Qatar

Khushboo Shahdadpuri
Al Tamimi & Company, UAE

Hani Al Naddaf
Al Tamimi & Company, Qatar

1. What is your jurisdiction?

Qatar.

2. Are the FIDIC forms of contract used for projects constructed in your jurisdiction? If yes, which of the FIDIC forms are used, and for what types of projects?

Yes, the FIDIC forms of contract are frequently used in construction projects in Qatar. In particular, projects executed by the government and public entities such as the Public Works Authority (Ashghal), General Electricity and Water Corporation (Kahramaa) and Qatar Petroleum are usually based on the FIDIC Red Book form of contract, where the main contractor carries out the construction works with the initial design issued by the employer.

The Yellow Book FIDIC form of contract is also relied on by government and public entities in cases where the contractor is responsible for both the design and construction of the project.

Moreover, several major projects in Qatar, such as the Hamad International Airport project in Doha, have been executed under the Green Book FIDIC form of contract.

3. Do FIDIC produce their forms of contract in the language of your jurisdiction? If not, what language do you use?

FIDIC does produce its full suite of contract forms in Arabic. On 14 January 2019, the Law on the Protection of the Arabic Language was enacted in Qatar by way of Law No 7 of 2019. This law mandates that all ministries, government agencies, public bodies and institutions in Qatar use the Arabic language in their regulations, instructions, documents, contracts and correspondence, among others. As a result, the FIDIC contracts are usually adopted in Arabic in contracts entered into with government entities. However, given that the construction industry often involves international parties, English versions of the FIDIC contracts are popular and are simultaneously adopted in contractual arrangements with government entities.

In contractual relationships lower down the supply chain between main contractors and subcontractors, the FIDIC forms of contract are usually executed only in English.

4. Are any amendments required in order for the FIDIC Conditions of Contract to be operative in your jurisdiction? If yes, what amendments are required?

Generally speaking, Qatari law respects parties’ freedom to contract and contractual clauses agreed between the parties in their contract are considered to be binding as long as the clauses do not contravene any mandatory Qatari law provisions. These mandatory provisions are mainly contained within the Qatari Civil Code, which expressly states that any contractual term to the contrary is void. In addition, provisions that breach public order or morality will also be considered void. Mandatory provisions under Qatari law cannot be contracted out of, even with the agreement of both parties.

One of the key mandatory provisions contained within the Qatari Civil Code is the reduction of pre-agreed damages in circumstances where it can be shown that the pre-agreed sum does not reflect the actual loss suffered, is grossly exaggerated or if the obligation has been partially performed. Another mandatory provision that cannot be contracted out of is the strict liability imposed on the contractor and the engineer with respect to any collapse or defect related to the integrity of the building under Qatari law. This liability lasts for 10 years and is known as ‘decennial liability’. Under this provision, the contractor is liable for the defect related to the workmanship but will not be liable for the defective design unless the same should have been discovered by the contractor in accordance with the principles of the profession. In this case, the contractor is obligated to refuse to execute the works and to warn the employer about the defective design. Otherwise the contractor will be jointly liable with the engineer for any damages.

Another mandatory provision in contracts entered into with the Qatari government or semi-government entities is that the total amount of pre-agreed damages must not exceed 10 per cent of the value of the contract. Therefore, in contracts with a Qatari public entity, a contractor’s liability for delay damages will be capped at 10 per cent of the contract price.

Where any clause in the FIDIC Conditions of Contract is not amended in line with the mandatory provisions of Qatari law, the clauses that contravene the mandatory provisions will not be enforceable and will be deemed null and void.

5. Are any amendments common in your jurisdiction, albeit not required in order for the FIDIC Conditions of Contract to be operative in your jurisdiction? If yes, what (non-essential) amendments are common in your jurisdiction?

There are no common amendments as such. However, there are some rights provided to parties under Qatari law, in addition to contractual rights. For instance, the Qatari Civil Code entitles subcontractors (and their employees) to demand that the employer pay any outstanding sums due directly. This right may be enforced by initiating local court proceedings. If the project is located in Qatar, then the Qatari courts may accept jurisdiction to hear the proceedings irrespective of a different governing law agreed in the main contract and subcontract. If a favourable judgment is obtained, the employer will be compelled by the court’s decision to make payment to the subcontractor (in the amount equivalent to its claims made in the local court proceedings) before making any further payments to the main contractor.

If the FIDIC Conditions of Contract are not amended to include clauses that provide for the additional rights allowed under Qatari law, the parties will nevertheless be able to avail themselves of such rights under Qatari law.

6. Does your jurisdiction treat Sub-Clause 20.2.1 of the 2017 suite of FIDIC contracts as a condition precedent to Employer and Contractor claims?

There has not been any definitive ruling by the Qatari courts on this matter and there are strong arguments for both positions. Sub-Clause 20.2.1 of the 2017 FIDIC contracts can be viewed as a condition precedent on the basis that Qatari law respects parties’ right to agree on notice provisions, which would bar an otherwise meritorious claim from being advanced if a party fails to provide notice within an agreed or reasonable period, as the case may be. On the other hand, there are principles under Qatari law that can be relied on to mitigate the impact of a condition precedent argument, such as principles of good faith, abuse or unlawful exercise of right, estoppel and unjust enrichment to a certain extent. In particular, the Qatari Civil Code stipulates that contracts must be performed in a manner consistent with the requirements of good faith and arguably notice under sub-Clause 20.2.1 may be considered to be issued if it has been outlined in meeting minutes or reports, among others.

Sub-Clause 20.2.1 of the 2017 FIDIC contracts can also be viewed as a violation of the mandatory prescription period, which cannot be contracted out of and would be unenforceable on account of denying access to justice under Qatari law.

7. Are dispute boards used as an interim dispute resolution mechanism in your jurisdiction? If yes, how are dispute board decisions enforced in your jurisdiction?

Dispute boards have not gained much traction in Qatar and are infrequently used by the parties as an interim dispute resolution mechanism. Generally, dispute board decisions are not binding and cannot be enforced. In the rare instances they are agreed by the parties as an interim dispute resolution mechanism, they can be relied on in subsequent arbitration or litigation proceedings.

8. Is arbitration used as the final stage for dispute resolution for construction projects in your jurisdiction? If yes, what types of arbitration (ICC, LCIA, AAA, UNCITRAL, bespoke, etc) are used for construction projects? And what seats?

Yes, arbitration is frequently used as the final stage for dispute resolution in construction projects. Typically, contracts provide for arbitration under the ICC Arbitration Rules or the Qatar International Centre for Conciliation and Arbitration (QICCA) Arbitration Rules before a three-member arbitral tribunal. The seat of the arbitration is usually Qatar or the Qatar Financial Centre (QFC).

9. Are there any notable local court decisions interpreting FIDIC contracts? If so, please provide a short summary.

Previous Qatari court decisions have held that termination of contracts without a court order can only be allowed if the contractual clause explicitly indicates that a court order is not required.

Qatari courts have interpreted and applied construction clauses relating to the FIDIC forms of contract generally. However, as Qatari court cases rarely set out the full factual background in dispute, it is difficult to summarise these decisions.

10. Is there anything else specific to your jurisdiction and relevant to the use of FIDIC on projects being constructed in your jurisdiction that you would like to share?

As mentioned above, mandatory provisions that cannot be contracted out of under Qatari law will apply to the parties’ FIDIC contract, whether or not the parties have explicitly agreed to these clauses. Conversely, any clause in the parties’ FIDIC contract that does not respect these mandatory provisions will be deemed null and void.

Japan

Mugi Sekido
Mori Hamada & Matsumoto, Tokyo
mugi.sekido@mhm-global.com

Lexi Takamatsu
Mori Hamada & Matsumoto, Tokyo
lexi.takamatsu@mhm-global.com

1. What is your jurisdiction?

Japan.

2. Are the FIDIC forms of contract used for projects constructed in your jurisdiction? If yes, which of the FIDIC forms are used, and for what types of projects?

Yes, for some international works, especially off-shore wind and wave power stations, as well as for some construction projects in countries outside of Japan where the foreign investor or contractor requests the use of the FIDIC forms. Specifically, Official Development Assistance (ODA) projects funded by the Japan International Cooperation Agency (JICA) generally use the FIDIC forms of contract, as JICA recommends FIDIC contracts in its standard bidding documents for JICA-funded projects. JICA assists with the development of infrastructure – largely transportation and electric power and gas projects – in developing countries by providing concessional loans for ODA projects. In line with the JICA standard bidding documents, the Pink Book is generally used for design bid build projects, while the Yellow Book is often used for design build contracts.

For non-ODA projects, the Red Book, Yellow Book and Silver Book are the three most commonly used in practice, though use of the Silver Book has increased in recent years, due to the increased involvement of investors and financial institutions in large construction projects.

For domestic private works, however, Japanese parties typically select form contracts that are more in line with domestic practice, such as the General Conditions for Construction Contracts, published by the Committee of Seven Associations of Architects and Contractors. Public construction works are design-bid-build contracts, which are governed by the Public Work Standard Contract, published by the central government.

3. Do FIDIC produce their forms of contract in the language of your jurisdiction? If not, what language do you use?

Japanese translations have been published for some of FIDIC forms of contract. However, the English originals are generally used in Japan when contracting with international parties.

4. Are any amendments required in order for the FIDIC Conditions of Contract to be operative in your jurisdiction? If yes, what amendments are required?

Most Japanese laws related to construction projects may be altered by the agreement of the parties (‘non-mandatory laws’); to the extent non-mandatory laws conflict with the terms of the FIDIC Conditions of Contract, the parties’ agreement to those terms will be seen as overriding non-mandatory provisions of the Japanese Civil Code or other laws. While some laws are ‘mandatory’ (ie, cannot be varied by agreement), these laws are the exception and typically relate to issues of public policy, such as prohibitions of anti-competitive conduct.

For example, after 1 April 2024, if the construction project is located within Japan, it will be necessary to amend FIDIC Sub-Clause 6.5 [Working Hours] to comport with the Act on the Arrangement of Related Acts to Promote Work Style Reform (Act No 71 of 2018) (the ‘Act’). Under the Act, Contractors may not cause their personnel to work for hours exceeding the limitations specified in the Act. This may conflict with FIDIC Sub-Clause 6.5, which states that work may not be carried out on-site outside of normal working hours unless if (i) otherwise stated in the Contract; (ii) the Engineer gives consent; or (iii) the work is unavoidable or necessary for the protection of life or property or for the safety of the works.

The authors are not currently aware of any other provisions of the FIDIC Conditions of Contract that require amendment to be operative in Japan.

5. Are any amendments common in your jurisdiction, albeit not required in order for the FIDIC Conditions of Contract to be operative in your jurisdiction? If yes, what (non-essential) amendments are common in your jurisdiction?

To avoid uncertainty as to the application of non-mandatory laws to a particular contract, parties sometimes amend the FIDIC Conditions of Contract to explicitly exclude application of specific non-mandatory Japanese laws.

For example, some parties choose to amend FIDIC Clause 11 [Defects after Taking Over] to explicitly state that Clause 11 is to be the sole remedy for defects, in order to avoid application of the Japanese Civil Code for non-conformance liability. The statute of limitations for non-conformance liability is by default potentially much longer than the Defect Notification Period set out in the FIDIC contracts. Moreover, the potential remedies for non-conformance liability under the Japanese Civil Code are potentially more severe than FIDIC Clause 11 [Defects after Taking Over], as they give the Employer the option to terminate the contract on the basis of non-conformance (Japanese Civil Code Article 541). Given the potential severity of remedies, and the longer limitation period during which they might be available, some parties choose to explicitly limit the remedies for defect liability to FIDIC Clause 11.

6. Does your jurisdiction treat Sub-Clause 20.2.1 of the 2017 suite of FIDIC contracts as a condition precedent to Employer and Contractor claims?

There is no clear precedent or other guidance on this point under Japanese law, and whether failure to comply with Sub-Clause 20.2.1 would prevent an Employer or Contractor from pursuing claims would ultimately be a matter of contractual interpretation. Under Japanese law, the reasonable intention of the parties is the key guiding point, with reference to the parties’ course of conduct, custom and other factors.

7. Are dispute boards used as an interim dispute resolution mechanism in your jurisdiction? If yes, how are dispute board decisions enforced in your jurisdiction?

Dispute Adjudication Boards (DABs) or Dispute Avoidance and Adjudication Boards (DAABs) are not generally used in Japan outside of the FIDIC context. Although they are permitted as a contractual dispute resolution mechanism, they are not considered international arbitration and are not enforceable as such. Rather, dispute boards are seen (and encouraged) as a mechanism for contract management or dispute prevention, rather than dispute resolution procedures.^[1]

8. Is arbitration used as the final stage for dispute resolution for construction projects in your jurisdiction? If yes, what types of arbitration (ICC, LCIA, AAA, UNCITRAL, bespoke, etc) are used for construction projects? And what seats?

For Official Development Assistance (ODA) projects funded by the Japan International Cooperation Agency (JICA), the JICA standard bidding documents require that disputes be resolved through international arbitration, through the Japan Commercial Arbitration Association (JCAA), International Chamber of Commerce (ICC), or arbitration institution designated by the parties. The parties are free to choose the seat of arbitration; JICA does not provide any specific recommendations on this point.

For private non-ODA projects, the ideal for many Japanese parties would likely be a JCAA arbitration seated in Japan; however, many parties ultimately agree to Singapore International Arbitration Centre (SIAC) or ICC arbitrations seated in Singapore.

9. Are there any notable local court decisions interpreting FIDIC contracts? If so, please provide a short summary.

There are no notable local court decisions interpreting FIDIC contracts at this time. This is not surprising, as there is no general doctrine of precedent in the Japanese judicial system, and it is rare for decisions below the Supreme Court level to receive publicity.

10. Is there anything else specific to your jurisdiction and relevant to the use of FIDIC on projects being constructed in your jurisdiction that you would like to share?

The rule of good faith and fair dealing plays a larger role in contract interpretation under Japanese law compared with many other jurisdictions. Put simply, the rule of good faith requires consideration of the fairness or balance between the parties to the contract, and is oriented towards finding the most reasonable resolution of any dispute over interpretation.

The Civil Code explicitly stipulates that ‘the exercise of rights and the performance of obligations shall be conducted in good faith in accordance with good faith’ (Civil Code Article 1, Paragraph 2). This language is mirrored in the Construction Industry Law, Article 18, which specifically applies in relation to construction projects.

For example, in cases where following the explicit terms of a contract would lead to a result that is extremely unreasonable from a business standpoint, such as one party incurring significantly high costs, the duty of good faith and fair dealing may be recognised in order to change the result. While it is unlikely that a Japanese court would alter a contract based on the FIDIC forms on this basis – the FIDIC forms are generally understood as allocating the risk to the contracting parties in a fair manner based on the party who can best manage the risk – principles of good faith may come into play where amendments have been made to the FIDIC forms that significantly alter the allocation of risk. For example, JICA has issued a ‘Check List for One Sided Contracts’, identifying amendments that may significantly alter the allocation of risk in the hope of avoiding the unfair allocation of risks and liabilities between contracting parties, which may lead to frequent disputes or even termination of the contract.^[2] It is possible that, where a party asserts an interpretation of a FIDIC term that would not be appropriate under the JICA Check List, that party’s interpretation would be rejected based on the principle of good faith and fair dealing and on the expressed intentions of the parties.

Notes

^[1] See JICA Dispute Board Manual (March 2012) at www.jica.go.jp/Resource/english/our_work/types_of_assistance/oda_loans/oda_op_info/guide/c8h0vm0000aoeprl-att/db_manual2012.pdf accessed 15 February 2024.

^[2] JICA, ‘Check List for One Sided Contracts’ (March 2011) at www.jica.go.jp/Resource/activities/schemes/finance_co/procedure/guideline/pdf/check_e.pdf accessed 15 February 2024.