International contractors coming to Qatar should be wary of pitfalls

International contractors coming to Qatar should be wary of pitfalls

UrbaCon’s contract director highlights the modification made to international contracts in Qatar and the ramifications of this for external contractors not watching where they step in the market

Contracting hinges on its contracts, naturally, and in most countries around the world these are standardised international forms of contract like FIDIC, but Qatar tends to be a different story.

“One of the main issues is that the employers over here tend to use their own form of contract, so they take a FIDIC and amend with clauses that make it a more onerous contract for the contractor,” explains Alexander Milne, contracts director at UrbaCon Trading & Contracting (UCC).

“So any contracts department must make sure to identify the risks in each of the contracts and address those risks either by qualification or by pricing.”

An early identification of these risks is therefore a key step as contractors look to safeguard themselves from otherwise unnecessary arbitrations at a later date down the project timeline.

Milne notes: “That’s one of the issues that make it difficult out here – if there is a major dispute you can obviously go to arbitration, but that’s certainly not a route that I would recommend if you want to keep the client on-side, and you obviously want to keep a good relationship.”

“I think it’s all about relationships, and about nipping things in the bud before they get to a head and become a major problem. A contract’s a contract, but it’s how the personalities interpret it.”

UCC, for its part, and as a Qatari-based company, has never been involved in arbitration, and this can be put down to both its attention to its contractual obligation and its local harmonisation.

Mohamed Moataz AlKhayat, CEO of UCC, comments: “If you make sure the client is happy, and understand each other, as we do, then you will have a significantly reduced chance of any major legal action.”

“You do not want to head towards arbitrations as a contractor or a client, because it destroys the relationship between the two parties, and in terms of trust that makes it very expensive.”

Ramez Khayyat, MD of UCC, sums: “Contracting is about trust between client and contractor, and if the client shares the risk then it is so much the better – it makes for a much happier project.”

As a whole Qatar has seen relatively little arbitration, with the exception of works on the New Doha International Airport, but as FIFA World Cup 2022 projects begin many new contracts will see ink on paper, and only then will the system truly be tested.

Milne adds: “Arbitration is relatively new in Doha, but there have been one or two test cases to look at, and looking at those I think it will go very much like Dubai, which should give confidence to the contractors.”