, as ministries and regulatory agencies do not share regulatory plans or publish draft laws for public consideration. Draft bills are not made public and an official public consultation process does not exist in Qatar. Following Cabinet meetings, plans of potential draft legislation are made public, but few details are provided. Nonetheless, the Shura Council (which statutorily is comprised of two-thirds elected officials and one-third appointees from the Emir, but in practice are all appointees of the Emir) consults and reviews legislation. The Cabinet passes draft laws to the Shura Council for consultation, comments, and recommendations. The Shura Council votes and members must reach a consensus to pass a draft legislation, which is then returned to the Cabinet for further review and approval. Final approval is granted by the Emir. Laws and regulations are developed and drafted by concerned ministries and entities.
The text of all legislation is published online and in local newspapers upon approval by the Emir. All Qatari Laws (except for those issued by the Qatar Financial Centre) are issued in Arabic and eventually translated into English. Qatar-based legal firms provide translations of Qatari legislation to their clients. Qatar’s official legal portal is http://www.almeezan.qa and QFC regulations are listed at http://www.qfcra.com/en-us/legislation/ .
Each approved law explicitly mandates one or more government entities with the responsibility to carry out and enforce legislation. These entities are clearly defined in the text of law. In some cases, the law also sets up regulatory and oversight committees made of representatives of concerned government entities to safeguard enforcement.
The main commercial regulator is the Ministry of Economy and Commerce. Commercial Companies’ Law 11/2015 necessitates that public shareholding companies submit financial statements, in compliance with International Financial Reporting Standards (IFRS) and International Accounting Standards (IAS), to the Ministry of Economy and Commerce. Publicly listed companies should also publish financial statements 15 days before its Annual General Meeting, in two local newspapers (in Arabic and English) and on the company’s website. All companies are required to keep accounting records (including Private Shareholding Companies, Limited Liability Companies, and Limited Partnership Companies), prepared according to standards promulgated by the International Accounting Standards Board (IASB).
The Qatar Central Bank is the main financial regulator that oversees all financial institutions in Qatar, as set in Law13/2012. This law aims to promote financial stability and enhance regulation coordination through the Financial Stability and Risk Committee, which is headed by the Central Bank Governor. The Qatar Central Bank also oversees financial markets within the Qatar Financial Center.
International Regulatory Considerations
Qatar is part of the Gulf Cooperation Council (GCC), a political and economic regional union. One of the GCC’s main objectives is to formulate common regulations in finance, trade, customs, and tourism. A common GCC regulation, such as the upcoming shared excise taxes of 2017 on products harmful to health, is handled separately by each government, as each has sovereign leverage in how to implement common regulations domestically. Laws based on GCC regulation have to go through the legislative process and are reviewed by the Cabinet and the Shura Council.
Legal System and Judicial Independence
Qatar’s legal system is based on a combination of civil and Sharia law. The constitution takes precedence over all laws, followed by legislation and decrees, and finally ministerial resolutions. While the constitution mandates an independent judiciary system, all judges are appointed by the Supreme Judicial Council, under Law 10/2003. The Supreme Judicial Council oversees Qatari courts.
Qatari courts determine civil and commercial disputes in accordance with legislation. International agreements have the same status as Qatari laws; the Constitution ensures that international pacts, treaties and agreements, to which Qatar is party, are respected and taken into account. Qatar does not currently have a specialized commercial court; domestic commercial disputes are generally settled at the Civil Court and the civil division within the Court of Appeal.
Companies registered with the Ministry of Economy and Commerce are subject to Qatari courts and laws, mainly the Commercial Companies’ Law 11/2015, while companies set up through the Qatar Financial Center (QFC) are regulated by commercial laws based on English Common Law and the courts of the Qatar Financial Center Regulatory Authority, as established in Law 7/2005. The QFC legal regime is separate from Qatari legal system – with the exception of criminal law – and it is only applicable to companies licensed by the QFC.
Laws and Regulations on Foreign Direct Investment
Investment Law 13/2000 is the primary legislation governing foreign investment, and generally limits foreign ownership to 49 percent of the capital for most business activities, with a Qatari partner(s) holding at least 51 percent. However, the law allows, upon obtaining special government approval, up to 100 percent ownership by foreign investors in certain sectors, including: agriculture, industry, health, education, tourism, development and exploitation of natural resources, energy, or mining. Qatar amended the law in 2004 to allow foreign investment in the banking and insurance sectors upon obtaining approval of the Cabinet. Moreover, foreign financial services firms are allowed 100 percent ownership if they register at the Qatar Financial Center (QFC).
When approving majority foreign ownership in a project, the law states that the project in question should be in line with the country’s national development plans. It adds that preference should be given to projects that use raw materials available in the local market, manufacture products for export, produce a new product or use advanced technology, facilitate the transfer of technology and know-how to Qataris, and/or promote the development of Qatari human resources.
In an effort to attract more foreign direct investment, the government is currently reviewing a draft law that introduces amendments to the existing foreign capital investment law and allows 100 percent foreign capital investment in all sectors provided that the foreign investor hires a Qatari service provider.
Commercial Companies Law 11/2015, Qatar’s main and updated commercial law, simplifies company registration and sets up the “one stop shop” at the Ministry to facilitate company licensing. The law lowers requirements for setting up a business and reduces wait times for commercial registration and other related processes.
The procurement law of November 2015 (Law 24/2015), is designed to promote a fair, transparent, simple and expeditious tendering process. It abolishes the Central Tendering Committee and establishes a Procurement Department within the Ministry of Finance which will have oversight responsibility over the majority of government tenders. The new department has also created an online portal which consolidates all government tenders and provides relevant information to interested bidders, including facilitating the process for foreign investors (https://monaqasat.mof.gov.qa ).
A Public Finance Law (Law 2/2015) was enacted in 2015 to optimize the use of public funds and institute international best practices and standards in Qatar’s financial regulatory framework. The legislation is trying to help Qatar develop a long-term investment strategy by setting up a macroeconomic unit within the Ministry of Finance to monitor overall economic management and planning, including a public investment program established to identify the State’s major projects and ways in which to prioritize them. The law also amended Qatar’s fiscal year, such that it ends December 31, rather than March 31.
Competition and Anti-Trust Laws
Certain sectors are not open for domestic or foreign competition, including public transportation, electricity and water, steel, cement, and fuel distribution and marketing. In these sectors, a single semi-public company has complete or predominant control.
Qatar has begun to liberalize its telecommunications sector to permit outside private investment, starting with the issuance in December 2007 of a second mobile license to a consortium including Vodafone and the Qatar Foundation. The same consortium was awarded the country’s second fixed-line license in September 2008. There is a minimum requirement of QR 200,000 in initial capital for any telecommunication business, which creates a barrier to entry for small entrepreneurs.
International law firms with 15 years of continuous experience in their countries of origin are allowed to set up operations in Qatar, but the license will be granted only if authorities in Qatar deem that the field in which the applying firm specializes is of use to Qatar. On the recommendation of the Ministry of Justice, the Cabinet may reduce the number of required years’ experience or fully waive the condition. Cabinet Decision Number 57/2010 states that the Doha office of an international law firm is allowed to practice in Qatar only if their main office in the country of origin remains open for business. In April 2015, the QFC stopped issuing new licenses to foreign law firms in response to complaints leveled by local Qatari firms, alleging unfair competition.
Expropriation and Compensation
Under existing legislation (Law 13/1988 and its subsequent amendments governing expropriation of real property), the government may divest an owner of title to private property and redistribute it for public use only if the owner receives fair compensation in return. Expropriation has been undertaken more frequently in recent years due to the increased number of major infrastructure projects undertaken in preparation for the hosting of the FIFA World Cup in 2022. Since 2010, the Official Gazette of the State of Qatar has reported 118 decisions to expropriate private property and distribute it for public use. However, such expropriation is unlikely to occur in any of the investment zones where non-Qataris may purchase or obtain a right of property, although the law does not restrict the power to expropriate in these areas.
ICSID Convention and New York Convention
Qatar has been party to the 1958 New York Convention since 2011, and a member of the International Center for the Settlement of Investment Disputes (ICSID) since 2002. Qatar enforces foreign arbitral decisions concluded in states that are party to the New York Convention.
Investor-State Dispute Settlement
If investment disputes occur, Qatar accepts binding international arbitration. However, Qatari courts will not enforce judgments or awards from other courts in disputes emanating from investment agreements made under the jurisdiction of other nations.
International Commercial Arbitration and Foreign Courts
The Qatar Financial Centre (QFC) civil and commercial courts, and the regulatory tribunal, make up its Judiciary and the legal infrastructure. In addition, the court also features an Alternative Dispute Resolution (ADR) center. Although primarily concerned with hearing commercial matters arising from within the QFC itself, the QFC intends to expand the courts’ jurisdiction to enable it to accept other disputes at its discretion. The Qatar International Court and Dispute Resolution Center adjudicates disputes of firms associated with the QFC based on the British common law system.
In March 2017, Qatar passed an arbitration law (Law 2/2017) based on the United Nations Commission on International Trade Law (UNCITRAL) that gives Qatar International Court and Dispute Resolution Centre the jurisdiction to oversee arbitration cases in the state of Qatar in line with recent local and international developments. The purpose of this new law is to simulate and strengthen the investment and business environment in Qatar.
There is no set duration for dispute resolution and the time to obtain a resolution depends on the case. The Qatar International Court and Dispute Resolution Centre publishes past judgments on its website (http://www.qfccourt.com/Judgement.html ).
In order to protect their interests, U.S. firms are advised to consult with a Qatari or foreign-based law firm when executing contracts with local parties.
In Qatar, there are two concurrent bankruptcy regimes. The first is the local regime, the provisions of which are set out in Commercial Law 27/2006. However, the bankruptcy law is largely untested. The bankruptcy of a Qatari citizen or a Qatari-owned company is rarely announced and the government sometimes plays the role of guarantor to keep a bankrupt business running and to safeguard creditors’ rights.
The second bankruptcy regime is found in the QFC Insolvency Regulations of 2005 and applies to corporate bodies and branches registered in the QFC. There are currently two firms in the U.K. offering full dissolution bankruptcy services to QFC-registered companies.