Litigation vs Arbitration in Qatar: Choosing the Right Path for Commercial Disputes

The question usually asked — which is better, litigation or arbitration? — has no general answer. What is better changes with the contract, the nature of the dispute, who the parties are, and where the losing party's assets sit. More importantly, the choice is not made when the dispute arises: it was already made in the dispute-resolution clause.

The clause decides the route

Arbitration is consensual: under the Law of Arbitration in Civil and Commercial Matters issued by Law No. 2 of 2017 it is defined as a legal consensual method to settle disputes in lieu of judicial proceedings. It rests on agreement alone. Absent a valid arbitration agreement, the courts are the default.

Article 7 imposes a decisive formal condition: the arbitration agreement must be in writing, failing which it is invalid. It counts as written if contained in a document signed by the parties, in paper or electronic correspondence, or by any other means of communication allowing written proof of receipt. The requirement is also met where one party asserts the agreement's existence in the statement of claim or defence and the other does not deny it in its defence. A reference in a contract to a document containing an arbitration clause is an arbitration agreement, provided the reference clearly makes that clause part of the contract.

There is also a substantive limit that agreement cannot cross: arbitration is not permitted in matters in which conciliation is not permitted. Some disputes are outside arbitration's reach as a matter of law, and inserting an arbitration clause does not create jurisdiction over them.

Suing in court despite an arbitration clause

An arbitration clause does not make it factually impossible to go to court, but it changes the outcome. Article 8 provides that bringing a claim before the court does not prevent the commencement or continuation of arbitral proceedings or the issuance of an award. The arbitral route can proceed in parallel.

Who decides, and who picks them

This is a structural difference. In arbitration the tribunal comprises one or more arbitrators as the parties agree; if they do not agree on the number it is three, and where there are several arbitrators the number must be odd, otherwise the arbitration is void (Article 10). An arbitrator is appointed from those approved and registered in the register of arbitrators at the Ministry, and any other person may be appointed if they have full capacity, have not been convicted by final judgment of a felony or a misdemeanour involving moral turpitude or breach of public trust even if rehabilitated, and are of good conduct and reputation. No particular nationality is required unless the parties agree or the law provides otherwise (Article 11).

By contrast, in litigation the parties do not choose the judge. The practical counterweight to that freedom in arbitration is that constituting the tribunal takes time and the parties bear the arbitrators' fees — a matter the award itself must address, since Article 20 requires the award to state the costs and fees of the arbitration, who pays them and the payment procedure, unless the parties agree otherwise.

Procedural flexibility, and confidentiality

In arbitration the parties may agree the procedure, including rules of evidence, and may subject the procedure to the rules of any arbitration institution or centre inside or outside the State (Article 19). They may agree the place of arbitration inside or outside the State, and if they do not, the tribunal determines it having regard to the circumstances of the case and the convenience of the place for the parties (Article 20). They may agree the language of the proceedings (Article 22). That flexibility is the clearest distinction from litigation, where procedure is fixed in advance.

Confidentiality should not be treated as an automatic feature of arbitration. Its extent depends on what the parties agreed and on the rules of any centre to which they subjected the proceedings, and challenge or enforcement may in any event bring aspects of the dispute before the courts. A party relying on confidentiality should provide for it and check its scope rather than assume it.

Interim measures

This is often the decisive practical factor. Unless the parties agree otherwise, the tribunal may order provisional measures or issue interim awards dictated by the nature of the dispute or to prevent irreparable harm — including maintaining or restoring the status quo, preventing current or imminent damage, providing a means of preserving assets against which later awards may be executed, and preserving important evidence — and may require security for the costs of the measure (Article 17).

But a tribunal's order needs the court for compulsory enforcement: the party in whose favour it was made may, after obtaining the tribunal's written permission, ask the Competent Judge to order its enforcement, and the judge shall so order unless the order or award contradicts the law or public policy (Article 17). The Competent Judge may also, where the tribunal is not yet constituted or cannot act effectively, order interim or precautionary measures before or during the arbitral proceedings — and such an application is not a waiver of the right to uphold the arbitration agreement (Article 9).

Challenge: the sharpest difference

An arbitral award may not be appealed by any method of appeal; the only recourse is an application for setting aside before the Competent Court (Article 33). Such an application is not accepted unless the applicant proves one of the grounds the article specifies. The Competent Court may set an award aside of its own motion where the subject matter is not capable of settlement by arbitration under the law of the State, or the award conflicts with the State's public policy.

The window is narrow: an application to set aside is filed before the Competent Court within one month from the date the parties received the award, from the date the applicant was notified of it, or from the date of issue of any correction, interpretation or additional award under Article 32, unless the parties agree in writing to extend it. A party that miscounts that month loses its only route of challenge.

Litigation, by contrast, offers established routes of appeal through the court tiers. A party wanting broader substantive review may prefer the courts; a party wanting faster finality may prefer arbitration. That is an explicit trade-off, not something a general rule settles.

Enforcement, which decides what the outcome is worth

An arbitral award has the status of res judicata and is enforceable under the Law regardless of the country in which it was issued (Article 34). The application for enforcement is submitted in writing to the Competent Judge with a copy of the arbitration agreement and the original award or a certified copy in the language in which it was issued, plus a certified Arabic translation if issued in a foreign language, unless the parties agreed other methods. The application is not accepted until the period for applying to set the award aside has lapsed.

Recognition or enforcement of an award may not be refused, whatever the country of issue, except in two situations: on the application of the party against whom it is invoked if that party proves one of the specified grounds, or by the Competent Judge of his own motion where the subject matter is not arbitrable under the law of the State or recognition or enforcement would be contrary to the State's public policy (Article 35). An appeal from a decision refusing or ordering enforcement may be brought before the Competent Court within thirty days of its issue.

The practical question is always the same: where are the other party's assets, and which route produces an outcome enforceable there? That question belongs to the drafting stage, not to the aftermath of an award.

The Competent Court, and a point worth noticing

The Law defines the Competent Court as the Civil and Commercial Arbitral Disputes Circuit in the Court of Appeals, or the First Instance Circuit of the Civil and Commercial Court of the Qatar Financial Centre, pursuant to the agreement of the parties. It defines the Competent Judge as the enforcement judge in the First Instance Circuit, or the enforcement judge in the QFC Civil and Commercial Court, pursuant to the agreement of the parties.

So the QFC court may be a forum elected under the State's own arbitration law, rather than a separate regime invoked from outside it. That election is made expressly and is not established by assumption. Its effect on both challenge and enforcement is worth considering before signature.

How the decision is actually made

• Is the likely dispute arbitrable at all, or does it fall among matters in which conciliation is not permitted?
• Where are the other party's assets, and which route yields something enforceable there?
• Does the transaction call for specialist technical expertise in whoever decides?
• What is faster finality worth against the possibility of review through appeal tiers?
• Is confidentiality an actual requirement? If so it must be provided for and its scope checked.
• Might the dispute need urgent measures, and who can grant and enforce them in time?
• Who bears the arbitrators' fees and costs, and how does the clause deal with that?

None of this substitutes for examining the particular contract and dispute. The arbitral route is set out in detail in how arbitration works under Law No. 2 of 2017, and the clause itself in drafting commercial agreements. Our litigation and dispute resolution practice and arbitration team advise on choosing a route and drafting dispute-resolution clauses.