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Abu Dhabi, UAETuesday 19 June 2018

International firms unlikely to sign up to Qatar compensation committee: analysts

Doha said on Saturday that a new committee would pursue compensation for damages incurred as a result of the boycott by the UAE, Saudi Arabia, Bahrain and Egypt

A man walks past a branch of Qatar National Bank (QNB) in Riyadh on June 5, 2017. Faisal Al Nasser / Reuters
A man walks past a branch of Qatar National Bank (QNB) in Riyadh on June 5, 2017. Faisal Al Nasser / Reuters

International firms are unlikely to sign up to Qatar’s latest legal attempt to pressure the GCC countries isolating it, analysts said, and it is also unclear what international judicial avenues the pledge to seek financial compensation can take.

On Saturday, Qatar’s public prosecutor, Ali Al Marri, said a committee was being set up to pursue compensation for damages incurred as a result of the measures that the UAE, Saudi Arabia, Bahrain and Egypt have taken. The four countries severed travel, shipping and air commerce with Qatar and expelled its citizens over what they say is Doha’s support for extremism.

Mr Al Marri said the committee would handle claims by private companies, public institutions and individuals, ranging from Qatar Airways to students who were forced to return to the country. He gave few details about how the body would pursue the cases, but said it would use international legal mechanisms and international law firms.

While multinational companies have suffered losses due to the quartet’s measures, a regional analyst at a consulting firm said they would probably not want to risk losing larger operations in Saudi Arabia and the UAE by signing up to Qatar's new efforts.

"The big multinationals will have business throughout the GCC and this will not be something of interest to them," said the analyst, who requested anonymity. "I would imagine this would only be of interest to firms that only have business in Qatar, and mainly Qatari firms.”

Lawyers from international firms told Allison Wood, lead Qatar analyst at the Control Risks advisory in Dubai, that it was not clear how Doha could pursue the claims and which international bodies or legal venues would be available.

“A big challenge is, where might they sue? ‎One could imagine that they might try to bring a case against them at the International Court of Justice,” said Mark Vlasic, head of the international practice at Madison Law and Strategy Group, and an adjunct law professor at Georgetown University. “The challenge there is that the UAE would likely have to accept the jurisdiction of the court in The Hague for it to move forward, and it's unlikely that the UAE would accept such a case.”

The World Trade Organisation could be another route of legal recourse, where the Qatari committee may try to pursue specific claims on a case-by-case basis. “That’s a larger, more far-reaching body,” Ms Wood said. “But I do think it’s going to be difficult for them to do that. Right now we don’t really know the grounds on which they’re going to pursue these cases.”

If firms claim force majeure as the grounds for compensation — that a contract was not possible to fulfill because of unforeseen circumstances — there could be a prohibitively high legal bar. “Force majeure doesn’t mean business is hard but that business is impossible, or fulfilling your contract is impossible,” Ms Wood said. “So there is generally a quite high threshold.”

Qatari threats of taking legal action against the UAE, Saudi Arabia, Bahrain and Egypt - which say they are only boycotting Qatar and are within international law - did not begin with the new committee, but have been a consistent tactic to pressure the quartet in the realm of public opinion and also try to have the boycott measures diluted.

“This would not be the first time a lawsuit was initiated for the purposes of a larger campaign,” Mr Vlasic said.

Qatar has already requested arbitration from the United Nations' International Civil Aviation Organisation (ICAO) and the International Maritime Organisation.

“This (the committee) is a continuation of that strategy [and] an expansion of it because it is more broad-based in terms of the types of issues it seems to be looking at,” Ms Wood said.

So far, however, Doha has not struck any major victories. Bahrain and the UAE are signatories, along with Qatar, to the Chicago Convention that sets rules for global air travel, and Doha asked the ICAO to use a dispute resolution mechanism to open airspace closed by the other two countries.

But during a closed June 30 meeting requested by Qatar, ICAO officials reportedly told the body’s governing council that the isolation measures did not cause safety concerns because non-Qatari airlines could still use the airspace to fly to Doha.

Qatar Airways flights now appear to be using some parts of Bahraini airspace that they were not at the outset of the crisis, Ms Wood said, and the UAE is allowing non-Qatari airlines overflight permission to Doha, which might have been aimed to undercut any claims to the ICAO.

The restrictions placed on shipping also appear to allow for trade that would probably not be considered a full embargo, and could undermine such claims.

Freight forwarding companies in the UAE have not always known how to proceed, but some are transshipping from the UAE to Qatar via Oman with no problems, while others have just not wanted to take the risk, Ms Wood said.

* Additional reporting by Damien McElroy