The dispute resolution landscape in Oman

Dr. Shehab Farouk FCIArb provides an update and summary of the private dispute resolution, also known as the alternative dispute resolution (ADR) landscape in the Sultanate of Oman.

Key Facts

• The Sultanate of Oman, commonly known as Oman, is located in the south-eastern corner of the Arabian Peninsula. It is surrounded by the sea on two sides: the Sea of Oman to the north-east and the Arabian Sea and the Indian Ocean to the south-east. Oman is the second largest country in the Gulf Cooperation Council (GCC) in terms of geographical landscape.[1]

• Oman's legal framework, like that of other GCC states, is based on civil law, and its amended Basic Statute was introduced on 11 January 2021 by virtue of the Royal Decree No. 6/2021. The Judicial Authority is regulated in the Basic Statute in Book Six, Chapter One, spanning from Article 76 to Article 85. [2]

• Oman offers a range of mechanisms for resolving disputes in a regulated manner, including the state court system, conciliation, and arbitration. The procedures for resolving disputes through the state courts are outlined in Royal Decree No. 29/2002, which promulgated the Civil and Commercial Procedural Law, effective March 6, 2002.[3]

• Conciliation is another available dispute resolution method, governed by the procedures set forth in Royal Decree No. 98/2005, which promulgated the Conciliation Law. This law came into effect on November 28, 2005. [4]

• Arbitration is relatively common as a mode of settling commercial disputes in Oman, where comprehensive arbitration law was enacted in 1997 by Royal Decree 47/1997 on the Promulgation of the Law of Arbitration in Civil and Commercial Disputes (the Arbitration Law) as amended by the Royal Decree 03/2007. [5]

• The Arbitration Law is largely based on the UNCITRAL Model Law and sets down a comprehensive structure under which Omani arbitrations are to be conducted. In many respects, the Arbitration Law adheres to international norms, although certain regional nuances apply in that the proceedings are to be conducted in Arabic unless otherwise agreed. Accordingly, the Arbitration Law offers a high degree of comfort to those who wish to resolve their disputes in Oman by arbitration rather than the traditional route of using the Omani Courts. 

• Oman became a party to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, widely known as the New York Convention, on February 25, 1999. Additionally, Oman has been a contracting state with the International Centre for Settlement of Investment Disputes (ICSID) since August 1995. [6]

• Oman has introduced a recent law, “The Simplification of Legal Proceedings in Relation to Certain Disputes Before the Courts of Oman”, which was issued through Royal Decree No. 125/ 2020 [7] in an attempt to resolve these types of disputes in a timely manner, promoting Oman as a neutral seat for dispute resolution.

Looking ahead to the next 12 months

Oman has witnessed many new regulations since 2020 in an effort to achieve the Oman Vision 2040[8]. This includes establishing the Oman Commercial Arbitration Centre (OAC) and introducing its Arbitration and Mediation Rules[9]. In addition, it is expected that the current Arbitration Rules of OAC will be amended in the near future.

It is important to mention that the Chartered Institute of Arbitrators (Ciarb) and the OAC have entered into a training protocol. Under this collaboration, Ciarb conducts training sessions for legal practitioners in Oman in partnership with OAC.[10]

It is anticipated that the existing Oman Arbitration Law may undergo amendments to align with the latest developments in international commercial arbitration best practices. However, the specific timeframe for the introduction of the anticipated new or amended law is currently unavailable.

In a recent development, on 5 November 2023, the Oman Chamber of Commerce and Industry issued a new decision introducing the new Work System for OAC No.44/2023. The new Work System includes notable changes, for instance, reducing the number of board of directors from nine to five. All board directors are also now required to have practical experience of at least five years in managing and developing institutional work. Furthermore, the new Work System explicitly states that a board director must be fluent in English, and the chairman and deputy chairman of the board must be fluent in English, both spoken and written.

Oman is currently undergoing a significant wave of projects and direct foreign investments across diverse developmental realms. With arbitration emerging as the default choice for settling commercial disputes in local and international transactions, contracting parties are increasingly inclined to embrace arbitration to customise their preferred dispute resolution mechanism. To further enhance its standing as a neutral hub for dispute resolution through various forms of private dispute resolution (also known as Alternative Dispute Resolution), the Omani judiciary system is keen to mark Oman as an arbitration-friendly jurisdiction and a favourable destination for dispute resolution.  

About the author:  Dr Shehab Farouk FCIArb is a legal director at CMS Cameron McKenna Nabarro Olswang LLP in Oman. Shehab has over 15 years of expertise in international commercial and construction arbitration within the Middle East. His counsel spans civil, commercial, corporate, arbitration, and construction law, representing local and global construction corporations. He serves as the LCIA YIAG (London Court of International Arbitration, Young International Arbitration Group) Regional Representative for the Middle East. Furthermore, he has been instrumental in drafting the arbitration and mediation rules for the OAC. Shehab combines his practice as an arbitrator with academic pursuits; he is a certified tutor with Ciarb, instructing International Commercial Arbitration in Saudi Arabia and Oman, and has conducted training programmes for dispute resolution clauses and arbitral tribunal secretaries at the Saudi Center for Commercial Arbitration (SCCA) and OAC.   

Further Ciarb resources:

The State of Play of Arbitration in the MENA Region - November 2023

Footnotes:

[1] https://fm.gov.om/about-oman/state/map-of-oman/

[2] https://mjla.gov.om/legislation/laws/details.aspx?id=1

[3] https://mjla.gov.om/legislation/laws/details.aspx?id=88

[4] https://mjla.gov.om/legislation/laws/details.aspx?id=110

[5] https://mjla.gov.om/legislation/laws/details.aspx?id=57

[6] https://icsid.worldbank.org/about/member-states/database-of-member-states/member-state-details?state=ST104

[7] https://mjla.gov.om/legislation/decrees/details.aspx?Id=1281&type=L&lang=a

[8] https://www.oman2040.om/?lang=en

[9] The author has contributed to drafting the Arbitration and Mediation Rules in 2020 as a member in the draft committee appointed by the OAC Board of Directors.

[10]  At the time of writing, the author is the only certified tutor in Oman authorized to teach the Fellowship Program in International Commercial Arbitration.