Limitations and exclusions of liability under Qatari Law (Part 2)

• Qatar

• Litigation - Middle East

09-12-2021

This article continues from Part 1 of this series on limitations and exclusions of liability under Qatari law. Contractual provisions that limit or exclude a party’s liability for a breach of their obligations are generally enforceable under Qatar law, in the absence of deception or gross mistake. Nevertheless, the effect of such clauses can be avoided in certain circumstances and we explore this further. 

Lack of clarity

Under the rules of contractual interpretation in the Qatari Civil Code (Law No. 22 of 2004), any doubt or uncertainty as to the meaning or correct interpretation of a contractual provision should be interpreted in favour of the party performing the obligation. However, this rule is reversed for limitation/exclusion clauses. As such, the party performing the obligation will be able to rely on uncertainly or ambiguity to argue that the limitation/exclusion clause should not apply, or should be applied restrictively. The relevant provision of the Civil Code is Article 170:

“1. Doubt will be interpreted in favour of the debtor.

2. However, if a contract contains a term that excludes liability, then a narrow interpretation will be adopted.”

Public policy

Contractual provisions that contradict public morals are void and unenforceable, pursuant to Article 151 of the Civil Code:

“If the object of an obligation is contrary to the public order or morals, the contract will be void.”

Although not expressly stated within the Civil Code, it is generally considered that a provision which attempts to exclude, or even limit, liability for causing death or personal injury would be contrary to public policy.

Mandatory power of adjustment

Qatari courts have the power, pursuant to Articles 171(2) and 266 of the Civil Code, to adjust agreed levels of compensation in a way which overrides an agreed limitation/exclusion clause.

This power can be utilised if the contractual provision causes the receiving party to incur significant losses and the contract becomes unduly onerous. Such circumstances might arise if the limitation/exclusion clause deprives a party of a substantial benefit in circumstances which were not foreseen at the outset.

Articles 171(2) of the Civil Code provides that:

“If any general exceptional events occurred that could not have been foreseen and as a consequence of their occurrence the performance of the contractual obligation becomes, albeit not impossible, onerous for the obligee threatening him of a substantial loss, the judge may, depending on the circumstances and after balancing the interests of both parties, restore the onerous obligation to a reasonable limit. Any agreement to the contrary shall be void.”

Further, Article 266 of the Civil Code allows a court to reduce the amount of pre-determined compensation or contractual liquidated damages if the court finds that the amount of the agreed compensation is highly exaggerated or the party claiming it suffered no actual damages. Articles 171(2) and 266 are mandatory provisions of the Civil Code, which will prevail over any contractual agreement to the contrary.