Thursday, October 6, 2022

Arbitration Time Limits

Some well-known standard construction contracts used in Oman contain strict time limits on the process of taking a dispute to arbitration.  In addition, there are time limits prescribed by Omani law regarding the commencement and duration of an arbitration.  This article sets out issues regarding these additional time limits.

An English translation of Article 45 of the Law attached to Royal Decree 47/1997 (often referred to as the Oman Arbitration Law) provides:

  1. The arbitration board shall have to pass the final award in respect of the dispute within the time period agreed upon by the parties.  In the absence of any agreement, the award shall be required to be passed within 12 months effective from the date of commencement of the arbitration proceedings.  In all circumstances, the arbitration board may decide to extend the period of the proceedings for a further period.  However such extension shall not exceed six months, unless the parties agree to a period beyond six months.
  2. In the event, the arbitration award has not been passed within the period referred to in the preceding paragraph, either party to the arbitration may request the President of the Commercial Court to pass orders prescribing an additional period or have the arbitration proceedings brought to an end.  In such a case, either party may file his claims before the competent Court.

Note that:
  1. Unless the period is extended in some way, the arbitral tribunal has only 12 months to issue an award;
  2. The tribunal itself may grant itself an extension of six months (i.e., extending the 12 months to 18 months);
  3. The parties may agree to any further extension; and
  4. The President of the Commercial Court may grant a further extension, on the application of one party.
It is also worthwhile to note that potentially the Commercial Court may extend the time for arbitration, even after the time has expired.  So, all is not necessarily lost if the tribunal fails to issue an award in time but, if you are in such a situation, you should urgently seek legal advice. 

12 months, or even 18 months, is a short period for any arbitration of any complexity, so often parties agree to an extension, remind the tribunal to extend, or are ready to go to Court to get the extension if need be.  Past experience suggests that the Court will tend to give an extension of six months, but naturally this depends on the case, the reasons for the delay, and so forth.

Of particular note for those unfamiliar with arbitration in Oman is Article 27.  Article 27 (English translation) of the Oman Arbitration Law provides:

The arbitration proceedings shall commence on the day on which the defendant receives from the plaintiff the application for arbitration unless both the parties agree upon some other date.

Usually, the defendant is notified when they receive a document typically titled “Request for Arbitration” or “Notice of Arbitration.”  Bear in mind that at this stage the tribunal members have usually not been selected.  The appointment of the tribunal often takes months, and this will eat into the 12-month period.  For this reason, in Oman, it is often agreed in writing between the parties that the commencement date for the arbitration is a later date (such as the date of the first hearing or meeting with the tribunal).  Alternatively, a longer extension for the issuance of an award is agreed to compensate.

These procedural issues are all manageable, providing you receive advice from those experienced in handling them.  However, they cannot be ignored, and you should be aware of the need to quickly and diligently proceed with any arbitration.