Monday, October 16, 2017

Enforcement of Foreign Judgments in Oman

It is not uncommon for disputes emanating from commercial transactions to have cross-border effect. Quite often parties to a transaction are located in different jurisdictions. It is also not uncommon for commercial agreements to grant jurisdiction to the courts of a place where one or more of the parties are not domiciled or located. This may be for a variety of reasons. It is hence extremely important for a party having a foreign judgment in its favour (“Judgment Creditor”) to fully appreciate its ability to enforce that foreign judgment in another jurisdiction against the judgment debtor.

The enforcement of foreign judgments in Oman is governed under provisions of the Civil and Commercial Procedures Law issued pursuant to Royal Decree 29/2002 (as amended) (the “Civil Procedures Law”). Generally, while foreign arbitral awards can be readily enforced in Oman under the provisions of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1954, commonly referred to as the New York Convention, the same is not the case with judicial decisions.

Foreign judgments are, in theory, enforceable in Oman. It is possible to seek ready enforcement of foreign judgments in Oman, in particular under (a) the 1983 Convention on Judicial Co-operation between States of the Arab League (the “Riyadh Convention”), and (b) the 1995 Protocol on the Enforcement of Judgments Letters Rogatory, and Judicial Notices issued by the Courts of the Member States of the Arab Gulf Co-operation Council (the “GCC Protocol”). Both the Riyadh Convention and the GCC Protocol provide that each member state will recognise the judgments of the courts of any other member state, subject to fulfillment of prescribed conditions, that had proper jurisdiction over the case and where the judgment had been finally adjudged.

A judgment issued by a special court of a member state to either the Riyadh Convention or the GCC Protocol, such as the Dubai International Financial Centre Courts in the United Arab Emirates, is treated as a domestic member state judgment. Hence, that judgment would also be enforceable in Oman under the relevant treaty.

The enforcement of foreign judgments of countries that do not have mutual enforcement arrangements with Oman are subject to a judgment to be issued in compliance with the usual procedures followed in suits before the Primary Court. To enforce a foreign judgment in Oman, the Judgment Creditor is required to approach the competent Primary Court. Before enforcing that foreign judgment, the Omani courts will satisfy themselves that the conditions set out in Article 352 of the Civil Procedures Law have been met. Article 352 sets out the requirements for enforcement of foreign judgments, a translation of which is as follows:

(a) that the judgment or the order is issued by a competent judicial body pursuant to the principles of international rules of judicial competence determined by the domestic law of the country in which it was delivered and has become final according to that law and was not delivered on basis of deception;

(b) that the litigant parties to the case in which the foreign judgment was delivered had been rightfully notified and represented;

(c) that the judgment or order does not contain a request which breach an operative law in the Sultanate;

(d) that the judgment or order does not contradict a previous judgment or order delivered by a Court in the Sultanate, and does not contain something against public order or decency; and

(e) that the country in which the foreign judgment was delivered accepts the enforcement of judgments delivered by Oman Courts within its own territories.

At times, a Judgment Creditor seeking to enforce a foreign judgment in Oman may not be able to satisfy all the requirements prescribed by Article 352 of the Civil Procedures Law. However, should a foreign judgment not be enforceable pursuant to the above rules, then it is possible that such a judgment would nevertheless be of evidentiary value and the matter may be litigated de novo in Oman in a full hearing before the competent Omani court.

Arabic is the official language of Oman. In case a foreign judgment that is sought to be enforced in Oman by a Judgment Creditor has been issued in a language other than Arabic, the judgment together with all other documents should be translated into Arabic.

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Monday, October 9, 2017

What's New in the 2017 FIDIC White Book?

In March 2017 the Fédération Internationale des Ingénieurs Conseils (“FIDIC”) issued the Fifth Edition of the White Book, or the Client/Consultant Model Services Agreement to give it its full name. The White Book forms part of the FIDIC suite of documents and is one of the most commonly used professional services agreements in the world.

The Fifth Edition contains some major amendments to the Fourth Edition, which was published in 2006. We consider below some of the more important changes introduced by the latest update.

Form of agreement 
The Fifth Edition introduces an order of precedence to the documents listed as forming and to be construed as part of the agreement, both under the Form of Agreement and in the General Conditions.

By omitting to do so, the Fourth Edition was unclear as to which document’s terms would take precedence in the event that provisions in one document contradicted those in any of the others. 

Standard of care 
The enhanced standard of care set out in clause 3.3.1 now conforms more closely with wording typically found in client-bespoke agreements. The new wording provides that the consultant must exercise the “reasonable skill, care and diligence to be expected from a consultant experienced in the provision of such services for projects of similar size, nature and complexity.”

Further, the consultant must “perform the services with a view to satisfying any function and purpose that may be described in Appendix 1 (Scope of services).” The above wording stops short of introducing a “fit for purpose” clause, though in Oman the absence of such wording will not affect the consultant’s statutory decennial liability for the collapse of a building.

The Fifth Edition makes clear that the standard of reasonable skill, care and diligence only applies to the performance of the services. Under the Fourth Edition, the consultant had “no other responsibility than to exercise reasonable skill, care and diligence” in the performance of all its obligations in the agreement, including commencement, completion dates, procurement and maintenance of insurance, and any reporting. In the Fifth Edition these are now treated as absolute obligations.

Intellectual property rights 
The new edition distinguishes between background intellectual property (intellectual property owned by either party prior to the commencement of the services) and foreground intellectual property (intellectual property created by the consultant during the performance of the services). Foreground intellectual property remains the property of the consultant, but the client will have a licence to use it for any purpose connected to the project. The licence is broad, however, and would allow the client to use the foreground intellectual property in any future extensions of the project.

Dispute resolution 
The dispute resolution provisions now include adjudication as part of a multitiered dispute resolution process. If a dispute cannot be resolved amicably, it must first be referred to adjudication before any arbitration proceedings can be commenced.

In Oman, it is likely that these provisions will be amended so as to refer any dispute straight to arbitration.

Good faith 
The Fifth Edition introduces a broad good faith obligation (applying to “all dealings”) which has the potential to be at issue in almost any dispute. The governing law and jurisdiction of the contract will have a significant bearing on the extent of this “good faith” obligation.

Good faith under Omani contract law can be interpreted as a requirement to act reasonably and moderately, not to use the terms of a contract to abuse the rights of the other contracting party, and not to cause unjustified damage to the other party.

In Omani law an act of bad faith by one party may constitute a cause of action for the other party to the contract. Accordingly, the duty of good faith is overarching, in contrast with the position at English law. Under English law the extent of the obligation depends on the context and how explicitly it is defined. However, it is clear that the English courts are reluctant to construe a good faith obligation as imposing a positive obligation on a party to act against its commercial interest, or to give precedence to such an obligation over an express contractual right.

Liabilities 
In the new edition, default must be not only “deliberate,” as was the case in the Fourth Edition, but also “manifest and reckless” in order for the exclusion of the cap on liability to apply.

The Fifth Edition also provides for the mutual exclusion of liability for a number of heads of loss or claim. This is favourable for the consultant, as in many jurisdictions, without express wording excluding liability for loss of profit, etc.; the consultant would be liable insofar as these constituted “direct losses.”

Programmes 
The Fifth Edition sets out more detailed requirements as to what programmes should contain. There are also more detailed provisions obligating the consultant to provide a programme within 14 days of the commencement date; specifying which information the programmes should include; and obligating the consultant to revise the programme if the client does not reasonably believe the project will be completed on time.

Variations 
The new edition expands on: the circumstances which could constitute a variation; the procedure for initiating variations and agreeing on their impact on the programme; and the consultant’s remuneration.

Termination 
The Fifth Edition now explicitly provides that the client is not entitled to terminate for convenience in order to carry out the services itself or through a third party. In the Fourth Edition, this was not expressly stated.

The Fifth Edition now allows for immediate termination where there is corruption or insolvency. It also permits the client, with 28 days’ notice, to suspend the services for convenience.

There are more extensive rights of suspension, including an express right for the consultant to suspend if the client fails to demonstrate that it has made satisfactory arrangements to meet its payment obligations.

Summary 
The allocation of risk between the parties under the new edition of the White Book appears to remain broadly similar to that set out in the previous Fourth Edition. However, the Fifth Edition has gone a long way to remedying many of the shortcomings of the Fourth Edition.

 As a result of the changes, the parties should now be better able to understand and manage their risk allocation.

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Monday, October 2, 2017

Oman Becomes Fourth GCC Member State to Implement the Unified GCC Trademarks Law

Oman has recently become the fourth Gulf Cooperation Council (“GCC”) state to implement the Law of Trademarks for the GCC States (“GCC Trademarks Law”). Royal Decree 33/2017 was issued in Oman on 25 July 2017 with immediate effect. However, the nuances of how this new law will be implemented in Oman remain to be seen, as the implementing regulations have yet to be published.

The GCC Trademarks Law was approved by the GCC Trade Cooperation Committee in 1987, with further amendments made in 2006 and 2013. However, the Trademark Law only came into force upon the issuance of the Implementing Regulations in December 2015. Since then, Saudi Arabia, Bahrain, Kuwait and now Oman have fully adopted the GCC Trademarks Law to replace their respective national trademark laws.

Although Oman has not yet published the implementing regulations, the GCC Trademarks Law itself provides an instructive preview of the main features of the law.

Under the GCC Trademarks Law, once a party submits an application for a trademark the examination much be completed within ninety days of filing. Any requests for further information from the relevant Trademarks Office must be met with a response also within ninety days. The GCC Trademarks Law provides a period of sixty days for parties to oppose published trademark applications; note that currently the opposition period in Oman is ninety days. Applicants must respond to oppositions within sixty days of notification, or risk their applications being considered abandoned.

Following the applicant’s response is a hearing session, after which the Trademarks Office issues its decision within ninety days. Appeals to the Trademarks Office’s decision rejecting an application shall be filed within sixty days to the Objections Committee. The decisions of the Objections Committee are also subject to appeal to the competent court within sixty days. This is a shift from the previous Omani law, which provides that decisions in opposition were appealable to a Trademarks Office within the relevant Ministry, with a further opportunity to appeal to the competent court afterwards.

In the determination of well-known trademarks, the GCC Trademarks Law provides criteria similar to those provided by the World Intellectual Property Organization (“WIPO”). For a mark to be declared as well-known, the GCC Trademarks Law requires that the mark be widely recognisable by consumers due to the marketing efforts of the trademark owner; that the mark be registered and used widely across countries; and/or that the mark be widely valued or useful in promoting the products or services to which it is applied.

Along with an increase in application fees, an increase in penalties for trademark infringement will be seen in Oman. According to the GCC Trademarks Law, the penalties that apply “where a person counterfeits a registered trademark in a manner which misleads the public [or] in bad faith uses a counterfeit trademark and who affixes this mark to its products” include a fine between OMR 500 (USD 1,300) and OMR 100,000 (USD 260,000) and/or imprisonment for up to three years. Where a person “knowingly sells goods which contain a counterfeit or unlawfully affixed trademark,” a fine of between OMR 100 (USD 260) and OMR 10,000 (USD 26,000) and/or imprisonment for up to one year are applicable.

Although Oman has yet to publish the implementing regulations of the GCC Trademarks Law, it is clear that the adoption of a unified trademarks law is a beneficial development. Rights holders will take comfort in claiming similar levels of protection throughout the GCC, and new applicants and businesses will be attracted by the ease of a single set of provisions for the registration and enforcement of their trademark rights.

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Monday, September 25, 2017

Capital Increases for Joint Stock Companies in Oman

Joint stock companies in Oman seeking to increase their issued share capital have the option by way of a rights issue, or through private placement. The board of directors may, in accordance with the Commercial Companies Law of Oman (“CCL”), approve the rights issue through a board resolution within the limits of the authorised share capital of the company, provided that five years have not elapsed from the date on which the shareholders approved the increase in the authorised share capital. In the event that five years have lapsed from the date on which the increase of the authorised capital of the company was approved, the rights issue will require the approval of the shareholders of the company through an extraordinary general meeting.
In relation to a capital increase through a rights issue, Article 82 of the CCL provides that each shareholder has a preferential right to subscribe for the new shares in proportion to the number of shares currently owned by such shareholder. Accordingly, the additional new shares will be offered to all the shareholders of the joint stock company on a pro rata basis.
Once the approval of the shareholders or board of directors has been obtained and in order for a shareholder to exercise their right and proportionately subscribe for the new shares, a written notice must be sent to each shareholder at their address registered in the shareholders’ register informing them of such preferential right.  For shareholders of a public joint stock company, the notice must be accompanied by a copy of the prospectus duly approved by the Capital Market Authority (“CMA”) and the notice must be published in two daily newspapers for two consecutive days after being certified by the Department of Company Affairs. The said notice must, inter alia, indicate the specified period during which the preferential right may be exercised, provided such period shall not be less than 15 days from the date of publication.
The prospectus should include satisfactory information about the company’s past business performance and the financial position including the certified balance sheet and profit and loss account for the previous financial years or the period that begins from the date of the establishment of the company, if such date goes back less than three years.
With respect to subscription and allotment of shares post a rights issue, Article 83 of the CCL provides that new shares which are not subscribed for by the present shareholders of the company within the offer period may be offered for public subscription or, alternatively, the board may reduce the issued share capital of the company to the extent of shares that are not subscribed for. However, it may be noted that offering the unsubscribed shares to the public is possible only for public joint stock companies.
Notwithstanding the above, a further issue arising out of Article 83 of the CCL is with regard to the shareholders of a public joint stock company being entitled to waive or assign or transfer to a third party their preferential right in respect of the rights issue in accordance with the provisions of the Rules for Waiver of Rights Issue, issued by Ministerial Decision 156/2002 (“MD 156/02”). MD 156/2002 provides that the shareholders’ preferential rights may be assigned/transferred within the period specified for exercising the pre-emption right.
Finally, public joint stock companies need to fulfil an additional requirement of disclosing any material information in respect of the rights issue to the public. Accordingly, Article 3 of the Capital Market Authority Law issued through Royal Decree 80/1998 provides that no securities of any joint stock company may be offered for public or private subscription except in accordance with the prospectus approved by the CMA. A summary of the approved prospectus should be published in two daily newspapers, one of which must be in Arabic. The prospectus must be made in accordance with the form specified by the CMA. Any omission or avoidance of any material information or the inclusion of incorrect statements or information shall be the responsibility of the entity preparing the prospectus.

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Monday, September 18, 2017

Anti-Monopoly and Competition Law in Oman

Introduction

This article provides a brief overview of the legal framework of the Anti-Monopoly/Competition Law in Oman, its implementation, and consequences of businesses in violation of its provisions.

The Competition Protection and Monopoly Prevention Law (the “Competition Law”) was promulgated by Royal Decree 67/2014 in order to establish a control regime and prohibit agreements that would result in abuse of market dominance. The provisions of the law are applicable to all production, trading, or services activities, including any economic or commercial activities that are practiced inside or outside Oman and have an influence on the Omani market.

Under the Competition Law, the concept of the relevant market is defined as a market that is based on two elements: i) the relevant products, and ii) the geographical scope. The relevant products are the those regarded as interchangeable or substitutable from the point of view of the recipient of the service or commodity. This includes products that are provided by competitors in other markets that are accessible by the consumer. The geographical scope refers to the geographical area in which the conditions of competition are homogeneous, with both sellers and purchasers contributing towards the setting of prices. Interestingly, the geographical scope is not limited to Oman, as the Competition Law applies to any economic or commercial activity that has effects inside Oman.

Impact of the Competition Law on businesses

While the Competition Law does not apply to wholly owned government entities, it has significant implications for private-sector businesses that have a dominant market share.

Under the Competition Law, private-sector businesses with dominance in the market are prohibited from engaging in practices that would undermine, lessen, or prevent competition. A juristic or legal person is considered in a “dominant position” if it has control of, or has an influence over, more than 35% of the relevant market, including the acquisition of a market share. This market share is the sole determinant of a business’ dominant position; the Competition Law does not include any references to local turnover or other financial indicators.

If a business is considering taking acts that might result in market dominance, whether directly or indirectly, to avoid sanctions under the Competition Law it must submit a written application before undertaking these acts (see below).

The Competition Law also prohibits businesses or individuals from entering into agreements or contracts, whether inside or outside Oman, for the purpose of monopolising the import, production, distribution, sale, or purchase of any commodity.

Enforcement of the Competition Law  
The Public Authority for Consumer Protection (the “PACP”) implements the Competition Law. When a business applies for approval of an act, it must provide PCAP the information relevant to the specific situation. The PACP then has a period of time to consider the application; interestingly, if the period expires without a response, this is considered an approval of the act. However, the PACP may withdraw an approval after its issue in case it discovers that the information submitted by the applicant is incorrect or deceptive. In any case, any act that will result in a market share of more than 50% is prohibited and no such approval may be granted.

The PACP is rather strict in enforcing the Competition Law provisions and the consequences are wide- ranging as explained above. By virtue of Article 17 of the Competition Law, any person may submit a complaint to the PACP, including competitors and the general public. The PACP receives a large number of complaints and investigates them thoroughly. We are aware of a number of such proceedings and therefore we do not advise any entity to take such a risk, especially considering the severity of the penalties.

Consequences of violating the Competition Law  
A business’ failure to apply to the PACP for approval, followed by acts resulting in market dominance, may result in sanctions under the Competition Law. These range from imprisonment to administrative fines depending on the violation committed. Under the Competition Law, the PACP may also choose to refer a case to the Public Prosecution. The chairman and members of the board of directors, the chief executive officer, and the authorised managers of the violating business may face penalties depending on their awareness of the violation of the Competition Law. Finally, the Omani courts may force businesses to take measures in compliance with the Competition Law.

Unfortunately, the PACP current policy in respect to this issue is not to disclose details of the filings received and this, coupled with the fact that the Executive Regulations of the Competition Law have not been issued yet, contributes to the general uncertainty on the actual application of the Competition Law.


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Monday, September 11, 2017

Promotional Offers in Oman: Key Considerations

A commercial establishment looking to conduct a promotional offer in Oman must be aware of and comply with the provisions and terms set out in Ministerial Decision 239/2013 (the “Regulations”), the key aspects of which are set out herein.

Do you need a licence to conduct a promotional offer? 

By Article 3 of the Regulations, a commercial establishment must obtain a licence from the Ministry of Commerce and Industry (the “MOCI”) prior to undertaking or advertising any promotional offer. It is important to note that a licence shall only be granted to an Omani entity or a registered agent or distributor in Oman. Further, a licence application must be submitted to the MOCI at least fifteen days prior to the start of the promotional offer and must be supplemented with the following details:

  • type of offer and way of running the promotion; 
  • periods and places in which the promotion will be run; 
  • a list detailing the number and type of prizes and gifts to be given to the winners; and 
  • date and place for raffle and mechanism of selection of the winner. 

The MOCI is the responsible authority for review and approval of any such licence application. On the basis that approval is granted, the period of the promotional offer shall be a maximum of two months. However, it is within the MOCI’s discretion to grant one licence which runs for two concurrent periods, equating to four months. As Article 6 of the Regulations limits the amount of times any given promotional offer may run to four times a year, and the period for each promotional offer is two months, the maximum time in which the promotion can run is eight months per annum. If the MOCI grants a licence for an initial period of four months (i.e., two concurrent periods), the licence may be renewed for a further two months and then a further two months period after that. 

Requirements on the licencee: how to effectively conduct a promotional offer? 

To comply with the Regulations, a promotional offer must be displayed in a conspicuous location within the shop(s) in which the offer is being conducted, whereas only a copy of the licence needs to be displayed in each of the locations for the period of the promotional offer.

It is a requirement on the licencee to notify the MOCI of the names and addresses of the winners of any promotional offer in Oman. Additionally, the names of the winners should also be published in two daily newspapers, one of which must be in Arabic. A winner of a promotion has a period of three months from the date of newspaper publication to claim their prize, and any Oman-based winner seeking to claim their prize after the date in which three months has elapsed shall forfeit their rights to the prize. Any unclaimed prizes of Oman-based winners should be reallocated to charitable associations under the supervision of the MOCI.

In an effort to protect the interests of consumers, in addition to the Regulations, the Consumer Protection Law promulgated by Royal Decree 66/2014 (the “CPL”) and its implementing regulations by Ministerial Decision 77/2017 (the “Implementing Regulations”) (collectively the “Relevant Legislation”) provide for strict rules on commercial enterprises. By way of example, under the CPL suppliers must provide their customers with correct and true information. Suppliers are also not permitted to engage in false or misleading advertising activities by virtue of Article 20 of the CPL. When making a promotional offer, other key requirements for a commercial establishment to be aware of and comply with include as follows:

  • coordinating with the Public Authority for Consumer Protection in addition to the MOCI; 
  • providing a statement setting out the manner of running the promotional offer; and 
  • providing a description of prizes, gifts and other benefits of any given promotional offer. 

When conducting promotional offers in Oman it is recommended to consider all provisions and terms of the Relevant Legislation. Non-compliance with the provisions of the Regulations may see a violator prohibited from conducting promotional offers for up to one year and, more serious still, under the CPL a supplier which fails to provide its customers with correct and true information could face imprisonment of between ten days to one year and/or a fine. Any supplier which engages in false or misleading advertising activities could face imprisonment of between three months to three years and/or a fine as stipulated by the CPL.

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Tuesday, September 5, 2017

Third-Party Funding in International Arbitration

While third-party funding (“3PF”) is not new, it is playing an increasingly prevalent role in big ticket commercial arbitration and in investment treaty cases. 3PF involves the financing of arbitrations or claims in exchange for a portion of the proceeds in the event of success. Funders commonly include insurance companies, hedge funds, private equity funds, investment banks and law firms. The funder may earn an agreed percentage of any award or a success fee or both. In the event of an unfavourable award, the funder will lose its investment and will not be entitled to any payment.

In Europe and East Asia (principally Hong Kong and Singapore), 3PF is burgeoning. Professional funders have realised that the potential of multimillion- and multibillion-dollar cases are the norm in the current environment, and are also attracted by the absence of regulation of 3PF in key jurisdictions. Meanwhile, 3PF offers claimants the ability to pursue claims that they would have otherwise abandoned or settled. Though some countries have drafted voluntary codes of conduct (for example, the French bar association has declared 3PF to be consistent with French law), 3PF remains unregulated in many places and there is currently no formal regulation of its use in the context of international arbitration.

3PF in the GCC region 
In the GCC, 3PF has not been widely used and currently little, if any, regulation addresses 3PF. One of the few bodies in the region to address 3PF is the Dubai International Financial Centre (DIFC), which after public consultation formally adopted a Practice Direction on third-party funding in March 2017. The DIFC guidance requires disclosure to the other party of the existence of 3PF; such notice must include the name of the funder, but no further details of the funding arrangement. The guidance may have been a response to the funded case of Al Khorafi v Bank Sarasin in which the DIFC Court ordered damages in excess of US$50 million. This case and others reflect growing confidence in enforceability of judgments in the region, further encouraged by the establishment of the English common law Abu Dhabi Global Markets (ADGM) Court in 2016.

We are not aware of any cases in Oman using 3PF to date, but we see no bar to the use of 3PF in arbitration claims in Oman. It is reasonable to expect institutions that typically fund arbitrations to look at the caseload of ad hoc and institutional arbitrations currently underway in the Sultanate. The current restricted liquidity in many sectors across the GCC may also heighten interest in seeking 3PF.

Why engage in 3PF?

The sudden increase of 3PF in international arbitrations has raised concerns of increased frivolous claims, while proponents of 3PF argue that the careful screening of claims by funders protects against unmeritorious claims. In reality, 3PF of international arbitration offers the potential to bring together funders seeking a return on their investment with clients in need of finance to support their claims. 3PF is also being used by claimants to take the costs of conducting an arbitration ‘off-balance sheet.’ Any claimant company would prefer to outsource these costs rather than be required to carry them as a contingent liability in its accounts.

What are the risks of 3PF? 
3PF is no longer completely unregulated, but in the absence of regulation some of the risks and concerns that need to be considered in any 3PF include (i) potential conflicts of interest arising out of the involvement of an investor; (ii) whether reliance on 3PF is grounds for ordering security for costs; and (iii) whether and to what extent a party relying on 3PF should disclosure the 3PF arrangement.

Incentives to funders/investors 
Investors in international arbitration are attracted by high quantum claims and the enforcement benefits of the New York Convention on the Recognition of Foreign Arbitral Awards. Other key drivers that attract funders are:

(i) a strong case on the merits;
(ii) the size of the estimated damages, usually a minimum of US$10 million;
(iii) the funder’s share of the award;
(iv) the amount of costs that the funder has agreed to bear;
(v) the prospects of success;
(vi) where the assets are situated;
(vii) a solvent respondent and its ability to meet the damages awarded and costs;
(viii) the jurisdiction in which the arbitration takes place; (ix) the ease of enforcement of the award; and
(x) the time it will take to bring the case to a settlement or award.

The percentages earned by funders in 3PF arrangements vary between 20-50 per cent of the quantum awarded in a case and can be a multiple of the amounted invested by the funder. A funder is usually looking for a minimum return on investment of three, as in any project finance or private equity transaction.

Funders have also been encouraged by the recent case of Essar Oilfield Services Ltd v Norscot Rig Management Pvt Ltd in which the English High Court upheld an arbitrator’s decision to award a funding premium as part of the claimant’s claim for costs. This funding premium reimbursed the claimant for its costs of seeking 3PF for the case. While the effect of this case remains to be seen in other jurisdictions, claimants using 3PF now have a framework for making similar requests for costs.

An increase of arbitral decisions, commentaries, and efforts to codify applicable rules represent the first step towards self-regulation. One can expect more regulation if the voluntary codes of conduct currently in operation in many jurisdictions prove ineffective or if funders cannot meet their commitments. Where 3PF is legal, it is safe to say statutory regulation is likely to increase.

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Monday, August 21, 2017

Waqf in Oman

The ancient Islamic concept of waqf (plural ‘awqaf,’ meaning religious endowment) recently made headlines in Oman when, in April this year, Meethaq Islamic Banking announced that it would be collaborating with the Ministry of Awqaf and Religious Affairs (MARA) in support of the Organisation of Waqf, which was launched by MARA to encourage innovative uses of awqaf in the Sultanate.

A waqf is a charitable endowment that allows a person to donate property for the public good in the name of Allah. Typically, this is achieved by building mosques, schools or hospitals for the benefit of local communities in perpetuity. The Qur’an does not mention waqf explicitly, though it advocates charitable donations more broadly. The conceptual framework was set out in more detail later in the Hadith.

Waqf is frequently compared with the English charitable trust, with many speculating that the former inspired the latter by way of Crusaders who, during the 12th century, might have been exposed to the concept of waqf in Muslim territories and seen it as flexible device that could be used by both religious and state interests to fulfil a number of purposes.

A waqf is a contract, and it follows that the founder (called al-waqif or al-muhabbis in Arabic) must have the capacity to enter into a contract. A waqf is usually established by a written document, accompanied by a verbal declaration.

Waqf is a special form of disposal of property allowing its owner to freeze the property from subsequent transfer and transmission to others. This power of the owner is inalienable and cannot be rescinded by anyone, except in accordance with the conditions expressly provided for by the owner in the document creating the waqf.

There are several conditions that a waqf must satisfy, the most important of which is that the waqf is perpetual in nature. The subject matter of the waqf can be either movable or immovable, but its corpus must be preserved and remain inalienable.

The property used to establish a waqf must be the subject of a valid contract and should not already be in the public domain. Public property, therefore, cannot be used to form a waqf. Furthermore, the property should be free from any encumbrance.

As explained above, the main characteristic of a waqf is that it should be perpetual. In order to comply with this requirement, the waqf must be maintained at all times. Accordingly, part of the income of the waqf is necessarily spent on its maintenance, renewal and development.

Both natural and legal persons can be beneficiaries of a waqf. However, a waqf cannot be created for the benefit of the founder himself, or for an immoral or sinful purpose. The beneficiaries of the waqf can be specified by the founder.

Waqf institutions earn returns by depositing the income generated from the waqf with Islamic financial institutions. Any further returns so generated are then spent on charitable purposes.
Mazin bin Ghadouba, one of the followers of the prophet Muhammad, is credited with having built the Al-Midmar Mosque - the first mosque in Oman - in approximately 627 A.D. At the time, waqf was limited to building and renovating mosques. Later, Omanis extended the ambit of waqf to helping the poor, and for other charitable purposes.

Now there are over thirteen types of waqf in Oman, including those for mosques, education, Qur’an schools, and the maintenance of graves. Until relatively recently, awqaf were managed by imams. In 1950, the father of the present Sultan, Sultan Said Bin Taimur, established an institution dedicated to the management of awqaf, which in 1997 evolved into the present-day Ministry of Awqaf and Religious Affairs.

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Monday, August 14, 2017

Recent Improvements in the Public Transport Sector in Oman

The Sultanate of Oman has recently seen a shift in public transport methods towards more convenient and accessible means of short-distance travel. Previously, the main forms of public transport available to individuals were the conventional orange and white (or “street”) taxis used for short to medium distances, and Oman National Transport Company (“ONTC”) buses for long-distance journeys.

While the ONTC buses were adequate for long-distance travel, the options for short-distance transport seemed relatively outdated when compared to neighboring countries. Taxis were not required to use a meter unless operating from the airport (as required by Ministerial Decision 34/1998), and commuters were subject to varying and unpredictable pricing. However, in the past year, the ONTC has been rebranded and restructured as Mwasalat, and Marhaba Taxi has begun operations in Oman. These developments have improved and modernized the transport system, and have resulted in an uptick in consumer use.

The rebranding of ONTC to Mwasalat has been hailed as major development, as the company introduced new buses with modern features and operational protocols. Mwasalat has also been granted a licence by Ministry of Transport and Communications (the “MOTC”) to start operating taxis from airports and malls which, in turn, will provide tourists and citizens alike with comfort, ease of mind and modern means of transport.

The commencement of the operations of Marhaba Taxi in Oman has also led to better public transport services, as individuals may now use their smart phones to book taxis in a convenient and safe manner. Marhaba Taxi has also been provided with a licence to operate from Sultan Qaboos Port and hotels, which should lead to better services in general to and from the main hubs used by residents and tourists alike.

It is important to note that the licences given to Mwasalat and Marhaba Taxi have been granted to manage the services in those specific areas, and not to completely replace the current street taxis operating in those areas. In turn, street taxis will not be permitted to offer their services in the specific areas assigned to the two companies, unless they are working under the relevant licensed company. MOTC has urged all taxi owners operating near these specific area to join either Marhaba Taxi or Mwasalat accordingly in order to be permitted to operate therein. Street taxis not operating in these designated locations remain subject to their current regulatory scheme, though the MOTC is expected to issue revised regulations in the near future.

With the implementation of these regulations and the issuance of the above-mentioned licences, MOTC has contributed significantly to the development of the public transport sector in Oman, establishing new services while retaining the services of the conventional orange and white taxi drivers. Moreover, MOTC has been able to provide much-needed security, efficiency and technology in this area as requested and required by the general public. MOTC has also recently provided official and approved tariffs for transport, which could lead the way to implementing a metering system for street taxis as well. MOTC has also sought to provide better training of taxi drivers, particularly with regard to safety and security protocols.

The revamped transport sector in Oman is expected to contribute greatly towards the development of various other sectors, including tourism, whilst also spurring job creation. It is important to keep in mind that taxi drivers must be Omani citizens, thereby contributing to Omanisation and in-country value.

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Monday, August 7, 2017

Protecting Personal Data and Individual Employee Privacy in Oman

While there are no specific Omani laws that explicitly protect the privacy and personal data of employees, there are general laws that govern an employer’s conduct with respect to an employee’s privacy. A summary of the laws that govern privacy and personal data protection of individuals is set out below.

The Basic Law, issued by Royal Decree 101/1996, provides for the individual’s right to privacy in communication.  Article 30 of the Basic Law prohibits any interference with or monitoring of an individual’s telephone calls or written correspondence and guarantees the confidentiality of their contents, except in certain circumstances. It is therefore generally not permitted for an employer at the workplace to impinge upon an employee’s privacy by making a recording without permission, confiscating an employee’s details or revealing confidential information about the employee to a third party. 

Individual privacy is also protected in the Penal Procedure Law promulgated by Royal Decree 97/1999, as amended (“CPL”). Article 90 of the CPL provides that correspondence and cables may not be confiscated or perused; newspapers, publications and parcels may not be confiscated; conversations taking place in private may not be recorded; telephone conversations may not be tapped; and dialogue may not be recorded without the permission of the Public Prosecutor of Oman. The permission specified in Article 90 of the CPL may only be issued by the Public Prosecutor, who would only permit audio or video recording of an individual if there is sufficient evidence of a an offence or misdemeanor punishable by imprisonment for a period exceeding three months. Once granted, the permission is valid for a renewable period not exceeding 30 days, during which the audio or video evidence must be obtained.

In general, the courts of Oman are very protective of employees’ interests.  In practice, therefore, the employer would need to have a compelling reason to obtain permission from the Public Prosecutor and violate an employee’s privacy using one of the methods described above.

Exceptions to the presumption of privacy
Royal Decree 69/2008, enacting the Law of Electronic Transactions (the “ETL”), applies to parties who have agreed to perform their transactions electronically and safeguards the confidentiality of information or data contained in such transactions.

The ETL allows for exceptional circumstances in which personal data may be disclosed (i.e., allowing access to electronic communications and the disclosure of their contents to third parties). According to Article 43 of the ETL, obtaining, disclosing, providing or processing of personal particulars or data shall be lawful in the following cases:

• If such information is necessary for preventing a crime or detecting a crime pursuant to an official request by the enquiring authority;

• If such particulars were required or authorised by any law, or if the collection of such particulars occurred pursuant to a court order;

• If such particulars were necessary for the assessment of any tax or fees; and

• If the processing of such particulars was necessary for the safeguarding of vital interests of the person about whom such particulars were being collected.

Penalties for breaching an employee’s privacy
The CPL sets out penalties for those who violate an individual’s privacy. Article 276 of the CPL provides that any person who illegally observes or collects information or data, violates another’s privacy or their right to protect their secrets, or reuses collected information and data shall be punished by imprisonment for a period of not less than three months and not more than two years, by a fine of OMR 100-500, or both.
The Cyber Crime Law, promulgated by the Royal Decree 12/2011, also sets out certain penalties for breaching an individual’s privacy, which include:

(a) Imprisonment for a period of not less than one month and not exceeding one year and/or a fine of not less than OMR 500 and not exceeding OMR 2,000 is applied to any person who uses information technology tools to obstruct or intercept the flow of data or electronic information transmitted by way of information technology.

(b) Imprisonment for a period not less than one year and not exceeding three years and/or a fine of not less than OMR 1,000 and not exceeding OMR 5,000 is applied to any person who uses information technology tools (such as camera phones) to photograph or record individuals without their permission; who disseminates such information, even if it is true; or who uses such information towards slander and defamation.

Conclusion
Taken as a whole, Omani law protects individual privacy, especially that of employees. Employers are prohibited from monitoring or recording their employees, and may only obtain permission to do so from the Public Prosecutor under stringent circumstances.  Employees and private individuals have a reasonable expectation that, if they are photographed or recorded without permission, they will have recourse in the law.

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