Introduction

One of the key steps to an efficient dispute resolution process is having well-drafted dispute resolution provisions. If a contract provides that disputes be finally resolved by arbitration and the arbitration agreement is treated as invalid or unenforceable, there could be protracted and costly disputes over the agreed method of dispute resolution. When arbitration is the agreed method of dispute resolution, a poorly drafted arbitration agreement could lead to disputes on the jurisdiction of an arbitral tribunal over the entirety or part of a dispute under the contract. This article examines the requirements of a valid arbitration agreement.

Qatar Arbitration Law No. 2 of 2017

Qatar Arbitration Law No. 2 of 2017, which replaced the old articles from 190 to 210 of the Qatari Civil and Commercial Procedures Code No. 13 of 1990, regulates arbitration proceedings in Qatar. 

Article 7(1) of the Qatar Arbitration Law defines an arbitration agreement as:

"the agreement of the Parties who, whether they are legal or natural persons, have the legal capacities necessary to agree to recourse to Arbitration to settle all or some disputes that have arisen or may arise between them".

Article 7(3) also stipulates that an arbitration agreement must be in writing, otherwise it will be null and void. An arbitration clause in a contract will be deemed an arbitration agreement, independent from other clauses in the contract, if the arbitration clause clearly incorporates the terms of an arbitration agreement by reference (Articles 7(5) and 16(1)). Accordingly, an arbitration clause should contain the key provisions of an arbitration agreement to avoid disputes and to ensure that the arbitration agreement is valid.

Requirements of an arbitration agreement

The following key provisions should be included in an arbitration agreement (or an arbitration clause in a contract) to avoid disputes and ambiguity:

• Arbitration centre and arbitration rules: An arbitration agreement should specify the rules of the arbitration institution the parties wish to adopt. The arbitration rules govern the arbitration procedure and are incorporated by reference in the arbitration agreement. It is important to specify the arbitration rules and the centre in the arbitration agreement. Arbitration centres include the International Chamber of Commerce (ICC), the London Court of International Arbitration (LCIA) and Qatar International Centre for Conciliation and Arbitration (QICCA). Each centre has its own arbitration rules. 
• Seat or legal place of arbitration: The seat or legal place of arbitration determines the procedural law that will apply to the arbitration. The seat or legal place also determines the availability of interim remedies and any rights related to enforceability of arbitral awards. The seat or legal place should be expressly stated due to its significance. If Qatar is chosen as the seat or legal place of arbitration, Qatar Arbitration Law No. 2 of 2017 will apply. If London is chosen, the Arbitration Act 1996 applies.
• Governing law of the arbitration: An arbitration agreement is a separate binding contract. The governing law of an arbitration agreement can be different from the governing law of the substantive contract, if the arbitration agreement is incorporated through an arbitration clause in the contract. It is important to specify the governing law, as it governs matters such as formation, termination and interpretation of the arbitration agreement. 
• Number and appointment of arbitrators: The number of arbitrators to be appointed often depends on the value and complexity of the disputes that are likely to arise. For high-value and complex contracts, three arbitrators are usually preferred. Otherwise, a sole arbitrator may be suitable. The arbitration rules will set out the process for appointing arbitrators, but it is recommended that the number of arbitrators should be agreed and specified in the arbitration agreement to avoid disputes.
• Language: It is important to specify the language of the arbitration proceedings because all submissions and evidence will be presented in the agreed language.
• Place or venue of arbitration: If an arbitration involves parties from different countries, it is likely that the parties are also based in different locations. It is useful to specify the place or venue for the arbitration proceedings to take place to avoid a dispute on this point.

A common mistake that causes disputes between parties in an arbitration is the failure to differentiate between the seat or legal place and the place or venue of an arbitration. There is an important difference between the two. The seat or legal place of arbitration determines the procedural law that will apply to the arbitration proceedings, whereas the place or venue of arbitration is the physical location at which the arbitration hearing takes place. Both provisions should be set out clearly and separately in an arbitration agreement.

Conclusion

Parties choose arbitration as the preferred method of dispute resolution because it has the advantage of being private and confidential. It also has the ease of being enforced in other jurisdictions when compared with judgments in foreign courts, where assets are located in other jurisdictions.

Having a detailed and thoroughly drafted arbitration agreement could assist in increasing the efficiency of arbitration proceedings. Poorly drafted arbitration agreements could cause disputes between parties and inevitably lead to increased cost and significant delays in resolving disputes under their underlying contracts. This may mean that disputes are referred to the local courts if the arbitration agreement is treated as invalid or unenforceable, which may provide an unsatisfactory outcome for the parties.