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Legislating for change

By Mohammed al Khulaifi May 2012

Qatar's rapid economic growth is driving amendments to local commercial and business law
Qatar's economy has been booming dramatically in a way that generates great attention. The flourish of business which has accompanied the boom has seen a flood of companies from around the world express a desire to cash in, both by establishing local branches of their foreign corporations and investing heavily in the country.

Accordingly, the Qatari legislator has recognised the rapid change in the country's economy and the great impact this sea change has had on corporate working mechanisms. For this crucial reason, a series of new commercial provisions were adopted from 2000 to 2010, replacing the archaic rules of commerce. The Law of Bidding and Tender (No. 26 of 2005), the Law of Protecting Commercial Secret (No. 5 of 2005), the Law of Establishing the Qatar Development Fund (No. 19 of 2002) and the Law of Protecting Commercial Consumer (No. 8 of 2008) are examples of effective regulations in the field of developing business.

Internationally, Qatar has a very similar legal practice in commerce, as well as other legal aspects, as neighbouring countries in the Middle East. Anyone who studies or reads law can easily find many similarities in the provisions governing a multitude of legal issues in Arab society. Furthermore, the influence of the principles of Shari'a can also be found in these countries. As part of Qatar's economic development, Islamic finance has a great impact on banking transactions in the country. In a recent development, the Islamic banking branches of commercial banks in the country were ordered to close, leaving the practice of Islamic financing exclusively to dedicated Islamic banks in Qatar.

Taking into consideration the importance of economic globalisation to Qatar, as well as the need to open the door to inward foreign investment, the Qatari legislator adopted the Law of Foreign Capital Investment in Economic Activities (No. 13 of 2000). This law was enacted to ease the legal processes and burden on foreign businesses and act as a magnet for overseas investors towards Qatar.

Importantly, Qatari regulations were also brought into line with the rules of international law in many topics, especially in the area of business. For example, the Law of Commerce (No. 27 of 2006) vividly states in article 143 that: "Rules and international regulations issued by the International Chamber of Commerce shall cover the types of sale which are not covered by this law". Furthermore, article 216 of the same code states: "The provisions of the transportation contract stipulated in this chapter shall apply to air transportation in the absence of any special text in this part, notwithstanding the international agreements to which the state is a party."

Moreover, and similarly to the United Arab Emirates, the Qatari legislator has recently acknowledged the importance of e-commerce by adopting a special law that organises this vital method of doing business. The Decree Law No. (16) of 2010 on the Promulgation of the Electronic Commerce and Transactions Law illustrates a number of legal issues such as the definition of an e-transaction, its requirements, its effects, the transmission and storage of information, and consumer protection.

Today, Qatar is engaged in a tremendous number of high-valued projects, which have been approved by the government. According to projectqatar.com, the country is currently involved with approximately $250 billion-worth of projects related to the organisation and hosting of the FIFA World Cup in 2022 - including building a modern railroad, new hotels and other commercial buildings, and expanding the road network. To provide full legal protection for these projects against any misinterpretation of law, the regulations of the country must be solid and vivid in illustrating the rights and obligations of each type of business, especially with regulations concerning insurance and construction.

According to the World Economic Forum's Global Competitiveness Ranking 2011-2012, Qatar was ranked 14th globally, and number one in all Gulf Co-operation Council (GCC) and Middle East countries. This induction itself should continuously notify the legislator and lawmakers in the country to deal with change in the commercial landscape, by regularly reviewing existing laws and providing new, reliable regulations that will legally protect businesses operating in Qatar.

Dr Mohammed A al Khulaifi is assistant professor of Commercial Law at Qatar University.

© The Gulf 2012

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