Offset Obligations Under the Oman Authority Of Partnership For Development

The Oman Authority of Partnership for Development (the “Authority”) was established by RD 9/2014 and is affiliated with the Ministry of Commerce and Industry (“MOCI”). It was set up to ensure that offset obligations are applied to all large civilian and military procurement contracts with foreign companies and Omani companies where foreign content is involved. These offset obligations are applied through the Partnership for Development (“PFD”) program established by the Authority. Various other offset programs linked to large military procurement contracts have been applied successfully by other GCC member States for decades, including notably in the UAE and Saudi Arabia. They have also been used successfully by other countries including but not limited to Turkey, The Netherlands, Spain, Morocco and Indonesia.'

What is an Offset Obligation?

Offsets span a range of compensation arrangements required by a foreign government as a condition for the purchase of defence or civilian goods or services from a foreign supplier. The arrangements are usually wide ranging such as investments in local industries, local production requirements and various joint ventures. When countries spend a large part of their government budget buying defence equipment from foreign suppliers or awarding mega infrastructure projects, they demand that the suppliers enter into offset agreements in order to gain economic benefits from their expenditures.

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Choosing Your Arbitration Rules

As many readers would be aware, on 23 November 2015, Peter Wolrich, Partner, Curtis Paris, and Jean- Claude Najar, Counsel, Curtis Paris presented a publication titled “ICC International Arbitration Toolkit: How to run a cost-effective and time-efficient arbitration.”

The speakers are well qualified to speak on the publication, given their extensive involvement with the ICC. For those that were unable to attend, the publication provides practical tools and tips for making time-efficient, cost-effective decisions at key points in a dispute, from pre-arbitration through settlement considerations to the hearing itself.

One question from the audience was in relation to choosing the type of arbitration one might specify in a contract. As the panel explained, appointing bodies charge fees on different bases, and this may be a factor in any decision made. For example, the costs payable to arbitrators and the ICC in relation to arbitration in accordance with the ICC Arbitration Rules will be calculated primarily based upon the amount in dispute. On the other hand, the costs payable in relation to an arbitration in accordance with LCIA rules will be determined using hourly rates. Hence, it may ultimately be cheaper to have a complicated construction dispute decided via the ICC Arbitration Rules, whereas it may be cheaper to have a straightforward claim decided via the LCIA Arbitration Rules.

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