Often,
when parties enter into a new agreement, the dispute resolution clause is not
considered as carefully as other important terms of the contract. There are numerous considerations that,
depending on the context, both parties should bear in mind when drafting their
dispute resolution clause. This series
of articles will take a look at a number of these considerations in the context
of entering into contracts in Oman.
This
first article considers the issue of whether parties should choose courts or
arbitration to determine their disputes.
Some of the main considerations are as follows.
If
parties decide that their dispute will be resolved by the Omani courts, the
following will apply:
- Proceedings will
be held in Arabic.
- Parties will have
several rights of appeal of decisions.
- The costs paid to
the court will be much lower than costs paid to a tribunal.
- A court decision
will be enforceable in Oman as well as other countries that are party to
the Riyadh Convention on Judicial Cooperation 1983.[1]
If
parties choose arbitration to resolve their disputes, some of the key
characteristics are as follows:
- Proceedings will
be held in the language agreed to by the parties, which is often English.
- There is no right
of appeal; however, an application will need to be submitted to the court
to have the award enforced, even if the arbitration is held in Oman and
subsequently enforced in Oman.
- There are higher
administrative costs related to arbitrations; however, a tribunal has the
authority to award the successful party these costs, though it is not
certain that a successful party will have all of its costs paid.
- An award is
enforceable in the 161 countries that are party to the New York Convention.
Building
on the points above, parties will need to consider many factors when deciding
what type of dispute resolution mechanism they will choose. If contracting with a counterparty that has
little assets in Oman but significant assets in other countries, it will be
critical that any award or decision can be enforced against the counterparty;
therefore, where an award or judgment is going to be enforced also needs to be
taken into consideration when choosing a dispute resolution mechanism.
Another
key consideration is that the process in arbitration and in courts can be very
different. In Oman, all submissions are
made through documents rather than through oral arguments and witness
testimony. If parties choose arbitration
rather than courts, the parties will determine with the arbitrator what the
arbitral process will entail, often a more common law style of proceeding with
oral arguments and oral witness testimony being adopted. However, some arbitrations, particularly those
where the parties choose Arabic as the language of the arbitration, more often
follow the procedures of Omani courts.
Overall
it can be said that depending on the nature of the dealings between the parties
as well as any potential dispute that may arise will determine whether courts
or arbitration is most appropriate. Unfortunately,
it will not be possible for parties to opt for courts or arbitration at the
time a dispute arises; therefore, careful consideration of a number of factors
must be weighed up at the time of entering into a contract when deciding what
dispute resolution mechanism the parties should choose.
[1] Algeria, Bahrain, Djibouti,
Iraq, Jordan, Kuwait, Lebanon, Libya, Mauritania, Morocco, Oman, Palestine,
Qatar, Saudi Arabia, Somalia, Sudan, Syria, Tunisia, UAE, Yemen.
