Monday, September 17, 2018

Debt Recovery in Oman

In the current climate, increasing numbers of contractors and consultants are finding it difficult to recover payment for work they have already undertaken in Oman.

In the past, many companies working in the region have been wary of pursuing their entitlements through formal dispute resolution processes, due to perceived cultural sensitivities.  However, many now feel that they have no choice but to consider the available debt recovery options.

In many instances, the amounts owed are not disputed.  However, in the current market, some developers/contractors consider that they should not be obliged to pay their debts in full, and are attempting to avoid, defer, reduce and/or make piecemeal payments over a substantial period of time.

How to recover your debts in Oman

Wherever you are from, outstanding payments can be frustrating, not to mention costly.  However, a contractor will usually be aware of the tools available in its home jurisdiction in order to speed payment along.

When working overseas, however, the different cultural, legal and practical issues can make the whole process much more challenging.  In Oman, this challenge is in part due to the local civil legal system.  Those instruments that common law practitioners are used to wielding are not present in quite the same form.

The options available to pursue non-payment of due monies will depend on the dispute resolution mechanisms contained within the relevant contract.  Typically, a contractor/consultant will have to litigate or arbitrate to recover payments.

In addition, there are a number of procedures available under local laws that could assist in the recovery of debts.  Potential options available under Oman law include:

An order of payment

An order for payment within Oman is a developing area of law.  It can therefore often be hard to determine the likelihood of success before the Omani courts when making such an application.  It is a procedure by which a party applies to the courts for summary judgement against a defendant for commercial debts, substantiated by a commercial instrument such as a bill of exchange, promissory note or cheque, which are valid, but not paid.

If a party has a successful application for an order for payment, the outcome would be a direction from the courts for the outstanding debts to be paid by the debtor.  Success is by no means guaranteed, but the mere threat of an order for payment can be a persuasive tool for the creditor, as an outstanding debt can bring with it considerable public embarrassment within the local community.  This in turn can act as an incentive for the debtor to settle any outstanding debts.

Precautionary attachment order

A precautionary attachment order, if granted, essentially allows the court to seize the assets in question at the claimant’s request prior to judgement/arbitral award in order to preserve those assets during the trial.  It is as close to seeking injunctive relief as it gets in Oman.  The procedure, timing and effect of precautionary attachment orders can at times be somewhat unclear.

Precautionary attachment orders are made in absence of the other party and are ordinarily used as a tool to ensure that assets are not disposed of prior to receiving the court’s judgement/arbitration.

The order can be made against any assets in Oman, including machinery, bank accounts, goods or other assets owned by the defendant and under his possession, or owned by a defendant but in the possession of a third party.  It should be noted that the assets, money or material to be attached must be specified before the application will be granted.

If a precautionary attachment order is granted, the substantive case must be filed at court within eight days.

An order for sale

This is a procedure whereby a claimant applies to court for an order that a property or part thereof be sold where a defendant has failed to pay for material and equipment supplied for that property.

An order for a charge over property

In certain circumstances a contractor can exercise a form of charge over a property on which it is doing work until payment for that work is received.

Substantive action

As discussed above, pursing substantive action is also a possibility, either through the local courts or via arbitration.  Litigation in Oman can be both costly and time-consuming.  There are cases that continue for five years or more, and only local advocates can appear and plead before the courts. 

Arbitration might allow a claimant to remain within their common law comfort zone; however, cases usually take at least a year to reach a decision and the costs are not insignificant.

Practical tips

(a) Examine the payment terms in the contract;

(b) Ascertain entitlement to the outstanding debt and collate all the documentation in support of it;

(c) Review the dispute resolution mechanism in the contract, if any;

(d) Determine what assets the debtor owns and where these assets are held; and

(e) Review the amount in question and determine what is the best avenue for recovery.

Read More...



Monday, September 10, 2018

The Effect of Insolvency in Oman

The Oman Commercial Law issued by Sultani Decree 55/90 (the “OCL”) is the primary legislation governing insolvency in Oman.  Pursuant to the OCL, if a business is in financial distress and is unable to pay its debts, it will be forced to apply to the Commercial Court for a declaration of bankruptcy.  Otherwise, an application can be made by one of its creditors when such debtor has ceased payment of the debt.

In addition, any creditor pursuant to a commercial debt which is not yet due shall have the right to apply for the declaration of the bankruptcy of a debtor, if such debtor has no known domicile, has absconded, has closed the relevant business or initiated the liquidation thereof, or has effected dealings detrimental to its creditors.

How to apply for declaration of bankruptcy

A declaration of bankruptcy shall be by statement submitted to the registry of the Commercial Court, supported by reasons for the cessation of payment of debt.  An application must also attach certain documents, including but not limited to:

(a) the principal commercial books;

(b) a copy of the last balance sheet and of the profit and loss account;

(c) a statement of personal expenditure for the three years preceding the making of the application;

(d) a detailed statement of the immovable and movable property owned by the debtor and the approximate value thereof on the date of cessation of payment;

(e) a statement as to the names of the creditors and the debtors, their domiciles, the amounts of their entitlements or their debts, and the securities securing the same; and

(f) a statement of the protests for non-payment made against the debtor during the two years preceding the making of the application.

The effect of bankruptcy

After an application has been submitted, the Commercial Court may order the taking of measures necessary to preserve or administer the assets of the debtor until it makes its decision on the declaration of bankruptcy.  This may include delegating such person as it sees fit to conduct investigations into the financial state of the debtor and the reasons for its/his cessation of payment, and to submit a report thereon.

A consequence of a judgement declaring bankruptcy is such that as of the date it is rendered the bankrupt shall relinquish in favour of the administrator in bankruptcy the management of all his assets, including assets passing to him while he is in a state of bankruptcy.  This does not apply, however, to earnings and certain other assets that a judge considers commensurate with the bankrupt’s need to support himself and his family.

Further, the bankrupt may not effect any dealing in relation to any part of his assets, and he shall not be entitled to effect any act of payment or of receiving save where the receiving is of a commercial instrument and bona fide.

Right to restitution

1. Actual items

Any person may obtain restitution from the estate in bankruptcy for specific items in respect of which he can prove ownership, but the administrator may not deliver any item to the person seeking restitution before first obtaining leave of the respective judge.

If the administrator refuses to return items in respect of which restitution is claimed, the dispute will be placed before the Commercial Court.

2. Instruments of value

It is permissible to obtain restitution of commercial paper and other instruments of value delivered to the bankrupt in order to realise their value or to apply them to a specific payment, if they are actually present in the estate in bankruptcy and their value had not already been paid out when bankruptcy was declared.  Restitution will not, however, be permissible unless the instruments in question have been recorded in a current account between the person seeking restitution and the bankrupt.

Restitution of bank notes deposited with the bankrupt will not be permissible until the person seeking restitution proves they are actually the notes in question.

3. Goods in deposit

Under Article 636, it is permissible to obtain restitution of goods present in the possession of the bankrupt as a deposit, or for the purpose of their sale on behalf of their owner, or for the purpose of delivering them to the owner, on condition that they are present in the estate in bankruptcy.

If the bankrupt has already deposited the goods with a third party, restitution may be obtained from the third party.  If the bankrupt borrows and mortgages the goods by way of security for borrowing, and the lender was at the time of charging unaware that the bankrupt did not have title to the goods, there may be no restitution until the debt secured by the mortgage has been discharged.

4. Spouse’s assets

Either spouse may, whatever the financial regime followed in the marriage, obtain restitution from the other’s estate in bankruptcy of movable and immovable assets if title can be proven and the property will remain encumbered by rights lawfully acquired in respect thereof by third parties.

Assets which are purchased by the spouse of a bankrupt or which are purchased for the account of such spouse or for the account of infants comprised within the guardianship of the bankrupt from the date they took up trade will be considered to have been bought with the monies of the bankrupt, and will come into the assets of the estate in bankruptcy unless the contrary is proved.

Neither spouse may claim from the other spouse’s estate in bankruptcy gifts which the bankrupt spouse makes to such spouse during marriage by transaction inter vivos or with posthumous effect.
Similarly, the group of creditors may not claim from either spouse gifts which the bankrupt spouse makes to such spouse during marriage.

Read More...



Saturday, September 1, 2018

United States Issues Executive Order Imposing Sanctions against Iran as Part of Withdrawal from Nuclear Deal and EU Response

On 8 May 2018, the United States withdrew from the Joint Comprehensive Plan of Action (“JCPOA”), as discussed in our May 2018 Client Alert.  On 6 August 2018, President Trump issued a new Executive Order (the “New Iran E.O.”) that re-imposed certain sanctions with respect to Iran as part of the United States’ withdrawal from the JCPOA.[1]   While most of the sanctions had been in place prior to the United States’ implementation of the JCPOA, the New Iran E.O. expands certain sanctions and allows for penalties that were not previously authorised.[2]   Most of the provisions of the New Iran E.O. became effective on 7 August 2018; the remaining provisions will become effective on 5 November 2018, at the end of a 180-day wind-down period that began on 8 May 2018.
The European signatories have been vocal supporters of the JCPOA deal and vocal critics of the threats to re-impose U.S. sanctions.

The New Iran E.O.[3]

Provisions re-imposed by the New Iran E.O.

The majority of the sanctions that the New Iran E.O. imposes were in place prior to the implementation of the JCPOA.  For those unfamiliar with the Iranian sanctions regime in place prior to 2016, what follows is a brief description of the sanctions restored under the New Iran E.O.

Section 1 of the New Iran E.O. authorises blocking sanctions against non-U.S. parties, both Iranian and non-Iranian (Specially Designated Nationals or “SDN”).  The United States may block the property of any person that is part of the energy, shipping, or shipbuilding sector of Iran, as well as any person that operates a port in Iran.[4]   A non-U.S. person that provides material support to, or goods or services in support of, any such person may also be sanctioned.[5]   A non-U.S. person may also be sanctioned for providing material support for, or goods or services in support of, an acquisition of U.S. bank notes or precious metals by the government of Iran.[6]

Section 2 authorises the Secretary of the Treasury to prohibit Foreign Financial Institutions (“FFIs”) from establishing or maintaining a “correspondent account or payable-through account” in the United States if they are found to have conducted or facilitated certain transactions.  These include transactions “for the sale, supply, or transfer to Iran of significant goods or services used in connection with the automotive sector of Iran.”[7]   Section 2 also authorises additional sanctions against FFIs that will come into effect after the end of the 180-day wind-down period on 5 November 2018.  These include sanctions for the facilitation of transactions on behalf of or in connection with SDNs, the National Iranian Oil Company (“NIOC”) or the Naftiran Intertrade Company (“NICO”), as well as transactions involving petroleum, petroleum products, or petrochemical products from Iran.[8]

The New Iran E.O. also authorises “menu-based” sanctions, which the Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) utilises in various sanctions programs.  As an example of how menu-based sanctions typically operate, the Iran Freedom and Counter-Proliferation Act of 2012 (“IFCA”) requires the President to impose five or more of the sanctions listed in the Iran Sanctions Act of 1996 (“ISA”) if it is determined that a person has engaged in certain sanctionable activities.[9]

Section 3 of the New Iran E.O., by contrast, authorises but does not require the United States government to impose any of the fourteen possible sanctions listed in Sections 4 and 5, which include measures as severe as blocking sanctions.[10]

Under Section 3, as of 7 August 2018, a person may be penalised under these menu-based sanctions for knowingly engaging in a significant transaction in connection with the automotive sector of Iran.[11]   Additionally, after 5 November 2018, a person may be sanctioned for knowingly purchasing petroleum, petroleum products, or petrochemical products from Iran.[12]   These sanctions also extend to affiliates of a sanctioned entity, including an entity that (i) is the successor to a sanctioned entity, (ii) owns or controls such an entity, or (iii) is owned or controlled by such an entity.[13]

Section 6 includes sanctions against FFIs engaging in transactions denominated in the Iranian rial or maintaining funds denominated in Iranian rials.

Section 7 authorises blocking sanctions against persons determined to have either (i) diverted goods intended for the people of Iran — including food, medicine, and medical devices — or (ii) transferred goods or technology to Iran “that are likely to be used by the” government of Iran to commit “serious human rights abuses.”[14]   These sanctions are also extended to persons owned or controlled by any person blocked under this section.[15]

Finally, Section 8 prohibits foreign subsidiaries of a U.S. person from engaging in transactions with the government of Iran or with any person subject to the jurisdiction of Iran. General License H (“GL H”) had authorised foreign subsidiaries of U.S. companies to engage in certain activities with the government of Iran or Iranian companies.  To the extent transactions had been authorised by GL H, they have been provided a 180-day wind-down period under section 560.537 of the Iran Threat Reduction and Syria Human Rights Act of 2012 (“ITSR”), which expires after 4 November 2018.

The Significant Reduction Exemption

Under the New Iran E.O., sanctions against purchasers of petroleum and petroleum products, as well as sanctions against FFIs engaging in significant financial transactions related thereto, will only apply if the President makes two determinations.[16]   First, that “there is a sufficient supply of petroleum and petroleum products produced from countries other than Iran to permit a significant reduction in the volume” of these products from Iran.[17]   Second, that the purchaser or FFI in question is a national of a country that has not been granted a Significant Reduction Exemption.  Notably, President Trump has already made the first determination:  on 14 May 2018, the Trump administration sent a memo to the State Department confirming that global supply was sufficient.[18]

Historically, the Significant Reduction Exemption, set forth in Sec. 1245 of the NDAA, allowed the President to lift sanctions on FFIs if the U.S. government determined that “the country with primary jurisdiction” over the FFI had “significantly reduced its purchases of Iranian crude oil during a specific time period.”[19]   OFAC did not define “significantly reduced,” but noted that any “determinations will be preceded by aprocess of rigorous due diligence.”[20]

Functionally, this meant that if the United States government determined that a country had met this objective, FFIs in that country could facilitate purchases of petroleum and petroleum products from Iran.  More than a dozen countries received an exemption under this rule, including Japan, France, Germany, Italy, China, South Korea, Singapore, and South Africa.[21]   As the provisions of the NDAA were waived during the implementation of the JCPOA, these exemptions expired.  Countries will have to requalify for the exemption once Sec. 1245 goes back into effect after 4 November 2018.[22]   FFIs will be prohibited from facilitating purchases of petroleum and petroleum products from Iran unless and until the appropriate exemption has been issued.

The 8 May 2018 announcement made no reference to the Significant Reduction Exemption.  It remains to be seen which countries, if any, will be granted this exemption by the Trump administration.

The New Iran E.O. expands the scope of the sanctions

The New Iran E.O. not only re-imposes sanctions that were in effect prior to 16 January 2016, but also broadens the scope of the sanctions against Iran.

Section 1 authorises blocking sanctions against any person that provides material support, goods or services to someone that has been blocked under Section 1.  For example, if a person is blocked under Section 1 for providing material support to the NIOC or NICO, and a non-U.S. person provides material support, or goods or services, to that blocked person, the non-U.S. person may also be blocked.[23]   FFIs that provide material support or services to a blocked person may also be penalised under the newly expanded sanctions.[24]

The menu of sanctions has been expanded for persons who have knowingly engaged in certain significant transactions relating to petroleum, petroleum products, or petrochemicals.[25]   The U.S. government may deny visas to corporate officers, principals, or controlling shareholders of a sanctioned person.[26]   All U.S. persons may be prohibited from investing in or “purchasing significant amounts” of debt or equity issued by a sanctioned entity.[27]   Finally, any or all of the sanctions available in Sections 4 and 5 may be applied directly to the “principal executive officer or person performing similar functions and with similar authorities, of a sanctioned person.”[28]

The New Iran E.O. also expands sanctions on U.S.-owned or -controlled foreign entities by prohibiting transactions with persons blocked for:  (1) providing material support for, or goods and services in support of, Iranian persons on the SDN list; (2) being part of the energy, shipping, or shipbuilding sector of Iran, or a port operator in Iran; or (3) knowingly providing significant support to certain other persons blocked under IFCA or to an Iranian person on the SDN list.[29]

Payments after wind-down periods end

OFAC has advised that non-U.S., non-Iranian persons may receive payment after the end of the applicable wind-down period for “goods or services fully provided or delivered” beforehand.[30]   These payments must be based on written contracts entered into prior to 8 May 2018.[31]   So long as the agreement under which the payment arises existed prior to that date, if moneys are owed for goods or services provided before the end of the wind-down period, non-U.S., non-Iranian persons will be permitted to receive payment after the wind-down period according to the terms of the agreement.[32]

The payment must not involve any “U.S. persons or the U.S. financial system” unless specifically exempted.[33]

On the other hand, U.S. persons and U.S.-owned or -controlled persons may not receive such payments after the end of the wind-down period.[34]   Such payments are only authorised through the wind-down period.  A U.S. person seeking to receive payment for delivered goods or services must receive a specific licence from OFAC.[35]

Application of the New Iran E.O. to Iranian sectors

Iran’s automotive sector

Beginning 7 August 2018, the New Iran E.O. authorises menu-based sanctions on persons determined to have knowingly engaged “in a significant transaction for the sale, supply, or transfer to Iran of significant goods or services used in connection with Iran’s automotive sector.”[36]   Iran’s automotive sector constitutes “the manufacturing or assembling in Iran of light and heavy vehicles including passenger cars, trucks, buses, minibuses, pick-up trucks, and motorcycles, as well as original equipment manufacturing and after-market parts manufacturing relating to such vehicles.”[37]

OFAC anticipates that forthcoming regulations will define “goods or services used in connection with the automotive sector of Iran” to include goods or services that contribute to “(i) Iran’s ability to research, develop, manufacture, and assemble light and heavy vehicles, and (ii) the manufacturing or assembling of original equipment and after-market parts used in Iran’s automotive industry.”[38]   Finished vehicles exported to Iran that do not require further assembly or manufacturing,[39]  or goods or services for the maintenance of finished vehicles exported to Iran, would generally not fall under this definition.[40]   However, OFAC has indicated that the export, sale or distribution of goods, such as auto parts and accessories, or services that contribute to Iran’s ability to manufacture or assemble vehicles, or manufacture original equipment and after-market parts in Iran, could result in sanctions.[41]   Exporting “auto kits” to Iran for assembly in Iran would also be sanctionable if the transaction is deemed to be significant.[42]

Additionally, the New Iran E.O. authorises correspondent and payable-through account sanctions[43]  for FFIs that have “knowingly conducted or facilitated any significant financial transaction” for “the sale, supply, or transfer to Iran of significant goods used in connection with Iran’s automobile sector.”[44]

Iran’s energy, petroleum, and petrochemical sectors

Beginning 5 November 2018, the New Iran E.O. will re-impose “Executive Orders 13622, 13628, and 13645 with respect to the Iranian energy, petroleum, and petrochemical sectors.”[45]   The New Iran E.O. authorises blocking sanctions and correspondent and payable-through account sanctions on persons providing material support for, or goods and services to, NIOC and NICO.[46]   Additionally, persons that “sell, supply or transfer to or from Iran significant goods or services used in connection with Iran’s energy sector are exposed to menu-based sanctions” under the IFCA and the New Iran E.O.[47]   However, as noted earlier, “countries that are determined by the Secretary of State to have significantly reduced their purchases of Iranian crude oil will be excepted from these measures” under the Significant Reduction Exemption.[48]

EU response to revived U.S. sanctions against Iran

In response to the New Iran E.O., the EU expanded the scope of its 1996 “blocking regulation.”  The blocking regulation had prohibited compliance with certain U.S. sanctions then in force against Cuba, Libya and Iran (EU regulation 2271/1996), but under EU Regulation 2018/1100 the list of U.S. laws now covered by the blocking regulation are:

  • National Defense Authorization Act for Fiscal Year 1993, Title XVII Cuban Democracy Act 1992, sections 1704 and 1706
  • Cuban Liberty and Democratic Solidarity Act of 1996
  • Iran Sanctions Act of 1996
  • Iran Freedom and Counter-Proliferation Act of 2012
  • National Defense Authorization Act for Fiscal Year 2012
  • Iran Threat Reduction and Syria Human Rights Act of 2012
  • Iranian Transactions and Sanctions Regulations

Subject to some narrow exceptions, it is now prohibited for those subject to EU regulations (i.e., EU nationals, EU companies, EU-flagged aircraft and ships, and the EU operations of non-EU companies) to comply with the revived U.S. sanctions.

The EU, however, does not have the power to create or impose penalties outside the area of competition law, so it has been delegated to the individual member states to determine the penalty for non-compliance with this prohibition.

There are two other aspects of the blocking regulation which have received less attention than the prohibition.  The first is the ability of the European Commission to authorise an EU company to comply with the listed U.S. sanctions where non-compliance would jeopardise the interests of either the EU or the company.  The mechanics of making such application have now, for the first time, been published through EU Regulation 2018/1101 on 3 August 2018.  The second additional aspect of the blocking regulation is the ability it creates, under article 6, for a company or person to recover damages.

Conclusion

The New Iran E.O. goes beyond reinstating sanctions that pre-date the JCPOA.  The European signatories have been vocal supporters of the JCPOA deal and vocal critics of the threats to re-impose U.S. sanctions.  Non-U.S. companies engaged in (or planning to engage in) business with Iran or Iranian companies must understand the risks of continuing or entering into such activities.

Endnotes

[1]See Executive Order (E.O.) of 6 August 2018, Reimposing Certain Sanctions With Respect to Iran (the “New Iran E.O.”), available at https://www.treasury.gov/resource-center/sanctions/Programs/Documents/08062018_iran_eo.pdf; Iran Sanctions, DEP’T OF TREASURY (6 Aug. 2018), https://www.treasury.gov/resource-center/sanctions/Programs/Pages/iran.aspx; Press Release, WHITE HOUSE, Statement from the President on the Reimposition of United States Sanctions with Respect to Iran (6 Aug. 2018), https://www.whitehouse.gov/briefings-statements/statement-president-reimposition-united- states-sanctions-respect-iran/.

[2]See infra pp. 4-5.

[3]This Client Alert neither summarises the entire scope of U.S. sanctions against Iran, nor addresses each of the regulations that authorises such sanctions.  For a more complete discussion of the United States’ withdrawal from the JCPOA, see the May 2018 Curtis Client Alert.

[4]New Iran E.O., Sec. 1(a)(iv)(A)-(B).

[5]See id., Sec. 1(a)(iv)(C).

[6]See id., Sec. 1(a)(i).  Additional blocking sanctions are authorised in connection with providing support for the National Iranian Oil Company (“NIOC”) and the Naftiran Intertrade Company (“NICO”); New Iran E.O., Sec. 1(a)(ii).

[7]New Iran E.O., Sec. 2(a)(i).  For a more complete discussion of sanctions related to the Iranian automotive industry, see infra pp. 5-6.

[8]New Iran E.O., Sec. 2(a)(ii)-(v).

[9]See, e.g., IFCA Sec. 1245(a)(1).

[10]See id., Sec. 5(a)(iv).  The menu of sanctions also includes prohibitions against:  extending credit from the U.S. Export-Import Bank, granting specific licences to re-export goods, designating the sanctioned person a primary dealer in U.S. government debt, serving as a repository for U.S. government funds, entering into procurement contracts with the United States, and foreign exchange transactions subject to U.S. jurisdiction.  See id., Secs. 4(a)-(d), Sec. 5(a)(ii).

[11]New Iran E.O., Sec. 3(a)(i).

[12]See id., Sec. 3(a)(ii)-(iii).

[13]See id., Sec. 3(a)(iv)-(vi).

[14]Id., Sec. 7(a).

[15]See id., Sec. 7(a)(vii).

[16]See id., Secs. 2(c), 3(b).

[17]Id., Sec. 2(c)(i); see National Defense Authorization Act for Fiscal Year 2012 (“NDAA”), Sec. 1245(d)(4)(B).

[18]See REUTERS, Global oil supplies robust enough to cut Iran’s exports: Trump memo (May 14,
2018), available at https://www.reuters.com/article/us-iran-usa-oil/global-oil-supplies-robust-enough-to-cut-irans-exports-trump-memo-idUSKCN1IF2HS.

[19]New Iran E.O. FAQs, at FAQ 254.
  
[20]Frequently Asked Questions on the Implementation of Section 504 of the Iran Threat Reduction and Syria Human Rights Act of 2012 (the TRA), DEP’T OF TREASURY, at FAQ 174, available at https://www.treasury.gov/resource- center/faqs/Sanctions/Pages/faq_iran.aspx#eo_reimposing (“The Secretary of State intends to consider relevant evidence in assessing each country’s efforts to reduce the volume of crude oil imported from Iran, including the quantity and percentage of the reduction in purchases of Iranian crude oil over the relevant period, termination of contracts for future delivery of Iranian crude oil, and other actions that demonstrate a commitment to substantially decrease such purchases.”).
  
 
[22]Iran Sanctions, CONGRESSIONAL RESEARCH SERVICE, at 21 (29 Jun. 2018), available at https://www.everycrsreport.com/files/20180629_RS20871_58278a0b1746567ef7e7f128086fe7 64f9145b21.pdf.

[23]See New Iran E.O. FAQs, at FAQ 601 (citing New Iran E.O., Sec. 1(a)(iii)(B)).

[24]See id. (citing New Iran E.O., Sec. 2(a)(ii)).

[25]See, e.g., id.

[26]New Iran E.O., Sec. 4(a)-(d); New Iran E.O. FAQs, at FAQ 601.

[27]New Iran E.O., Sec. 5(a)(v).

[28]Id., Sec. 4(f); Sec. 5(a)(vii).

[29]See id., Sec. 8.; New Iran E.O. FAQs, at FAQ 601.

[30]See JCPOA Wind-Down FAQ, at FAQ 2.4.

[31]See id.

[32]See id., at FAQs 2.1, 2.4.

[33] See id., at FAQ 2.4.

[34]See id., at FAQ 2.5.

[35]See id.

[36]New Iran E.O. FAQs, at FAQ 614.

[37]New Iran E.O., Sec. 16(a); see also E.O. 13645, Sec. 14(a).

[38]New Iran E.O. FAQs, at FAQ 611.

[39]See id., at FAQ 612.

[40]See id., at FAQ 613.

[41]Id.

[42]See id., at FAQ 612.

[43]“[T]he Secretary of the Treasury may prohibit the opening, and prohibit or impose strict conditions on the maintaining, in the United States of a correspondent account or a payable-through account by such foreign financial institution.”  New Iran E.O., Sec. 2(b).

[44] Id., Sec. 2(i); New Iran E.O. FAQs, at FAQs 598, 606, 609.
  
[45]New Iran E.O. FAQs, at FAQs 607, 614.
  
[46] See id., at FAQ 614.
  
[47] New Iran E.O., Sec. 5; New Iran E.O. FAQs, at FAQ 614.
  
[48] New Iran E.O. FAQs, FAQ 614; see supra pp. 3-4.

Read More...



Monday, August 20, 2018

Anti-Money Laundering Laws in Oman - Know your Client

To adequately safeguard your business against any potential risks of money laundering and terrorism financing, it is important to know what these offences are and what steps should be taken when establishing new client relationships and managing existing ones.

Existing anti-money laundering legislation in Oman

Oman’s anti-money laundering and terrorism financing regime is largely governed by (i) the Law on Combating Money Laundering and Terrorism Financing promulgated by Sultani Decree No. 30/2016 (the “AML Law”) which repealed Sultani Decree No. 79/2010; and (ii) the executive regulations issued under Oman’s anti-money laundering law implemented in 2004 by Oman Sultani Decree No. 72/2004 (the “Executive Regulations”).  The Executive Regulations shall continue to apply to the extent that it does not conflict with the AML Law, and until such time as new executive regulations under the AML Law have been issued.

Money laundering offence

The AML Law describes a money laundering offence as having occurred if any person who knew or should have known or suspected that funds are the proceeds of a crime intentionally committed any of the following acts:

  • Converts or transfers such funds with the purpose of disguising or concealing the illegal nature or source of such proceeds or of assisting any person who committed the predicate offense to evade punishment for their acts;
  • Disguise or conceal the true nature, source, location, method of disposal, movement, or ownership of the funds and their related rights; or
  • Acquiring, possessing, or using such funds upon receipt.

Terrorism financing offence

Pursuant to the AML Law, a terrorism financing offence occurs if any person willingly collects or provides funds, directly or indirectly and by any means, with the knowledge that such funds will be used in full or in part to carry out a terrorist act, or by a terrorist individual or a terrorist organisation.

Scope of the AML Law and Executive Regulations

The AML Law applies to financial institutions, non-financial businesses, professions and non-profit associations and bodies (collectively hereinafter referred to as “Relevant Entities”).  This has been broadly defined in the AML Law and includes, among other things:

  • persons licensed to practice banking, financial or commercial activities (e.g., banks; exchange companies; investment companies; investment and credit funds; insurance companies);
  • companies and professionals who provide financial services;
  • traders in precious metals and stones;
  • notaries public;
  • law firms and accounting firms;
  • businesses involved in the management of bank accounts;
  • entities involved in establishment, operation and/or management of companies;
  • any other arrangements or professions as determined by the National Committee for Combating Money Laundering and Terrorism Financing; and
  • any charities or religious not-for-profit organisations.
In addition to the above, the Central Bank of Oman and the Capital Market Authority have issued a number of Circulars (secondary legislation) that apply to licensed banks and companies listed on the Muscat Securities Market.

Internal steps to be taken by a Relevant Entity

A Relevant Entity should assess the money laundering and terrorism financing risks it faces and, if applicable, establish electronic data monitoring systems for monitoring all electronic banking transactions.  By carrying out a risk assessment, this should assist a Relevant Entity in classifying clients and services according to the degree of risk of money laundering and terrorism financing and to determine whether enhanced due diligence should be applied to a particular client.

What client due diligence checks should a Relevant Entity be carrying out? 

The AML Law and Executive Regulations specifically set out a number of obligations regarding checks a Relevant Entity is required to undertake, namely:

  • correctly identifying the relevant counterparties, clients and beneficiaries to a transaction;
  • determining whether a client or beneficial owner is a politically exposed person (“PEP”) and carrying out further due diligence for PEPs; and
  • undertaking further due diligence in respect of any party for whom it opens a bank account.

A Relevant Entity is not permitted to open anonymous accounts or accounts under assumed or fictitious names or numbers or codes, and shall not provide any services to such accounts.

All documents and records collated by a Relevant Entity that relates to the identity of clients and beneficiaries and their activities must be stored for a period of 10 years.

Who is a PEP?

For the purposes of the AML Law, a PEP is any natural person currently or formerly appointed to (i) a prominent position in the Sultanate of Oman or a foreign country or (ii) an international organisation. Family members and close associates of any of those persons in (i) or (ii) are also considered to be PEPs.
A Relevant Entity should have appropriate risk management systems in place to determine if a potential client is a PEP.  Enhanced due diligence measures must be applied when dealing with a PEP.  In addition, senior management approval must be obtained to continue the relationship and steps must be taken to determine the source of the PEP’s funds.

When should a Relevant Entity carry out AML checks? 

A Relevant Entity must apply due diligence measures to identify their clients, using reliable and independent sources, documents, data and information in the following cases:

  • before establishing a business relationship;
  • before carrying out a transaction for a customer with whom the Relevant Entity does not have an established business relationship, the value of which is equal to or greater than a threshold applied by the applicable supervisory authority;
  • before executing a wire transfer for a customer with whom the Relevant Entity does not have an established business relationship with, the value of which is equal to or greater than a threshold applied by the applicable supervisory authority;
  • when there is suspicion of a crime of money laundering or terrorism financing; and
  • when there are doubts concerning the accuracy or adequacy of information and/or documentation received from the potential and/or existing customer. 

It is also important to monitor all existing relationships and client transactions on an ongoing basis to ensure that information regarding such relationships is consistent with the client due diligence information held on file for that client.

Conclusion 

Client due diligence is necessary to assess the extent to which a client may expose your business to money laundering and terrorist financing risks.  At the onset of a business relationship you must take appropriate steps to identify and verify the identity of your client or any person acting on behalf of a client, as well as a client’s beneficial owners.  Understanding who your client is and the purpose of the business relationship is key to guarding against potential fraud and staying compliant with the AML Law and Executive Regulations.

Read More...



Monday, August 13, 2018

The Liability of Managers in Limited Liability Companies in Oman

1. The general overview 

The starting point for ascertaining the general powers and obligations of a manager in a limited liability company (“LLC”) is to look at the provisions of the constitutive documents of the company.
There are, however, express provisions under Omani law that impose penalties and liabilities on managers and authorised signatories of LLCs in certain circumstances.

2. Liabilities of managers under the Commercial Companies Law No. 4 of 1974 and its amendments (“CCL”)

In case of managers of an LLC, the CCL imposes penalties and liabilities where managers have failed to discharge their statutory obligations, where obligations have been discharged negligently, or powers have been misused contrary to law.

Article 155 of the CCL provides that the managers of an LLC may be liable towards the company, the shareholders, and other parties should they act outside the scope of the authority conferred upon them.  Specifically, the managers of an LLC may be held liable to the company and third parties (a) for damages resulting from their acts in contravention of the law; (b) for their acts which exceed the limits of their authority; (c) for any fraud or negligence committed by them in the performance of their duties; and (d) for failing to act prudently in the given circumstances.

If liability attaches to more than one manager, pursuant to Article 155 of the CCL, the Primary Court of Oman shall be entitled to make any of the managers liable for all or part of the damage as the Court may deem fit and proper in view of the circumstances of the case.  Such manager may be held personally liable for damages arising from any of the offences referred to above.
If any of the managers commits any of the offences referred to in Article 155, then either the shareholders or the affected third party may have a claim against the manager.  Such third party or the shareholders may have the right to sue the manager, as opposed to the shareholder who may have nominated such manager, as the manager’s liability under Article 155 is personal and may not be attributed to the shareholders who have recommended or appointed such manager.

As is clear from the relevant law set out above, any manager registered as such with the Ministry of Commerce and Industry is obliged to act, at all times, within the scope of his authority.  Therefore, the authorised signatories/managers of the Company will only be personally liable (and such liability will be civil and/or criminal) for actions or debts incurred where they have acted in contravention of the law, outside of their authority, committed fraud or negligence, or failed to act prudently in the given circumstances.

3. Liabilities of managers under Sultani Decree No. 55 of 1999 promulgating the Commercial Law (the “Commercial Law”)

Article 695 of the Commercial Law provides that where it is evident, after the company is declared bankrupt, that it has insufficient assets to pay at least 20% of its debts, the Omani Courts may, at the request of the trustee in bankruptcy, order all managers of the company, or some of them jointly or severally, to pay all or some of the debts of the company save where it is established that they have exercised the necessary care in organising the affairs of the company.
Managers of the company may be held liable criminally for any misrepresentation made by them in the preparation of the company’s accounts or towards third parties who are expected to place reliance upon their representations.

4. Liabilities of employees under Sultani Decree No. 7 of 1974 promulgating the Penal Code (the “Penal Code”) 

Article 155 of the Penal Code provides that any employee (including a manager) who receives a bribe, for himself or for others, be it money, gift, promise or any other benefit, in order to perform, stop or delay a task originating from his job responsibilities shall be sentenced to imprisonment from three months to three years, a fine, at least equal to what has been given or promised to be given to him, and dismissal from work.  Similarly, if the manager or a senior employee accepts or demands a bribe for performing a task contrary to the duties of the job, he shall be sentenced to imprisonment for up to ten years and a fine equal, at least, to the amount of the bribe and dismissal from work.
Article 160 of the Penal Code also provides that, if an employee misuses his job by merely benefiting or harming others, or refuses to carry out his job duties in pursuing a person who has committed a crime, the investigation of which or arresting the actor of which lies within the limits of his responsibilities, the employee shall be sentenced to imprisonment of three months to three years and to a fine of OMR 20 to OMR 100.
Article 162 of the Penal Code further provides that any employee who intentionally neglects to perform the duties of his job shall be fined from OMR 5 to OMR 100.  If the negligence results in harming the interests of the State, the actor shall be jailed from one month to one year.

5. Liabilities of managers under Sultani Decree No. 28 of 2009 promulgating the Income Tax Law and its amendments (the “Income Tax Law”)

Under the Income Tax Law, managers of LLCs may face certain penalties, fines and/or imprisonment if they fail to discharge compliance or reporting obligations.  Managers may face such punishments in various cases, including failure to submit information requested by the relevant authority such as returns, financial statements, statements of income and any other documents requested.  Other instances where penalties may be imposed include failure to answer questions and attend meetings in relation to the tax returns of the company, interference with the authorities’ work and failure to obtain the relevant tax files needed for the company.
The relevant provisions for the penalties mentioned above are stated in Articles 179 to 185 of the Income Tax Law, and include heavy fines of up to OMR 50,000 and jail sentences that could reach up to three years.  Generally, the tax authority endeavours to provide adequate notice to companies to comply with such regulations.  However, the Law allows them to levy heavy penalties in case of non-compliance.

6. Other liability provisions

In the event that a judgment has been enforced against a company, the enforcing party may pursue all measures available to it under the law.  This includes travel ban and arrest warrants against certain individuals, primarily the authorised signatories and managers of the company.
Criminal actions in this jurisdiction can be brought only against individuals and not against companies.  Therefore, any detention penalties arising (e.g., from the Consumer Protection Law or certain provisions under the Omani Labour Law) can only be imposed on the authorised signatories and managers of the company.  This, however, may vary on a case-by-case basis.

Read More...



Monday, August 6, 2018

Extending the Statutes of Limitations or Time Bars in Common Law Jurisdictions and Under Omani Law

Statutes of limitations are laws passed to set the maximum time after an event within which legal proceedings may be initiated.  Often times this is when parties know or should have known damage was suffered.  Statutes of limitations are in place to protect persons against claims made after disputes have become old, evidence has been lost, memories have faded, or witnesses have disappeared.  Once the time limit to bring a claim has passed, the claim is “time barred.”

Various claims and civil actions have different statutes of limitations.  By way of example, under New York law various statutes of limitations periods are outlined in the New York Civil Practice Law and Rules.  In England, the statute of limitations for civil claims is governed the Limitations Act 1980.

There are generally a very limited number of circumstances in which a statute of limitations may be extended.  For example, under New York law, a statute of limitations can be tolled if a person is outside of the state or living under a false name; if the person is a minor or insane (capacity); due to war; or, in some circumstances, the agreement of the parties.  English law follows a similar approach. It should be noted that under both New York and English law, limitation periods (typically in construction contracts) may be shortened.

If a statute of limitations is tolled, the practical effect is that a party may commence a claim when they otherwise would be time barred.  If a statute of limitations period is shortened, which generally takes place in construction contracts where a defects liability period is applicable, a party may have a considerably shorter time to file a claim.

In Oman, time bars take the form of statutory rules that restrict the period of time within which a legal action can be brought successfully, and therefore restrict the rights of the disputing parties to bring legal proceedings to recover losses or obtain compensation.  There are various time bar rules set out in Omani legislation, and they vary depending on the subject matter of the dispute.
While there is no provision under Omani law for the extension of time bars, a legal claim that is brought by a plaintiff past the limitation period does not automatically fail.  The existence of a time bar to the claim (generally, where the claim is brought outside the set limitation period) must be raised by the defendant as a legal, or procedural, defence.  If the defence is successful, the plaintiff’s claim will not be heard in the courts.

When representing a client in a commercial dispute, it is fundamental to consider first whether there is any applicable time bar.  Before a plaintiff makes a decision on whether or not to bring a legal action in the courts, he should be informed by his lawyer whether the claim is time barred.  Conversely, the defendant’s attorney should consider whether or not the claim is time barred and raise this as a legal defence in the court before addressing the subject matter of the case.  Thus, ascertaining the existence of a time bar to a legal claim can potentially shorten the legal proceedings and help the parties to the dispute save time and legal costs.

Determining the existence of a time bar at the beginning of the legal dispute is also of strategic importance.  As a matter of procedure, the time bar must be raised as a legal defence at the beginning of the proceedings at the Court of First Instance.  If a defendant fails to invoke this defence in the Court of First Instance, he will not be able to do so in proceedings at the Court of Appeal or the Supreme Court.

Overall, there are a number of different time bars in Omani legislation and the relevant time bar provisions should be considered by each party to a commercial dispute at the beginning of the dispute and, if relevant, raised as a defence at the beginning of the legal proceedings.  If this is done then it will provide a good defence against the action.  However, if the defendant’s lawyer does not do so at the appropriate time, the court will nevertheless hear the case, even though it is outside the time limits.


Read More...



Monday, July 30, 2018

Omani Arbitration Law: Time for a Change?

Domestic and international arbitrations conducted in Oman are governed by the Law of Arbitration in Civil and Commercial Disputes, Sultani Decree 47/1997 as amended (the “Oman Arbitration Law”).  While the Oman Arbitration Law incorporates some aspects of the Model Law on International Commercial Arbitration adopted by UNCITRAL (the “UNCITRAL Model Law”), overall it is not harmonised with the UNCITRAL Model Law or with other arbitration laws in the region.  Given recent developments in other GCC countries, specifically the UAE, it may be beneficial for Oman to consider commensurate reforms to its arbitration regime.

In May 2018, the President of the UAE issued a new arbitration law expected to be published imminently as Federal Law No. 6 of 2018 on Arbitration (the “UAE Arbitration Law”).  The UAE Arbitration Law repeals Articles 203 to 218 of the UAE Civil Procedure Code (Federal Law No. 11 of 1992) previously applicable to arbitration, and any other provisions contrary to the UAE Arbitration Law.  This new law is noteworthy because it is a direct adaptation of the UNCITRAL Model Law, thereby modernising the regulatory framework governing UAE arbitrations.  Because the UNCITRAL Model Law is intended to assist states in reforming and modernising their laws in a uniform matter that takes into account the features of international commercial arbitration, states that adopt or adapt the UNCITRAL Model Law make themselves more attractive to investors.

On the whole, the UAE Arbitration Law brings the country in line with international commercial arbitration norms.  For example, the new law enumerates limited grounds to annul an arbitral award, and provides for the authority of an arbitral tribunal to rule on its own jurisdiction.  While Article 22 of the Oman Arbitration Law does permit an arbitrator to rule on the question of his or her own jurisdiction, currently in Oman the courts have broad and unspecified powers to nullify an award if it conflicts with an earlier decision passed by the Omani courts or if the award contains terms which contravene public policy, among other grounds.

Another welcome change brought by the UAE Arbitration Law is its flexibility regarding the formalities of an agreement to arbitrate.  While it does preserve the requirements under the previous law for an arbitration agreement to be in writing and to be entered into by a duly authorised representative of each party, the UAE Arbitration Law is not as prescriptive in respect of these two conditions.  For example, the new law permits the incorporation by reference in any commercial contract of any document containing an arbitration clause (e.g., general terms and conditions) as sufficient to constitute an arbitration agreement.  In contrast, Articles 2 5 of the Oman Arbitration Law prescribe quite specific requirements which must be met before there is considered to be an agreement to arbitrate.  Specifically, the arbitration agreement (which must also be in writing and entered into by duly authorised representatives) must be specific to the dispute between the parties and must identify the venue, procedural rules, and applicable law in order to be valid.  This may ultimately result in fewer agreements to arbitrate being honored under the Oman Arbitration Law than may be intended by the parties.

Perhaps the most significant reform under the UAE Arbitration Law relates to the enforceability of UAE arbitration awards.  Under the new law, the procedure to enforce an arbitration award in the UAE has been simplified and shortened.  Enforcement proceedings commence directly at the appellate level, rather than at the first instance level.  In Oman, as per Article 47 of the Oman Arbitration Law, parties seeking to enforce an award file an application at the enforcement department of the primary court, and the application is subject to obstacles and delays at several levels of court examination.  One potential obstacle includes the nullification of an arbitral award as per Article 53 of the Oman Arbitration Law, which contains several grounds upon which a challenging party may rely.  Separately, under Article 363 of the Civil and Commercial Procedures Law (Sultani Decree 29/2002), a challenging party may also seek an Istishkal, or a temporary action that any party to a court judgment or arbitral award can seek, with the result of further delaying payment of the award amount.  An Istishkal also results in a delay of enforcement, as the enforcement process may only commence or resume once a final decision is rendered on the Istishkal.

One change introduced by the UAE Arbitration Law has already been partially adopted in Oman.  The UAE Arbitration Law permits both arbitral tribunals and courts to issue preliminary orders and interim measures relating to potential or ongoing arbitrations, and Article 14 of the Oman Arbitration Law permits the Omani courts to grant preliminary or interim relief in proceedings subject to arbitration.

Despite this and other positive features of the Oman Arbitration Law, there remain some uncertain provisions which may discourage parties from choosing Oman as an arbitration forum.  For example, Article 27 prescribes twelve months as the standard period for completion of the arbitration or rendering the arbitral award.  This time period starts on the day that a defendant received notice that a dispute exists and that it must be resolved by arbitration.  Although there is scope for the parties to agree to a longer period, this is a little-known provision which leaves uncertainty as to whether an arbitration lasting longer than twelve months is vulnerable to nullification.  This may be devastating to parties involved in complex arbitrations involving expert evidence, such as construction disputes, that often take much longer than twelve months to complete.

Overall, the changes introduced by the UAE Arbitration Law are designed to promote the efficiency, expediency, and ease of arbitration in the UAE, which will likely encourage business parties, both local and foreign, to arbitrate their disputes within the UAE.  Oman would be well served to reconsider its own arbitration law, and perhaps reform it according to some or many features of the UNCITRAL Model Law.  Parties doing business in Oman and seeking to resolve disputes by arbitration would take comfort availing themselves of an arbitration regime that is harmonised with others in the GCC and throughout the world.


Read More...



Monday, July 16, 2018

Requests to Stay the Implementation of Administrative Decisions

1. Introduction

The Administrative Judicature Court is the body charged with judicial oversight of the work of administrative bodies in the Sultanate of Oman.  One of its most important responsibilities is its competence to rule as invalid administrative decisions that are unlawful.

Although this oversight provides individuals with the protection they seek, such rulings are issued only after specific judicial procedures have been followed, and after the expiry of specified dates within which the ruling may be appealed, which extends the duration of the dispute.

If a decision is implemented before the issue of the ruling, such implementation in some cases may result in irreversible consequences, and proceeding with the case after that in order to obtain a ruling of invalidity will be useless.

Accordingly, various pieces of legislation, including the Omani Law Regulating the Requesting and Staying of the Implementation of Administrative Decisions, have attempted to balance the public interest, which requires the implementation of administrative decisions immediately after their issuance for the proper functioning of public utilities, and private interests, which require the provision of urgent judicial protection for individual rights if it is apparent from the case documents that the challenged decision is likely to be unlawful and that its implementation will cause irrevocable harm to these individuals.

2. The concept behind a request

The purpose of an emergency request is to give the claimant urgent judicial protection of his right to avoid negative consequences that may result from the implementation of an administrative decision.  This request must be submitted in a petition challenging the validity of the decision, or in a subsequent application submitted at the end of the first hearing.

3. Legal basis of the request

The legal basis for requesting the stay of an administrative decision is Article (19) of the Administrative Judicature Court  Law, which stipulates:

“The filing of the case with the court shall not lead to a stay of the decision against which the appeal is made.

However, the concerned party may seek the suspension of the execution of this decision in a plaint or by a subsequent application submitted on a date before the termination of the first pleading session.  The department to which the case is referred shall decide on such application within fifteen days from the date of reference or from the date of submission of application during the case proceedings as the case may be.  The department shall not rule on the suspension of the execution of the decision unless it believes on the basis of the papers that the case is based on serious grounds and that the results of such execution might be difficult to undo.”


The Administrative Judicature Court applies the provisions of this article when considering a request for suspension of execution, supported - if necessary - by the rules of expedited judicial procedures provided for in the Civil and Commercial Procedures Law issued by Royal Decree 29/2002, on condition that it does not contradict the nature of the administrative dispute in applying the provisions of Article (105) of the Administrative Judicature Court Law.

4. Appeal against the judgment issued in the application to stop implementation

The judgment issued in the application to stop implementation is characterised by being a final judgment, as other final judicial judgments.  The decision issued is considered final once issued and must be executed immediately.  Concerned parties may appeal against it before the Court of Appeal without waiting for the judgment to be rendered on the subject, because the court has already decided on the suspension application, so it is not permissible for it to reverse the ruling, even if the judgment does not restrict it when considering the invalidity of the contested decision.  Appeals must be filed within fifteen days from the day following the issuance of the judgment, according to Article (17) of the Administrative Judicature Court Law, which stipulates:

“The deadline for filing appeal shall be thirty days from the day after the date of issuance of judgment.

The period shall be fifteen days in respect of the judgment issued on an application for the suspension of the judgment.”

5. Practical applications of requesting that the implementation of a decision should be stayed by a court ruling

A number of recent cases have, in applying Article (19) of the Administrative Judicature Court Law, affirmed the principle that appealing an administrative decision does not in itself have the effect of staying its implementation.  In other words, simply challenging the decision and demanding its cancellation does not stop the implementation of the contested decision.  The purpose of this principle is not to allow individuals to obstruct the administrative work and paralyse the movement of administrative bodies that seek to achieve public interests through appeals against administrative decisions.

There are, however, exceptions to the principle, where stays of administrative decisions have been granted by the courts in order to protect the interests of individuals and to ensure that the administrative body in question is not being arbitrary in the implementation of its decisions.  In Judgment on Appeal No. (1) for the Judicial Year (4) dated 17 January 2004 the court ruled:

“It is established that administrative decisions are enforceable, except if their implementation entails irreversible results, whereupon the court may depart from this principle and order a stay of the implementation of the decision in following a request from the concerned party.  Ruling in such a matter of urgency requires the proceedings to be swift and simplified, and the job of the court at that time is to check the existence of two pillars concerning the request for a stay of implementation in order for it to issue a judgment:

First pillar:  The pillar of seriousness is an objective pillar which is present when it is established that the appeal against the appealed decision - according to what is stipulated in the documents - is based on serious reasons.


Second pillar:  The pillar of urgency which is present if the results of the implementation of the decision are irreversible should the decision not be taken to stay its implementation.”


Read More...



Monday, July 2, 2018

Arbitration in the GCC: An Overview of the Choices

When parties arbitrate in Oman, the most popular arbitral framework is ad hoc arbitration, usually using the Gulf Cooperation Council (“GCC”) arbitration rules or the United Nations Commission on International Trade Law (“UNCITRAL”) rules.  In other cases, parties agree to have arbitration in Oman that is administered by an outside arbitration centre; while there is no arbitration centre in Oman, there are quite a few arbitration centres throughout the GCC.  This article will provide an overview of some of the most popular arbitration centres in the region.

ICC

The International Chamber of Commerce (“ICC”) is the most established arbitration centre in the world.  The ICC is headquartered in Paris and has a number of branch offices throughout the world.  The ICC recently opened a representative office in Abu Dhabi for the Middle East and North Africa (“MENA”) region.  Prior to opening the new office in MENA, ICC arbitration had been long established in Oman.  The ICC secretariat is considerably sophisticated, and the ICC arbitration rules are highly regarded, widely used and considered a truly international set of arbitration rules.

DIFC-LCIA

The DIFC-LCIA was established in 2008.  It can be considered a joint venture between the Dubai International Financial Centre (“DIFC”) and the London Court of International Arbitration (“LCIA”) which is one of the most established arbitration centres in the world.  The DIFC-LCIA rules are modeled on the LCIA rules.  There are a number of notable features contained in the DIFC-LCIA; of particular importance is the fee structure.  In comparison to the other rules that are outlined in this article, the centre’s and arbitrator’s fees for a DIFC-LCIA administered arbitration are calculated on an hourly rate system rather than an ad valorum scale (fixed fee based on the amount in dispute).

DIAC

The Dubai International Arbitration Centre (“DIAC”) was first established in 1994 as the Centre for Commercial Conciliation and Arbitration.  DIAC, a popular arbitration centre in Dubai, uses rules that came into effect in 2007; however, notably, the DIAC has drafted a new set of rules that are waiting for Royal Decree in order to come into force.  The new rules contain a number of notable features, namely that the default seat of arbitration under the rules will be the DIFC, which is governed by common law rather than civil law.  The new rules are also anticipated to include provisions relating to the governing of third-party funding.  It is expected that the new DIAC rules will come into effect in 2018.  The new rules will significantly update the 2007 rules and will be the topic of a later blog post (once they come into effect).

ADCCAC

The Abu Dhabi Commercial Conciliation & Arbitration Centre (“ADCCAC”) is a local arbitration centre that mainly deals with domestic arbitrations.  Its arbitration clause is contained mainly in contracts that are entered into with United Arab Emirates (“UAE”) public entities.  The ADCCAC rules came into effect in 2013 and contain various modern provisions.  ADCCAC provides hearing facilities free of charge to parties conducting arbitrations on their premises.

BCDR-AAA

The Bahrain Chamber for Dispute Resolution (“BCDR”) was established by Legislative Decree No. 30 of 2009.  It operates in partnership with the American Arbitration Association (“AAA”).  The AAA is an international arbitration centre with various offices throughout the world.  In addition to administering arbitrations and appointing arbitrators, it administers mediations and runs various training services.  The BCDR-AAA has a modern set of arbitration rules that came into effect in 2017.

GCC Arbitration Centre

The GCC Commercial Arbitration Centre (“GCCCAC”) was established in March 1995 by the GCC Supreme Council and is based in Bahrain.  The centre is considered a regional arbitration authority which is independent from the six GCC member states, including the host state.  It has an independent legal entity and enjoys administrative, financial and technical independence.  Simultaneously, it is considered one of the GCC organs.  The GCCCAC rules came into effect in 1994 and were amended in 1999.  The GCCCAC administers arbitrations and its rules are commonly used in ad hoc arbitrations in Oman.

Cairo Regional Centre for Arbitration

The Cairo Regional Centre for International Commercial Arbitration (“CRCICA”) was established in 1979 by an international agreement signed between the Egyptian government and the Asian African Legal Consultative Organization (“AALCO”) making it the oldest centre in Africa and the Middle East.  The latest CRCICA rules came into force in 2011, and are based on the UNCITRAL rules with some minor amendments emanating mainly from the centre’s role as an arbitral institution and an appointing authority.  In addition to administering commercial arbitrations, CRCICA arbitration is provided for in a number of bilateral investment treaties, many of which do not involve Egypt as a party.

Conclusion

As noted, there are various arbitration centres in the region, many of which have experience administering arbitrations in Oman.  The fact that there is no arbitration centre in Oman is a particularly peculiar one which leads to the regional centres administering disputes related to Oman taking place both inside and outside of the country.  It should also be mentioned that all the centres noted above, including the ICC which is a representative office, have space to hold hearings.  The fact that there is no hearing centre in Oman is a disadvantage; when parties hold their hearings in Oman, this takes place in hotels or in law offices.

Read More...



Monday, June 18, 2018

Know your Business Partners - Part II: Basic Due Diligence Tips

In the first part of this article, we reviewed how a foreign company considering doing business in Oman can (and should) gather basic information on proposed clients, agents and business partners. This second part provides a brief outline of basic searches an Omani company should undertake when doing business with a foreign company.

Most countries have online commercial registry records that can be accessed and allow documents to be downloaded either for free or for a small fee. The first step is to identify the official website of the registry as opposed to private companies providing the same service at a premium. By way of example, if you are looking for information on an English company, Companies House (the beta service can be found at https://beta.companieshouse.gov.uk/) publishes an overview, the full filing history and details of the officers of each company.

The documents filed, which include annual returns, can be viewed or downloaded for free and will provide useful background information on the company. Also, you will be able to confirm whether the company representative with which you are interacting is officially authorised to act on behalf of the company.

A similar system is available in Australia and Italy. Access to the documents is subject to a fee payable online starting at as little as €4 and subject to (free) registration on the website. Wikipedia publishes and updates from time to time a list of the existing registries (https://en.wikipedia.org/wiki/List_of_company_registers) and is a useful starting point to identify the relevant registry. If the target company is registered in the United States of America, please note that you will need to consult a state-specific registry or, alternatively, for public companies you may utilise the search options provided by the U.S. Securities and Exchange Commission (https://www.sec.gov/edgar/searchedgar/companysearch.html). The website includes a guide and a tutorial on how to perform efficient searches. Generally and in most jurisdictions, listed companies are subject to disclosure requirements and there is a wealth of information available. Often useful documents can be found on the official website of the company in the “Investors’ Information” section.

Whenever the potential foreign partner does business in a regulated sector such as finance, banking or legal services, it likely will have to be registered with a regulator. It is often possible to consult the regulator’s registry to confirm that the proposed partner is duly registered and in good standing. Examples of such regulators include professional associations and financial conduct authorities.

Check the press: in many countries it is customary to disclose names in connection with court proceedings. The local press in the country/area of operations of your proposed business partner may have reported on the company or its officials. Any online translation tool will allow you to understand the general sense of a newspaper article regardless of its original language. In the past year, on three separate occasions, a simple internet search showed that a foreign individual who approached an Omani business person/company to propose a joint project or an investment had previous convictions for fraud or financial crimes in his home country or elsewhere. In one specific instance, the fraud that led to conviction in the home country had a structure identical to the business proposition presented to the Omani business man. Always remember that “if it’s too good to be true, then it probably is” or, in other words, be wary of people or situations that offer a large benefit for very little in return.

Check the proposed partner’s website, use scam alert and similar websites to search company names and persons’ names and to verify who owns the website/domain and for how long it has been registered.

Finally, when you are reasonably satisfied that the foreign company/individual you reviewed appears to satisfy the requirements for being a reliable business partner, ensure that you acquaint yourself with the basic rules applicable to foreigners doing business in Oman.

For instance, if you are planning to set up a limited liability company, the foreign corporate partner must be registered in the country of origin for at least three years (ten years if the project involves the establishment of a consultancy company). In foreign participated companies, requirements apply also to the Omani partner, in particular with reference to the financial status. Verify whether you, as local partner, and the prospective business partner, as foreign partner, actually qualify with respect to the requirements of the specific activity you are considering.

Evaluate whether you wish to be involved directly as an individual partner or through a corporate entity you may establish and, if the latter appears preferable, review the financial and compliance requirements applicable to the corporate vehicle.

Finally, consider the level of involvement you are planning to have in the business and the degree of liability and financial commitment that you are willing to take on.

Click here to read Know your Business Partners - Part I: Basic Due Diligence Tips

Read More...