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On 18 November 2025, the Qatari Court of Cassation (Civil Chamber) delivered a landmark judgment in Cassation Appeal No. 1075/2025, arising from a complex, multi-party dispute over one of the mega construction projects in Qatar. The decision provides authoritative guidance on the treatment of concurrent delay, the enforceability and scope of pay-when-paid clauses, and the prohibition of double compensation in construction contracts.
Background
The dispute originated from a subcontract executed in 2011 for works on a major Qatari construction project. Two subcontractors brought proceedings against the main contractors, seeking substantial unpaid sums, compensation for project delays, and the return of a QR 43 million performance bond. The main contractors resisted these claims, arguing that delays were concurrent and that their payment obligations were conditional upon receipt of payment from the project owner, relying on so-called "back-to-back" or "pay-when-paid" provisions.
The litigation was protracted, involving consolidated claims, expert reports, and multiple court decisions. Ultimately, the Court of Appeal awarded the subcontractors over QAR 142 million, including compensation for delay and sums related to bank guarantees. The main contractors appealed to the Court of Cassation.
Key legal principles clarified
1 Concurrent delay and apportionment of liability
The Court of Cassation set out a clear framework for analysing concurrent delays. Where both contractor and subcontractor are independently responsible for delays occurring within the same period and with equal effect, neither can shift full liability to the other. In such cases, delay penalties and compensation are generally not recoverable by either party for that period. However, if delays are separable in time, cause, or impact, each party is liable for the delay attributable to its own fault. The Court upheld the lower court's finding that, while one extension period involved concurrent fault, subsequent delays were solely the responsibility of the main contractors due to late instructions and approvals.
2 Pay-when-paid clauses: Clarification on prolongation costs
A significant aspect of the judgment concerns the interpretation and application of "pay-when-paid" clauses. The Court distinguished between "pay-when-paid" clauses, which allow a reasonable postponement of payment, and "pay-if-paid" clauses, which attempt to extinguish the payment obligation if the employer does not pay. The Court held that the clause in question was of the former type and could not be used to deny subcontractors their entitlement once works were completed and accepted. 10-112686703-1
Crucially, the Court drew a clear distinction between the subcontractor's entitlement to payment for the works actually executed and the subcontractor's entitlement to compensation for prolongation costs. While a pay-when-paid clause may, subject to certain conditions, apply to the timing of the subcontractor's entitlement to payment for completed works, the Court found that such clauses do not apply to claims for compensation for prolongation costs.
The Court expressly stated that the main contractor cannot rely on a pay-when-paid clause as a defence to withhold payment of prolongation costs owed to the subcontractor, even if the employer has not paid the main contractor for those costs. The Court reasoned that the subcontractor's compensation for prolongation costs is not "unconditional or contingent on the main contractor receiving compensation from the employer." The main contractor's remedy, if the employer fails to pay, is to pursue the employer directly, not to withhold payment from the subcontractor.
This distinction is particularly significant and appears to represent a new interpretation of the scope and application of pay-when-paid clauses under Qatari law. Based on the Court's analysis, while the timing of payment for executed works may be subject to a reasonable postponement under a pay-when-paid provision, the subcontractor's entitlement to compensation for prolongation costs is not conditional on the main contractor's receipt of payment from the employer.
3 Defects and acceptance of works
The main contractors argued that defects in the subcontractors' works justified withholding payment. The Court rejected this, emphasising that the issuance of a preliminary handover certificate is strong evidence of proper completion. Minor or non-fundamental defects do not justify refusal of acceptance but may be addressed through deductions or remedial works. The expert's valuation of defects had already been deducted from the subcontractors' entitlements.
4 Prohibition of double compensation
The Court partially accepted the appeal on the issue of double compensation. While it upheld compensation for prolonged project duration and for delayed payment of outstanding sums, it found that an additional QAR 4 million awarded under a separate head constituted compensation for the same harm. This duplication violated the principle that damages must correspond precisely to the loss suffered and must not result in unjust enrichment. The Court overturned this specific award.
The Court's decision
The Court of Cassation:
- Partially overturned the appellate judgment in respect of the duplicated compensation award;
- Rejected the claim for the additional QAR 4 million in damages;
- Upheld all other findings, including liability for delay, entitlement to subcontractor payments, and the interpretation and scope of pay-when-paid provisions, particularly as they relate to prolongation costs;
- Ordered costs accordingly.
Significance for the construction industry
This judgment provides important clarification for parties involved in construction projects in Qatar, particularly regarding the allocation of risk for delay and the enforceability of pay -when-paid clauses. The Court's distinction between payment for executed works and compensation for prolongation costs under pay-when-paid clauses is especially noteworthy, marking a significant development in Qatari construction law.
