Wednesday, October 5, 2016

Extending the Period of Arbitral Proceedings in Oman

Arbitration is one of the most popular types of alternative dispute resolution methods used by parties to resolve a dispute, both in the private and public sectors in Oman.  An often-cited reason for selecting arbitration is to reach a final resolution of a dispute in a timely, inexpensive and less formal manner.

Under the Omani Arbitration Law issued by Royal Decree 47/1997 (as amended), Article 4 defines “Arbitration” as the arbitration agreed upon by both parties to the dispute at their own free will, irrespective of whether the body that would be attending to the arbitration proceedings, in accordance with  the  agreement  between  the  parties,  is  an  organization,  a  permanent  arbitration  centre,  or otherwise.

To  ensure  that  disputes  are  resolved  expeditiously,  the  Omani  Arbitration  Law  (Sultani  Decree
47/1997) sets time limits within which an award must be issued.

Per Article 45 of the Omani Arbitration Law, the arbitral tribunal shall have to pass a final award in respect of a dispute within the time period agreed upon by the parties.  Article 45 further says that if the parties fail to agree on the timeframe for adjudicating the dispute, then the award shall be required to be passed within 12 months from the date of commencement of the arbitration proceedings.

Once an arbitrator is appointed, for the purposes of these timeframes, the commencement date of the arbitration proceedings can either be a date agreed between the parties in an arbitration agreement, or a date determined by the arbitral tribunal (in which case it will often be the date of service of notice of arbitration by one party to the other party).

Period of extension under Oman Arbitration Law

If the dispute is not settled by the arbitral tribunal within the initial timeframe described above, Article 45 of the Omani Arbitration Law allows the arbitral tribunal to extend the period of the arbitration proceedings for a further period of six months from the date that the initial arbitration period expired. The arbitral tribunal’s decision for an extension of a further period of six months must be in writing.

However,  parties  to  a  dispute  must  keep  in  mind  that  any  further  extension  of  the  period  for arbitration proceedings beyond the above-referred six months requires consent of the parties as per Article 45 of the Omani Arbitration Law.

Article 45 (2) of the Omani Arbitration Law says that if the arbitration award has not been passed within the period specified above, either party to the arbitration may request the President of the Commercial Court to pass orders prescribing an additional period or have the arbitration proceedings brought to an end. In such a case, either party may file their claims before the competent court.

If the arbitration award is not issued within the initial timeframe plus the six-month extension period, the parties should send written notice to the Arbitrator requesting a further extension of the arbitration period proceedings.  This must occur before the initial arbitration period plus the six-month extension period expires.  In this way, the parties can avoid the premature closure of the proceedings, or an application to the courts.

In summary, the most important points to note are:

  • clearly record the date of commencement of the arbitration proceedings in writing at the start of the arbitration; and
  • both parties should communicate their consent for an extension beyond the initial arbitration period  plus the six-month extension  period  before  expiration  of the extension  period  to the arbitral tribunal.