Businessman acquitted of issuing bad cheques

A businessman was Tuesday acquitted of issuing five cheques worth Dh122.5 million that bounced, to an Islamic housing finance company for the purchase of 20 land plots.

Dubai A businessman was yesterday acquitted of issuing five cheques worth Dh122.5 million that bounced, to an Islamic housing finance company for the purchase of 20 land plots.

The Dubai Appeal Court overruled the primary judgement against the Emirati businessman, A.T., and absolved him of any malicious intention when he signed the cheques.

"The court cancelled the primary judgement and acquitted A.T. The court also rejected the prosecutors' appeal and dismissed the civil lawsuit lodged by the claimant in civil right [the Islamic housing finance company]," Presiding Judge Mahmoud Fahmi Sultan said in Courtroom 17 Tuesday.

A.T.'s acquittal came after his lawyer Samir Jaafar argued before the court that his client did not have any criminal intention when he issued the cheques

Defence's argument

"My client struck an agreement with the company and purchased 20 land plots for Dh371.5 million. He earlier paid Dh250 million, then paid the balance in form of five cheques worth Dh122.5 million," Jaafar said.

"Shortly after signing the cheques, A.T. discovered that the company had mortgaged the land plots for Dh2.7 billion to a local bank… When he issued the cheques he was not aware of the mortgage. We believe that the company obtained the cheques [using] deceptive methods, and which absolve our client of any criminal intention."

The Dubai Misdemeanour Court had earlier fined A.T. Dh30,000 for the bounced cheques. The judgement remains subject to appeal before the Cassation Court within 30 days.

Summary of Proceedures for building a Warehouse in Qatar

Listed below is detailed summary of the procedures, time and costs to build a warehouse —including obtaining necessary licenses and permits, completing required notifications and inspections and obtaining utility connections.

No.	Procedure	Time to Complete	Associated Costs
1	Obtain Planning Permisssion from the Municipality The Municipality of Industrial Area is part of the Municipality of the Greater Doha. Architects apply to obtain planning permission on any working day but can receive the planning permission only on Sundays, Tuesday, and Thursdays. The cost of the obtaining a planning certificate (QAR 100) has not changed since 1998. The application to obtain a planning permission includes the below documents. These documents are usually available within the company, causing no need for further procedures to be recorded: -Ownership Certificate : The government owns all lands in Doha and leases them to private citizens. A rent payment is paid on an annual basis to the MIA. The architect should only bring the receipt of last year's payment. This receipt is a proof that all previous payments have been made. No stamp is needed. -Land plan showing the location, area, and neighboring plots of land. -Copy of the applicants ID card -Copy of company's registration certificate The planning permission includes a location clearance from the Municipality of Industrial Area, set of design guidelines for construction work from the Municipality of Industrial Area, and a land plan with site map. Agency: Municipality of Industrial Area	3 days	QAR 100
2	Submit documents and obtain preliminary approval (opening of file) from the Municipality The papers required to open a file are a copy of the owner's ID card, owner's letter authorising the architect and a certified copy of the land ownership document. The architect shall apply to the concerned municipality to open a file with all the above d Agency: Municipality of Industrial Area	10 days	no charge
* 3	Obtain fire safety clearance from the Civil Defense Department at the Urban Planning and Development Authority The law requires the Fire Department to issue permission to build a warehouse within 15 days. Usually the fire department does not take more than 15 days to issue such permissions. Agency: Civil Defense Department, Uban Planning and Development Authority	14 days	no charge
* 4	Obtain clearance from Road Construction Department at the Urban Planning and Development Authority Agency: Road Construction Department, Uban Planning and Development Authority	7 days	QAR 200
* 5	Obtain clearance from Kahramaa at(in the Urban Planning and Development Authority) for power and water service delivery Agency: Kahramaa Counter, Uban Planning and Development Authority	7 days	no charge
* 6	Obtain clearance from QTEL (in the Urban Planning and Development Authority) for telecom service delivery Agency: QTEL counter, Uban Planning and Development Authority	1 day	no charge
7	Obtain clearance from the Building Permit Department of the Urban Planning and Development Authority The planning permission, which was obtained in procedure 1 is added to the plans and drawings and submitted to plans and drawings section of the Building Permit Department. The Building Permit Department checks whether the drawings have been achieved according to the regulations of Qatar National Building Specifications (QNBS). The key QNBS are: - Construction cannot utilize 100% of the land area - Right to use land - Number of stories allowed in each area of Doha - Height specification for each building in Doha BuildCo must seek approval from Building Permit Department stating that the project will not affect utilities’ infrastructure. Agency: Building Permit Department, Urban Planning and Development Authority	7 days	no charge
8	Obtain final building permit approval from the Municipality The application is composed of a file showing that land rent payments have been made, the project meets zoning requirements, the Fire Department permits building the warehouse, and the Building Permit Department states that the project will not affect utilities’ infrastructure. The fees are paid in the MIA for the building permit issuance. QAR 50 are paid to support the Palestinians via NGOs and charity organizations that focus on health organizations in the West Bank and Gaza. Agency: Municipality of Industrial Area	10 days	QAR 1,351
9	Submit public announcement of construction project at the Municipality After obtaining drawings approvals from Building Planning Department, the contractors, inspector, and owner should sign a statement showing that they fulfill requirements mentioned in Qatar National Building Specification. Agency: Municipality of Industrial Area	1 day	no charge
10	Receive electrical inspection from Kahramana and obtain proof of testing of electrical networks certificate Agency: Kahramaa	1 day	no charge
11	Obtain final cadastral measurements of the warehouse at the Municipality of Industrial Area This file includes: - Health and hygiene clearance form - Building drawing - Cadastral certificate Agency: Municipality of Industrial Area	1 day	no charge
12	Submit final records of construction project to the Municipality Agency: Municipality of Industrial Area	1 day	no charge
13	Receive final inspection Agency: Municipality of Industrial Area	1 day	QAR 100
14	Receive fire safety approval from the Civil Defense Department This approval also includes certificate of fire and panic safety and inspection certificate Agency: Municipality of Industrial Area	3 days	no charge
15	Obtain certificate of completion from Municipality There is a one-stop shop at the Buildings Permit section of the Municipality of Industrial Area. This one-stop shop is responsible for internal approvals related to completion of the building project. Representatives from the planning, engineering, services and building control departments are available in a single window. Contractors visit this single window asking for the above five approvals. It takes 3 days to obtain these approvals from the same window. There is only one interaction between the contractor and the MIA in this step. Every other interaction that takes place within the three-day period is internal within the one stop shop staff members Agency: Municipality of Industrial Area	3 days	no charge
16	Register the building at the municipality The Municipality of Industrial Area submits all data online and updates the database on a perpetual basis. Silence-is-consent rules apply in this procedure. Most people do not use the electronic database because they find the process faster when it is manual. Agency: Municipality of Industrial Area	1 day	no charge
* 17	Obtain electricity connection from Kahramaa The following documents are required to obtain an electricity connection Building Completion Certificate (to Activate Electric Supply) Copy of Building Permit One set of approved Building Permit drawings Copy of Policy Plan 'Meter Card' form complete with KAHRAMAA approved contractor’s stamp and signature 'Service Note' form complete with KAHRAMAA approved contractor's stamp and signature Copy of Identification Card Copy of the 'Land Deed' Agency: Kahramaa	30 days	QAR 20
* 18	Obtain water and sewage connection from Kahramaa Agency: Kahramaa	5 days	QAR 20
* 19	Obtain telephone connection from QTEL

Establishing a construction related business in Qatar

Company law
Construction company
Engineering construction-related office
Other options
Comment

Company law

A company may be incorporated in Qatar under three different legal regimes:

• the Commercial Companies Law (Law 5 of 2002, as amended);
• the Qatar Financial Centre (QFC) Companies Regulations; or
• the Qatar Science & Technology Park (QSTP) Free Zone Regulations (Schedule A of the Company Regulations).

The QFC regime was designed for banking, finance, insurance and other related businesses, while the QSTP regime was developed for businesses involved in research and development, technology, education, training and other related activities. Other types of businesses, including construction-related businesses, can avail themselves of the Commercial Companies Law regime.

Construction company

Given the specific scope of application of the QFC and QSTP regimes, the Commercial Companies Law provides the most appropriate legal framework for incorporating a construction company in Qatar. It recognises several types of entity, including single person companies, limited liability companies, public and private shareholding companies, and so-called 'Article 68 companies'. An Article 68 company is a special type of shareholding company, at least one partner of which must be the government of Qatar, a public corporation, a public authority or a company 51% of the capital of which is held by the State of Qatar. If less than 51% of the shares in the capital are held by the State of Qatar, the formation of the company is subject to the approval of the Council of Ministers.(1)

Subject to certain exceptions, foreign investors may invest in most sectors of the national economy (including the construction sector), provided that they team up with one or more Qatari partner which owns a minimum of 51% of the shares in the capital of the local company (the Foreign Investment Law (Article 2.1 of Law 13 of 2000)).(2) Therefore, a single person company (ie, a company with only one partner) is a feasible option for a foreign investor only if an exemption is obtained from the Ministry of Business and Trade.(3)

Engineering construction-related office

The establishment of a local or an international engineering consultancy office in Qatar is governed by the Engineering Law (Law 19 of 2005). An engineering consultancy office created under the Engineering Law may undertake engineering construction-related work in Qatar.(4)

Local engineering consultancy office
A foreign engineering company may register a local engineering consultancy office provided that it has one or more Qatari partner which owns no less than 51% of the shares in the capital of the local engineering consultancy office.(5) Qatari partners can be a Qatari physical or legal person. In the latter case it must be a wholly owned Qatari entity.

The local engineering consultancy office is divided into three classes. For each class, the Engineering Law provides special requirements, in particular regarding the minimum number of engineers involved and the scope and value of projects to be conducted.

International engineering consultancy office
A foreign engineering company may register an international office in Qatar as a branch. The main office abroad must be licensed to provide engineering consultancy services and must have been continuously active in the engineering sector for at least 10 years. An international engineering consultancy office does not require a Qatari partner and is not divided into different classes. All of the engineers working for the local or international engineering consultancy office must be registered before the Engineering Committee and hold a Qatari engineering practice licence.

Other options

Depending on the circumstances, there may be no need to incorporate a local company for carrying out construction-related business in Qatar. Depending on the precise nature of the activities to be carried out, construction-related business may be undertaken by either a foreign branch or a trade representative office. A Qatari partner is not required in any of these scenarios.

Foreign branch
Subject to obtaining an exemption from the Ministry of Business and Trade, a foreign construction company may register a branch in Qatar under Article 3 of the Foreign Investment Law. To obtain this exemption, the foreign construction or engineering company must have a contract or subcontract which facilitates the rendering of a service or otherwise benefits the public in Qatar. This generally entails entering into a contract or subcontract with the Qatari government or a quasi-governmental entity.

An exemption obtained from the Ministry of Business and Trade applies only in respect of the project for which it is granted. The Qatari branch of the foreign construction or engineering company is entitled only to conduct the necessary activities to fulfil its obligations under the specific project in respect of which the exemption has been granted, and therefore its lifetime is linked to the duration of the project.

Trade representative office
A trade representative office might be considered to be a kind of 'shop window'. It may be used to promote a foreign construction or engineering company in Qatar by introducing that company to the Qatari market through marketing and promotions. The trade representative office cannot sell or enter into contracts in Qatar. Business must be carried out either by the foreign construction or engineering company (where the contract can be performed outside Qatar) or by a company or branch established in Qatar (where the contract must be performed in Qatar).

Comment

There are four alternatives for foreign investors which wish to undertake construction-related activities in Qatar. They may:

• set up a local company under the Commercial Companies Law;
• register a foreign branch (provided the scope and nature of the proposed project meet the criteria set forth in Article 3 of the Foreign Investment Law);
• establish a local or an international engineering consultancy office; or
• establish a trade representative office (simply to promote construction business).

Endnotes

(1) Law 2 of 2008 amending provisions of Law 5 of 2002 relating to the commercial companies.

(2) Law 13 of 2000 Regulating the Investment of Foreign Capital in Economic Activities as amended by Law 31 of 2004, Law 2 of 2005, Law 6 of 2006 and Law 1 of 2010 respectively.

(3) The Ministry of Business and Trade may grant an exemption in relation to selected sectors, such as agriculture, industry, health, education, tourism, development of natural resources or energy and mining, consultancy services, IT services, and other services related to sports, culture, entertainment and distribution (Article 2.2 of the Foreign Investment Law).

(4) Engineering Consultancy: preparing architectural and constructional drawings, diagrams, designs, surveying, diagramming; supervising over performance; giving advice; conducting feasibility studies; estimating costs and computing quantities; and managing projects in the various engineering professions (Article 1 of Law 19 of 2005).

(5) Law 19 of 2005 Regulating the Practice of Engineering Professions and Decision 1 of 2006 issuing the Regulations for implementing Law 19 of 2005 of the Board of Directors of the Public Works Authority and the General Authority of Planning and Urban Development.

Arbitration in Qatar

There are certain nuances within the Qatari civil code that all companies carrying out business in Qatar, whether it is a developer or contractor, ought to be aware of in order to protect their position.

The most effective way for such companies to protect their position, in relation to disputes, is through careful drafting of the dispute resolution clause.

During contract negotiations, where price and commercial risks are considered the most pressing issues, it is all too easy to give no more than a cursory glance towards the back of the agreement to the standard dispute resolution clause. However, adopting a considered approach at the drafting stage could be time well spent if a dispute occurs later in the project.

When drafting a dispute resolution clause, consideration ought to be given to the choice of dispute resolution forum. In Qatar, there are two main options: arbitration or litigation. Arbitration is a private process, so negative press can be avoided. It allows the parties to choose the arbitrators, normally with the two nominated arbitrators selecting the chairman.

This has the benefit of ensuring experienced construction arbitrators, which may not be available in the local judiciary. Also, the timing of the process can be managed by the parties in order to expedite the resolution of a dispute.

Litigation in the Qatari Courts

Although the Qatari courts are generally regarded as reliable and predictable, they do not have specific expertise in construction law, and this may be considered a drawback in the context of a highly technical, multi-million dollar construction dispute. Therefore, it may be that Qatari court judges rely on court-appointed construction specialists, which can produce an element of uncertainty where a judge may be led by a technical expert with no legal training.

Where a construction contract has a clause awarding jurisdiction to the Qatari courts, it ought always to be kept in mind that the parties may, depending upon the nature of the dispute, agree an alternative resolution process at the time a dispute arises.

In our experience it is not uncommon, particularly where claims presented are of a technical nature, for the parties to agree that arbitration ought to replace the contractual agreement to pursue a claim in the Qatari court. However, it is clearly preferable to avoid any such uncertainty by drafting the contract accordingly.

Arbitration in Qatar

The choice of arbitral rules for disputes in Qatar comes down to an internationally recognised arbitration body, such as the ICC and Uncitral, or the Qatar Chamber of Commerce and Industry (QCCI).

ICC arbitrations are generally managed by the International Court of Arbitration in Paris, while Uncitral arbitrations are managed by a nominated centre; however, there is no reason why the parties could not agree to stage arbitration in Qatar, if this is considered most convenient.

Qatar is a signatory to the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards, so a foreign arbitral award would be enforceable in Qatar (providing it came from a country that is also a signatory to the New York Convention).

Arbitration at the QCCI is possible, however, as the QCCI Arbitration Centre is relatively new, some procedural points may be uncertain.