From pearl fishing to being one of the world’s wealthiest countries, per capita, Qatar is on an upward trajectory. What do you need to know to do business there?
Once upon a time Qatar was a poor Gulf state, known for its pearl fishing. But nothing stays the same and the discovery of vast oil and gas reserves has made it very wealthy, with one of the highest rates of GDP per capita in the world.
Owner of Harrods, and investor in the Shard, the Stock Exchange and Sainsburys, as well as the home of the Al-Jazeera news network, it punches above its weight in world politics. In nine years time the global focus will be on picking footballs, rather than pearls, out of the net when the country hosts the World Cup. So what are the commercial and legal prospects for doing construction business there?
It has, despite the Arab Spring, a stable government and economy and, since June, a new Emir, the youthful, 33 year-old Sheikh Tamim bin Hamad Al-Thani.
His father, Sheikh Hamad bin Khalifa Al-Thani, has stepped down, as has prime minister Sheikh Hamad bin Jassim bin Jaber Al-Thani, who was also the foreign minister and influential chief executive of the sovereign wealth fund, the Qatari Investment Authority.
Plans for Qatar’s future are already in place. The Qatar National Vision 2030 points the way and the National Development Strategy 2011-2016 provides a route map to a sustainable economy less dependent on its oil and gas riches. And, as an incentive, Qatar is, of course, expecting a lot of visitors in 2022, for the World Cup. There are 12 climate-controlled, carbon-neutral football stadiums on the to-do list, not to mention 24 team hotels, 48 training sites and 80,000 hotel rooms.
The National Vision talks of Qatar investing in world class infrastructure and it is. There is $36 billion to be spent on a high quality, integrated public transport system, $20 billion for roads, a new Doha International Airport to handle 50 million passengers a year, the new Port project and the Msheireb urban regeneration in Doha. It is said that the total shopping bill for infrastructure over the decade could hit the $100 billion mark. And all this with a population of less than two million, of which expatriate workers may make up as much as 80%.
The World Bank Group 2013 Ease of doing business table ranks Qatar at 40 overall, out of 185, and at 18 for obtaining construction permits, and Qatar is at 27, out of 176, equal with the UAE, in the 2012 Transparency International Corruptions Perception Index.
Qatar likes joint ventures. Qatar’s Investment Law No. (13) of 2000 generally makes foreign investment conditional on having a Qatari partner with no less than 51% of the capital.
Qatari law will be familiar to contractors who work elsewhere in the Gulf because it is based on the Egyptian Civil Code and well developed so, for instance, the concepts of decennial liability and good faith make their customary appearance.
Enforcement of contract entitlements through the local courts is likely to be slow and lacking the necessary expertise in particularly large, complex, infrastructure disputes, so arbitration is the way forward. Currently dealt with in the Civil and Commercial Procedure Law No. (13) of 1990, Qatar’s arbitration law could do with modernisation but the Qatar International Center for Conciliation and Arbitration, set up in 2006, has its own arbitration and conciliation rules, issued last year and modelled on the UNCITRAL 2010 rules. A choice of Qatari law, and arbitration under modern rules, with the seat of the arbitration in Qatar, could be a practical solution in selecting contract dispute resolution machinery.
Further support for arbitration is to be found in Qatar’s signature of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards and also the ICSID Convention.
To go boldly?
Competition for construction work in Qatar is inevitably fierce but the UK is one of Qatar’s key trading partners. Qatar has significant investments in the UK and the planned heavyweight infrastructure spending could offer significant construction opportunities for those prepared to invest the necessary time, research and patience, where London 2012 Olympic experience might just be key for World Cup projects. Prince Charles and Boris Johnson have both made trips to Qatar this year to fly the flag; Qatar could also be an important destination for the UK construction industry.
Raid Abu-Manneh is a partner in the Construction and Engineering team at Mayer Brown International LLP and heads the International Arbitration Group in London