Many corporate entities in Oman are increasingly turning to arbitration to resolve their disputes as opposed to court litigation.
Arbitration is considered to be an efficient and reliable mechanism for dispute resolution for various reasons. The main factor is that an arbitral award is usually rendered in Oman within 12 months of the aggrieved party stating in writing that a dispute has arisen.
In contrast, court processes can often be lengthy, particularly where technically complex issues are involved.
The fact that cases normally go through three tiers of justice (Primary, Appeal and Supreme) in any event naturally means a longer process.
The Omani Arbitration Law (Royal Decree 47/97 as amended) defines the term “Arbitration” as a dispute resolution mechanism agreed to by parties of their own volition. Usually, the parties will state in their initial contract that any dispute will be resolved by arbitration pursuant to, for instance, Omani Arbitration Law. The Law mandates that an arbitration agreement should be in writing.
It is also permissible for parties to agree in writing, once a dispute has arisen, that it will be resolved by arbitration. In such cases, however, the agreement has to specify the underlying issues that the parties have agreed to resolve by arbitration.
In all cases, an agreement to resolve a dispute by arbitration should set out:
- the number of arbitrators
- the arbitral procedure (eg Omani Arbitration Law)
- the venue of the arbitration
- the language of the arbitration.
However, an agreement to resolve a dispute by arbitration does not entirely rule out the involvement of the Omani Courts.
For instance, if the parties cannot agree upon the identity of the arbitrator(s), the Court will make the appointment.
Equally, if a party is dissatisfied with an arbitral judgment, they can apply to the Omani Courts – in very limited circumstances – to seek nullification of the award. However, to the best of our knowledge, the Omani Courts have never nullified an Omani arbitral award.
Oman is a signatory to the 1958 New York Convention on Recognition and Enforcement of Foreign Arbitral Awards. This means that an Omani arbitral award should be enforced in another signatory state, and vice versa, although the process may not be as straightforward as one would hope.
In short, arbitration in Oman may lead to a much quicker resolution of a dispute. An Omani arbitral award has the same force as a final, non-appealable court judgment, and the Omani Courts will enforce an arbitral award, subject to the losing party’s right to seek nullity of the award, as referred to above.
