Sharia Law in Oman

Companies that are new to Oman often ask us about Sharia law (Islamic religious law) and its influences on Omani law. This article provides a brief introduction to Sharia law and highlights some key points that companies doing business in the Sultanate should bear in mind.

What is Sharia law?

Sharia law is the divine law of Islam. The Arabic word sharia literally means ‘way’ or ‘path’.

Traditionally, there are two primary sources of Sharia law. The first is the Qur'an, the holy book of the Islamic religion. The second is the Sunnah, which records the sayings and deeds of Islam’s founder, the Prophet Mohammed.

In addition to these two primary sources, Islamic jurisprudence (figh) recognises a number of secondary sources, which may include consensus analogical deduction and reasoning by religious scholars. As there are a number of schools of Islamic jurisprudence, the selection, weight and prioritisation of secondary sources vary across Islamic religious communities.

How does Sharia law influence Omani law?

In principle, Sharia law is the bedrock foundation for all Omani law. The Basic Law of the Sultanate of Oman (Sultani Decree No. 101/1996), which serves as a form of national constitution, sets forth the fundamental principles which guide the Sultanate’s laws and policies. In Article 2, the Basic Law states that “The religion of the State is Islam and the Islamic Sharia is the basis of legislation”.

At a practical level, however, Sharia law in Oman is manifested principally in family law matters such as marriage, divorce and inheritance (Miraath). In family law, Sharia law actively governs and all matters are carried out strictly in accordance with Sharia principles.

When it comes to the Omani law governing commercial matters, however, Sharia law typically supplies guiding background principles rather than specific rules.

Indeed, Article 5 of the Law of Commerce (Sultani Decree No. 55/1990) provides that the following hierarchy – placing Oman’s explicit commercial law provisions at the top – shall apply to commercial transactions:

“If there is no legal provision then custom shall have effect and special or local custom shall take precedence over general custom. If there is no custom then the provisions of the noble Islamic Shari’a shall apply, and after that the principles of equity.”

A number of Omani Supreme Court decisions, the latest of which was issued in 2008, have confirmed that the role Sharia law plays in commercial transactions is different to that which it plays in other areas such as family law. In commercial matters, Sharia law will typically not come into play, except perhaps to fill in gaps among the explicit provisions of Oman’s commercial laws.

What does Sharia law mean for businesses in Oman?

The main takeaway for businesses is that Oman takes a strictly Sharia-based approach to family law matters, but takes a more secular and capitalistic approach to most commercial law matters. This means that Omani companies are usually free to follow standard international commercial practices without restriction from Sharia law. For example, while other countries may require the use of traditional Islamic financing methods such as Sukuk, Murabaha and Mudharaba, Oman typically does not require this.

The key caveat, however, is that businesses should be mindful of areas where family law can intersect with commercial law. The prime example of this is that inheritance issues – a family law matter adjudicated by Sharia law – can affect a company’s succession planning or shareholder composition. Navigating these intricacies is yet another way in which legal professionals can assist companies in crafting their corporate structures.