Similar to what is commonly referred to as a “tort” claim in many common law jurisdictions, Omani law principally recognises a party’s right to bring a commercial claim against a non-contracting party.
Specifically, it is an established principle in Omani law to allow a party to pursue a claim against a non-contracting party when an exchange or incident, and the resultant claim, involves only two entities. However, in scenarios involving three parties, a party’s right to bring a claim against its non-contracting party may differ, particularly in construction contracts.
This article will explore the circumstances under which a party is legally permitted to bring a claim against a non-contracting party. It will also explore the circumstances in which it is impermissible for a party to bring a claim against a party with whom its relationship is not rooted in contract.
The right to file suit against a non-contractual party in a two-party transaction
The right to sue a non-contracting party, in scenarios involving two parties, was confirmed by the Supreme Court in its judgment number 160/2008. In this case the Supreme Court held that a party may bring a claim against a non-contracting party seeking recompense for actual and reasonably foreseeable losses when its losses arise from a “wrongful act” or “harmful act.” The Supreme Court further explained that “the basic rule followed in law is that anything done or said which causes harm to any other person is deemed to constitute a failure to observe the legal obligation incumbent upon all men not to inflict harm on any other person without lawful cause.”
Naturally, the Supreme Court’s position is consistent with what was established by the Omani legislature in 2013 in the Omani Civil Code (“Civil Code”), promulgated by Royal Decree 29/2013. Article 176 of the Civil Code, which is located under the chapter titled Harmful Acts, provides that a party shall be liable for “any harm to others” – that is, irrespective of whether the two parties have a contractual relationship.
Very importantly, the facts presented before the Supreme Court in Case No 160/2008 involved only two parties. As we discuss below, the right to sue a non-contractual party in scenarios involving three parties may be different under Omani law.
The right to a sue a non-contracting party in scenarios involving three parties
Under Omani law, a party may be precluded from bringing a claim against a non-contracting party, specifically in commercial transactions involving three parties. A common example in which this scenario arises is with construction-related contracts – such as when an employer (or project owner) has a contractual relationship with only a main contractor, and a sub-contractor also only has contractual relationship with the same main contractor. Thus, although the employer and sub-contractor are both involved on the same transaction, they do not have a contractual relationship with one another; rather, both the employer and sub-contractor have mutually exclusive contracts with a third-party intermediary, the main contractor.
In the event that a sub-contractor believes that an employer’s conduct has caused the sub-contractor to sustain damages, the sub-contractor does not have the legal right to bring a claim against the employer under Omani law. Again, this is irrespective of whether the sub-contractor considers the employer’s ‘harmful’ or ‘wrongful’ acts to be a direct cause for it having sustained losses. The sub-contractor’s only right of recourse will be against its own contractual counterparty, the main contractor; not the employer.
This principle has been established by case law, most notably by the Supreme Court in Case No 364/1994. Therein, the Supreme Court stated that the “general principles of independence of privity” precluded a sub-contractor from bringing a direct claim against the employer. In other words, the lack of a contract between the employer and the sub-contractor meant that the sub-contractor could not bring a direct claim against the employer.
The Supreme Court’s position set out in its 364/1994 decision has also been confirmed by the Civil Code. Article 645 of the Civil Code provides that “a sub-contractor shall have no claim against the employer for anything due to him from the first contractor….” Thus, a sub-contractor’s right for recourse is limited to claims only against its contractual counterparty, the main contractor.
Recoverable damages against non-contracting third parties
As discussed above, a party will be generally precluded from seeking recompense from a non-contracting party in commercial transactions involving three parties. However, a party may be able to recover damages from a non-contracting party in scenarios or transactions involving only two parties.
Notwithstanding this, the amount of recoverable damages will be limited to actual, provable losses sustained, together with reasonably foreseeable losses. Further, a claimant must demonstrate a direct, provable nexus between the losses incurred and the amount of compensation in which he seeks.
In its 65/2003 decision, the Supreme Court stated that all recoverable losses must be ‘direct’ and ‘natural’ arising from the alleged harmful or unlawful act. Further, Article 181 of the Civil Code states that a party’s compensation for losses arising from a harmful act “shall be assessed on the basis the amount of harm suffered by the aggrieved, together with loss of profit, provided that that is a natural result of the harmful act.”