By TBY | Qatar | Jun 15, 2014
In the Loop
Qatar is hoping to attract foreign investment and entrepreneurs to the country as it seeks to reach its targets set by the National Vision 2030.
Despite its historical reliance on petroleum, Qatar looks forward to the day when its wealth will be derived from its own human capital. The country is diversifying its economy and encouraging private enterprise. Qatar is particularly interested in attracting foreign businesses. Job creation, multibillion-dollar investments in education, and interaction with the entrepreneurial culture of foreign businesspeople are the legs of the stool that will support Qatar’s future economy. The country is encouraging investment in many sectors, including infrastructure, healthcare, and athletics. While Qatar’s National Vision lays out goals for 2030, it is using the FIFA World Cup, which it will host in 2022, as an international coming out party to gain recognition, while also staying on focus and on schedule. In a nod to the country’s progress so far, Morgan Stanley upgraded Qatar from Frontier Market to Emerging Market status in 2013.
Despite inviting approximately 2 million foreigners into their country—Qatari citizens number in only the hundreds of thousands—Qataris insist that diversification and development remains a project by and for Qataris. They are keen to borrow some aspects of foreign cultures. For example, local interest in football, which is growing into a genuine national obsession, is encouraged because it promotes individual health and teaches the country’s youth the value of teamwork. However, fundamentally, Qatar is uninterested in becoming a little Europe or America on the Gulf. Nonetheless, Qatar prides itself on allowing foreigners and their families to live in a comfortable parallel society. Critically, Doha is dotted with international schools that are responsive to the expectations of the foreign population.
Equally important, foreign businesses can be confident in the rule of law in Qatar. Moreover, Qatar’s bi-cephalous legal system is conceptually accessible to foreign investors. As discussed below, Qatar is a civil law country, meaning that its procedural and substantive law is ultimately rooted in the ancient legal traditions of continental Europe. Alternatively, the Qatar International Centre for Arbitration adjudicates disputes with procedures resembling those in common law jurisdictions.
Foreign investors typically establish a presence in Qatar by creating a local entity, most commonly a limited liability company (LLC). An LLC requires a minimum capitalization of QAR200,000 (approximately $55,000) and ordinarily requires a local partner—either a natural or legal person—to own a 51% interest.
As an alternative to incorporating a local entity, a foreign business may also open a representative office in Qatar for sales and after-sale support. Representative offices may engage in commercial and marketing activities in order to better connect the client in Qatar with the overseas entity. Establishing a representative office is a simple and economical way for a foreign business to sponsor visas for its employees and establish a physical presence in Qatar.
Foreign investors with a legally appropriate presence in Qatar are welcome to compete in the public tender process. In Qatar, the process of awarding public contracts is clearly defined by the law and is both objective and transparent under Law 26 of 2005 (Tenders and Auctions Regulations).
In Qatar, employees may be engaged with either fixed-term or indefinite-period (at-will) contracts. The Ministry of Labor oversees the relationship between employers and their employees. When disputes arise, they are typically resolved by an administrative procedure within the Ministry. Note that an administrative decision by the Ministry of Labor is—legally speaking—a final judgment. For more information, see Law 14 of 2004 (Labor Law).
As noted above, Qatar’s civil courts follow procedures that are familiar to any civil law country. In addition, Qatar’s substantive law is heavily borrowed from foreign sources, and reflects a foreign conceptual framework. Operating in parallel is the Qatar International Court and Dispute Resolution Centre, which is housed in the Qatar Financial Centre, a special physical and legal jurisdiction for international banks, law firms, and foreign insurance companies. The Qatar International Court and Dispute Resolution Centre is an arbitral body that applies procedures similar to those in common law jurisdictions; its justices are highly experienced and come primarily from the UK. By offering a sophisticated alternative avenue of dispute resolution alongside its conventional courts, Qatar allows investors from any foreign country to acclimate quickly to the legal environment here.