In the first part of this article, we reviewed how a foreign company considering doing business in Oman can (and should) gather basic information on proposed clients, agents and business partners. This second part provides a brief outline of basic searches an Omani company should undertake when doing business with a foreign company.
Most countries have online commercial registry records that can be accessed and allow documents to be downloaded either for free or for a small fee. The first step is to identify the official website of the registry as opposed to private companies providing the same service at a premium. By way of example, if you are looking for information on an English company, Companies House (the beta service can be found at https://beta.companieshouse.gov.uk/) publishes an overview, the full filing history and details of the officers of each company.
The documents filed, which include annual returns, can be viewed or downloaded for free and will provide useful background information on the company. Also, you will be able to confirm whether the company representative with which you are interacting is officially authorised to act on behalf of the company.
A similar system is available in Australia and Italy. Access to the documents is subject to a fee payable online starting at as little as €4 and subject to (free) registration on the website. Wikipedia publishes and updates from time to time a list of the existing registries (https://en.wikipedia.org/wiki/List_of_company_registers) and is a useful starting point to identify the relevant registry. If the target company is registered in the United States of America, please note that you will need to consult a state-specific registry or, alternatively, for public companies you may utilise the search options provided by the U.S. Securities and Exchange Commission (https://www.sec.gov/edgar/searchedgar/companysearch.html). The website includes a guide and a tutorial on how to perform efficient searches. Generally and in most jurisdictions, listed companies are subject to disclosure requirements and there is a wealth of information available. Often useful documents can be found on the official website of the company in the “Investors’ Information” section.
Whenever the potential foreign partner does business in a regulated sector such as finance, banking or legal services, it likely will have to be registered with a regulator. It is often possible to consult the regulator’s registry to confirm that the proposed partner is duly registered and in good standing. Examples of such regulators include professional associations and financial conduct authorities.
Check the press: in many countries it is customary to disclose names in connection with court proceedings. The local press in the country/area of operations of your proposed business partner may have reported on the company or its officials. Any online translation tool will allow you to understand the general sense of a newspaper article regardless of its original language. In the past year, on three separate occasions, a simple internet search showed that a foreign individual who approached an Omani business person/company to propose a joint project or an investment had previous convictions for fraud or financial crimes in his home country or elsewhere. In one specific instance, the fraud that led to conviction in the home country had a structure identical to the business proposition presented to the Omani business man. Always remember that “if it’s too good to be true, then it probably is” or, in other words, be wary of people or situations that offer a large benefit for very little in return.
Check the proposed partner’s website, use scam alert and similar websites to search company names and persons’ names and to verify who owns the website/domain and for how long it has been registered.
Finally, when you are reasonably satisfied that the foreign company/individual you reviewed appears to satisfy the requirements for being a reliable business partner, ensure that you acquaint yourself with the basic rules applicable to foreigners doing business in Oman.
For instance, if you are planning to set up a limited liability company, the foreign corporate partner must be registered in the country of origin for at least three years (ten years if the project involves the establishment of a consultancy company). In foreign participated companies, requirements apply also to the Omani partner, in particular with reference to the financial status. Verify whether you, as local partner, and the prospective business partner, as foreign partner, actually qualify with respect to the requirements of the specific activity you are considering.
Evaluate whether you wish to be involved directly as an individual partner or through a corporate entity you may establish and, if the latter appears preferable, review the financial and compliance requirements applicable to the corporate vehicle.
Finally, consider the level of involvement you are planning to have in the business and the degree of liability and financial commitment that you are willing to take on.
Click here to read Know your Business Partners - Part I: Basic Due Diligence Tips
Monday, June 18, 2018
Know your Business Partners - Part II: Basic Due Diligence Tips
Monday, June 4, 2018
Arresting a Vessel in Oman
Introduction
Oman has five ports: Al-Duqm Port, Sohar Port, Sultan Qaboos Port, Khasab Port and Salalah Port, all of which have been receiving an increase in traffic in the last several years. Given the numerous ports and Oman’s strategic position in the Gulf, there are a considerable amount of vessels that pass through Oman’s ports every year. In light of the number of vessels that visit Oman’s ports, it is worthwhile to consider the procedures involved in arresting a vessel.
The process
In order to arrest a vessel (also termed obtaining an attachment order), the vessel must physically be in an Oman port (1), and not ready to sail from the Omani port.
Often, it is beneficial to approach a court to obtain the arrest order on an ex parte basis (where notice is not given to the ship owner/ charterer) just prior to the vessel arriving in Oman. If the vessel owner or charterer is aware that there is a precautionary attachment issued against the vessel in Oman, the vessel will likely avoid calling to port in Oman. In Oman, it is possible to approach a court to obtain the arrest order without having first issued a proceeding against the vessel owner, provided a proceeding (with formal pleadings) is issued within 10 days of the arrest order being granted.
Security/bond
There are several key points to note that relate to security and the arrest of a ship. The first is that prior to a court issuing an arrest order the court will request security or bond from the party applying for the arrest. The amount of security required can vary and is determined by the court at its discretion. The second point in relation to security is that after the arrest of the vessel, if a bank guarantee or other form of security is provided by the ship owner, the court is obliged to release the ship (2). Finally, if the arrest of a ship is found to have been without legal basis, the party that had the ship arrested may be ordered to pay compensation to the ship owner (3).
The right to arrest
Under Omani law an application for the arrest of a vessel must be made to a relevant circuit judge of the Primary Court. The relevant court is the court at the port where the ship is berthed.
An application for arrest will be filed in accordance with Articles 190 and 191 of the Civil and Commercial Procedures Law, which provides that a court is competent to give provisional relief in the form of an injunction. Further, Article 187 of the Maritime Law provides that a precautionary attachment may be imposed on vessels by marine mortgage creditors.
In order to establish that a party is a marine mortgage creditor, that party needs to establish that the marine debt is a claim of right arising out of one of the following:
1. Damage caused by the vessel following a collision or other reason.
2. Loss of lives or physical injuries caused by the vessel, or which originated from her utilisation.
3. Aid and rescue.
4. Contracts for utilising or chartering the vessel under a charter party or other contract.
5. Contracts for the carriage of goods under a charter party, bill of lading or other.
6. Complete loss or damage of goods and luggage carried by the vessel.
7. General average (i.e., the apportionment of financial liability for the loss arising from the jettisoning of cargo by dividing the costs among all those whose property (ship or cargo) was preserved by the action).
8. Towage of vessel.
9. Pilotage of vessels.
10. Supply of equipment and tools which are necessary for the vessel’s utilization or maintenance.
11. Building, repairing and equipping of the vessel as well as the expenses incurred therein while in docks.
12. Wages of masters, officers and seamen and others who work on the vessel under articles of agreement.
13. Sums expended by the master, shippers, charterers or agents for the vessel’s account.
14. Dispute over the ownership of a vessel or dispute over single ownership.
15. The rights in the profits resulting from her utilisation.
16. Marine mortgage, especially every mortgage the origin of which enables the applying of limitation of liability of the owner or her husband (an agent on land representing the owner of a ship, who attends to the ship’s provisioning, repairing, and general management).
The above is considerably expansive and permits various parties to apply for the arrest of a ship in Oman.
Sister ship arrest
If the ship that a party wishes to arrest does not frequently call port in Oman, an alternative remedy to arresting the ship is the arrest of a sister ship. Article 189 of the Maritime Law provides that a vessel to which the debt relates may be arrested, and any other vessel on account of the same debt provided the other vessel was also “owned” by the same owner as the first vessel at the time the debt arose.
Article 190 of the Maritime Law provides that, if the vessel has been chartered out to a charterer who was given the right of navigational management and was solely responsible for a marine debt relating to the vessel, the creditor may impose attachment on this vessel or on any other vessel owned by the charterer himself. In the case of a charterer being solely responsible for the ship, attachment may not be imposed on any other vessel owned by the owner of the ship in accordance with Article 189 above, only other vessels owned by the charterer.
Concluding remarks
In light of Oman’s geographic position in the Middle East and the number of ports in Oman, as well as amenable laws relating to arresting vessels, parties should evaluate Oman as a viable option as a jurisdiction in which to take action when they are considering arresting a vessel.
Footnotes:
(1) Article 191 of the Maritime Law.
(2) Article 192 of the Maritime Law.
(3) Article 377 of the Civil and Commercial Procedures Law.
