Catagory:Middle East

1
RECENT CHANGES TO TENDER LAW REGULATIONS IN QATAR
2
Construction and Projects in Qatar: Overview
3
Qatar – An Opportunity for Operation and Maintenance PPPs
4
COVID-19: EPC AND EPCM IN LARGE CONSTRUCTION PROJECTS POST COVID-19
5
K&L GATES HONORED WITH MULTIPLE QATAR BUSINESS LAW FORUM AWARDS
6
K&L Gates Named a “Go-To Construction Law Firm”
7
Overview and Q&A: Construction and Projects in Qatar
8
Update: Collateral Warranties in Qatar
9
New UAE Penal Law Allowing for the Imprisonment of Biased Arbitrators Leads to Widespread Concern and Uncertainty in International Arbitration Community
10
QATAR COURT OF CASSATION CONFIRMS CONDITIONS FOR THE ENFORCEMENT OF ICC AWARDS IN QATAR

RECENT CHANGES TO TENDER LAW REGULATIONS IN QATAR

By: Pawel Piotrowski, Elias Matni, and Wafaa Dauleh

A series of provisions under the Executive Bylaws of the Law on the Organization of Tenders and Auctions No.16 (2019) have been amended by the Council of Ministers Resolution No.11 of 2022 (the 2022 Resolution). According to the Ministry of Finance officials, the changes made aim to strengthen and support the economic activities that fall outside the scope of the oil industry as there is a growing trend towards enhancing the role of the private sector in implementing a variety of development projects. The key points under these amendments pertain to the enhancement of procurement processes; the incorporation of in-country value (ICV); and support dedicated to micro and small-medium enterprises (SMEs). This short article shall address these main changes in turn, with specific reference to the relevant articles under the 2022 Resolution.

ENHANCEMENT OF PROCUREMENT PROCESSES

The amendments enhance the procurement process through the development and acceleration of procurement in government organizations, namely by providing specific time periods to organize transactions. For example, Article 29 of the 2022 Resolution stipulates that a bidder has 15 working days to submit a bid from the date of announcement, however, after the bid has been received, the Committee of Tenders and Auctions (the Committee) shall have 60 working days to decide on the tender and inform both the bidder and the competent department. Additionally, Article 22 specifies a period of 20 days from the date of submitting the final performance guarantee where the contract shall be signed, and under Article 70, the contract needs to be put into motion 90 working days from the date of signing. The aim of adopting these time restrictions is to aid in speeding up the process as well as increase the efficiency of tenders. The benefit from this is the minimized risk of a company incurring losses due to unspecified timings of the procedure. 

IN-COUNTRY VALUE

Another key inclusion under the 2022 Resolution is the added definition of ICV under Article 2 which is defined as:

The “total amount spent by the contractor, supplier or service provider within the State for the development of works, services or national human resources to stimulate productivity in the local economy. This shall be determined through a certificate of the previously executed contracts, or the plan provided by the bidder within its tender indicating the target amount of the local value of the contracting value.”

The rationale behind this amendment is to implement ICV procedures in the procurement process to aid in the country’s sustainable economic growth. Additionally, contained under Article 3 are provisions which encourage corporations to support the local economy by getting government clients to consider the ICV ratios of the bidders and then awarding the government contracts to successful bidders.

SMALL-MEDIUM ENTERPRISES

Under Article 4 of the 2022 Resolution provisions regarding the support of SMEs have been included which state that SMEs shall be exempted from paying for tender documents valued at less than QR1 million and from providing temporary and final performance guarantee. Additionally, the government authority may limit the participation of micro and small enterprises with regards to tenders valued at less than QR5 million and the SMEs shall only be required to pay half the value of the required classification fee. The goal behind these provisions is to provide opportunities that allow national micro and SME firms to grow, as well as increase the amount of tenders available to them and facilitate their cooperation within the public sector. 

Construction and Projects in Qatar: Overview

By: Paweł Piotrowski, Matthew Walker, and Amjad Hussain

A Q&A guide to construction and projects in Qatar.

The Q&A is part of the global guide to construction and projects. Areas covered include trends and significant deals, the main parties, procurement arrangements, transaction structures and corporate vehicles, financing projects, security and contractual protections required by funders, standard forms of contract, risk allocation, exclusion of liability, caps and force majeure. Also covered are material delays and variations, appointing and paying contractors, subcontractors, licences and consents, project insurance, labour laws, health and safety, environmental issues, corrupt business practices and bribery, bankruptcy and insolvency, public private partnerships (PPPs), dispute resolution, tax, the main construction organisations, and proposals for reform.

Qatar – An Opportunity for Operation and Maintenance PPPs

By: Pawel Piotrowski and Hena Sial

According to MEED.com Qatar awarded projects worth over US$136 billion between 2011–2020. Over the last decade, the focus of Qatar’s investment has been on the development of infrastructure related to the FIFA World Cup to be hosted in 2022. This includes stadiums and ancillary infrastructure such as metro lines, an airport expansion, expressways, and hotels.

In light of the great investment made by Qatar and with much of this infrastructure already built and the rest well underway, it may be worth shifting focus to the future of such infrastructure. Some questions that may assist such inquiry include, what are the best means to utilize this infrastructure to its full potential and how to best fund and deliver long-term infrastructure improvements that may be required over the upcoming decades.

In this article we will consider:

  • What are the benefits of using PPPs in the context of long-term O&M and infrastructure rehabilitation
  • How Qatar may utilize the existing legal framework for PPPs to ensure proper maintenance and rehabilitation of the state infrastructure; and
  • How PPPs should be delivered in order to minimize the risk of potential failures.

COVID-19: EPC AND EPCM IN LARGE CONSTRUCTION PROJECTS POST COVID-19

Authors: Pawel Piotrowski and Nicola J. Ellis

COVID-19 has highlighted some of the existing problems in the construction market such as fragmentation, low profitability and often low satisfaction for both owners and contractors (due to time and budget overruns and lengthy claims procedures and disputes). In this article, we consider the choice of the procurement method for large construction projects and issues and risks raised by COVID-19.

EPC

Owners often procure major construction projects on a fixed price, lump sum turnkey contract whereby the contractor is responsible for all engineering, procurement and construction (EPC) aspects of the development by a specified date (subject to a limited number of circumstances which will provide the contractor with relief). Under this arrangement, the EPC contractor directly engages the supply chain and takes responsibility for building and delivering the project so that the owner simply has to ‘turn the key’. Any changes or variations that the owner may require to the original scope provided to the EPC contractor will be at the owner’s risk and therefore it is important to have a high degree of certainty and detail as to the scope of works, and often a detailed design provided by the owner to assist the EPC contractor in providing an accurate price.  

The EPC has many advantages for the owner, including that it places lower management burden on them. It provides a single point of responsibility for the project to the owner and gives the owner and any lenders a high degree of certainty as to the time and cost of the development. Since the owner has recourse against a single contractor rather than having to pursue multiple contractors and suppliers, the dispute resolution process is usually less complicated. The EPC contractor should therefore seek to pass down all main obligations from the EPC contract onto its subcontractors to mitigate its liability position.

In return for taking on a high amount of risk as to time and cost, contractors may reflect this in their pricing and may include a substantial risk premium in the contract price. Owners can mitigate this to some degree by procuring EPC contracts in competitive tenders where the lowest price is often the decisive factor. That, in turn, often results in EPC contracts carrying a risk of change orders / variations which can become very costly to the owners if agreed or potentially catastrophic to those contractors who haven’t included a sufficient risk premium when submitting a low price proposal, leading to a focus on cost control by the contractor.

In these unprecedented times, the risk of force majeure events, effects of a change in law, risk of supply chain disruptions and the risk of integrating the performance of the entire supply chain have posed a particular challenge for contractors.  As a result, contractors may become more reluctant to take on some of these risks and may seek to exclude or set parameters around their liability for such risks or owners may see tenders with higher risk premiums. 

EPCM

Where the owner wishes to retain greater control over the project, the owner may opt for an EPCM contracting structure. 

The EPCM or ‘engineering, procurement and construction management’ contract is a construction management agreement whereby the EPCM contractor is responsible for advising the client on the design and procurement of the project but also for overseeing and managing all construction and supply contracts. An EPCM contract can therefore be seen more as a professional services contract in contrast to EPC contracts which are design and construction contracts. The EPCM contractor does not perform construction work. It is the owner who directly enters into numerous contracts with various contractors and suppliers. 

EPCM has many advantages for owners, including greater flexibility allowing projects to be tailored to current conditions as owners can modify the design or procurement plan mid-project and negotiate directly with the relevant contractors or suppliers. This can mean early engagement of certain packages prior to finalising the scope of work which may result in an earlier completion date. 

The overall price of the project under an EPCM arrangement may be lower as most of the risk priced for in EPC contracts sits with the owner and the owner is able to negotiate with the supply chain itself. 

EPCM also has disadvantages. The administrative burden of the owner directly negotiating and contracting with each of the contractors or suppliers is far greater than under EPC and significant demands are placed on the owner’s skills and resources (although the EPCM contractor may be able to ease this burden). Interface risk and coordination between each contractor or supplier needs to be managed and this often sits with the owner.  Where a dispute arises, this is also more complex for the owner due to difficulties in allocating fault and risk amongst multiple contractors, rather than having a single point of responsibility as under EPC contracts.

However, from our experience, most of these disadvantages can be reduced by way of proper implementation strategy, planning, contracting and management. 

Both EPC and EPCM have advantages and disadvantages but can be beneficial when used in the right circumstances. The objectives, scope of work and risk profile should be clearly understood in choosing which method to use as the cost implications of choosing the incorrect form can be substantial for both parties. 

K&L GATES HONORED WITH MULTIPLE QATAR BUSINESS LAW FORUM AWARDS

The K&L Gates Qatar-based Construction & Infrastructure team received two awards during the recent 2019 Qatar Business Law Forum Awards, retaining the “Property and Construction Firm of the Year” title for a second consecutive year, as well as earning a new recognition for “Alternative Dispute Resolution Firm of the Year.” The annual forum and awards ceremony recognizes exceptional achievement within Qatar’s legal community and is judged by a panel of nearly 30 industry leaders, academic practitioners, and government officials. The firm is honored to receive these awards, which highlight our commitment to not only the Qatari market but also our Middle East practice.

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K&L Gates Named a “Go-To Construction Law Firm”

K&L Gates is pleased to have been named the “Best Firm to Handle the Construction Project of the Future” by Above the Law.

“The construction industry has been around for centuries, but that doesn’t mean it hasn’t adapted to the changing times. The Construction and Infrastructure Group at K&L Gates draws from vast past experience to focus on ensuring that construction projects are sustainable for the next generation. The firm’s lawyers specialize in niche areas like integrating technology and IP into construction projects and incorporating clean energy and green initiatives. When you’re planning a construction project for a better tomorrow, K&L Gates is thinking ahead.”

For the full article, please click here.

Overview and Q&A: Construction and Projects in Qatar

By Pawel Piotrowski, Matthew R. M. Walker and Amjad Hussain

The Q&A is part of the global guide to construction and projects. Areas covered include trends and significant deals, the main parties, procurement arrangements, transaction structures and corporate vehicles, financing projects, security and contractual protections required by funders, standard forms of contract, risk allocation, exclusion of liability, caps and force majeure. Also covered are material delays and variations, appointing and paying contractors, subcontractors, licences and consents, project insurance, labour laws, health and safety, environmental issues, corrupt business practices and bribery, bankruptcy and insolvency, public private partnerships (PPPs), dispute resolution, tax, the main construction organisations, and proposals for reform.

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New UAE Penal Law Allowing for the Imprisonment of Biased Arbitrators Leads to Widespread Concern and Uncertainty in International Arbitration Community

By Michael P. Cotton, K&L Gates, Pittsburgh

Through a recent amendment to Article 257 of the UAE Penal Code, any arbitrators, experts, or translators who issue biased decisions or opinions in UAE arbitration proceedings may now be subject to criminal liability. The new law has led to widespread concern and uncertainty in the international arbitration community.

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QATAR COURT OF CASSATION CONFIRMS CONDITIONS FOR THE ENFORCEMENT OF ICC AWARDS IN QATAR

By Matthew Walker and Leanie van de Merwe, K&L Gates, Doha

In Appeal No. 173/2016, the Qatar Court of Cassation considered an appeal against the Court of Appeal’s decision  dismissing an application for the enforcement of an International Chamber of Commerce (ICC) award.

SPEEDREAD

The Qatari Court of Cassation has clarified the position on enforcement of foreign arbitral awards in Qatar, by confirming that none of the domestic requirements relating to certification and authentication of foreign official documents apply to international awards, thanks to the New York Convention.

This judgment is a significant step in the right direction for arbitration in Qatar, especially where it concerns the hotly debated topic of  enforcement of foreign awards. Qatar, which has a mixed legal system (Civil Law based on overriding principles of the Shari’a), does not recognise the principle of legal precedent in the same way as a common law jurisdiction does. Judges are generally not strictly bound by the decisions made in previous cases or by superior courts. However, whilst this judgment may not be strictly binding on the lower courts in Qatar, it may be considered as highly persuasive, and is therefore not a case that the lower courts should overlook lightly.

It remains to be seen whether the French courts will uphold or dismiss the appeal in the parallel proceedings to annul the award. Until then, the Court of Cassation’s judgment stands and provides considerable clarity on the requirements for enforcement of an ICC award in Qatar. (Appeal No. 173/2016).

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