Wednesday, November 6, 2013

Dispute Resolution In Oman - Options & Tips

In this two-part article we will firstly discuss the options for handling disputes in Oman, and then next month we will offer important tips for efficient and successful dispute resolution.

Part 1: Options of dispute resolution in Oman

1. Dispute resolution through the courts

The Omani commercial courts are structured into a three-tier hierarchy:

  • The Court of First Instance (known as Primary Court) deals with civil and commercial cases, applications for appointment of arbitrators for arbitration, personal status cases and general, labor, tax, tenancy and other cases within its wide jurisdiction;
  • The Court of Appeal deals with appeals against rulings delivered by the Primary Court and hears matters “de novo” or afresh, reconsidering all evidence and submissions put before it; and
  • The Supreme Court, which is the highest court in Oman, deals with appeals against Court of Appeal decisions, and also with disputes over the extent to which laws and regulations comply with the Basic Law of the State and its provisions. An important difference between the Supreme Court and the Appeal Court is that the Supreme Court does not hear matters “de novo” but instead only rules on issues of law and procedure.
There are also Administrative Courts in Oman which rule on administrative disputes, such as cases filed against government departments. It is possible to pursue claims before both the Administrative and the Commercial Courts in parallel.

A. Jurisdiction of courts

Articles 36 and 37 of the Civil and Commercial Procedure Code (Royal Decree No. 29 of 2002) deal with jurisdiction and provide:
  • Where the value of the proceeding is less than RO 70,000 (approximately US$182,000), it is dealt with by one judge in the Primary Court.
  • Where the value of the proceeding is more than RO 70,000 or involves bankruptcy, composition of creditors, insurance cases, disputes over market securities, or intellectual property and patents, the claim is to be dealt with by a three-judge panel in the Primary Court.

B. Time limits for bringing claims

Time limits for bringing different types of claims vary greatly, and it is essential to get legal advice on applicable time limits at the earliest. As per the Commercial Law (Royal Decree No. 55 of 1990) the following is a summary of some key time limits:
  • As per Article 213, in case of damage to goods, a consignee must submit his claim to the carrier not later than seven days from the date of delivery.
  • As per Article 173, in cases where the goods are delivered without reservation, the right to seek recourse against the carrier due to damage, partial destruction or delayed arrival shall lapse unless the consignee proves the condition of goods and files a case against the carrier within 30 days from the date of delivery.
  • As per Article 118, in case of a claim arising from a guarantee, the limitation for any defect is one year from the date of delivery of the item sold, unless a guarantee for a longer period has been given.
  • As per Article 514, claims arising under a bill of exchange against an acceptor (i.e., a party who accepts to pay the bill of exchange in accordance with the terms of his acceptance to the holder), shall lapse after three years from the maturity date.
  • As per Article 157, claims arising from a contract for the carriage of goods or persons or a contract of carriage commission agency must be brought within one year.
  • As per Article 92, the limitation period for the obligation of merchants towards each other in relation to their commercial activities shall be ten years as from when the date for performance of such obligation lapses (unless the law provides for a shorter period).
  • The Engineering Consultancy Law (Royal Decree No. 120 of 1994) provides that where an engineering consultancy office’s scope of work is restricted to design, and does not include supervision or execution, any claim against the Engineer must be brought within three years from the time of discovery of the defect.
  • As per the Oman Labour Law (Royal Decree No. 35 of 2003), an employee’s right to bring an action shall lapse after one year of the event that gave rise to such an action.

2. Dispute resolution through arbitration

Arbitration is a voluntary method of dispute resolution. The Omani Arbitration Law (Royal Decree No. 47 of 1997) governs arbitration procedures, enforcement of arbitration awards and provisions relating to the limited rights of appeal. For an arbitration agreement to be effective and binding, it must be in writing, and it must state the language of arbitration, the number of arbitrators, location/place of arbitration and the applicable law governing arbitration. Arbitration awards properly issued have a final and binding force in Oman, and are generally enforceable.

On the basis that Oman is a signatory to the 1958 New York Convention on Recognition and Enforcement of Foreign Arbitral Awards, it is expected that international arbitral awards (those obtained in other convention member jurisdictions) can be enforced in Oman.

3. Dispute resolution through conciliation and settlement

Pursuant to the Conciliation and Settlement Law (Royal Decree No. 98 of 2005), parties may refer a dispute to the Committee for Conciliation and Settlement by submitting an application, free of charge, before a reference is made to the courts. The Committee shall attempt to settle the dispute within 60 days from the date of application to the Committee; however, this period may be extended for a further period of not more than 30 days upon the agreement of parties. If settlement is achieved the Committee will prepare a report to be signed by all parties, which then can be enforced in the same manner as a final judgment of a court. Parties to a dispute are also free to explore mediation themselves, through the appointment of a professional mediator.

Next month we will discuss practical tips for managing disputes both before and during proceedings.