by Lina Mohammed Darwish

From the day the Emir H H Sheikh Hamad bin Khalifa Al Thani took the reins of government in 1995, the State of Qatar has made significant progress in all fields. The economy of Qatar has flourished across many sectors. Today, Qatar is aiming to become a role model in economic and social transformation in the region. Consequently, due to the influx of a huge number of foreign investors, an entity was required to set out and organize a framework for foreign investors and ensure that their qualifications are aligned to the vision of Qatar. The Qatar International Financial Center was established by the government of Qatar in keeping with this vision, under the law No (7) of Year 2005, which states in Article (3) that:

“The business of operating the QFC shall be managed in accordance with its objectives in Article 5 by an authority known as the Qatar Financial Centre Authority (the “QFC Authority”), which is hereby established. The QFC Authority shall have an independent legal personality and full capacity to act as such in accordance with this Law, and shall have financial and administrative independence from the State (save as expressly provided by this Law). The QFC Authority shall have the capacity to enter into contracts, to sue and to be sued and to own and lease assets of all types. It shall be responsible for obligations and liabilities arising out of the conduct of its activities (subject always to the immunity provided for in Article 16) and the State shall have no liability for its acts or omissions. 2. The headquarters of the QFC Authority shall be in the QFC. 3. The QFC Authority shall be managed by the Board. 4. The QFC Authority shall conduct its affairs in accordance with this Law and, subject to this, shall have power, by decision of the Board, to determine its own procedures and management. 5. The Minister shall be the Chairman.”

The Qatar Financial Centre has an independent legal personality and has its full legal capacity to initiate legal actions in accordance with the law and enjoy financial and administrative independence from the state of Qatar.

The concept of Qatar Financial Center is similar to the concept of Dubai International Financial Center, which aims to develop the same standing as New York, London and Hong Kong. Especially since both Qatar and Dubai are sovereign states, have legislation bodies, dependent on civil law and subject to the Shariah Islamic law. Accordingly, the regulations and rules of the DIFC are derived from both the Financial Service Authority (FSA), an independent body that regulates the financial services industry in the UK, and the US Securities and Exchange Commission (SEC), which seek to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation in the US.

Qatar Financial Center provides financial institutions with a world class financial services platform. It has been created with a long-term perspective to support the development of Qatar and the wider region, develop local and regional markets, and strengthen the links between the energy based economies and global financial market.

The QFC has many bodies such as: Qatar Financial Centre (QFC) Authority, Qatar Financial Centre (QFC) Regulatory Authority and The independent Judiciary.

The QFC Authority is responsible for commercial strategy and for developing relationships with the global financial community and other key institutions both within and outside Qatar. QFC Authority aims to help all QF licensed firms generate new, and sustainable, revenue streams, and in doing so contribute to the further development and deepening of the financial services sector in Qatar.

One of the most important roles of QFC Authority is to approve and issue licences to individuals, businesses and other entities that wish to incorporate or establish themselves in Qatar with the Centre. In practical terms, QFC helps licensees concentrate on their core business by offering fast and efficient on–call support and commercial counsel. It provides a direct link with government institutions in Qatar and a wide reaching international political and business network.

The QFC Authority provides licensees with a principal point of contact via its Operations Department for infrastructure, office space and IT, as well as communications support for its licensee community. Licensed firms are able to choose their own location provided that it has been confirmed as an approved site.

The QFC Regulatory Authority is an independent statutory body and authorizes and supervises businesses that conduct financial services activities in, or from, the QFC. It has developed principle-based legislation of international standards, modeled closely on those standards employed by London and other major financial centres. The QFC Regulatory Authority has powers to authorize, supervise and, where necessary, discipline regulated firms and individuals.

In 2007, the government announced a decision to create a single unified financial regulatory platform in which the QFC Regulatory Authority, the banking supervisory arms of the Central Bank and of the Qatar Financial Markets Authority, which oversees the Doha Securities Market, would be combined into one body, and the laws and rulebooks of the country’s financial sector would be revised and rewritten to meet international standards. This move will set Qatar apart from its regional neighbors and will provide a high level of regulation and efficiency for all participants in Qatar’s financial sector.

The Centre also comprises a Civil and Commercial Court and a Regulatory Tribunal. The judiciary exists to uphold the rule of law and ensure the transparency of QFC business transactions. These two bodies provide the legal infrastructure for the QFC to resolve disputes between QFC firms or financial institutions and their counter-parties, and for arbitration or the formal resolution of civil disputes.

The Court is modeled on the internationally respected Commercial Court in London. It is responsible for hearing and delivering judgments on cases that come before it, and is the final arbiter in the event of disputes in matters of law. The Regulatory Tribunal has been established to hear and decide upon appeals from decisions of the QFC Regulatory Authority and other QFC agencies.

Leading academics at Qatar University Law School, like. Salman Al Ansari in his paper entitled: Qatar Financial Centre Sub-Government and its Potential Futur, have asked the question which authority will have legal precedent in the event of a dispute between the Qatar Financial Centre (QFC), Qatar Central Bank (QCB) and the Doha Stock Market (DSM). This essay will demonstrate the interplay between the authorities and give a recent overview of the laws and regulations that govern the Qatar Financial Centre which is the most recent and most visible from an international perspective regarding legal certainty in the financial landscape of Qatar and then demonstrate how the QFC Tribunal may co-exist with all the aforementioned regulatory bodies in a partnership like relationship.

2 Exceptions

In exceptional circumstances, there may be conflicts between different tiers of activities. However, it is my opinion that this may be the exception and not the rule. A simple example that could illustrate this point is a scenario between company A and company B within the (QFC) contrasted with another scenario between company B and company X where company X is outside the (QFC), but registered within the state of Qatar.

2.1 QFC is empowered to deal with commercial matters only but not criminal matters between the parties registered in the QFC.

The Qatar Financial center deals with commercial matters only between the parties registered in the QFC according to what is mentioned in the Qatar Financial Law in Article (5) and Article (10). All matters criminal or otherwise must be dealt with under the laws of the state of Qatar which clearly demonstrate that there is no conflict with the government authority in this particular area as it is set in article (19/2) of the Qatar Financial Center which stated that: “All Board members of the QFC Authority and the Regulatory Authority, all members of the Appeals Body and the management of the QFC Companies Registration Office and all employees of, and persons acting under the direction of, the QFC Authority, the Regulatory Authority, the Appeals Body or the QFC Institutions shall be deemed to be public officers/servants for the purposes of the Criminal Law No 11 of 2004 referred to above.”.

In other words, the criminal laws and sanctions of the State of Qatar shall apply in the QFC. However, the conduct of any business in the QFC in accordance with an Authorisation or a Licence issued under the QFC Law and in compliance with the QFC Regulations shall not constitute an office or be a breach of any criminal or other law applicable in the State.

Further, the civil (as opposed to criminal) laws, rules and regulations of the State shall apply in the QFC save to the extent that the QFC Regulations exclude or conflict with or are inconsistent with them.

2.2 Deals with Commercial Matters only

One of the most important roles of QFC is to approve and issue licenses to individuals, businesses and other entities that wish to incorporate or establish themselves in Qatar under the Centre especially in the banking, finance, and insurance-related businesses sectors. However, the QFC Regulatory Authority only regulates and has jurisdiction over, entities operating within or from the QFC. Matters or inquiries relating to banks, financial institutions, securities firms or other entities operating in Qatar but not from or within the QFC should be referred to the following Qatar authorities: Qatar Financial Centre Authority, Qatar Central Bank (QCB), Doha Securities Market, Ministry of Economy and Commerce, and Qatar Financial Information Unit (QFIU).

Generally, to the extent that a QFC licensed firm carries on business in or from the QFC, the approval, Authorisation, Licensing, supervision or Regulation of that business will fall outside the jurisdiction of the other institutions of the State of Qatar, including but not limited to:

The Ministry of Economy and Commerce;

The Qatar Center Bank;

The Qatar Commercial Registry;

The Qatar Chamber of Commerce and Industry; and

The Municipality of Doha.

(To be continued)

2.3 Deals Between the Parties Registered in the QFC.

Consequently, the QFC has a control over just the entity which subject to its laws and under its jurisdictions, so when the QFC Regulatory Authority detects conduct that may threaten the integrity of the QFC, it will act swiftly and decisively to stop the conduct, minimize the effects and prevent similar conduct recurring. In so doing, it will act fairly, openly and accountably in the exercising of its enforcement powers. While the other entities which are out of the QFC sovereign will be subject to the government authorities and their regulations.

2.4. Types of Business in QFC

Activities which are permitted to be carried on in or from the QFC fall into two categories-’ regulated activities’ (essentially financial services) and ‘ non-regulated’ activities in support of financial services). All QFC firms must apply to the QFC Authority for a licence which confirms that the firm is conducting a permitted activity in or from the QFC. Firms planning to conduct regulated a activities also need to apply to the QFC Regulatory Authority for authorization.

3. Qatar Central Bank

The QCB on the other hand draws its authority from Law (No. 15 / 1993) and governs all financial institutions that are in the State of Qatar but not in QFC. The question has been asked by the Legal Academics at Qatar University, like Mr. Salman Al_Ansari in his paper entitled: Qatar Financial Centre Sub-Government and its Potential Futur, is how the governing law of the QCB interacts if at all with the governing authority of the QFC known as the Appeals Body soon to be renamed as the Qatar Financial Central Tribunal.

An attempt to answer the above mentioned question, we must clarify that the QFC was contacted to give an insight as to the workings of the legal and regulatory framework. In response to the inquiry some interesting light was shed on the inner workings of the QFC appeals body, which stated that in reference to legislation, the Regulatory Tribunal as was established by the 2005 Law ( No. 7 ); and therein referred to as the Appeals Body is to be amended. It was further stated that this amendment to the Law is yet to be signed into law by the Emir. Once it is law the Appeals Body will be re-titled to The Regulatory Tribunal. Also it was stated that there are supporting draft Regulations which will also be approved once the Law is in force.

As to the details of the members of the current Appeals Body, it was stated that Sir William Blair and Michael Thomas QC were appointed as Chairman and Member, respectively, on the 8th March 2006 and Professor Francois Gianviti was appointed as the third Member on the 13th December 2006, And that their Letters of Appointment are held by the Council of Ministers.

In conclusion, from the information obtained from the QFC, the conflict may not really be there because the QFC recognizes its position within the Qatar financial family.

4. Doha Stock Market

The DSM draws its authority from Law No. (14) of year 1995 and governs all financial institutions that conduct investment business on the stock market in the Doha Stock Exchange in the State of Qatar but not in QFC. A similar question as was asked by the Legal Academics at Qatar University, like Mr. Salman Al_Ansari in his paper entitled: Qatar Financial Centre Sub-Government and its Potential Futur, is how the governing law of the DSM interacts if at all with the governing authority of the Qatar Financial Central Tribunal.

5. Ministry of Justice

The Ministry of Justice is the organ of the State and draws its authority from Emir as per Law No. (14) of year 1991 and governs all legal matters including financial institutions in the State of Qatar. Once again, Legal Academics at Qatar University, like Mr. Salman Al_Ansari in his paper entitled: Qatar Financial Centre Sub-Government and its Potential Futur, have stated that there may be a possible legal conflict that may have been set up due to a usurping of the powers of the MOJ by the Qatar Financial Central Tribunal.

6. The role of The Council of Ministers and the Minister of Economy and Commerce in the framework of the QFC

According to what it is mentioned in the QFC law in many articles, such as article (2/2) which stated that “The location of the QFC shall initially be set and can be altered from time to time by the Council of Ministers.” article (3) which mentioned that “ The Minister shall be the Chairman.”. article (6/5) which stated that “ In order to realize its objectives, the QFC Authority shall have the following powers: to approve, authorize and license persons, companies and other entities which may be authorized pursuant to this Law that wish to conduct their business at the QFC (whether by establishing a branch or other business in the QFC or by incorporating or establishing a new company or entity therein) provided that such persons, companies and other entities shall not be permitted to conduct any Regulated Activities unless they have received an appropriate approval, authorization or licence from the Regulatory Authority;”, which is owned by the state of Qatar according to article (8/1) which stated that “Notwithstanding any provision to the contrary in this or any other Law or regulation the Regulatory Authority is hereby established for the purposes of regulating, licensing and supervising banking, financial and insurance-related businesses carried on in or from the QFC and, without prejudice to any provisions of this Law or Regulations of general application to persons establishing or carrying on any business in the QFC, the Regulatory Authority shall be the only body with jurisdiction to regulate, license and supervise such activities. The Regulatory Authority is a body corporate owned by the State. Subject to the provisions of this Law, including the provisions set out in Schedule 4, Regulations made with the consent of the Council of Ministers shall define the management, objectives, duties, functions, powers and constitution of the Regulatory Authority (including, without limitation, the exact activities which shall fall to be regulated, licensed and supervised by the Regulatory Authority) and such Regulations may only be varied or revoked with the consent of the Council of Ministers.”, article (8/1) which mentioned that “ The Regulatory Authority is a body corporate owned by the State. Subject to the provisions of this Law, including the provisions set out in Schedule 4, Regulations made with the consent of the Council of Ministers shall define the management, objectives, duties, functions, powers and constitution of the Regulatory Authority (including, without limitation, the exact activities which shall fall to be regulated, licensed and supervised by the Regulatory Authority) and such Regulations may only be varied or revoked with the consent of the Council of Ministers.”, article (8/2) which stated that “ An Appeals Body is hereby established for the purposes of hearing appeals by entities, individuals and corporate bodies against the decisions of the Regulatory Authority. Subject to the provisions of this Law, including the provisions set out in Schedule 5, Regulations made with the consent of the Council of Ministers shall define the management, objectives, duties, functions, powers and constitution of the Appeals Body and such Regulations may only be varied or revoked with the consent of the Council of Ministers. The Appeals Body shall be the only body with the jurisdiction to hear appeals against decisions made by the Regulatory Authority and its decision shall be final and binding on the parties and shall not be subject to further appeal.”, article (8/3) which stated that “ In the case of any Regulations referred to in paragraph 1 or 2 which are submitted to the Minister by the Regulatory Authority or the Appeals Body, the Minister shall, when seeking consent to the enactment of such Regulations from the Council of Ministers, provide to the Council of Ministers a copy of the draft Regulations submitted by the Regulatory Authority or Appeals Body together with the Minister’s comments in relation to the same. In giving its consent in accordance with paragraphs 1 and 2, the Council of Ministers may require such changes, modifications or additions as it thinks fit and nothing in this paragraph shall be taken as requiring the consent of the Regulatory Authority or Appeals Body to any such changes, modifications or additions.”, article (9) which stated that “ 1. Each of the QFC Authority, the Regulatory Authority and the Appeals Body shall have the power to prepare and submit to the Minister such Regulations (or amendments, modifications to or repeal of existing Regulations) as it shall deem appropriate to achieve its respective objectives or to aid it to implement, carry out and enforce its powers and functions from time to time, including provisions for the determination and payment of compensation and fines in the event of breach of, or as otherwise provided in, any such Regulations. The Minister shall have power to enact such Regulations (save that the enactment of any regulations referred to in paragraph 1 or 2 of Article 8 shall additionally require the consent of the Council of Ministers as required by such Article) and, save as aforesaid, the Minister shall have power to enact amendments and modifications to and may repeal existing Regulations. 2. The Regulations may govern, without limitation, the matters set out in Schedule 2 and may be written in such language as the Minister shall determine. 3. The Regulations may provide for, without limitation, the establishment of an arbitral body and any other tribunal within the QFC, which shall have jurisdiction to determine disputes relating to activities undertaken in or from the QFC or events occurring in the QFC or to make orders, directions or determinations in accordance with and to the extent provided in such Regulations, and to provide for the manner of its constitution, its functions, duties and the proceedings of any such body. Any body or other tribunal established pursuant to this provision shall not have jurisdiction over those matters reserved to the Regulatory Authority or the Appeals Body pursuant to this Law or Regulations. 4. The decisions, orders, directions and determinations of any arbitral body or tribunal established by Regulations in accordance with paragraph 3 above shall be enforced and such orders, directions and determinations shall not be subject to appeal, challenge, or review unless Regulations provides otherwise.”, and article (10/3) which stated that “ The Council of Ministers may designate any activities as prohibited from being carried on in or from the QFC on the grounds that it is contrary to the interests of the State or to public policy.”. The Council of Ministers and the Minister of Economy and Commerce played an important role in the framework of the QFC. Many decisions could not be taken without their approval.

7. QFC is supporting Qatar in many aspects

Moreover, there are other articles which demonstrate that the QFC is supporting the State of Qatar in many aspects, such as article (5/1) which stated that “ The objectives of the QFC Authority shall be the following: to establish, develop and promote the QFC as a leading location for international finance and business designed to attract international banking, financial services, insurance businesses, corporate head office functions, as well as other business;”, article (5/4) which mentioned that “ The objectives of the QFC Authority shall be the following: to act in accordance with and promote international best practice and to eliminate bureaucracy to the maximum extent possible;” and article (6/8) which stated that “ In order to realise its objectives, the QFC Authority shall have the following powers: to provide advice to the State on any appropriate double tax treaties;”.

8. Conflicts of Law

Article (18) of the QFC law presents some Interaction with other Laws, but this did not mean that the QFC is contradicting with the national law since these procedures mentioned in article 18 will simplify the QFC transaction without suspending it and not to complex it. Article (18) stated that :” 1. Save as provided in this Law, (including but not limited toArticle 11) the criminal laws and sanctions of the State shall apply in the QFC. However the conduct of any business in the QFC in accordance with an approval, authorisation or licence issued under this Law and in compliance with the Regulations shall not constitute an offence or be a breach of any criminal or other law applicable in the State. 2. Without prejudice to paragraph 1 above, the civil (as opposed to criminal) laws, rules and regulations of the State shall apply in the QFC (and, without limitation, to contracts, transactions or arrangements made in the QFC between entities established in the QFC or between such entities and

employees and contractors thereof) save to the extent that the Regulations exclude or conflict with or are inconsistent with them and subject always to paragraphs 3 and 5 below. 3. In relation to any activities conducted in any part of the State outside the QFC by any entity established in, and conducting operations from, the QFC and in relation to any contracts, transactions or arrangements made between any such entity and any person resident in the State or any entity established in the State but outside the QFC, the laws, rules and regulations of the State shall apply as if the entity established in, and conducting operations from, the QFC were established in a jurisdiction outside the State. 4. Notwithstanding any provision to the contrary in any other law or regulations of the State, the QFC Authority shall have power to issue all visas, permits and other documents relating to or required for employment in or doing any business with or in, the QFC and such visas, permits and other documents shall be fully valid and implemented and accepted by all State authorities. 5. Notwithstanding any provision to the contrary in any other law or regulations of the State, the laws governing the rules, terms and conditions applicable to employees of the Civil Service of the State shall not apply to the QFC Authority, the Regulatory Authority, the Appeals Body, the QFC Institutions, and any of their respective employees. The QFC Authority, the Regulatory Body, the Appeals Body and the QFC Institutions shall each have the power to set their own internal regulations concerning the rules, terms and conditions applicable to their employees.”

9. Allaying the fears of people

To allay the fears of people who believe that the QFC usurps the powers of the QCB and the MOJ, these fears can be set aside due to the Law which gives the Council of Ministers the mechanism through the MOJ or the QCB to suspend transactions carried out at the QFC. This shows that the COM and the MOJ are ultimate authority. However were this law be exercised by the MOJ or QCB the result would be that though, many of the QFC transaction may be suspended the harm that may be caused to the State of Qatar would be immeasurable as the foreign investors would be wary of reinvesting into Qatar again in the future.

10. Conclusion

Qatar is one of the world’s fastest growing economies; therefore the existence of Qatar International Financial Center was required to supply ambitious investment and development strategy. Subsequently, it was a dream of the investors to have huge investment in Qatar. The QFC is specialized in commercial and financial matters and are subject to the QFC laws and regulations while any other matters are governed by the national laws. Also, it is subject just to entities which are dealing under the QFC. The QFC is working according to the MOJ rules as the QCB and DSM. The Council of Ministers and the Minister of Economy and Commerce played an important role in the QFC structure; consequently, the QFC is controlled by them. Any conflict of laws, if any, is in the interest of the state of Qatar.