Introduction

The case of Obrascon Huarte Lain SA (t/a OHL Internacional) & Anor v. Qatar Foundation for Education, Science & Community Development ([2019] EWHC 2539 (Comm)) presents a significant challenge under the Arbitration Act 1996, specifically Section 68(2)(a). This challenge pertains to a Fourth Partial ICC Award issued by the England and Wales High Court (Commercial Court) on October 2, 2019. The central issue revolves around whether Qatar Foundation (QF) validly terminated a substantial hospital construction contract in Doha, Qatar, based on Clause 19 of the contract, in accordance with Qatari law.

The parties involved are Obrascon Huarte Lain SA (operating as OHL Internacional) and the Qatar Foundation. The joint venture (JV) entered into a contract governed exclusively by Qatari law, which included arbitration under the ICC Rules for dispute resolution. The JV challenged the tribunal's decision that QF had lawfully terminated the contract, alleging serious irregularity in the tribunal's legal analysis and procedural fairness.

Summary of the Judgment

The High Court dismissed the JV's challenge to the ICC Award, concluding that there was no serious irregularity affecting the tribunal's decision-making process. The tribunal had determined that QF's termination of the contract was lawful based on Clause 19, which permitted termination by notice for various reasons, including default. The JV argued that the tribunal erred by not addressing whether QF's termination required a court or arbitral tribunal order under Article 184 of the Qatari Civil Code ("QCC").

The tribunal evaluated expert testimonies, preferring the opinions of Mr. Richard Fernyhough QC over Professor Dr. Wahab, a Qatari law expert for the JV. The tribunal concluded that Clause 19 of the contract was sufficiently clear and unequivocal in providing that QF could terminate the contract by serving a notice, thereby satisfying the conditions of Article 184 of the QCC. The JV's contention that the tribunal failed to address the "Automatic Termination Condition" was rejected, as the tribunal had, in fact, considered and dismissed the JV's interpretation based on the evidence presented.

Analysis

Precedents Cited

The judgment references several precedents and legal principles to substantiate the tribunal's decision. Notably:

• Bandwidth Shipping Corporation v. Intaari [2007] EWCA Civ 998 - Emphasizes the high threshold for challenging arbitration awards, requiring substantial injustice.
• Zermalt Holdings SA v Nu Life Upholstery Repairs Ltd [1985] 2 EGLR 14 - Highlights the courts' general approach to uphold arbitration awards unless there is clear evidence of procedural unfairness.
• Petrochemical Industries Company (K.S.C.) v The Dow Chemical Company [2012] EWHC 2739 (Comm) - Discusses the enforceability of contractual termination clauses under Qatari law.

Additionally, the tribunal considered internal Qatari legal authorities, including Qatari Court of Cassation decisions, and the commentary of Abd el-Razzak el-Sanhuri, an eminent Egyptian jurist, to interpret Article 184 of the QCC.

Legal Reasoning

The core legal reasoning rested on interpreting Clause 19 of the contract in light of Article 184 of the QCC. Article 184 allows for contracts to be terminated either automatically upon breach or through a contractual mechanism without needing a court order, provided the contractual terms are unequivocal.

The JV argued that Clause 19 did not meet the "Automatic Termination Condition" as it required QF to serve a notice of termination, implying the necessity of a court or arbitral order. Professor Dr. Wahab supported this view. In contrast, QF, supported by Mr. Fernyhough, contended that the clause was clear and sufficient under Article 184(1), negating the need for judicial intervention.

The tribunal preferred Mr. Fernyhough's interpretation, finding Clause 19 to be "unequivocally and unambiguously" clear in allowing termination by notice, thereby satisfying Article 184 without the need for a court order. The JV's challenge under Section 68(2)(a) was dismissed as they failed to demonstrate a breach of the tribunal's duty under Section 33 of the Arbitration Act, which mandates fairness and impartiality.

Impact

This judgment reinforces the principle that arbitration tribunals have considerable discretion in interpreting contract clauses, especially under foreign law. It underscores the high threshold required for successfully challenging arbitration awards in English courts, emphasizing that only serious irregularities causing substantial injustice warrant intervention.

For practitioners, the case highlights the importance of clear contractual drafting, especially regarding termination clauses and adherence to applicable foreign laws. It also illustrates the courts' reluctance to interfere with arbitration awards, affirming the autonomy and finality of the arbitration process.

Complex Concepts Simplified

Arbitration Act 1996 - Section 68(2)(a)

This section allows a party to challenge an arbitration award in court if there has been a "serious irregularity" that affects the tribunal, proceedings, or award. Such irregularity must cause or likely to cause substantial injustice to the applicant. This provision serves as a safeguard against fundamental procedural flaws in arbitration.

Article 184 of the Qatari Civil Code (QCC)

Article 184 governs the termination of contracts under Qatari law. It provides two conditions under which contracts can be terminated:

• Automatic Termination Condition: Contracts can terminate automatically upon the occurrence of a specified event or breach without needing further action.
• Contracting Out Condition: Parties can agree to exclude the need for court or tribunal intervention in termination, provided the contractual terms are clear.

The clarity and specificity of the termination clause in the contract are crucial in determining whether these conditions are met.

Automatic Termination Condition vs. Contracting Out Condition

The JV posited that because Clause 19 required QF to serve a notice, it implicitly required a court order for termination, thus not satisfying the Automatic Termination Condition. Conversely, QF argued that the clause was sufficiently clear, fulfilling the Contracting Out Condition under Article 184(1), allowing termination without judicial intervention.

Conclusion

The judgment in Obrascon Huarte Lain SA v. Qatar Foundation underscores the judiciary's strong support for arbitration as a final and binding dispute resolution mechanism. The case highlights the necessity for precise contractual terms, especially in international contracts governed by foreign law.

Importantly, the decision illustrates that challenges to arbitration awards must meet a stringent standard, with courts avoiding intervention unless clear procedural injustices are evident. This fosters confidence in arbitration as a reliable and authoritative means of resolving complex commercial disputes.

For legal practitioners, the case serves as a reminder to meticulously draft arbitration clauses and termination provisions, ensuring they align with the governing law's requirements. Additionally, it emphasizes the importance of presenting and maintaining consistent legal arguments throughout arbitration proceedings.