The procedural law of all Omani-seated arbitrations is Royal Decree No. 47/1997 (as amended) promulgating the Civil and Commercial Disputes Arbitration Law (the Arbitration Law). This is a detailed law substantially based on the UNCITRAL Model Law on International Arbitration. Below, we summarize some of the important provisions of the Arbitration Law.
The arbitration agreement
Arbitration agreements must be, or deemed to be, in writing. A record signed by two parties or contained in messages or telegrams, or other means of written communication exchanged by the two parties may constitute an arbitration agreement. Failure to do so will lead to the invalidity of the arbitration agreement. Parties entering into an arbitration agreement must have sufficient capacity to enter into it. Arbitration clauses are usually agreed amongst the contracting parties in their contract and relate to future disputes. They are considered as independent agreements and are unaffected by the invalidity, revocation or termination of the main contract. Parties may always enter into a submission agreement for present disputes. Submission agreements are generally more detailed as opposed to arbitration clauses.
The existence of an arbitration agreement constitutes a defence on the part of the respondent if a claimant submits a claim before Omani courts. The respondent must raise the existence of the arbitration agreement before it submits its defence. Failure to do so will lead to the Omani courts assuming jurisdiction to hear a dispute amongst the parties, despite the existence of the arbitration agreement.
In their arbitration agreement, parties must agree whether one arbitrator or more will hear a dispute amongst them, which must always be an odd number. The Arbitration Law sets the default number of arbitrators to three in the absence of party agreement to the contrary. The Arbitration Law sets out the requirements an arbitrator must possess, including the default procedure for the appointment of an arbitrator in the absence of the parties’ agreement.
The Arbitral Procedure
Generally, parties have the freedom to agree on the procedure(s) to be adopted by the Tribunal. Natural justice principles, such as the right to a fair hearing and the rule against bias must be applied. Parties must be treated equally and each one of them must be given an equal and full opportunity to present its claim.
The arbitration process is deemed to have commenced on the date the respondent receives the notice of arbitration from the claimant, unless the parties agree on a different date. The default language of the arbitral procedure is Arabic, unless the parties agree otherwise. It is international good practice for the parties and the arbitrator(s) to hold a procedural hearing at the outset of the arbitration to agree on all procedural matters relating to the arbitral procedure, including the timetable for the submission of pleadings, hearing dates, etc. It is important for the parties to agree on the procedure otherwise the default provisions of the Arbitration Law will apply which may not always be in the best interests of the parties.
The default timeframe under the Arbitration Law for the Tribunal to issue a final award is twelve months from the date the arbitration procedure commenced, unless the parties agree otherwise. Failure to comply with the timeframe, whether agreed between the parties or under the default provisions of the Arbitration Law, entitles either party to approach Omani courts to either extend the timeframe for rendering a final award or terminate the proceedings.
Awards are passed by majority of votes if the dispute is heard by more than one arbitrator. During the arbitral process, Tribunals may issue a number of awards all of which are considered as final on the issues each award determines. Alternatively, a final award may be issued resolving all claims (and counterclaims, if any) submitted to arbitration. Issued awards must satisfy the formalities set out in the Arbitration Law.
Risk of invalidity of an award and enforcement
Unlike in litigation proceedings, the losing party has limited recourse to challenge an award. Article 53 of the Arbitration Law lists the grounds an award may be set aside. The losing party may submit an application to the court to set aside the award within ninety days of the date the award was notified to the losing party.
The winning party may commence enforcement procedures of an award after the period of ninety days mentioned above has expired, subject to the winning party satisfying the formalities set out in the Arbitration Law. An award issued in Oman may be enforced in any country which is a signatory of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958) and in which the losing party has assets.
Role of Omani Courts in Omani-seated arbitrations
The role of Omani Courts in Omani-seated arbitrations is limited and it is mostly supportive and supervisory. Omani Courts may interfere in Omani-seated arbitrations in the following instances:
- Stay of court proceedings
- Temporary or preventive measures
- Appointment of the Arbitral Tribunal
- Where the arbitral procedure is contravened
- Challenge to the Tribunal’s jurisdiction
- Impossibility to perform tasks or Tribunal’s failure to undertake tasks
- Enforcement of orders
- Failure of witness(es) to attend hearings when ordered
- Tribunal’s failure to issue the award within the agreed time
- Deposit of the award with the Secretariat of the Omani Courts
- Invalidity claim
- Enforcement of an award
- Stay of enforcement proceedings
- Challenge of an order rejecting enforcement of an award
The author is Maria Mariam Petrou, Senior Associate at SASLO.
SASLO is a pre-eminent law firm in Oman, providing legal services to the local and international business community since being founded by Said Al Shahry in 1992. The firm prides itself in representing a prestigious clientele, whether they operate locally or globally and whether they are market leaders or smaller firms. It remains the only Muscat based law firm with well-established branch offices in Salalah, the capital of the fast developing Dhofar Governorate in the south of the country, and Sohar, the industrial hub of the Batinah coast.
SASLO is a full service commercial law firm, and thus offers the full spectrum of commercial law services meeting the requirements of commerce and industry. These requirements range across: corporate transactions for both private and listed companies; financing and security transactions for banks, airlines, shipping companies, developers, manufacturing companies and others; infrastructure projects; the full range of commercial agreements; and dispute resolution, arbitration and litigation services. These services are provided through SASLO’s two principal departments, Company/Commercial and Dispute Resolution, which are supported by strong administrative departments. SASLO is unique in offering a blend of highly experienced senior Omani and foreign lawyers with extensive local and international expertise.