Similar
to what is commonly referred to as a “tort” claim in many common law
jurisdictions, Omani law principally recognises a party’s right to bring a
commercial claim against a non-contracting party.
Specifically,
it is an established principle in Omani law to allow a party to pursue a claim
against a non-contracting party when an exchange or incident, and the resultant
claim, involves only two entities. However,
in scenarios involving three parties, a party’s right to bring a claim against
its non-contracting party may differ, particularly in construction
contracts.
This
article will explore the circumstances under which a party is legally permitted
to bring a claim against a non-contracting party. It will also explore the circumstances in
which it is impermissible for a party to bring a claim against a party with
whom its relationship is not rooted in contract.
The
right to file suit against a non-contractual party in a two-party transaction
The
right to sue a non-contracting party, in scenarios involving two parties, was
confirmed by the Supreme Court in its judgment number 160/2008. In this case the Supreme Court held that a
party may bring a claim against a non-contracting party seeking recompense for
actual and reasonably foreseeable losses when its losses arise from a “wrongful act” or “harmful act.” The Supreme
Court further explained that “the basic
rule followed in law is that anything done or said which causes harm to any
other person is deemed to constitute a failure to observe the legal obligation
incumbent upon all men not to inflict harm on any other person without lawful
cause.”
Naturally,
the Supreme Court’s position is consistent with what was established by the
Omani legislature in 2013 in the Omani Civil Code (“Civil Code”), promulgated by Royal Decree 29/2013. Article 176 of the Civil Code, which is
located under the chapter titled Harmful Acts, provides that a party shall be
liable for “any harm to others” –
that is, irrespective of whether the two parties have a contractual
relationship.
Very
importantly, the facts presented before the Supreme Court in Case No 160/2008
involved only two parties. As we discuss
below, the right to sue a non-contractual party in scenarios involving three
parties may be different under Omani law.
The
right to a sue a non-contracting party in scenarios involving three parties
Under
Omani law, a party may be precluded from bringing a claim against a
non-contracting party, specifically in commercial transactions involving three
parties. A common example in which this
scenario arises is with construction-related contracts – such as when an
employer (or project owner) has a contractual relationship with only a main
contractor, and a sub-contractor also only has contractual relationship with the
same main contractor. Thus, although the
employer and sub-contractor are both involved on the same transaction, they do
not have a contractual relationship with one another; rather, both the employer
and sub-contractor have mutually exclusive contracts with a third-party
intermediary, the main contractor.
In
the event that a sub-contractor believes that an employer’s conduct has caused
the sub-contractor to sustain damages, the sub-contractor does not have the
legal right to bring a claim against the employer under Omani law. Again, this is irrespective of whether the
sub-contractor considers the employer’s ‘harmful’
or ‘wrongful’ acts to be a direct
cause for it having sustained losses. The
sub-contractor’s only right of recourse will be against its own contractual
counterparty, the main contractor; not the employer.
This
principle has been established by case law, most notably by the Supreme Court
in Case No 364/1994. Therein, the
Supreme Court stated that the “general
principles of independence of privity” precluded a sub-contractor from
bringing a direct claim against the employer. In other words, the lack of a contract between
the employer and the sub-contractor meant that the sub-contractor could not
bring a direct claim against the employer.
The
Supreme Court’s position set out in its 364/1994 decision has also been
confirmed by the Civil Code. Article 645
of the Civil Code provides that “a
sub-contractor shall have no claim against the employer for anything due to him
from the first contractor….” Thus, a
sub-contractor’s right for recourse is limited to claims only against its
contractual counterparty, the main contractor.
Recoverable
damages against non-contracting third parties
As
discussed above, a party will be generally precluded from seeking recompense
from a non-contracting party in commercial transactions involving three
parties. However, a party may be able to
recover damages from a non-contracting party in scenarios or transactions
involving only two parties.
Notwithstanding
this, the amount of recoverable damages will be limited to actual, provable
losses sustained, together with reasonably foreseeable losses. Further, a claimant must demonstrate a direct,
provable nexus between the losses incurred and the amount of compensation in
which he seeks.
In
its 65/2003 decision, the Supreme Court stated that all recoverable losses must
be ‘direct’ and ‘natural’ arising from the alleged harmful or unlawful act. Further, Article 181 of the Civil Code states
that a party’s compensation for losses arising from a harmful act “shall be assessed on the basis the amount of
harm suffered by the aggrieved, together with loss of profit, provided that
that is a natural result of the harmful act.”
