Transparency of the Regulatory System
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 has taken measures to protect competition and ensure a free and efficient economy. In addition to the National Competition Protection and Anti-Monopoly Committee, regulatory authorities exist for most sectors in the economy and are mandated with monitoring economic activity and ensuring fair practices.
According to the World Bank’s Global Indicators of Regulatory Governance, Qatar lacks a transparent rulemaking system, as government ministries and regulatory agencies do not share regulatory plans or publish draft laws for public consideration. An official public consultation process does not exist in Qatar. Nonetheless, the 45-member Shura Council (which statutorily is obligated to have 30 publicly-elected officials, but in practice is comprised solely of direct appointees by the Emir) must reach consensus to pass draft legislation, which is then returned to the Cabinet for further review. Final approval is granted by the Emir. Laws and regulations are developed and drafted by relevant ministries and entities.
The text of all legislation is published online and in local newspapers upon approval by the Emir. All Qatari laws 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 implement and enforce legislation. These entities are clearly defined in the text of each law. In some cases, the law also sets up regulatory and oversight committees made of representatives of concerned government entities to safeguard enforcement.
Qatar’s primary 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. Publicly-listed companies must also publish financial statements at least 15 days before Annual General Meetings in two local newspapers (in Arabic and English) and on their firm’s website. All companies are required to keep accounting records, prepared according to standards promulgated by the IAS Board.
The Qatar Central Bank is the main financial regulator that oversees all financial institutions in Qatar, per Law 13/2012. To promote financial stability and enhance regulation coordination, the law established the Financial Stability and Risk Control Committee, which is headed by the Central Bank Governor. According to the Law 7/2005, the QFC Regulatory Authority is the independent regulator of the QFC firms and individuals conducting financial services in or from the QFC,” but the Qatar Central Bank also oversees financial markets housed within QFC.
International Regulatory Considerations
Qatar is part of the Gulf Cooperation Council (GCC), a political and economic regional union. Laws based on GCC regulations must be approved through Qatar’s domestic legislative process and are reviewed by the Cabinet and the Shura Council prior to implementation.
Qatar has been a member of the WTO since 1996 and it notifies the WTO Committee on Technical Barriers to Trade (TBT) with draft technical regulations. Qatar is a signatory to the Trade Facilitation Agreement (TFA) and has implemented 92.9 percent of TFA commitments, which will help expedite the movement and clearance of goods and improve cooperation between customs authorities and other appropriate authorities on trade facilitation and compliance issues.
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. All judges are appointed by the Supreme Judicial Council, under Law 10/2003. The Supreme Judicial Council oversees Qatari courts and in practice functions independently from the executive branch of the government as per the Constitution.
Qatari courts adjudicate civil and commercial disputes in accordance with civil and Sharia law. International agreements have equal status with Qatari laws; the Constitution ensures that international pacts, treaties and agreements, to which Qatar is a party, are respected and taken into account. Qatar does not currently have a specialized commercial court; domestic commercial disputes are generally settled in civil courts. Decisions made in civil courts can be appealed before the Court of Appeals, or later the Court of Cassation.
Companies registered with the Ministry of Economy and Commerce are subject to Qatari courts and laws—primarily the Commercial Companies’ Law 11/2015 – while companies set up through QFC are regulated by commercial laws based on English Common Law and the courts of the QFC Regulatory Authority, per Law 7/2005. The QFC legal regime is separate from the 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 capital for most business activities, with a Qatari partner(s) holding at least 51 percent. However, the law does allow, upon obtaining special government approval, up to 100 percent foreign ownership in certain sectors, including: agriculture, industry, health, education, tourism, development and exploitation of natural resources, energy, mining, information technology, cultural services, business consulting services, sports, and entertainment. Qatar amended the law in 2004 to allow foreign investment in the banking and insurance sectors upon obtaining approval of the Cabinet.
When approving majority foreign ownership in a project, the law states that the project in question must align with the country’s national development plans. Preference is given to projects that use raw materials produced in the local market, manufacture products for export, produce a new product, use advanced technology, facilitate the transfer of technology and expertise to Qataris, and/or promote the development of Qatari human resources. Separately, foreign financial or professional services firms are allowed 100 percent ownership if they register at QFC.
In an effort to attract more FDI, the Cabinet approved, in January 2018, a draft law that introduces significant amendments to the existing foreign capital investment law, which will allow 100 percent foreign capital investment in most sectors, with the exception of commercial agencies and real estate. Investments in the banking sector and in insurance companies remain subject to Cabinet approval. The law will also include provisions on the protection of foreign investments from expropriation and the exemption of some foreign investment projects from income tax and customs duties on imports of raw materials. The Cabinet has referred the draft law to the Shura Council for review.
Competition and Anti-Trust Laws
Certain sectors are not open for domestic or foreign competition, including public transportation, electricity, water, steel, cement, and fuel distribution and marketing. Instead, semi-public companies have complete or predominant control of these sectors. Law 19/2006 for the Protection of Competition and Prevention of Monopolistic Practice mandates the formation of the Competition Protection and Anti-Monopoly Committee, which is in charge of receiving complaints about anti-competition violations. This law, however, exempts state institutions and government-owned companies.
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 venture was awarded the country’s second fixed-line license in September 2008. However, in February 2018, Vodafone sold its stake in the consortium to the Qatar Foundation, highlighting the ongoing fragility of competition in the telecommunications sector. Separately, there is a minimum financing requirement of QAR 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 can only become licensed if Qatari authorities deem that their fields of specialization are useful to Qatar. On the recommendation of the Ministry of Justice, the Cabinet can choose to reduce the number of required years of 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.
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 being developed in preparation for the hosting of the FIFA World Cup in 2022. Since 2010, the Official Gazette of Qatar has reported over 118 decisions to expropriate private property and distribute it for public use. Such expropriation is unlikely to occur in any of the investment zones in which non-Qataris may purchase or obtain rights to 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) 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 court’s jurisdiction to enable it to accept other disputes at its discretion. The Qatar International Court and Dispute Resolution Center adjudicates disputes brought by firms associated with the QFC in accordance with British common law.
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’s International Court and Dispute Resolution Centre the jurisdiction to oversee arbitration cases in Qatar in line with recent local and international developments. The purpose of this law is to stimulate and strengthen Qatar’s investment and business environment.
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 (https://www.qicdrc.com.qa/the-courts/judgments ).
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.
Two concurrent bankruptcy regimes exist in Qatar. 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 prop up domestic businesses and 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 firms that offer full dissolution bankruptcy services to QFC-registered companies.
The Qatar Central Bank established the Qatar Credit Bureau in 2010 to promote credit growth in Qatar. The Credit Bureau provides the Central Bank and banking sector with a centralized credit database to inform economic and financial policies and support the implementation of advanced techniques in risk management as outlined in the Basel II Accord.