Claims for time-related losses can exceed those provided for under contract in Qatar

Afforded by article 267 of the Qatar Civil Code (Law No. 22 of 2004), this potentially exposes companies working on construction projects where these clauses are commonly agreed as a limitation on liability for time-related losses. 

What constitutes serious fault?

Establishing serious fault, as opposed to a simple contractual fault, requires a high benchmark to be met, as it results in the party’s contractual agreement being usurped.

Whilst the term ‘serious fault’ is not defined under the Qatar Civil Code, various court decisions provide guidance as to its meaning. Despite judgments not having a binding effect in Qatar, such guidance can be persuasive.

A 2017 Qatar Court of Cassation decision described serious fault or error as “a deliberate error, an unforgivable error or an error associated with a risk behaviour that should not occur during any stage of the debtor’s contract execution”. The judge in this case also indicated that serious fault is similar to fraud or scam.

Egyptian judgments and commentary can also be persuasive in Qatar given Qatar’s civil code emanated from Egypt’s.

Egyptian legal scholar Al-Sanhoury defined serious fault as going beyond “a simple contractual fault”.

The Egyptian Court of Cassation has commented that a serious fault is one “that caused damages exceeding the damage presumed from a simple error or fault” and it is based on “severe negligence” of the obligations and rights within a contract. The court commented that such a defendant must have had “no regard to the damage that may occur”.

Interestingly, in the UAE, the Civil Code expressly stipulates that pre-agreed damages can be increased by the courts. 

Despite the availability of this remedy in Qatar, and even in the UAE where the law permits increased contractual damages, such claims are rarely successful. The lack of a definition of serious fault provides judges with sufficient flexibility to determine such cases based on the unique set of facts. 

There are three important takeaways. There needs to be a deliberate and intentional breach, the size of the loss must be significant. Knowledge of the impact of the breach and recklessness as to its impact is also a relevant determining factor.

Co-written by Aya Elwadia of Pinsent Masons.