CURRENCY
The official currency is the Omani Rial which is divided into 1,000 Baizas. Omani courts and tribunals will enforce judgments in foreign currency.
GOVERNMENT AND LEGAL SYSTEM
On 23 July 1970, His Majesty Sultan Qaboos bin Said acceded to the throne of the Sultanate of Oman and launched radical reforms in government administration and the judicial system. His Majesty established a modern government structure and introduced major development programmes to build the infrastructure of the country and for building a prosperous future for the people of Oman.
In November 1996, Basic Statute, Oman’s first written constitution, was issued by Royal Decree 101/96. It prescribes the legal framework for governance and codifies the legal order of Oman. It provides rules for the royal succession, principles guiding state policies, functions of different authorities, individual rights and the structure of the Government.
Basic Statute characterizes the country as an independent, Arab, Islamic, fully sovereign state with Muscat as its capital and sets the political, economic, social, cultural and security principles of state policies. Political principles are stated to be: (i) preserving the State’s independence and sovereignty, and defending it against all forms of aggression; (ii) reinforcing cooperation and ties with all countries on mutual respect, common interest, noninterference in internal affairs and in compliance with generally recognised principles of international law for the promotion of world peace and security; (iii) laying foundations for the establishment of Shura consultation, based on the national heritage and Shariah; and (iv) establishing a good administrative system that guarantees justice, peace and equality for citizens, ensures public order and safeguards the interests of the State. Basic Statute provides for an independent judiciary and the right to a fair trial. It guarantees to individuals the right to life and liberty and freedom of speech and expression within limits of the law. It recognises the principle of due process of law and guarantees the right to defence in courts of law.
The Government structure comprises His Majesty the Sultan as the head of State and the council of ministers, functioning as a cabinet that consists of ministers appointed by the Sultan. The bicameral parliament or “Majlis Oman” comprises Shura council “Majlis Al Shura” or Consultative Council and “Majlis Al Duwlah” or State Council. Members of the State Council are appointed by His Majesty. The Shura council is a representative council whose members are elected by the people and it has mandate to review legislation pertaining to economic and social development prior to its becoming law.
Basic Statute contemplates the establishment of a higher council to oversee the running of courts and auxiliary bodies. The court system comprises courts of first instance, courts of appeal, and the Supreme Court.
Legislation consists of primary legislation and secondary legislation. Primary legislation is issued by and known as Royal Decree (“RD”) and published in the fortnightly Official Gazette. RD may be amended by RD only. Secondary or interstitial legislation is issued by Ministerial Decision (“MD”). Decisions and implementing regulations by a relevant executive body or ministry are also published in the Official Gazette.
Oman has civil law jurisdiction. All laws are required to be in conformity with Basic Statute. Laws become effective from the date of publication in the Official Gazette.
In 1975, the Diwan of legislation was formed to review all laws and to draft RDs, international agreements and Government contracts. The Ministry of Legal Affairs, established in 1994, is responsible for the preparation of RD and for reviewing all draft laws, regulations and MDs before they are promulgated and published in the Official Gazette. It issues the Official Gazette and gives legal opinions and advice to the Government on interpretation of RDs and laws.
RD 75/08 promulgated the State of Emergency Law authorising the declaration of emergency when the State’s security or public order is threatened by war, internal disturbance, general crisis or spread of epidemic. RD 76/08 promulgated the General Mobilization Law authorising the announcement of mobilization upon outbreak of war or of its revocation by Royal Orders.
HOLIDAYS
The Hejira calendar is the official calendar of Oman. Based on this, there are five official holidays: Eid Al-Fitr, Eid Al-Adh’ha, Milad-Un-Nabi, new Heira year and Al Isra and Al Miraj. In addition, based on the Gregorian calendar, official holidays are also declared on 23 July – Renaissance Day, marking His Majesty’s ascendance to the throne, and National Day, which falls on 18 November.
LANGUAGE
The official language is Arabic. All documents, correspondence and agreements submitted to the Government and its instrumentalities must be in Arabic. Omani courts and tribunals will consider and construe only documents submitted in Arabic or in Arabic translation as translated by a duly licenced translator. Although unofficial English translations of many Omani regulations are available, the authoritative text is Arabic text. Omani court proceedings must be in Arabic. However, parties may agree on any other language for arbitration.
OFFICE HOURS AND TIME ZONE
Oman is in GMT +04.00 hours. Office hours vary widely by business, but in general are from 8:00 AM to 1:30 PM Saturday through Thursday and 4:00 PM to 6:30 PM Saturday through Wednesday. In 2008, on the recommendation of the Oman Chamber of Commerce and Industry, many companies adopted the five-day workweek of Sunday through Thursday with official hours of business increased by one hour on weekdays. Official working hours for Government offices are from 7:00 AM to 2:00 PM Saturday through Wednesday. Banks are open to the public from 8:00 AM to 1:00 PM from Sunday to Thursday.
Wednesday, June 25, 2008
The Oman Law Digest 2009 - INTRODUCTION
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The Oman Law Digest 2009
BUSINESS ORGANISATIONS
The Oman Law Digest 2009
AGENCY Foreign natural or juridical persons must engage in commercial activities through a locally registered commercial agent in Oman. Accordingly, foreign manufacturers or suppliers who do not have legal presence in Oman must appoint a local agent to sell, promote or distribute a product or commodity or to provide service. The relationship between the foreign principal and commercial agent in Oman is governed by Law of Commerce [RD 55/90] and Commercial Agencies Law [RD 26/77 as amended]. Law of Commercial Agencies defines commercial agency as an agreement whereby a foreign producer or supplier who has no legal presence in Oman assigns to one or more Omani natural or corporate persons the right to sell, promote or distribute a commodity or product or to provide service for profit or commission. The Law does not draw a distinction between commercial agent, representative, distributor or any other intermediary. The agent may be a natural or juridical person. If the agent is a natural person, he must be an Omani national and resident of Oman; if a juridical entity, the Omani shareholding must be more than 51% and commercial agency must be stated as the business object of the agent. Following Oman’s accession to WTO, companies with up to 70% shareholding are permitted to be commercial agents. Agencies may be non-exclusive and more than one agent may be engaged by foreign principals. An agency agreement must be in writing and registered with the Agency Registrar at the Ministry of Commerce and Industry (“MCI”) [MD 11/85 as amended]. Agreements signed abroad must be duly legalised by the Omani embassy. If the agency agreement is not in Arabic, a duly authenticated Arabic translation must be provided for registration of the agency. The approximate Government fee for agency registration is US $400 which includes the cost of registering the agency with the Ministry of Commerce and Industry and with the Oman Chamber of Commerce and Industry. Registration must be renewed every three years. Except in respect of goods for the Ministry of Defence, a principal cannot sell products directly to a customer without involvement of an agent. A duly appointed agent is entitled to commission even if the principal has resorted to direct selling of products or services to customers in contravention of the law and the agency agreement. Products manufactured abroad may be imported by customers without an intermediary or agent for private use which is not intended for a commercial purpose.
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The Oman Law Digest 2009
CORPORATIONS
The Oman Law Digest 2009
Commercial Companies Law [RD 4/74 as amended] provides for the formation, regulation, merger, conversion, liquidation and dissolution of general partnerships, limited partnerships, joint ventures, closed joint stock companies, public joint stock companies, holding companies and limited liability companies. Subject to licencing and other restrictions, foreign natural and juridical persons can invest in a joint venture, closed or public joint stock company and limited liability company. Foreign investment in local companies is authorised pursuant to Foreign Capital Investment Law [RD 102/94]. Joint venture is an unincorporated association in the nature of a consortium of two or more commercial entities, usually to execute a project. There is no registration requirement but a foreign company participating in a joint venture must be a licenced entity. In its functioning, a joint venture can be considered to be a de facto general partnership between participants in such joint venture. Entities in a joint venture must have a written agreement on sharing of profits and other common issues. Limited liability company must have at least two natural or juridical shareholders referred to as partners or members. Share capital must be at least RO 20,000 if shareholders are Omanis and RO 150,000 if there are one or more foreign partners. Capital is divided into shares of equal nominal value that are not available for public subscription. Members’ liability is restricted to shareholding in the capital. The limited liability company cannot engage in the business of banking, insurance, financial guarantees or commercial aviation. Shareholders have an effective right of preemption and right of first refusal before a shareholder sells its shares to a third party. Shares confer equal voting rights. Share certificates are not issued and shareholding is evidenced by incorporation documents including a contract of incorporation called a constitutive contract. The limited liability company must keep a membership register giving names of members and other relevant particulars. Any proposed shareholders’ action which increases financial liability requires unanimous approval of shareholders. Management of a limited liability company is entrusted to one or more managers or a board of managers. The manager may perform acts for the company’s objects unless restricted by constitutive contract or law. Accounts must be maintained and audited in accordance with international accounting standards. Companies with a capital of over RO 50,000 or having more than ten shareholders, or so required by the contract of incorporation, must have an internal auditor. A joint stock company with at least three shareholders must have authorized and issued share capital. The Memorandum and Articles of Association must be approved by the MCI before incorporation. Joint stock companies may be public or closed. Public joint stock company is authorised to issue stocks to the public and must have a minimum share capital of RO 2,000,000. It is subject to a code of corporate governance and other regulations issued by the Capital Market Authority (“CMA”). Besides the MCI, registration must also be made with the CMA, Muscat Security Market (“MSM”) and Muscat Depository and Securities Registration Company SAOC (“MDSRC”). Share transfers must be effected through MSM. Closed joint stock company is not permitted to offer shares to the public. It must have a minimum share capital of RO 500,000. Registration with MCI, which is the relevant authority for its corporate matters, is mandatory for commencement of business. Share transfer must be effected through MSM. Nominal value of a share in a public or closed joint stock company should not exceed RO 1 and at least half of the nominal value must be paid up on subscription and the full value within three years from the date of incorporation. Joint stock companies cannot be established without prior authorization from MCI. Application for authorisation must be signed by at least three founder members. Founder members of a public joint stock company must subscribe for not less than 30% but not more than 60% of shares and no single shareholder may own more than 20% of shares without prior authorisation from CMA. Management of a joint stock company must be entrusted to a board of directors comprising at least three directors for closed and five for public, who must draft bylaws for management, business and personnel affairs within one year of registration of the company. A board of directors of the company must be elected by shareholders for a renewable term of three years according to rules for electing the board issued by MCI or CMA. The board may perform all functions except selling all or substantial parts of the company’s assets; mortgaging the company’s assets; guaranteeing third-party debts; or making donations which require authorisation from shareholders or the Articles of Association. Holding company may be a limited liability or joint stock company exercising financial and administrative control over one or more companies in which it has at least 51% shareholding. Share capital must be at least RO 2,000,000. Its objectives should be to manage its subsidiaries; invest funds in stocks; provide loans, guarantees, etc. to subsidiaries; and acquire patents, trademarks, concessions and other intangible assets. Pursuant to a recent amendment to the Law of Income Tax on Companies [RD 47/81 as amended], companies with up to 70% foreign shareholding are charged income tax at a rate of 12%, similar to wholly Omani owned companies. Omani law on the accountancy and auditing professions provides that accounts of companies must be prepared according to International Accounting Standards (now the International Financial Reporting Standards) (IFRS). Incorporation of banks and insurance companies requires additional approvals from Central Bank of Oman and CMA, respectively. They are required to be incorporated as joint stock companies.
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The Oman Law Digest 2009
FOREIGN CAPITAL INVESTMENT
The Oman Law Digest 2009
In order to do business in Oman, it is necessary for a foreign natural or juridical person to comply with laws governing foreign business activity, which includes Foreign Capital Investment Law [RD 102/94] (“FCIL”), Commercial Register Law [RD 3/74 as amended], Commercial Agencies Law [RD 26/77 as amended], Commercial Companies Law [RD 4/74 as amended] and Law of Commerce [RD 55/90]. According to FCIL, foreign companies seeking to do business in Oman are required to form a locally registered company with local equity participation of at least 55%. A foreign capital investment licence is granted by MCI to foreign entities upon satisfying capital and other requirements. The licence permits a foreign company to have shareholding in a local registered company. Although FCIL restricts foreign ownership in Omani companies to 45%, pursuant to Oman’s accession to WTO in 2002, foreign shareholding up to 70% in all sectors is permitted without need for approval from the cabinet or the Council of Ministers. Foreign ownership of 100% is permitted for certain types of businesses in Oman such as brokerage services and for projects which are deemed by the Council of Ministers to contribute to the development of the national economy. The minimum capital requirement for such companies is RO 500,000. Minimum capital requirements for different types of companies with foreign equity participation are: (i) limited liability companies, RO 150,000 although Oman had committed to abolish this requirement as of January 2001; (ii) closed joint stock company, RO 500,000; and (iii) public joint stock company, RO 2,000,000. There is no restriction on repatriation of foreign funds. There are no foreign exchange controls. The Omani Rial is pegged to the US Dollar at a fixed rate of US $2.59/RO 1. BRANCH OFFICE A foreign company may establish a branch office for the purpose of performing a government or quasi-government (including partly owned government companies) contract. Tenure of a branch office is restricted to the terms of the contract and may be extended for additional terms if the contract is extended for further periods or there is another government or quasi-government contract for longer duration. The branch cannot do business other than the performance of the contract for which it is established. Branches are subject to a high rate of taxation starting from 30% on taxable income of over RO 30,000. REPRESENTATIVE OFFICE A foreign company may form a representative office for the limited purpose of marketing and promotion of products. It is prohibited from directly engaging in sale or doing any other activity deemed to be commercial activity. It is authorised to recruit employees. Pursuant to the Free Trade Agreement between Oman and the US effective 1 January 2009 (“FTA”), American investors will be accorded preferential treatment in business. US companies seeking to conduct business in Oman will get an unprecedented level of openness and access to the Omani services market. The FTA guarantees national and most favoured nation treatment for services including production, distribution, marketing and sale of services and includes benefits for service providers across a range of fields, including banking, insurance, securities, and asset management. The FTA also offers a comprehensive dispute resolution mechanism. The MCI has issued MD 102/08 on registration of branches of American establishments and companies. Similarly, Omani companies seeking to do business with the US will now have open access to the world’s largest economy. Details of how it will work in practice are still emerging. It remains to be seen how current Omani procedures will adapt to the provisions of the FTA, but it is clear that the FTA will encourage strong economic relations between the US and Oman. Additional provisions provide for state-of-the-art protection of intellectual property, as well as protections for the environment and domestic labour laws. The US has a FTA with only one other GCC country (Bahrain), although more are expected in upcoming years.
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The Oman Law Digest 2009
TAXATION
The Oman Law Digest 2009
Personal income is not subject to tax in Oman. Tax is payable by companies and establishments if they have permanent establishment in Oman. Tax is charged on income, from all sources, which is realised or has arisen in Oman. All allowable deductions, such as business costs or depreciation, are defined in Law of Income Tax on Commercial Companies [RD 47/81 as amended] (“Tax Law”). Permitted depreciation rates are set out in the Tax Law. In practice, tax is charged on what is substantially a profit calculation. The tax regime is administered by the Secretariat General of Taxation under the Ministry of Finance. Tax rates depend upon the legal status of the entity. All companies registered in Oman, wholly Omani owned or with up to 70% foreign participation, and branches of wholly GCC owned companies are subject to a uniform rate of 12% on taxable income over RO 30,000. Other entities, including branches of foreign companies, are taxed as follows:| Taxable Income | Tax Rate | |
| | 0 – 5,000 | Nil |
| | 5,001 – 18,000 | 5% |
| | 18,001 – 35,000 | 10% |
| | 35,001 – 55,000 | 15% |
| | 55,001 – 75,000 | 20% |
| | 75,001 – 100,000 | 25% |
| 100,001 – and above | 30% | |
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The Oman Law Digest 2009
INSURANCE
The Oman Law Digest 2009
Insurance in Oman is regulated by Insurance Companies Law [RD 12/79 as amended] and Executive Regulations [MD 5/80] (together, “Law”). Jurisdiction of insurance was transferred from MCI to CMA [RD 90/04]. Since taking over the functions of insurance, CMA has issued: (i) the Code of Corporate Governance for Insurance Companies and (ii) the Code of Practice for Insurance Business. For conducting insurance business in Oman, an insurance company must satisfy certain conditions: (i) it should be commercially registered in Oman; (ii) the minimum capital should not be less than that prescribed for insurance companies; (iii) it should be a joint stock company; (iv) it should be licenced by CMA to carry on all or some classes of insurance business specified by the Law; and (v) it should deposit requisite guarantees and maintain a required margin of solvency. Licenced companies, both local and foreign, must comply with reporting requirements and must establish and maintain reserves and deposits as required by the Law. For foreign insurance companies operating through agents, branch offices or other local service units, the Law stipulates: (i) all policies covering risks situated in Oman and/or originating in Oman and/or connected with property in Oman or long-term policies insuring Omani residents against risks must be issued in Oman; (ii) a record of all policies issued with respect to Oman must be maintained in a local office; (iii) the accounts of the local office should be audited annually by an independent auditor; (iv) the parent company should have been established in accordance with laws of the country of origin; (v) local office is subject to tax laws of Oman; (vi) RO 150,000 must be deposited with CMA for doing business in any class of insurance and not less than RO 300,000 for more than one class; (vii) an amount not exceeding 25% of each insurance policy issued in Oman must be reinsured with a national insurance company; and (viii) provisions of the Law in respect of margin of solvency, principal manager, actuary and accounts are applicable. Except life insurance, the Law prohibits insurance contracts with foreign companies which are not commercially registered in Oman. This prohibition is applicable to the Government, public authorities, public sector companies and natural and juridical entities registered with the commercial register for doing business in Oman. Insurance companies may reinsure part of the risk with offshore insurance companies and are required to maintain transparency in reinsurance placements. Customers may be involved in negotiations with brokers and underwriters. Insurance companies underwriting businesses must retain at least a small portion of the total risk on its net account. Following CBO Circular BM 908 issued by Central Bank of Oman (“CBO”) dated 21 January 2001, licenced banks are authorised to collaborate with licenced insurance companies, brokers and agents to sell insurance products subject to conditions: (i) banks must be diligent in selecting insurance companies for association; (ii) formal agreements must be concluded; (iii) banks must assume no liability for acts of insurance companies; (iv) all terms of agreement should be fair and transparent and diligence should be exercised with respect to related party transactions; and (v) the core business of banking should not be affected by the insurance business. The CMA issued a decision amending the Executive Regulations of Insurance Companies Law, increasing the solvency margin for insurance companies. MOTOR VEHICLE INSURANCE It is compulsory for all vehicles in Oman to have third-party insurance which must cover death, bodily injury and material damage to third parties. SOCIAL INSURANCE Pursuant to Social Insurance Law [RD 72/91 as amended], subscription to the social security system is mandatory for all employers employing Omani employees, who must subscribe on behalf of them and pay a subscription premium of 10.5% of basic salaries of Omani employees towards social insurance, and employees have to contribute 6.5% of basic salary. Social insurance is administered by the Public Authority for Social Insurance. Employers cannot contract out of this liability. Contributions are made by the employer, the employee and the Government to cover death, disability, old age, and occupational hazards (injuries and illnesses caused by work). This law is amended periodically to specify the percentage of basic wage contributable to social insurance and to set limits on basic pay to be used for determining employer and employee contributions.
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The Oman Law Digest 2009
BUSINESS REGULATION AND COMMERCE
The Oman Law Digest 2009
The Law of Commerce [issued by RD 55/90] regulates commercial activities in Oman. The Law covers all aspects of business including sale, purchase, agency, lease, insurance, charge and guarantee. The Law defines “commercial act” as an act effected by a person with entrepreneurial intent even if he is not a merchant and gives a non-comprehensive list of commercial acts which includes: sale and purchase of goods; lease of equipment; contracts of supply; public and private banking; commercial agency; transactions involving negotiable instruments; incorporation of commercial companies and sale and purchase of securities; extraction of natural resources; insurance; carriage of goods by land, sea and air; construction contracts; and maritime and aerial navigations. Sale of immoveable property, sale of business, agency, real estate lease, and mortgage are required to have formal written contracts and require registration. Sale and purchase contracts of moveable property do not require registration. Non-Omani persons cannot engage in commerce unless appropriately authorised by law. In sale and purchase transactions, parties must agree on goods and price, and the principle of caveat emptor applies. Consideration must be in proportion to prevailing standards in trade. All types of sales including sale of business, sale by delivery on board, sale at port, Cost, Insurance and Freight (CIF) and Free on Board (FOB) are covered by this law. A commercial agency is defined as a contract whereby a principal assigns to another person the task of carrying out a specific legal act for remuneration unless it is agreed to be gratuitous. If remuneration is not agreed in writing then it must be according to prevailing trade standards. Merchants are required to maintain two types of commercial books: day books, in which all day-to-day transactions must be entered, and inventory books, which must be updated at least once a year. In private sector transactions, negotiable instruments may be prepared and negotiated in English. Bills of exchange must contain: (i) the term “bill of exchange” written in the text of instrument; (ii) an unconditional order to pay specified sum; (iii) the name of the drawee; (iv) the name of the payee; (v) the date of maturity; (vi) the place of payment; (vii) the date and place of making; and (viii) the signature of the drawer. Bills of exchange may be drawn payable at sight or on a specified date or specific time from making or from sight. Endorsements must be unconditional and partial endorsements are void. An endorsement to a holder shall be deemed to be an endorsement in blank. The holder may fill the blank with his name or that of another person; further endorse in blank to another person; or deliver it to another person without completing or endorsing it. Acceptance of a bill of exchange shall evidence that provision for payment is held by the acceptor which cannot be rebutted by drawee or holder. If a bill of exchange is not accepted, the burden of proof will be upon drawer to prove that drawee held provision for payment on the date of maturity. Order promissory notes must contain: (i) the term “Order Note” written in text of note; (ii) an unconditional promise to pay specified sum; (iii) the date of maturity; (iv) the place of payment; (v) name of the payee; (vi) the date and place of making; and (vii) the signature of the maker. Provisions with respect to bills of exchange in relation to endorsement, maturity, payment, recourse by reason of non-payment, prohibition on granting of time for payment, conservatory attachment, protest, calculation of time limits and working days, recourse by drawing, payment by way of intervention and extinctive prescription are expressed to be applicable to order promissory notes as well. A demand order promissory note must be presented for payment within one year after the date of making it. Cheques must contain: (i) the term “cheque”; (ii) an unconditional order to pay the specified sum; (iii) the name of drawee; (iv) the place of payment; (v) the date and place of making; (vi) the name of person to whom or to whose order payment is made; and (vii) the signature of the maker. Cheques must be drawn on a bank, and may be expressed to be payable to the bearer. Cheques made payable to a person are negotiable by endorsement. Issuance of cheques without sufficient funds on account is a criminal offence. Cheques drawn in Oman must be presented for payment within six months but, in practice, these limitations are not strictly adhered to. The Law also contains provisions on crossed and account payee cheques. The Unified Industrial Organisation Law for GCC Countries [RD 61/08] is applicable to companies undertaking industrial activities. The law ratifies GCC policy on industrialization to further regional economic development plans and programs and emphasizes use of local raw materials; installation of modern technology most suited to the local industrial environment; and recruitment and training of local manpower and deals with health, safety and environment standards and standards approved by the WTO for trade and export.
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The Oman Law Digest 2009
COMMERCIAL REGISTER
The Oman Law Digest 2009
Every natural or corporate person conducting business in Oman must register with the Commercial Register at MCI. Under Commercial Register Law [RD 3/73 as amended], the certificate of registration would include the commercial registration number, the registrant’s name, its legal form, principal office address, registered activities, the name(s) of manager(s) and directors, and the date and place of registration. Information registered in the Commercial Register is available for public inspection. TRADE NAME The Law requires every business to have a trade name which must be different from other registered names. It must not misrepresent its nature of business. According to internal regulations of MCI on name, commercial names must consist of meaningful Arabic words. Foreign names are permitted for companies with foreign shareholders having similar registered names abroad and for companies with recognised international names. Trade names must be registered in the Commercial Register. If a trade name is used by a competing business, the interested party may seek a ban on such usage and claim compensation. Usage of names of countries and places such as Muscat and Oman and terms such as “Financial” and “investment” have minimum capital requirements. Trade names and commercial and municipality registration numbers must be displayed on the front of the commercial premises. All stationery and trade documentation must contain the trade name and the commercial registration number. TRADEMARKS Law on Trademarks, Trade Secrets and Protection against Illegal Competition [RD 38/00] and laws relating to Industrial Designs, Topographic Designs, Geographical Indications and Patents [RDs 39/00, 40/00, 41/00 and 82/00] have been repealed by the Law of Industrial Property Rights [RD 67/08]. This Law provides for the protection and registration of trademarks, patents, industrial designs, topographic designs and inventions. Upon registration of industrial property rights, owner gets full protection of the law and exclusive rights. Unregistered trademarks get limited protection under Law of Commerce [RD 55/90] which prohibits deception, fraud and dissemination of misleading information in relation to sale of products. The Law regulating Production of Compact Discs and Accessories was introduced by RD 66/08. COPYRIGHTS Copyright and Related Rights Law [RD 37/00] was repealed by RD 65/08 which secures rights of authors of literary, artistic and scientific works. Copyright works include (i) computer programs (complying with TRIPS requirement for protecting computer programs like literary works); (ii) audio and audio-visual works; (iii) literary works and drawings; (iv) dance, drama, musical and motion picture productions and (v) lectures and speeches. The law provides for (i) exclusive rights for authors of copyrighted works; (ii) civil and criminal proceedings for violation of the law; and (iii) precautionary measures including injunction, seizure of infringing materials and closure of premises used for copyrights infringement.
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The Oman Law Digest 2009
CONTRACTS
The Oman Law Digest 2009
Attainment of majority, soundness of mind and no infirmity in relation to the intended commercial transaction are stated to qualify a person for entering into commercial transactions. Persons declared insolvent or convicted of fraud, theft, cheating, breach of trust, forgery, etc. are disqualified from entering into contracts. There is sufficient latitude to agree to terms of a contract if the purpose of the contract is lawful. Contracts are binding on parties and, if not in writing, may be proved by any means. If there is no valid contract, provisions of law would apply. If the law does not address a specific aspect of commercial transaction then custom, Shari’ah or principles of equity in that order would prevail. Electronic Transactions Law [RD 69/08] validates electronic transactions agreed by parties to be conducted electronically. Electronic transaction includes contracts performed or concluded wholly or in part by electronic messages. It excludes from its purview certain transactions such as those pertaining to personal law; court proceedings like service of summons, etc.; and documents required to be attested by a Notary Public. DAMAGES Proven direct damages are awarded for breach of contract. Indirect or consequential damages are not excluded as a matter of law but have limited applicability. There must be a nexus between loss suffered and damages claimed. Secondly, there must be a degree of foreseeability, i.e., damage must not be too remote. Consequential loss is generally contractually excluded but Omani courts are known to assess and award loss of profit. EXCUSE FOR NONPERFORMANCE Force Majeure and impossibility of performance and, in some projects, government risk events are recognised grounds for non-performance. APPLICABILITY OF FOREIGN LAW Contracts may be subject to foreign law applicability. However, an Omani court would generally construe and apply only Omani law. Hence, foreign law applicability if supported by an arbitration clause enhances its enforceability in an Omani court as Oman is a signatory to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards and written agreements providing for arbitration for dispute resolution exclude jurisdiction of Omani courts. Pursuant to Arbitration Law [RD 47/97], Omani courts enforce validly issued arbitral awards. GOVERNMENT CONTRACTS Contracting with the Government is subject to Tender Law and its Regulations. A new Tender Law was issued by RD 36/08 repealing and replacing the old law (RD 86/84 as amended). It defines public, international and local tenders and regulates public bid requirements, direct purchases, bid submission rules, contract award rules and also specifies the Tender Board functions. Standard forms of pubic works contracts are used for government and quasi-government contracts. These include Standard Conditions for Construction of Building and Civil Work; Standard Condition for Mechanical and Electrical Works; and Standard Conditions for Civil Consultancy Works. These contracts are modeled on standard FIDIC contracts. Financial signatory powers of ministers and government officials in relation to government contracts are stipulated in RD 48/76 as amended. Public sector or quasi-government companies (where their Articles of Association provide for it) have internal tender committees, or executive committees for awarding contracts up to specified value. Contracting parties require bid, performance and, where applicable, advance payment guarantees issued by approved local banks. Oman is not a signatory to Convention on International Sale of Goods.
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The Oman Law Digest 2009
INTEREST
The Oman Law Digest 2009
Commercial Banks and other enterprises routinely charge interest. Periodic circulars are issued by Government on commercial interest rates. Pursuant to the Banking Law [RD 114/00], CBO has the power to regulate interest rates in banking transactions. CBO sets interest rates chargeable by banks. Omani courts have consistently upheld payment of interest in commercial suits. Number of laws and regulations, including Law of Commerce [RD 55/90], Banking Law [RD 114/00], Civil and Commercial Procedure Law [RD 29/02] and Law of Commercial Companies [RD 4/74], specifically refer to interest being chargeable and enforceable. Interest rates and currency hedging arrangements are recognised and commonly used in project financing in Oman. Forward transactions are permitted under Omani law provided they are not exclusively for speculative purposes. The MCI periodically issues a decision on the maximum interest rate chargeable for commercial loans.
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The Oman Law Digest 2009
INVESTMENT REGULATIONS
The Oman Law Digest 2009
The CMA was established pursuant to Capital Market Law [RD 80/98 as amended]. It is empowered to regulate all matters relating to public joint stock companies and securities activities in Oman including offering of securities, information requirements in prospectus for offering securities for public subscription, activities of MSM [RD 53/88], investment service, brokerage activities, and investment companies’ activities. Pursuant to RD 90/04, the CMA also has jurisdiction over insurance matters. Securities of public and closed joint stock companies are traded through MSM. MDSRC was established by RD 82/98 as the sole service provider for the registration and transfer of ownership of securities and safekeeping of ownership documents (depository). CMA has issued various rules in relation to public joint stock companies and securities including the Code of Corporate Governance [CMA Circular 11/02], Rules for Election of Board of Directors, Rules on Disclosure and rules for placement of funds in non-Omani securities.
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The Oman Law Digest 2009
MONEY LAUNDERING
The Oman Law Digest 2009
Money Laundering Law [RD 34/02] requires banks and financial institutions and other natural and juridical entities involved in financial dealings to conduct ‘Know Your Customer’ checks and verify their customer’s identity and address before opening accounts, taking securities for safe custody, granting safe deposit facilities or engaging in any other business dealings. Banks and financial institutions are required to develop internal systems to combat money laundering through: (i) development and enforcement of internal policies, systems and procedures, including appointment of qualified senior officers at the senior management level to enforce such policies, systems and procedures; and (ii) development of ongoing training programmes for officers to keep them informed of new techniques used in money laundering transactions and improving their abilities to identify such transactions for combating the same. Banks and financial institutions are required to: (i) retain records of transactions for a minimum period of ten years; (ii) adopt precautionary measures to uncover and prevent money laundering transactions; and (iii) assist in criminal prosecution for violations.
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The Oman Law Digest 2009
MONOPOLIES, RESTRAINT OF TRADE, AND COMPETITION
The Oman Law Digest 2009
Law of Commerce [RD 55/90] and Law of Commercial Trademark, Data, Trade Secrets and Protection Against Unfair Competition Law [RD 38/00] prohibits dissemination of misleading information or information inconsistent with facts in relation to origin or nature of goods or any other trade matter, with intention to draw away clientele of competitor. Other sector specific laws have related provisions on restraint of trade and competition. Consumer Protection Law [RD 81/02] requires the Government to curtail monopolies or over-dominance in the market but does not specify what action must be taken and vests discretion in the relevant Minister to formulate rules. The Law also requires the issuance of rules for controlling excessive price increases and prohibits suppliers from hoarding commodities which would result in an artificial price rise. Although there is no separate competition authority in Oman, the Law is implemented by the MCI.
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The Oman Law Digest 2009
MORTGAGES
The Oman Law Digest 2009
Under Omani law, mortgages, liens and pledges are valid and enforceable only if they are registered with the appropriate Ministry. Although Government debts and employees’ dues take priority over all other credits, registered mortgagees as secured creditors rank in priority after them. COMMERCIAL MORTGAGE Law of Commerce [RD 55/90] and Regulations for registration of commercial mortgages [MD 5/80 issued by MCI] regulate commercial mortgages. A commercial mortgage is the creation of a charge over tangible and intangible fixed and/or floating commercial assets, such as all moveable properties, raw materials, machinery, equipment, receivables, trademarks and other intellectual property rights and insurance policies. More than one charge may be created over commercial assets with the consent of the previous priority charge holder. Commercial mortgages must be registered with MCI. Legal mortgage is a charge created over real estate property and is regulated by Land Law [RD 5/80], Usufruct Law [RD 5/81], Real Estate Registration Law [RD 2/98], and Regulations for registration of legal mortgages [MD 5/80 issued by Ministry of Housing, Electricity and Water]. Registration with the Ministry is evidenced by recording the charge as a notation on the Mulkhiya or title deed of the real estate property. A charge may also be created over usufruct rights, i.e., rights to utilise and develop land and lease. Ship mortgage is also permitted under Omani law. Maritime Law [RD 35/81] provides for the creation, registration and enforcement of mortgage. Ship mortgage must be registered with Ministry of Transport and Communication.
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The Oman Law Digest 2009
PROPERTY
The Oman Law Digest 2009
Ownership of real property is evidenced by the Mulkhiya or title deed. Real estate records of ownership, transfer, usufruct rights and legal mortgage are kept in the real estate register at the Ministry of Housing (MOH). Land registration is maintained by MOH by virtue of Land Law [RD 5/80], MD 5/91 (issued by MOH) and Land Register Law [RD 2/98]. Legal provisions and supporting legislation set up a Real Estate Register which is designed to act as a record of land interests. An independent page in the Land Register should be assigned for each separate real estate unit which should include salient particulars of the property [MD 29/99]. The Real Estate Register is only available for inspection by parties with interest in land. Under MD 5/91, MOH has authority to levy fees for registration of interests in land. Omani nationals are entitled to freehold and leasehold real estate rights. Wholly Omani owned companies and public joint stock companies with 51% Omani shareholding may own real estate. Pursuant to MD 43/98 issued by MOH, corporate ownership of real estate is restricted to holding it for administrative office, staff accommodation, warehouses, show rooms and similar special purpose premises in relation to achieving the company’s objectives and should not be for investment purposes unless it is a land development company with a specific land development object. Companies acquiring land for administrative and other purposes are prohibited from disposing of the real estate within two years of acquisition. Pursuant to Law Regulating the Ownership of Real Estate by GCC Nationals [RD 21/04], the right to own land in Oman has been extended to GCC nationals and wholly GCC owned companies. Previous law issued by RD 20/00 restricted a GCC entity’s right to own land to not more than 3,000 square metres. This law entitles GCC natural persons and wholly GCC owned juridical entities to own land or construct property for the purposes of residence or investment in Oman in accordance with Omani law. This law seeks to give similar land ownership rights to GCC nationals as Omani nationals. However, a GCC national purchasing a vacant plot of land is legally obliged to develop within four years from registering it. If the land is not developed within the stipulated time, the Government may dispose of the property but with due compensation. The Government may acquire land from owners for public use and pursuant to a Royal Decree. The owner of the land must be duly compensated for expropriation [RD 64/78]. Usufruct Law [RD 5/81 as amended] provides for usufruct rights that may be granted by the Government to a third party to utilise and develop real estate. Usufruct is a real right to exploit and benefit from the land granted pursuant to a written agreement. Usufruct of real estate may be held for an initial term of 50 years and may be renewed for additional terms. The beneficiary of usufruct is entitled to use land as its own for the term. Real estate reverts to owner upon termination or on expiry of usufruct agreement. Usufruct rights over land are granted by the Government (MOHEW) to public utility and infrastructure projects that are considered as contributing to the development of the national economy. It is also possible to sub-usufruct usufruct rights. Owners may lease real estate which must be registered with the local municipality [RD 6/89]. A lease of over seven years must be registered with MOH also. This interest is strictly contractual and amounts to a tenancy agreement which is to be registered with the relevant municipality. A lease does not provide any actual real rights in real estate but it is a right granted by contract for payment of rental to occupy land and buildings built upon the land. Law for ownership of real estate by foreigners in integrated tourist complexes was issued by RD 12/06. This law allows non-GCC foreign nationals and companies to own registered freehold title to Omani land provided that the land is situated in an area designated as an integrated tourist development area. Specific rights that are granted to a development company over an area of project land are recorded in a development agreement. The development agreement sets out rights and obligations of the developer and obligations of the Government in relation to supporting the project. Rights granted to property developers in these areas are heavily controlled by the Government. The developer has to satisfy the Government that its project is beneficial to the country and will deliver a good quality and successful project. Issues relating to transfer of title, succession and applicable laws, permanent residence in Oman, etc., are addressed in recently issued MD 191/07 issuing the Executive Regulations to the Law. Law regulating the Tenancy of Residential, Commercial & Industrial Premises [RD 6/89] was recently amended by RD 72/08 bringing about significant changes to curb rising rents.
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The Oman Law Digest 2009
CONSUMER PROTECTION
The Oman Law Digest 2009
Consumer Protection Law [RD 81/02] entitles consumers to obtain correct information about purchased commodity which must contain label listing particulars in relation to price, date of production and expiry, country of manufacture, conditions and instructions of application, basic components, degree of effectiveness and after sale service. Consumer is entitled to guarantee of quality and agreements depriving consumers of any guarantees are void. Price must be reasonable. Except perishable commodity, defective items must be replaced but within ten days of purchase. All guarantees passed on by original manufacturer must be passed on to consumer. Maximum penalty for violation of law is fine of RO 5,000. Food Safety Law [RD 84/08] deals with various aspects of food products including quality, safety, transportation, import and export. The Ministry of Regional Municipalities and Water Resources will be issuing executive regulations for the law.
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The Oman Law Digest 2009
TOURISM
The Oman Law Digest 2009
Depletion of energy reserves has accelerated the pursuit of alternate sources of revenue and Oman’s endowment with varied landscapes unmatched in the region has pushed tourism to the forefront. To promote the market and develop tourism in Oman, the Ministry of Tourism was carved out of MCI following issuance of the Law of Tourism [RD 33/02] and Executive Regulations [MD 91/03]. Responsibilities of this Ministry include: (i) making a comprehensive evaluation of Oman’s tourism potential and developing it as an alternate source of revenue to oil and gas; (ii) drafting national five-year plans and programmes for development of tourism; (iii) reviewing new tourism projects, attracting foreign investments and recommending tax and other exemptions for tourism projects; (iv) assistance in identifying and alloting of land for tourism and setting up tourism projects in accordance with Land Law [RD 5/80], Usufruct Law [RD 5/81] and Foreign Capital Investment Law [RD 102/94]; (v) determining fees and granting licence for tourism-related services; and (vi) monitoring and controlling prices for services offered by hotels and tourist establishments. A natural or corporate person engaging in a tourism-related commercial activity must obtain the relevant licence from the Ministry. A fine of up to RO 3,000 may be imposed and/or licence may be revoked for violating provisions of the law. A licence is required for establishing or utilising tourist resorts, construction of hotels or tourist establishments, operating travel and tourism offices, establishing time-sharing resorts, bringing foreign performing artistes from abroad, etc. Appendices attached to Executive Regulations specify details regarding the fee payable for each licence, duration of licence, bank guarantees required for licence, and time regulations for foreign performing artists. Law lays down criteria for classification of hotels and tourist establishments and allotting grades which may be altered if found necessary during technical and administrative inspection. Applicants for a licence as tourist guides must appear for tests to be conducted in knowledge of history, culture, ancient monuments, heritage, geography, social science, Arabic and at least one foreign language. Based on location of practice, tourist guide may be granted licence as a general tourist guide or regional tourist guide. Many real estate tourism projects are underway. This has also led to issuance of Law on Integrated Tourist Complexes [RD 12/06] permitting non-Omani individuals and companies to own land and build units for residential and investment purposes in areas designated by the Government as Integrated Tourist Complexes (“ITC”). Pursuant to this law, the Government grants usufruct rights to real estate developers over ITC land and obligations of developers are recorded in a development agreement. Most ITC projects have well-defined tourism, commercial and housing components.
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The Oman Law Digest 2009
NATIONALITY AND ALIENS
The Oman Law Digest 2009
ALIENS In general aliens have the same civil rights as citizens. Aliens are subject to Omani court jurisdiction as residents of Oman or if the cause of action arose in Oman. A non-Omani natural or corporate person cannot engage in commercial activity without obtaining a licence. Foreign natural persons must obtain a visa to enter and must obtain a permit to reside in the country. Visas for some nationalities are granted upon arrival. Others must obtain visas in advance. Local sponsorship is required for employment, family-joining and short-term visit visas. Local employers must obtain labour clearance from the Ministry of Manpower before employing a foreign employee. Based on labour clearance, an employment visa is granted to employees to enter Oman. Applications for visas for an employee’s spouse and children must be routed through the employer for sponsorship. CITIZENSHIP Omani citizenship may be gained: (i) by birth, if both parents are Omanis; (ii) by descent, for child of Omani father, regardless of child’s country of birth; and (iii) by naturalization, to women through marriage to an Omani, and by special decree for men. Foreigners may be granted citizenship by the Sultan for outstanding service to the State over a number of years. A foreign woman who marries a citizen of Oman is granted citizenship by registration after a few years of marriage and residency in the country. A foreign man who marries a citizen of Oman is not eligible for Omani citizenship. A child of an Omani mother and unknown or stateless father and a child of unknown parents are granted citizenship. Dual citizenship is not recognised but law does not specifically forbid acquisition of second citizenship. However, exercise of rights and privileges of second citizenship may result in divestment of Omani citizenship. Voluntary renunciation of Omani citizenship is permitted by law.
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The Oman Law Digest 2009
CIVIL ACTIONS AND PROCEDURE
The Oman Law Digest 2009
Civil cases are governed by Civil and Commercial Procedure Law [RD 29/02]. Omani citizens and residents are able to file cases in Omani court. Judicial Authority Law [RD 90/99] vests the authority to administer court systems in the Ministry of Justice with the exception of the Administrative and State Security Courts. Jurisdiction for deciding commercial disputes was earlier vested in an authority called The Authority for the Settlement of Commercial Disputes (ASCD). RD 13/97 designated the Authority as Commercial Courts. Judicial Authority Law [RD 90/99] which established the Supreme Court stipulates hierarchy of courts. The Supreme Court has appellate jurisdiction over all other courts. It has authority to review legal principles, review decisions of lower courts, and supervise judges in application and interpretation of law. A historical development in 2008 was the issuance of Evidence Law for Civil and Commercial Transactions for the first time [RD 68/08]. There are six Appellate Courts and 45 Primary Courts. Primary and Appellate Courts have commercial, civil, criminal, Shariah and labour circuits. Courts of first instance constitute the lowest rung of judicial hierarchy. Pursuant to Conciliation and Settlement Law [RD 98/05], parties to disputes may voluntarily seek mediation by conciliation committees before approaching court for redress. CRIMINAL CASES RD 92/99 established independent Prosecution Service and Public Prosecutor’s office in accordance with Basic Law. With exception of appeals to Supreme Court, all appeals in criminal matters must be filed within 30 days. Primary Court hears appeals from rulings made by court of first instance. Appeals over Appellate or Primary Court decisions are heard by five judge bench of Supreme Court. In case of death or life sentence, final petition for clemency may be made to His Majesty. Under the current system, the Public Prosecutor has offices in regional headquarters which brings cases before the criminal courts. There are two prisons in Oman where those convicted of serious crimes are sent. Prison Law [RD 48/98] requires that education and vocational training are given to prisoners and wages paid to those who are capable of work. Before release, prisoners who have served four years or more of their sentence are given rehabilitation training to reintegrate them into society. Juvenile Accountability Law was introduced by RD 30/08 to deal with juveniles committing acts punishable by law. The Law requires juveniles (aged between 9 and 18 years) to be tried in special circuits of the Primary Court in designated locations and convicted juveniles to be sent to reformatory. Extraditidn - RD 4/00 stipulates handing over of criminals to a country demanding extradition. Extradition of a person granted political asylum in Oman is excluded. Omani citizens are not permitted to be extradited. Death penalty - The Law of Criminal Procedures mandates that Courts of Appeals must refer to the Grand Mufti for religious opinion before awarding death sentences. Administrative court is administered by the Diwan of the Royal Court to review appeals against government and quasi-government administrative decisions. It has the authority to nullify administrative decisions and to award compensation. Appointments to Administrative Court are subject to approval of the Administrative Affairs Council, with the exception of the Court President and Court Deputy President, who are appointed pursuant to Royal Decree. State security court exercises jurisdiction over cases involving national security and criminal matters that require expeditious or especially sensitive handling. The Security Court procedures mirror closely those applicable elsewhere in the criminal system. Stare decisis became a feature of Omani law after the issuance of Judicial Authority Law [RD 90/99]. FOREIGN JUDGMENT Civil and Commercial Procedure Law [RD 29/02] requires that orders for enforcement of foreign judgment in Oman must be made only if certain conditions are satisfied: (i) the foreign court which issued judgment had jurisdiction to issue it in accordance with rules of jurisprudence of that country; (ii) the judgment is final pursuant to the law of that country; and (iii) it is not issued pursuant to fraud. An Omani court must also ascertain that: (i) the defendant was notified of the case and duly represented; (ii) the judgment is not inconsistent with any law in force or the judgment or order issued by an Omani court or with public policy; and (iii) the courts where the judgment/award is issued accept the enforcement of Omani judgments pursuant to the rule of reciprocity. In practice, due to the strictness of conditions, foreign judgments may be of evidentiary value only and matters may have to be litigated de novo in Omani court. LEGISLATURE Refer to Government and Legal System. Juvenile Accountability Law [RD 30/08] requires establishment of special circuits of Primary Court in designated locations. To settle disputes regarding jurisdiction of courts and enforcement of conflicting judgments, Law of Conflict of Jurisdiction and Provisions Authority Law was issued by RD 88/08.
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The Oman Law Digest 2009
ARBITRATION
The Oman Law Digest 2009
Oman is a signatory to the New York Convention of 1958 on enforcement of arbitral awards [ratified by RD 36/98]. Pursuant to Law of Arbitration [RD 47/97], jurisdiction of an Omani court is excluded in matters covered by written agreement for arbitration. Arbitral awards issued in or outside Oman (including those issued pursuant to the rules of international bodies such as ICC and UNCITRAL) are final and enforceable in Oman pursuant to a writ issued by the Primary Court upon an application for enforcement. An Omani court may nullify an arbitration award if: (i) there is no arbitration agreement or if such agreement is null or rescindable or has lapsed by limitation; (ii) one of the parties to the agreement is incapacitated or incompetent to enter into the agreement; (iii) one of the parties was not represented by reason of not being notified of arbitration or of appointment of arbitrator; (iv) the arbitrator has not applied the law agreed by the parties; (v) the arbitration is conducted or arbitrators are appointed in a manner contrary to Omani law or agreement between parties; or (vi) the arbitrator decides on issues not included in the arbitration agreement or exceeds jurisdiction.
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The Oman Law Digest 2009
BANKRUPTCY
The Oman Law Digest 2009
Under the Law of Commerce [RD 55/90], a commercial entity may be declared, by a competent court, as bankrupt or insolvent if: (i) its financial state is in disorder; and (ii) it has ceased to discharge its commercial debts. Bankruptcy may be ordered by court, suo motu, or upon application by the commercial entity or by an undischarged creditor. The court may appoint an administrator for debtor’s assets pending disposal of bankruptcy application. Under Commercial Companies Law [RD 4/74 as amended], a company may be liquidated if it has been declared bankrupt or there is a loss of all or most of its share capital. The court is empowered to appoint a liquidator upon application by a commercial entity or undischarged creditor. Judgment on the declaration of bankruptcy must be made public by publishing a summary of the judgment in the Official Gazette within two weeks from date of judgment and by entering it in the Commercial Register at MCI within 30 days following date of judgment. An interested party may appeal against judgment within 15 days from publication. After a declaration of bankruptcy, set-off of rights and liabilities in respect of individual creditors is not permitted unless there is a connection between them. Connection may be established if such entitlements and liabilities are attributable to one cause or in relation to one current account. All expenses of the administrator/liquidator, including compensation, must be paid from assets of judgment-debtor before any distribution is made to creditors by the administrator pursuant to the Law on recovery of Government debts [RD 32/94] which ranks creditors in order of priority as: (i) Government; (ii) Employees; (iii) Secured Creditors; (iv) Unsecured Creditors; and (v) Subordinated Creditors. As a general rule, secured and unsecured private debts are subordinate to debt owed to the Government even if the latter debt arose later and is not secured. The Government is generally known to give up its priority ranking in favour of employees. Enforcement is stated in the law to be by way of judicial sale or public auction which will transfer title to purchaser.
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The Oman Law Digest 2009
DOCUMENTS AND RECORDS
The Oman Law Digest 2009
ACKNOWLEDGEMENTS Documents executed in a foreign jurisdiction for official purposes in Oman must be duly notarised by a notary public and authenticated by the relevant foreign affairs department in that country and by the Omani embassy. A non-Arabic document must be translated by an officially approved translator in Oman before submission to a Government authority. NOTARIES PUBLIC Pursuant to Notary Public Law [RD 40/03], persons holding a bachelor’s degree in Shar or law from a Government recognised institution are qualified for appointment as notaries public. Notaries are well-versed in Shari’ah. Notaries are civil servants appointed by and under supervision of the Ministry of Justice.
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The Oman Law Digest 2009
EMPLOYMENT
The Oman Law Digest 2009
Omani labour law comprises Labour Law [RD 35/03] and various regulations issued as MD by the Ministry of Manpower (“MOM”) (together “Law”). Recent significant amendments [RD 74/06] include permission for formation of trade unions and regulations for strikes. Both Omani and expatriate employments in the private sector are regulated by Law. The Law provides for employment of Omanis to the maximum possible extent. For employing a foreigner, the employer must obtain prior labour clearance from MOM which is subject to conditions: (i) qualified Omanis are not sufficiently available for the relevant post; and (ii) the employer has achieved the minimum Omanisation percentage specified for its sector. Foreign employees must satisfy certain conditions: (i) must be professionally competent with requisite qualifications for the post; (ii) must comply with Foreigners Residence Law [RD 16/95]; (iii) must be medically fit; (iv) must have a contract with employer who has licence to do business; and (v) must have a work permit. The prescribed fee (currently, RO 100) for labour clearance is used for funding vocational training programmes for Omani employees. Sector-wise, long-term Omanisation targets were introduced by a series of MDs in 2003. These are regarded as mandatory, and exceeding the target percentage entitles employers to preferential treatment in expediting the process of getting labour permits for other foreign employees and in other dealings with Government authorities. Minimum benefits in the Law must be accorded to employees. Employer may provide more benefits but, in case of conflict in interpretation of benefit, the superior benefit prevails. An employment contract is required to be in writing and must include the names of employer and employee, employee’s date of birth, qualification, place of residence and nationality, job description, salary and notice period. In addition, the employee must undertake in the contract: (i) to abide by the terms and conditions of contract; (ii) to respect Islam, laws of country, customs and traditions; and (iii) to refrain from interfering in any activities prejudicial to security of country. If the contract does not provide for a duration, it is deemed to be for an indefinite term. For non-Omani employees, term of work permit (i.e., two years) would be deemed to be the contract term. Law permits, but does not require, a probationary period which may not exceed three months. Either party may terminate the contract during the probation period by serving seven day notice to the other party prior to the intended date of termination. Where a contract is for an indefinite term, any party may terminate by serving a 30-day notice (if wages are paid on a monthly basis) to the other party specifying reasons. Notice may be waived if compensation equivalent to employee’s wage for notice period is paid by the party waiving the notice. Upon termination, the employer must pay an end-of-service benefit calculated on the basis of half month’s last earned basic salary for each year of the first three years of service and one month’s basic salary for each of the following years. Employees must not work for more than nine hours per day and 48 hours per week. Actual working hours will be decreased during Ramadan for Muslim employees to six hours per day or 36 hours per week. Employees are entitled to annual vacation of 15 days upon completion of first year of service and 30 days for each year thereafter. The Law also regulates employment of women and juveniles, employment in mines and quarries, industrial safety, medical facilities, resolution of labour disputes, representative committees, transfer of employees, and penalties for violation of Law. Human Trafficking Law [RD 126/08] seeks to control human trafficking offences including intentional exploitation, illegal transportation, shelter or recruitment by coercion, deception or undue influence which carry a sentence of up to 15 years’ imprisonment and/or a fine of up to RO 100,000. A national committee to tackle human trafficking will be constituted. An independent Human Rights Commission was established pursuant to RD 124/08.
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The Oman Law Digest 2009
ENVIRONMENT
The Oman Law Digest 2009
Environmental and pollution control are the responsibility of the Ministry of Environment and Climate Affairs which recently bifurcated from the Ministry of Regional Municipalities, Environment and Water Resources pursuant to RD 90/07. The UN Environment Programme has cited Oman as a country with a good record in environmental conservation and pollution control. Oman has a whole body of environmental laws, principal among them being Law for Protection of Environment and Combating Pollution [RD 114/01]. This law imposes strict penalties for release of environmental pollutants and discharge of effluents in land and marine territory of Oman. The Environmental regime regulates, among other things, circulation and use of chemicals [RD 46/95]; marine pollution [RD 34/74]; air pollution from stationary sources [MD 5/86]; management of solid non-hazardous waste [MD 17/93]; management of hazardous waste [MD 18/93]; noise pollution in the work place [MD 80/1994]; waste water re-use and discharge [MD 145/93]; occupational health and industrial safety precaution [MD 19/82]; noise pollution in the public environment [MD 79/94]; disposal of commercial waste materials [MD 8/84]; and disposal of liquid effluents into the marine environment [MD 7/84]. Petroleum Law [RD 42/74] and Mining Law [RD 27/03] stipulate environmental standards for items covered by it and Civil Defence Law [RD 76/91] contains provisions relating to fire safety and environment. Petroleum Law stipulates that prior approval must be obtained to explore, exploit, extract, store or distribute oil and gas resources and to construct or install wells, extracting facilities, plants, separators, refineries, processing plants, pipelines, storage facilities, facilities for water supplies including boring for water, offshore platforms or other installations, sea and submarine loading facilities including facilities to or from the mainland, pumps and pumping stations, lighting and other facilities or works. Exemption from this Law could only be effected by RD. Concessions are granted to companies by RD for oil and gas exploration. The Law for the Control of Marine Pollution [RD 34/74] prohibits the discharge or release of pollutants from a ship, shore location or oil transport facility in Pollution Free Zones. RD 39/08 ratifies Oman’s accession to International Convention on Oil Pollution, Preparedness, Response and Cooperation 1990 which deals with emergency plans, reporting procedures, and national, regional and international response systems. All industrial projects must obtain preliminary environmental licence before commencing activity. An environmental impact study must be conducted on site and all measures to minimise pollution must be undertaken. Final environmental licence is granted after commencement of project upon being satisfied that project is compliant with all environmental regulations. Oman has ratified many international treaties on the environment including the Basel Convention on Transport of Waste and its cross-border disposal, UN Convention on Law of Sea, UN Framework Agreement on Climatic Change, Agreement on Biological Diversification, Convention on Marine Pollution, and UN Agreement on Prevention of Desertification in Countries Facing Severe Arid Conditions.
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The Oman Law Digest 2009
ADVOCACY
The Oman Law Digest 2009
Pursuant to Advocacy Law [RD 108/96 as amended), persons practicing advocacy must be independent; ensure delivery of justice; and uphold rule of law by safeguarding rights of clients. Lawyers must register in lawyers’ register at Ministry of Justice and obtain relevant licence. Legal practice includes: (i) appearing before courts, arbitration panels, and administrative committees; and (ii) providing legal advice. Lawyers may practice individually or in association with other lawyers. Only Omani lawyers are permitted to practice in courts. Omani lawyers may form, among themselves or with non-Omani lawyers, law firms as juristic entities. Names of such entities may be derived from names of partners. Persons holding public office or attached to companies are not permitted to practice. Extensions were granted periodically for compliance with legal requirements relating to bar on non-Omani lawyers practicing in courts and on Omani lawyers practicing in courts for holding public posts or being attached to companies. RD 78/08 extended the deadline for compliance to 31 December 2008. However, RD 140/08 restored the status quo ante by extending time for compliance by vesting the discretion on Council of Ministers to announce a future date.
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The Oman Law Digest 2009
TREATIES AND CONVENTIONS
The Oman Law Digest 2009
Oman acceded to the WTO in 2000 and is in the process discharging its liberalisation commitments. Oman is a signatory to double taxation treaties with a number of countries. It has entered into investment protection agreements with several countries. It is a signatory to International Centre for the Settlement of Investment Disputes 1965; 1958 New York Convention on Recognition and Enforcement of Foreign Arbitral Awards; Convention on the Elimination of All Forms of Discrimination Against Women 1979; Convention on Eradication of Racial Discrimination; UN Agreement on Registration of Ships; Paris Convention for Protection of Industrial Property; Berne Convention for Protection of Literary and Artistic Works 1971 and 1979; International Convention for the Prevention of Pollution from Ships 1973, as modified by the Protocol of 1978; World Intellectual Property Organisation Conventions. The United States of America and Oman entered into a Free Trade Agreement (“FTA”) on 19 January 2006 as part of the US strategy to create the Middle East Free Trade Area (MEFTA) by 2013. It is a comprehensive pact designed to eliminate tariffs and barriers and expand trade between both countries. Oman is the fifth Middle Eastern country to have negotiated an FTA with the United States. Effective 1 January 2009, the US-Oman Free Trade Agreement came into force. All consumer and industrial products traded between the US and Oman will now be tax-free. As a result, residents in Oman can expect lower prices on US consumer and industrial products. Similarly, Omani companies seeking to do business with the US will now have open access to the world’s largest economy. In addition to eliminating its tariffs on US products, Oman will provide substantial market access across its entire services regime, provide a secure, predictable legal framework for US investors operating in Oman, provide for effective enforcement of labour and environmental laws, and protect intellectual property. The US has an FTA with only one other GCC country (Bahrain), although more are expected in upcoming years. It remains to be seen how current Omani procedures will adapt to the provisions of the FTA, but it is clear that the FTA will encourage strong economic relations between the US and Oman. Two-way goods trade between the United States and Oman was US $748 million in 2004. US goods exports to Oman in 2004 totaled US $330 million. Oman’s accession to the WTO in 2000 and the 2004 US-Oman bilateral Trade and Investment Framework Agreement (TIFA) paved the way for a robust economic dialogue on promoting closer economic ties, freer trade, greater openness, a stronger investment climate, and economic reforms. FTAs were also signed by the US with Jordan, Morocco and Bahrain in the Middle East.
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The Oman Law Digest 2009
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