Monday, November 11, 2019

Enforcement of Awards, Part 2: Enforcing an Arbitral Award

Introduction 

This article sets out the procedure under Omani law for enforcing an arbitral award, whether it be in Oman or abroad.

After an arbitration is concluded and an award is rendered by a tribunal, the award cannot be enforced immediately.  First, the party seeking enforcement will need to have the award executed by a court in Oman before it will be considered final and in turn enforceable in Oman.

Enforcement of an award in Oman

Under Omani law, once an award is rendered, the losing party has a 90-day period to commence proceedings to have an award annulled.  Once the 90-day period has lapsed without proceedings having been commenced to annul the award, or after the rejection by the court of the annulment application, an application can be made to the Oman courts to have the award executed.

The procedures for the annulment and the execution of an award are similar to the procedures in other countries that are party to the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York, 10 June 1958) (the “New York Convention”).

Enforcement is initiated by giving the debtor notice of the enforcement proceedings.  Notice can be effected by in-person service or service at the debtor’s domicile or place of business.  The notification must include the required particulars and the order to the debtor to pay within seven days as of date of the notification.

The whole process of enforcement can take from seven months to one year in court.

Enforcement of an Omani arbitration award abroad

If the party that the award is being enforced against does not have assets in Oman, the award may be enforced in a foreign country that is also a signatory to the New York Convention.  Currently there are 159 countries that are parties to the New York Convention, including Oman.  Below is a general procedure overview of how a foreign award is enforced under the New York Convention.

The New York Convention facilitates the enforcement of awards in countries that are signatories to the New York Convention.  Once an award is binding and enforceable in the country where it is rendered, the award is then enforceable in other signatories to the New York Convention.  Not only is the award enforceable but, owing to the reciprocal nature of the New York Convention, the award will not be subject to stringent confirmation procedures in the country of enforcement.  It should be noted that there is a general (rebuttable) presumption that, once an award is final where it is rendered, it will be enforceable in a foreign country.

When enforcing a foreign award, Article IV of the New York Convention requires several basic formal requirements to be met in order for a foreign court to enforce an award under the New York Convention.  This includes the submission of:  the original award, the arbitration agreement and translations if necessary.  These requirements have been universally transposed into domestic legislation of the parties to the New York Convention.

When an application for the enforcement of a foreign award is made, the court in the foreign country must apply the same grounds for the enforcement of the foreign award that it would apply to a domestic award.  Generally these follow the grounds in the New York Convention.  However, it is permissible for countries to adopt “local standards” so long as the process for enforcement of foreign awards is not more onerous then the enforcement of domestic awards.

The narrow grounds for setting aside an award are listed in Article V of the New York Convention.

It should be noted that the grounds for refusing to enforce an award are the same as denying execution.  In light of this, if an award has been granted execution/confirmation where it is rendered, it is unlikely to be refused enforcement elsewhere under the New York Convention.  In light of the above, it can be said that once an award has been executed in Oman, it is relatively straightforward to have that award enforced abroad.

Lastly, it should be noted that the enforcement of a foreign award in Oman follows the same process.

Conclusion

While arbitral awards in Oman are not enforceable immediately after they are rendered, the enforcement of awards in Oman is a relatively straightforward process.  Likewise, the process for the enforcement of an Omani award in a foreign country is a relatively straightforward process through the New York Convention.

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Tuesday, November 5, 2019

Oman Drives Privatization and PPP Initiatives

Introduction

A series of laws were passed earlier this year that signify Oman’s ambition to be more active in adopting PPP models and drive privatization.  These laws comprise:

(a) The Public Private Partnership Law (Sultani Decree 52/2019) (“PPP Law”);
(b) Privatization Law (Sultani Decree 51/2019) (“Privatization Law”); and
(c) Establishment of the Public Authority for Privatization and Partnership (Sultani Decree 54/2019) (“PAPP” or “Authority”).

During the recent PPP Oman Forum held in October 2019, it was reiterated that PPP is one of the cornerstones of Vision 2040 and that projects valued at approximately OMR 2.5 billion are envisaged for implementation during the current (ninth) five-year development plan spanning health, education, transportation and public services sectors.

In this article we highlight some of the key provisions of the PPP Law, Privatization Law and the role of the Authority.

PPP Law

The PPP Law was published in the Official Gazette on 7 July 2019 and came into force on 8 July 2019 with Executive Regulations (and related decisions) to be issued by 8 July 2020.  The PPP Law applies to Partnership Contracts and consultancy contracts relating to them.  Whilst the Tender Law and the Privatization Law are expressly carved out from such contracts, the PPP Law does not affect provisions of any other laws relating to management, lease, licensing, usufruct, or concession of any public facility.

The term “Partnership Contract” is broadly defined and is essentially the contract between the government (public) body and the private project company.

The key takeaways from the PPP Law are:

(a) Partnership Contracts must relate to partnership projects which have economic or social return and are in line with the strategy of the Sultanate and its development plan;

(b) Partnership Contracts are subject to competitive bidding, but direct award is possible with permission from the Council of Ministers;

(c) mandatory conditions and specifications for a partnership project (such as information and specifications about partnership project, value of temporary bond and calculation of final bond, technical, financial & legal principles on which bid will be evaluated, essential conditions of Partnership Contract along with statement of non-negotiable conditions);

(d) if a bid is submitted by a consortium, it is prohibited for any qualified candidate who is a member of the consortium to submit another bid (whether alone or in conjunction with another person (such as consortium or company in which he holds majority of capital or exercises control));

(e) the Authority is permitted to negotiate with a winning bidder and if negotiations fail, the Authority can negotiate with another bidder, but the Authority is not permitted to re-negotiate with a bidder with whom negotiations failed;

(f) requirement to establish a project company which may be 100% non-Omani owned;

(g) restrictions on project company during term of Partnership Contract (e.g., not permitted to sell shares, modify legal form, create encumbrances over shares (other than for the purposes of raising finance));

(h) mandatory content of Partnership Contract (ranging from identity of parties, insurance requirements, oversight, unilateral termination rights by public body and dispute resolution, amongst other requirements);

(i) step-in rights by public body (with consent from the Authority) to take over partnership project;

(j) mechanism for transfer of assets to State after expiration or termination of Partnership Contract;

(k) Partnership Contract must be subject to the laws of Oman;

(l) obligations on project company (such as prohibition to mortgage / sell land, compliance with Omani law, transfer of know-how, non-discrimination of products, preservation of assets, issuance of periodic reports); and

(m) the Authority can exercise control and oversight over partnership project.

Privatization Law

The Privatization Law was published in the Official Gazette on 7 July 2019 and came into force on 8 July 2019.  The Privatization Law contemplates the issuance of Executive Regulations by the Authority by 8 July 2020.  The Privatization Law expressly repeals the Privatization Law from 2004.

The key takeaways from the Privatization Law are:

(a) distinction between:

1. Privatization Project” (where a public project or a company wholly or partially owned by the government is transferred to a private person); and

2. Company Transformation Project” (where a public project is to be transformed into a joint stock company wholly owned by the government);

(b) definition of “Project Company,” which means:

1. in respect of a Privatization Project:  an Omani joint stock company which may be 100% non-Omani owned and whose rules and regulations in respect of capital etc. will be as set out in the Executive Regulations; and

2. in respect of a Company Transformation Project:  a joint stock company wholly owned by the government whose mechanism for appointing its board shall be specified by the Council of Ministers;

(c) Tender Law does not apply to Privatization Project or Company Transformation Project;

(d) public projects or companies which are wholly or partially owned by the government must only be privatized in the manner prescribed by the Privatization Law and such privatization must be part of the privatization programme; if not within privatization programme, the Council of Ministers to approve privatization;

(e) award procedures for a Privatization Project subject to rules of transparency, publicity, equal opportunity, non-discrimination and free competition;

(f) the Authority may negotiate with winning bidder on items which were not marked “non-negotiable”;

(g) if negotiations fail, the Authority may negotiate with next bidder, but the Authority may not re-negotiate with a bidder with whom negotiations previously failed;

(h) content of privatization contract to be stipulated in Executive Regulations;

(i) mechanism for Omani employees who are subject to the State law and who are affected by a Privatization Project or Company Transformation Project;

(j) if employees are transferred then they cannot be dismissed within a period of five years from date of transfer provided that these employees abide by work systems and other controls; and

(k) status of employees who are not absorbed by the Project Company shall be adjusted per the rules decided by the Council of Ministers.

Role of the Authority

The Authority assumes an important and active role. Both the Privatization Law and the PPP Law make frequent references to the Authority.  The law establishing the Authority lists the expansion of PPP, increased private sector activity and job creation as some of the Authority’s objectives as well as specifying the role of its Board and its CEO.  It will be interesting to observe the role of the Authority as PPPs and privatization projects get underway.

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In the Pipeline - October 2019


Law firms, audit firms and public joint stock companies have been invited to comment on the draft of the Executive Regulations of the Commercial Companies Law.  The Capital Market Authority hopes to collect feedback and comments on drafting regulations governing public joint stock companies.  All stakeholders have been asked to provide their feedback to the Capital Market Authority prior to 31 October 2019.
Sultani Decree 66/2019 establishes the “Tax Institution.”  Article (1) sets up an institution to be named “Tax Institution” that will have its own legal identity and will enjoy financial and administrative autonomy.  The Tax Institution will report to (be affiliated with) the Council of Ministers.
Article (3) transfers to the Tax Institution all the competences, powers, prerogatives, allocations and assets of the Secretariat General of Taxation at the Ministry of Finance.
Article (4) transfers to the Tax Institution employees of the Secretariat General of Taxation at the Ministry of Finance, along with their existing job statuses and financial allocations.
Article (5) states that the Head of the Tax Institution will be a member of the Financial Affairs and Energy Resources Council.
Article (6) provides that the phrases “Secretariat General of Taxation” and “Secretary General of Taxation,” wherever they recur in current laws and Sultani Decrees, will be replaced by “Tax Institution” and “Head of Tax Institution.”
The Comprehensive Agreement for Established Friendship and Bilateral Cooperation between the Government of the Sultanate of Oman and the Government of the United Kingdom has been ratified by Sultani Decree 59/2019.  The governments jointly wish to boost communication and collaboration in several sectors including health, science, innovation and technology.  The Agreement indicates both countries’ commitment to reinforcing a historic relationship.
Two new Ministries have been established.  The Ministry of Technology and Communications has been established by Sultani Decree 63/2019.  All the powers, assets and prerogatives of the Information Technology Authority; competences related to telecom policies at the Ministry of Transport and Communication; and competences of technology programs of the Technical Committee will be transferred to the Ministry of Technology and Communications.
Please contact us if you would like more detailed advice on the above.

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