Wednesday, July 5, 2017

Drafting, Enforcing and Terminating Power of Attorney in Oman: Key Considerations

Definition of Power of Attorney under Omani law

While there is no specific law in Oman governing the granting and use of a power of attorney (“POA”), POAs are described and regulated through various Sultani Decrees and other laws. According to Article 44 of the Property Registry Act, promulgated by Sultani Decree 2 of 1998 (“SD 2/98”), each POA shall refer to the specific contract which allows a person (the “attorney”) to undertake certain business for the sake of the principal. The attorney shall not be permitted to enter into an agreement with himself, unless the POA clearly refers to such an arrangement.

Article 45 of SD 2/98 requires that a POA be specific and explicit. A POA in relation to sales, mortgages, donations, distributions, or waivers must state the specific transaction that needs to be effected. In contrast, a POA that contains general expressions only authorises the attorney to undertake administrative works.

With respect to lawyers, the Advocacy Law promulgated by Sultani Decree 108 of 1996 (“SD 108/96”) does not permit lawyers to represent clients in a dispute unless a POA specific to this purpose is issued and certified. According to Article 43 of SD 108/96, this POA should be granted with specific reference to the lawyer, who may only act within the limits assigned to him by the client in accordance with the claim. Unless specifically prohibited by the POA, a lawyer may delegate acts permitted by the POA to other lawyers associated with his office. In practice, Omani judges generally request lawyers to provide a copy of their POA during the first court hearing in order to verify their powers and obligations in representing their clients.

Enforceability of POAs

In order for a POA to be valid and enforceable, it must be executed and signed before a notary public in Oman. Alternatively, if the POA is executed outside Oman, it must be: (i) signed before the notary public in that country; (ii) stamped by the Ministry of Foreign Affairs in that country; and (iii) stamped by the Omani Embassy in the country where the POA is issued.

The notary public in Oman only certifies POAs that are issued in Arabic. If a POA is in another language, before taking it for signature before the notary public, applicants must ensure that the POA is translated into Arabic, stamped and attested by an official translator (who is certified and registered as a translator by the Ministry of Justice), and attested by the Oman Chamber of Commerce and Industry.

It is important to note that the notary public in Oman takes an active approach when certifying a POA. According to Article 42 of SD 2/98, prior to undertaking the authentication, the certifier (i.e., the notary public) shall verify the identity of the contracted parties and their eligibility, as well as the relationship of the representative and the scope of his authorisation. Article 43 of SD 2/98 requires that prior to the concerned parties signing the POA, the notary shall read the POA in its entirety and explain its legal effect to the parties.

In order for the notary public to comply with these obligations, the notary public generally requests the applicant to provide a valid passport copy (if the applicant is a foreign national) or a copy of the Omani identity card (if the applicant is Omani). If a POA is executed on behalf of a company, the notary public will require the company’s valid commercial registration document to verify the powers of the authorised signatories signing on behalf of the company.

Key considerations when drafting a POA

Omani law does not provide a comprehensive list of what needs to be included in a POA, but in practice the notary public tends to review POAs in detail to ensure that the following items are included:

1. the duration of the POA;
2. the obligations of the attorney;
3. the limitations on the authority of the attorney;
4. if applicable, the party signing on behalf of the company (i.e., whether he is authorised to act on behalf of the company); and
5. the governing law of the POA.

Validity period of POAs

POAs executed in Oman must be issued for a defined period of time, and cannot be indefinite. The Ministry of Justice has recently announced that the validity period of all POAs executed in Oman must be two years or less from the date of issuance. Prior to this, all POAs issued in Oman were valid for a period of five years. It is now necessary to renew POAs every two years, and it may also be advisable in certain cases to include an undertaking to renew within the POA itself.

Termination or revocation of POAs

Generally, a POA will automatically terminate upon the death or the insolvency of the principal, or after two years from the date of execution of the POA. Omani law does not allow for a POA to be irrevocable, and principals are entitled to revoke a POA prior to the lapse of the two-year validity period. In order to revoke a POA, the principal must sign a revocation deed before the notary public. If the principal is a company, the notary public requires that the revocation deed be signed by the authorised representative(s) of the company holding unlimited powers to act on behalf of the company. The principal must also ensure that the original POA is attached to the revocation deed, along with a valid commercial registration document in the case of a company.