Omani Arbitration Law: Time for a Change?

Domestic and international arbitrations conducted in Oman are governed by the Law of Arbitration in Civil and Commercial Disputes, Sultani Decree 47/1997 as amended (the “Oman Arbitration Law”).  While the Oman Arbitration Law incorporates some aspects of the Model Law on International Commercial Arbitration adopted by UNCITRAL (the “UNCITRAL Model Law”), overall it is not harmonised with the UNCITRAL Model Law or with other arbitration laws in the region.  Given recent developments in other GCC countries, specifically the UAE, it may be beneficial for Oman to consider commensurate reforms to its arbitration regime.

In May 2018, the President of the UAE issued a new arbitration law expected to be published imminently as Federal Law No. 6 of 2018 on Arbitration (the “UAE Arbitration Law”).  The UAE Arbitration Law repeals Articles 203 to 218 of the UAE Civil Procedure Code (Federal Law No. 11 of 1992) previously applicable to arbitration, and any other provisions contrary to the UAE Arbitration Law.  This new law is noteworthy because it is a direct adaptation of the UNCITRAL Model Law, thereby modernising the regulatory framework governing UAE arbitrations.  Because the UNCITRAL Model Law is intended to assist states in reforming and modernising their laws in a uniform matter that takes into account the features of international commercial arbitration, states that adopt or adapt the UNCITRAL Model Law make themselves more attractive to investors.

On the whole, the UAE Arbitration Law brings the country in line with international commercial arbitration norms.  For example, the new law enumerates limited grounds to annul an arbitral award, and provides for the authority of an arbitral tribunal to rule on its own jurisdiction.  While Article 22 of the Oman Arbitration Law does permit an arbitrator to rule on the question of his or her own jurisdiction, currently in Oman the courts have broad and unspecified powers to nullify an award if it conflicts with an earlier decision passed by the Omani courts or if the award contains terms which contravene public policy, among other grounds.

Another welcome change brought by the UAE Arbitration Law is its flexibility regarding the formalities of an agreement to arbitrate.  While it does preserve the requirements under the previous law for an arbitration agreement to be in writing and to be entered into by a duly authorised representative of each party, the UAE Arbitration Law is not as prescriptive in respect of these two conditions.  For example, the new law permits the incorporation by reference in any commercial contract of any document containing an arbitration clause (e.g., general terms and conditions) as sufficient to constitute an arbitration agreement.  In contrast, Articles 2 5 of the Oman Arbitration Law prescribe quite specific requirements which must be met before there is considered to be an agreement to arbitrate.  Specifically, the arbitration agreement (which must also be in writing and entered into by duly authorised representatives) must be specific to the dispute between the parties and must identify the venue, procedural rules, and applicable law in order to be valid.  This may ultimately result in fewer agreements to arbitrate being honored under the Oman Arbitration Law than may be intended by the parties.

Perhaps the most significant reform under the UAE Arbitration Law relates to the enforceability of UAE arbitration awards.  Under the new law, the procedure to enforce an arbitration award in the UAE has been simplified and shortened.  Enforcement proceedings commence directly at the appellate level, rather than at the first instance level.  In Oman, as per Article 47 of the Oman Arbitration Law, parties seeking to enforce an award file an application at the enforcement department of the primary court, and the application is subject to obstacles and delays at several levels of court examination.  One potential obstacle includes the nullification of an arbitral award as per Article 53 of the Oman Arbitration Law, which contains several grounds upon which a challenging party may rely.  Separately, under Article 363 of the Civil and Commercial Procedures Law (Sultani Decree 29/2002), a challenging party may also seek an Istishkal, or a temporary action that any party to a court judgment or arbitral award can seek, with the result of further delaying payment of the award amount.  An Istishkal also results in a delay of enforcement, as the enforcement process may only commence or resume once a final decision is rendered on the Istishkal.

One change introduced by the UAE Arbitration Law has already been partially adopted in Oman.  The UAE Arbitration Law permits both arbitral tribunals and courts to issue preliminary orders and interim measures relating to potential or ongoing arbitrations, and Article 14 of the Oman Arbitration Law permits the Omani courts to grant preliminary or interim relief in proceedings subject to arbitration.

Despite this and other positive features of the Oman Arbitration Law, there remain some uncertain provisions which may discourage parties from choosing Oman as an arbitration forum.  For example, Article 27 prescribes twelve months as the standard period for completion of the arbitration or rendering the arbitral award.  This time period starts on the day that a defendant received notice that a dispute exists and that it must be resolved by arbitration.  Although there is scope for the parties to agree to a longer period, this is a little-known provision which leaves uncertainty as to whether an arbitration lasting longer than twelve months is vulnerable to nullification.  This may be devastating to parties involved in complex arbitrations involving expert evidence, such as construction disputes, that often take much longer than twelve months to complete.

Overall, the changes introduced by the UAE Arbitration Law are designed to promote the efficiency, expediency, and ease of arbitration in the UAE, which will likely encourage business parties, both local and foreign, to arbitrate their disputes within the UAE.  Oman would be well served to reconsider its own arbitration law, and perhaps reform it according to some or many features of the UNCITRAL Model Law.  Parties doing business in Oman and seeking to resolve disputes by arbitration would take comfort availing themselves of an arbitration regime that is harmonised with others in the GCC and throughout the world.

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Requests to Stay the Implementation of Administrative Decisions

1. Introduction

The Administrative Judicature Court is the body charged with judicial oversight of the work of administrative bodies in the Sultanate of Oman.  One of its most important responsibilities is its competence to rule as invalid administrative decisions that are unlawful.

Although this oversight provides individuals with the protection they seek, such rulings are issued only after specific judicial procedures have been followed, and after the expiry of specified dates within which the ruling may be appealed, which extends the duration of the dispute.

If a decision is implemented before the issue of the ruling, such implementation in some cases may result in irreversible consequences, and proceeding with the case after that in order to obtain a ruling of invalidity will be useless.

Accordingly, various pieces of legislation, including the Omani Law Regulating the Requesting and Staying of the Implementation of Administrative Decisions, have attempted to balance the public interest, which requires the implementation of administrative decisions immediately after their issuance for the proper functioning of public utilities, and private interests, which require the provision of urgent judicial protection for individual rights if it is apparent from the case documents that the challenged decision is likely to be unlawful and that its implementation will cause irrevocable harm to these individuals.

2. The concept behind a request

The purpose of an emergency request is to give the claimant urgent judicial protection of his right to avoid negative consequences that may result from the implementation of an administrative decision.  This request must be submitted in a petition challenging the validity of the decision, or in a subsequent application submitted at the end of the first hearing.

3. Legal basis of the request

The legal basis for requesting the stay of an administrative decision is Article (19) of the Administrative Judicature Court  Law, which stipulates:

“The filing of the case with the court shall not lead to a stay of the decision against which the appeal is made.

However, the concerned party may seek the suspension of the execution of this decision in a plaint or by a subsequent application submitted on a date before the termination of the first pleading session.  The department to which the case is referred shall decide on such application within fifteen days from the date of reference or from the date of submission of application during the case proceedings as the case may be.  The department shall not rule on the suspension of the execution of the decision unless it believes on the basis of the papers that the case is based on serious grounds and that the results of such execution might be difficult to undo.”

The Administrative Judicature Court applies the provisions of this article when considering a request for suspension of execution, supported - if necessary - by the rules of expedited judicial procedures provided for in the Civil and Commercial Procedures Law issued by Royal Decree 29/2002, on condition that it does not contradict the nature of the administrative dispute in applying the provisions of Article (105) of the Administrative Judicature Court Law.

4. Appeal against the judgment issued in the application to stop implementation

The judgment issued in the application to stop implementation is characterised by being a final judgment, as other final judicial judgments.  The decision issued is considered final once issued and must be executed immediately.  Concerned parties may appeal against it before the Court of Appeal without waiting for the judgment to be rendered on the subject, because the court has already decided on the suspension application, so it is not permissible for it to reverse the ruling, even if the judgment does not restrict it when considering the invalidity of the contested decision.  Appeals must be filed within fifteen days from the day following the issuance of the judgment, according to Article (17) of the Administrative Judicature Court Law, which stipulates:

“The deadline for filing appeal shall be thirty days from the day after the date of issuance of judgment.

The period shall be fifteen days in respect of the judgment issued on an application for the suspension of the judgment.”

5. Practical applications of requesting that the implementation of a decision should be stayed by a court ruling

A number of recent cases have, in applying Article (19) of the Administrative Judicature Court Law, affirmed the principle that appealing an administrative decision does not in itself have the effect of staying its implementation.  In other words, simply challenging the decision and demanding its cancellation does not stop the implementation of the contested decision.  The purpose of this principle is not to allow individuals to obstruct the administrative work and paralyse the movement of administrative bodies that seek to achieve public interests through appeals against administrative decisions.

There are, however, exceptions to the principle, where stays of administrative decisions have been granted by the courts in order to protect the interests of individuals and to ensure that the administrative body in question is not being arbitrary in the implementation of its decisions.  In Judgment on Appeal No. (1) for the Judicial Year (4) dated 17 January 2004 the court ruled:

“It is established that administrative decisions are enforceable, except if their implementation entails irreversible results, whereupon the court may depart from this principle and order a stay of the implementation of the decision in following a request from the concerned party.  Ruling in such a matter of urgency requires the proceedings to be swift and simplified, and the job of the court at that time is to check the existence of two pillars concerning the request for a stay of implementation in order for it to issue a judgment:

First pillar:  The pillar of seriousness is an objective pillar which is present when it is established that the appeal against the appealed decision - according to what is stipulated in the documents - is based on serious reasons.

Second pillar:  The pillar of urgency which is present if the results of the implementation of the decision are irreversible should the decision not be taken to stay its implementation.”

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Arbitration in the GCC: An Overview of the Choices

When parties arbitrate in Oman, the most popular arbitral framework is ad hoc arbitration, usually using the Gulf Cooperation Council (“GCC”) arbitration rules or the United Nations Commission on International Trade Law (“UNCITRAL”) rules.  In other cases, parties agree to have arbitration in Oman that is administered by an outside arbitration centre; while there is no arbitration centre in Oman, there are quite a few arbitration centres throughout the GCC.  This article will provide an overview of some of the most popular arbitration centres in the region.

ICC

The International Chamber of Commerce (“ICC”) is the most established arbitration centre in the world.  The ICC is headquartered in Paris and has a number of branch offices throughout the world.  The ICC recently opened a representative office in Abu Dhabi for the Middle East and North Africa (“MENA”) region.  Prior to opening the new office in MENA, ICC arbitration had been long established in Oman.  The ICC secretariat is considerably sophisticated, and the ICC arbitration rules are highly regarded, widely used and considered a truly international set of arbitration rules.

DIFC-LCIA

The DIFC-LCIA was established in 2008.  It can be considered a joint venture between the Dubai International Financial Centre (“DIFC”) and the London Court of International Arbitration (“LCIA”) which is one of the most established arbitration centres in the world.  The DIFC-LCIA rules are modeled on the LCIA rules.  There are a number of notable features contained in the DIFC-LCIA; of particular importance is the fee structure.  In comparison to the other rules that are outlined in this article, the centre’s and arbitrator’s fees for a DIFC-LCIA administered arbitration are calculated on an hourly rate system rather than an ad valorum scale (fixed fee based on the amount in dispute).

DIAC

The Dubai International Arbitration Centre (“DIAC”) was first established in 1994 as the Centre for Commercial Conciliation and Arbitration.  DIAC, a popular arbitration centre in Dubai, uses rules that came into effect in 2007; however, notably, the DIAC has drafted a new set of rules that are waiting for Royal Decree in order to come into force.  The new rules contain a number of notable features, namely that the default seat of arbitration under the rules will be the DIFC, which is governed by common law rather than civil law.  The new rules are also anticipated to include provisions relating to the governing of third-party funding.  It is expected that the new DIAC rules will come into effect in 2018.  The new rules will significantly update the 2007 rules and will be the topic of a later blog post (once they come into effect).

ADCCAC

The Abu Dhabi Commercial Conciliation & Arbitration Centre (“ADCCAC”) is a local arbitration centre that mainly deals with domestic arbitrations.  Its arbitration clause is contained mainly in contracts that are entered into with United Arab Emirates (“UAE”) public entities.  The ADCCAC rules came into effect in 2013 and contain various modern provisions.  ADCCAC provides hearing facilities free of charge to parties conducting arbitrations on their premises.

BCDR-AAA

The Bahrain Chamber for Dispute Resolution (“BCDR”) was established by Legislative Decree No. 30 of 2009.  It operates in partnership with the American Arbitration Association (“AAA”).  The AAA is an international arbitration centre with various offices throughout the world.  In addition to administering arbitrations and appointing arbitrators, it administers mediations and runs various training services.  The BCDR-AAA has a modern set of arbitration rules that came into effect in 2017.

GCC Arbitration Centre

The GCC Commercial Arbitration Centre (“GCCCAC”) was established in March 1995 by the GCC Supreme Council and is based in Bahrain.  The centre is considered a regional arbitration authority which is independent from the six GCC member states, including the host state.  It has an independent legal entity and enjoys administrative, financial and technical independence.  Simultaneously, it is considered one of the GCC organs.  The GCCCAC rules came into effect in 1994 and were amended in 1999.  The GCCCAC administers arbitrations and its rules are commonly used in ad hoc arbitrations in Oman.

Cairo Regional Centre for Arbitration

The Cairo Regional Centre for International Commercial Arbitration (“CRCICA”) was established in 1979 by an international agreement signed between the Egyptian government and the Asian African Legal Consultative Organization (“AALCO”) making it the oldest centre in Africa and the Middle East.  The latest CRCICA rules came into force in 2011, and are based on the UNCITRAL rules with some minor amendments emanating mainly from the centre’s role as an arbitral institution and an appointing authority.  In addition to administering commercial arbitrations, CRCICA arbitration is provided for in a number of bilateral investment treaties, many of which do not involve Egypt as a party.

Conclusion

As noted, there are various arbitration centres in the region, many of which have experience administering arbitrations in Oman.  The fact that there is no arbitration centre in Oman is a particularly peculiar one which leads to the regional centres administering disputes related to Oman taking place both inside and outside of the country.  It should also be mentioned that all the centres noted above, including the ICC which is a representative office, have space to hold hearings.  The fact that there is no hearing centre in Oman is a disadvantage; when parties hold their hearings in Oman, this takes place in hotels or in law offices.

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