Issuance of Health Insurance Rules

In October 2019, the Capital Market Authority (the “CMA”) issued Ministerial Decision 78/2019 Issuing the Health Insurance Rules (the “Rules”) in respect of the Unified Health Insurance Policy (the “Policy”), the details of which were previously issued under Ministerial Decision 34/2019 and discussed in our July 2019 article, Oman Rolls Out Unified Health Insurance Policy – or ‘Dhamani.’  The Rules set out the obligations of the various stakeholders in the health insurance relationship, i.e., insurers, third-party administrators, health services providers, employees and employers.

Insurance coverage

The Rules provide that the Policy will determine the extent of the health insurance coverage to be provided under the Policy, provided that such coverage should not be below the basic health services the insured should enjoy.

Insured persons are entitled to cancel their health insurance policy at any time by providing 30 working days’ prior written notice, in which case the insurer is required to refund the insured the amounts in respect of the cancelled term in accordance with the terms of the insurance policy.  Such refund should be provided within 30 working days of the date of cancellation of the insurance policy.

The amount of the insurance premium will have to be agreed on between the parties, as long as such premium does not exceed the market pries for health insurance in Oman.

The health insurance coverage will expire under the following circumstances:

•          Expiration of the term of the insurance policy.

•          Exhausting the maximum limit of the benefits under the policy.

•          Death of insured.

•          Departure of the insured expatriate out of Oman.

•          Transfer of service of insured from one entity to another.

Any claims arising from a health insurance policy shall not be heard until one year has lapsed from the date of expiration of the relevant policy.  Statutes of limitations shall be considered paused by claim measures or procedures stipulated in the Rules.

Issuance of licence

The Rules provide that without prejudice to the provisions of Ministerial Decision E/31/2007 regarding licensing requirements for insurance companies, a company will also need to submit an application in the form stipulated in the Rules.  The CMA will examine the licence application within 60 days of submission.  In the event that the application does not provide all the required documents, the applicant is required to provide the required document within 30 days of being notified to do so.  Failure to provide the documents within the stipulated time period will result in the application being cancelled.  Once an application has been cancelled, another application cannot be submitted for a period of 90 days from such cancellation.  If the application is granted, the Executive President of the CMA will issue a decision granting the licence within 60 days of receipt of all the required documents within the prescribed time period.  If no decision is issued within the 60-day period, the application will be deemed to have been rejected.

A licence will be valid for a period of two years and renewable for similar periods.  The application for renewal will need to be submitted by the insurer at least 30 days prior to the expiration of the licence.

Provision of health insurance

All relevant parties are required to implement the Health Insurance Electronic Platform, as discussed in the Policy and in accordance with other decisions and notifications of the CMA.

Health insurance activities and operations may not be undertaken unless the relevant licence has been obtained from the CMA.  Healthcare providers licensed to provide health insurance services are barred from providing health insurance services unless they have satisfied the CMA’s enrollment requirements and paid the stipulated fees.

Except as permitted in accordance with the terms and conditions issued by the Executive President of the CMA, no insurer may own or operate a health care provider or third-party administrators, and no healthcare provider may own shares in companies licensed to undertake health insurance activities, insurance brokers or agents for health insurance companies, or third-party administrators.

Health insurance providers are required to retain a minimum of forty per cent. (40%) of the net health insurance premiums within Oman.

The Rules also set forth the obligations of the insurers, healthcare providers, and the insured vis-à-vis each other.

Health insurance dispute settlement committee

The Rules provide for a committee to be formed by a decision of the Executive President of the CMA to settle disputes arising from practicing health insurance activities.  The committee will be entitled to consider disputes arising between or among insurance providers, healthcare providers, the insured, third-party administrators and insurance brokers and agents; decide on claims that have been rejected, returned, or deducted by the insurance company; and any other matters which the Executive President deems necessary to bring before the committee.

The committee shall issue its decisions within 30 days from the date of the matter being put before it.  Concerned or interested parties will have the right to appeal against the decision of the committee to the Executive President within 60 days from the date of notification, or the date when the appellant became categorically or undoubtedly aware of the decision.  The appeal must be decided within 30 days from the date of its submission.  The expiry of the said period shall be considered as a rejection of the appeal.

Sanctions

Notwithstanding the sanctions listed under the Insurance Companies Law, the CMA shall be entitled to impose the below sanctions in the event of violation of the Rules:

•          Warning.

•          Administrative fine of OMR 1000-5000.

•          Suspending the licence for a maximum of six months.

•          Revocation of licence.

•          Cancellation of healthcare service provider enrollment.

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The Commercial Companies Law One Year Later

The Commercial Companies Law promulgated by Sultani Decree 18/2019 (“CCL”) was published in February 2019 and came into force 60 days after publication.  Please refer to our previous articles on this topic:

Oman’s New Commercial Companies Law

New Commercial Companies Law Permits Work and Services as Contributions in Kind to the Share Capital of Joint Stock Companies

The Board of Directors of an Omani Joint Stock Company under the New Commercial Companies Law

 Access to Company Documents under the Old CCL and the New CCL

 Dissolution and Liquidation Under the New Commercial Companies Law

The CCL provides that the Minister of Commerce and the Chairman of the CMA will issue executive regulations within a year of the CCL’s implementation in addition to any decisions required to enforce the provisions of the CCL.  Currently, the draft executive regulations appear to be at an advanced stage and due for timely publication. 

Companies must comply with the requirements of the CCL within one year of its implementation – which means the deadline of 18 April 2020 is approaching fast.

For the first time, annual general meetings of joint stock companies, which must take place before 31 March each year, will be held under the new regime.  Many joint stock companies will take the opportunity to organise an extraordinary general meeting (“EGM“) on the same day and at the same venue to reduce the administrative burden of convening two separate general meetings.

The EGM will approve the amendments to the articles of association (“AoA”) required to be made to comply with the CCL.  This may also be an opportunity for companies registered many years ago to undertake a full review of their constitutional documents and make further amendments to align them with best practice and corporate governance.

Please note that the CMA has issued model articles that listed joint stock companies are expected to adopt, subject to the inclusion of additional clauses.

Please find below a summary of the most relevant changes introduced by the CCL in respect of the organisation of general meetings:

1. The new deadlines mandated by the CCL apply.  The invitation to attend a general meeting must be published 15 days prior to the date of the meeting and must include both the date of the first and the second meeting (to be held within seven days from the date of the first meeting).  If the quorum is not met at the first meeting, the second meeting shall be held as provided in the invitation.
2. General meetings must be attended by the directors (but their absence will not affect the validity of the meeting).
3. Members of the board may not attend general meetings on behalf of the shareholders.
4. The company must constitute an auditing committee from among the members of the board and  appoint  a  legal  advisor  and  an  internal auditor.
5. Minutes of the general meetings must be signed by the secretary, the chairman, the auditor and the legal advisor and lodged with the competent authority within seven days calculated from the date following the date of the meeting.  The deadline under the previous law was 15 days.

Of course, the sections of the AoA regulating general meetings will have to be revised to reflect the provisions above.  Further changes may or will relate to:

1. The number of directors of the company:   as the CCL provides for an odd number of directors, companies which currently have an even number of directors will have to decide whether they wish to add or remove one seat on the board of directors (subject to compliance with the minimum and maximum number of directors allowed for each type of company).
2. The inclusion of more stringent provisions in respect of related party transactions and conflicts of interest.

Where changes are required, failing to comply with the provisions of the CCL within the deadline may result in the company, its authorised managers and/or directors being exposed to sanctions.

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Coronavirus and the Potential Impact on Construction Contracts in Oman

There is widespread economic impact as a result of the numerous factories that have suspended production in China due to the coronavirus, and with companies instructing many employees to work from home.  Construction activities are likely to be impacted worldwide as major suppliers are unable to meet delivery dates.  It is therefore timely to consider what contractors can do if faced with this type of delay.

The FIDIC Red Book

In the 1999 version of the FIDIC Red Book, a potential claim for an extension of time under Sub-Clause 8.4(d) should be considered for:

“Unforeseeable shortages in the availability of personnel or Goods caused by epidemic or governmental actions.”

This Sub-Clause is not often removed or amended in the Particular Conditions, and therefore provides entitlement for an extension of time, assuming of course that 28 days’ notice since becoming aware of the event or circumstance is provided, as per Sub-Clause 20.1.  In this context the “event or circumstance” would most likely be any notification from a supplier.

If problems become more serious, one may need to consider Force Majeure defined in Sub-Clause 19.1 as:

“an exceptional event or circumstance:

(a) which is beyond a Party’s control,

(b) which such Party could not reasonably have provided against before entering into the Contract,

(c) which, having arisen, such Party could not reasonably have avoided or overcome, and

(d) which is not substantially attributable to the other Party.”

Whilst the coronavirus event is not an “exceptional event or circumstance” of the kind listed following this definition, FIDIC makes clear that the list is not limited to those events.

Therefore, if the General Conditions are unamended at Sub-Clause 19.1, the Contractor could issue a notice under 19.2 within 14 days of becoming aware of the event or circumstance, which in turn could provide entitlement under Sub-Clause 19.4 to claim an extension of time.  However, it is interesting to note that to claim for some types of events listed in 19.1 (related to war, rebellion, riot, etc.), the event must occur in the country where the project is located, whilst for others (such as natural catastrophes) it does not.

Force Majeure can be limited in 19.1 strictly to the events or circumstances listed, by deleting “may include, but is not limited to” and then letting the list read as only the circumstances listed.  One could then turn to Employer’s Risks in Sub-Clause 17.3 and in particular argue that the coronavirus event is “any operation of the forces of nature which is Unforeseeable or against which an experienced contractor could not reasonably have been expected to have taken adequate precautions.”  Assuming that the Particular Conditions have not been amended to delete this provision as well (another common amendment), there would at least be entitlement to claim for an extension of time under Sub-Clause 17.4 (and 8.4(b)).  The advantage of claiming under 19.1, however, is the right to terminate the contract if the effect is prolonged as per 19.6, but care must be taken since this can work both ways:  either party may give such notice, thereby providing the employer grounds to terminate under the contract.

Under the 1987 FIDIC Red Book, there is entitlement to claim an extension of time under Sub-Clause 44.1(e) if considering the coronavirus as “special circumstances which may occur, other than through the default of or breach of contract by the Contractor or for which he is responsible.”  Notice should also be provided in this instance under 53.1.

The 1987 version of the FIDIC Red Book does not include Force Majeure although some of the Employer’s Risks listed at Sub-Clause 20.4 are considered as “Special Risks” at Sub-Clause 65.2.  The problem here is that the only Employer’s Risk that could apply to the coronavirus at 20.4(h) (“any operation of the forces of nature against which an experienced contractor could not have been expected to take precautions”) is not one of the Employer’s Risks taken to be a “Special Risk” at 65.5 where there is considerable scope to claim increased costs.  There is therefore no path to termination of contract but at Sub-Clause 66.1 there is still a possibility that a party may be released from further performance if “any circumstance outside the control of both parties arises after the issue of Letter of Acceptance which renders it impossible or unlawful for either or both parties to fulfill their contractual obligations.”

If therefore 20.4(h) has not been struck out in the Particular Conditions, there is a path for the contractor to recover any loss or damage arising from the coronavirus under 20.3 as a result of 20.4(h) by giving 28 days’ notice under 53.1.

The Oman Standard Conditions

There is no explicit provision for “force majeure” as such in the Sultanate of Oman Standard Conditions for Building and Civil Engineering Works Fourth Edition September 1999 (the “Standard Conditions”).  However, Clause 66 [Frustration] provides that:

“If … circumstances outside the control of both parties … arises … so that either party is prevented from fulfilling his obligations, or under the Law of the Sultanate of Oman, the parties are released from further performance, then the sum payable by the Employer to the Contractor in respect of the work executed shall be [the] same as that which would have been payable under the provisions of Clause 65 hereof.”

Clause 65 [Special Risks] of the Standard Conditions governs “Special Risks” and specifies in subsection 65(8) what payments the employer must make to the contractor in the event a contract is terminated as a consequence of the occurrence of a Special Risk, as defined in subsection 66(5).

Essentially, the contractor is entitled to:  payment for work executed prior to the date of termination; amounts payable for preliminary items; the cost of materials or goods ordered by the contractor for the works; expenditure incurred in expectation of completing the works; and any additional sums as provided earlier in Clause 66.

Omani law

Force Majeure is covered by Article 172 of the Oman Civil Code as promulgated by Sultani Decree 29/2013 (the “Civil Code”), which states:

“In contracts binding on both parties, if force majeure supervenes which makes the performance of the contract impossible, the corresponding obligation shall cease, and the contract shall be automatically terminated.”

The Civil Code does not define what constitutes force majeure, and the Omani courts have been reluctant to allow termination of a contract based on non-economic factors.  However, the courts have recognised that natural disasters may constitute circumstances that result in the frustration in the performance of a contract.

Whilst this article focuses on construction contracts, the issues discussed will likely apply to a broad range of commercial contracts.  We would be happy to assist any clients who have contracts that are impacted by delay.  As with managing all contractual delays, the key is to obtain advice and develop a strategy at the earliest possible opportunity. 

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