Real Estate and Construction Disputes in Qatar: Key Legal Considerations

Most of what is fought over on construction projects in Qatar is governed by the contract: scope, the variations mechanism, payment certificates, notice periods, delay and extension of time. But not everything is left to the contract. The Civil Code regulates contracting in Articles 682 to 715 and lays down special provisions for building and construction works — including one that cannot be contracted out of. Separating what the law fixes from what the contract fixes is the first step in assessing any dispute.

The rule the contract cannot change

The contractor and the engineer are jointly liable for any total or partial collapse or defect occurring within ten years in the buildings or fixed structures they built — even where the collapse or defect arises from a defect in the land itself, or the employer approved the defective works. The liability extends to defects appearing in the buildings or structures that threaten their strength and safety. Where the parties intended the structures to remain for less than ten years, the liability runs for that shorter period. In all cases the period begins from the date the work is taken over. The article does not affect any right of recourse the contractor may have against subcontractors (Article 711).

This statutory liability concerns buildings and fixed structures; whether a particular package of works falls within that regime depends on the nature of the works and the applicable contractual and legal framework.

The provision that changes the parties' calculations is Article 715: any provision intended to discharge the engineer or the contractor from that liability, or to limit it, is void. Within the scope of this liability, exclusion and limitation clauses simply do not take effect.

An action on that liability prescribes three years from the time of the collapse or from detection of the defect (Article 714). The two periods are different and are easily confused: ten years is the span of the liability, three years is the period for bringing the action once collapse occurs or the defect appears.

Allocation between design and execution is regulated too. Where the engineer's work is limited to preparing the design, the engineer is liable for defects arising from the design but not those arising from the method of execution; where the employer assigns supervision of execution in whole or part, the engineer is also liable for defects in the execution supervised (Article 712). The contractor is liable only for execution defects and not for those stemming from faulty design — unless the defects are such as could reasonably be detected according to professional practice — and is liable for design defects where the engineer who prepared the design is employed by the contractor (Article 713).

Variations and changes in scope

Here the answer differs with the contractual basis, and the Code distinguishes two cases.

Where the contract is made on an estimated measurement basis and it emerges during the works that exceeding the assessed measurements is necessary to execute the agreed design, the contractor must promptly notify the employer, stating the expected increase in costs — failing which the contractor loses the right to claim that increase. Where the excess is substantial, the employer may withdraw from the contract and stop execution without delay, paying the contractor for the works completed as assessed under the contract, without indemnity for the profit the contractor might have made had the work been completed (Article 708).

Where the contract is for a lump sum on the basis of a design agreed with the employer, the contractor may not demand any increase in its dues as a result of an amendment or addition to that design, except where caused by or on behalf of the employer, and the employer agrees with the contractor the extra amount for it (Article 709).

The practical lesson is the same in both cases: timely notice, written authorisation and an agreed price are what turn additional work into an entitlement. Work done on site by oral instruction and claimed for afterwards is among the most common sources of dispute and the weakest evidentially.

Delay and termination

The contractor must complete the work in accordance with the contract's conditions and within the agreed period; absent conditions or an agreed period, it must complete in accordance with recognised practice and within the reasonable time the nature of the work requires, having regard to trade custom, and must provide at its own cost the labour, tools and equipment needed unless agreement or custom provides otherwise (Article 687).

If it appears during the works that the contractor is performing defectively or contrary to the contract, the employer may put it on notice to correct the method within a reasonable period the employer sets; if that period expires without the contractor reverting to the correct or agreed method, the employer may seek rescission or judicial permission to perform the obligation at the contractor's cost (Article 688). Where the contractor delays commencing or completing such that delivery within the agreed period becomes impossible, or its conduct shows an intention not to perform or makes performance impossible, the employer may demand immediate termination (Article 689).

In the other direction: where performance requires a specific act by the employer within a specific period and the employer fails to act, the contractor may require the employer to act within a reasonable period it determines, and on expiry without action may demand termination without prejudice to any right to indemnity (Article 692).

The employer may withdraw from the contract and stop the work at any time before completion, provided the contractor is indemnified for all expenses incurred, all works completed, and the profit it could have made had the work been completed. The court may reduce the indemnity for lost profit where circumstances make that fair — in particular to the extent of costs the contractor saved through the withdrawal and profit earned by applying that time to other work (Article 707).

Taking over, and defects

Where the contractor completes the work and places it at the employer's disposal after notifying it, the employer must take the work over according to familiar dealing practice; if the employer refuses without good reason despite formal notice, the work is deemed delivered (Article 693).

The employer may refuse to take over where a defect or breach of the agreed conditions renders the work unfit for its intended purpose. Where the defect or breach does not go that far, the employer may only seek a reduction in the sum owed commensurate with its significance, or require the contractor to remedy it within a reasonable period the employer sets where a remedy is available at reasonable cost (Article 694). The employer may not rely on those rights if it caused the defect, whether by issuing orders contrary to the contractor's opinion or otherwise (Article 695).

Once the work is taken over, actually or constructively, the contractor is not liable for apparent defects or apparent breaches of the contract's conditions. As to hidden defects, if the employer detects them after taking over it must notify the contractor, subject to the rules of workmanship, failing which the employer is deemed to have accepted the work (Article 696).

The employer pays the contractor's dues on taking over the work, unless agreement or practice requires otherwise (Article 697). Where the work consists of distinct parts or the price is set by unit rate, either party may demand inspection on completion of each part significant enough in relation to the whole, and the contractor may collect its dues to the extent completed unless otherwise agreed; work for which dues have been paid is presumed inspected and accepted, save where payment was on account (Article 698).

Subcontracting, and claims that bypass the main contractor

The contractor may delegate all or part of the work to a subcontractor unless the contract prohibits it or the contractor's personality is material given the nature of the work. The main contractor's obligations to the employer remain in force and it is liable for the subcontractor's works (Article 701).

One provision is often missed in risk management: the subcontractor and the labourers working for the main contractor's account in performing the work may claim directly against the employer up to the amount payable to the main contractor at the time of the claim, and the subcontractor's employees have the same right against the main contractor and the employer (Article 702). The contractual chain does not insulate the employer completely.

What depends on the contract alone

Many of the issues that arise in construction disputes are not specially regulated by the provisions above; they are governed by the contract and by the Civil Code's general rules. These include:

• Retention: whether it applies, at what percentage, and the conditions for its release.
• Agreed compensation for delay and how it is calculated.
• The extension-of-time mechanism, the grounds for extension, and the deadlines for claiming it.
• Determinations by the engineer or the employer's representative, how binding they are, and how they may be challenged.
• Payment and inspection certificates, their timing, and the consequences of their not being issued.
• The variation-order procedure and how variations are valued.
• Pre-dispute steps, such as amicable settlement or referral to a named body before arbitration or litigation.

None of these should be assumed to attract a Qatari statutory rule that substitutes for the contract or repairs its silence. Where the contract is silent, the general rules apply — and they may not produce the result a party expected.

Evidence: what actually decides these disputes

Construction disputes are decided by documents more than by construction of clauses. The provisions above themselves turn on acts that must be proved: notice of a cost overrun, authorisation of an amendment, formal notice to correct the method of execution, placing the work at the employer's disposal, notice of a hidden defect, and the date of taking over from which the liability period runs.

• Record the date of taking over beyond argument: it starts the liability period.
• Keep notices and formal notices, the means of sending them, and proof of receipt.
• Tie every item of additional work to a written authorisation and an agreed price before it is carried out.
• Log events affecting time when they happen, not when the claim is being prepared.
• Retain inspection records, payment certificates and site correspondence in a form that can actually be retrieved.

Where the dispute is decided

The route is fixed by the contract's dispute-resolution clause. If that clause provides for arbitration, arbitration in civil and commercial matters is governed by Law No. 2 of 2017: the arbitration agreement must be in writing or it is invalid, and the arbitration clause is treated as independent of the contract's other clauses, so the contract's nullity, rescission or termination does not affect it so long as the clause is itself valid. That carries weight in construction disputes, where termination is so often alleged.

Of particular relevance to these disputes, the tribunal may appoint one or more experts to report on matters it specifies, and may request the Competent Court's assistance in taking evidence, including technical expertise and examination of evidence. The arbitral route is set out in detail in commercial arbitration in Qatar, and the choice between routes in choosing the dispute-resolution route.

Treatment differs with the type of contract, the standing of the parties and the nature of the project, and this article is no substitute for reviewing the particular contract and records. The clauses that decide where parties stand in a dispute are covered in contractual rights and obligations. Our litigation and dispute resolution practice and Contracts practice advise on construction and property disputes in Qatar.