Tuesday, December 18, 2012

Settlement Talks and Negotiations

A little-known fact of Omani law is that the jurisdiction has no concept of “without prejudice” negotiations. Interestingly, despite this fact, lawyers and/or litigants in the Sultanate do sometimes have “off the record” discussions with a view to a possible settlement. This normally happens when there is a high level of trust between the lawyers or litigants in question.

The problem, however, is that either lawyer or litigant could then write to his or her counterpart, thanking the latter for the offer which had been made. This may lead to a scenario where the Omani Courts are asked to infer that an admission of liability has been made.

In other jurisdictions, it is accepted that parties sometimes make a settlement offer even when they believe they are not liable at all. The offer might be made simply to negate the management time and lawyers’ fees otherwise incurred. When offers are made in this way, they are often termed “nuisance value offers”.

For claimants, the position is somewhat easier than for defendants. Under Omani law, the losing party in a court case is unlikely to have to pay more than RO 100 towards the winning party’s legal costs. This means that claimants can claim a large amount and, if their claim fails, they suffer hardly any impact. However, the situation is naturally somewhat different if the defendant files a sizeable counter-claim, because this could lead to the claimant having to pay a large sum to the defendant. 

Claimants can also feel comfortable in Oman sending a letter which contains their time-limited offer to settle. They can write to the counter-party, saying that they have a claim of, say, RO 750,000, but adding that they will accept RO 500,000 provided the latter sum is received within, say, 21 days of the date of the letter. The Claimant will also state in the letter that the time-limited offer constitutes a mere suspension of their full legal rights, and that they will revert to claiming the full RO 750,000 if the RO 500,000 is not paid within the requisite 21 days.

To conclude, extreme care must be taken in Oman as regards settlement talks and negotiations. This is of course especially true when the quantum of the claim is high.