The Basic Law of Oman: Principles for Business

The Basic Law of the Sultanate of Oman, promulgated as Royal Decree 101 of 1996, holds a unique place in Oman’s pantheon of laws.

All other royal decrees are statutes that govern a particular area of law, setting out specific rules and providing guidance for governmental authorities to enact further regulations.

The Basic Law is different. It forms the bedrock of all Omani law. As its name suggests, the Basic Law is a foundational document that is very broad in scope. Although the Basic Law does contain specific directives, such as on succession procedures for the position of Sultan, it mainly addresses the overall structure of Omani government, including the legislative and judicial framework. The Basic Law enshrines the fundamental rights of the citizens and the guiding principles of the State.

Several of these principles, in particular, can be illuminating to companies that seek to do business in Oman:

“The basis of the national economy is justice and the principles of a free economy … constructive, fruitful co-operation between public and private activity … to achieve economic and social development that will lead to increased production and a higher standard of living for citizens ….”

The above-quoted text, from the first of the Economic Principles listed in Article 11 of the Basic Law, is perhaps the most important to companies, because it embodies the Sultanate’s economic approach. The Omani government views foreign investment and cooperation between the public and private sectors as key to increasing the nation’s workforce skills, economic development and living standards. As we have seen in our own work, most Omani businessmen and government officials are very welcoming, professional and helpful because they truly want Oman to be ‘Open for Business’.

“Freedom of economic activity is guaranteed within the limits of the Law and the public interest, in a manner that will ensure the well-being of the national economy.”

This principle sums up another key feature of the Sultanate’s approach to business: Oman has not let its zeal for further economic development cause it to abandon prudent and upstanding business practices. We have often heard Omani businessmen and government officials make clear that they want long-term, responsible development, not the ‘fast buck’ or ‘hit-and-run profits’. Oman is most interested in long-term, conservative and sustainable business.

“The State encourages saving and oversees the regulation of credit.”

This principle, in some ways, may be the best sign of all for companies seeking to do business in Oman. It reflects Oman’s culture of financial conservatism, which has helped the Sultanate avoid the excesses that have put some of its neighbors under severe stress. Omanis plan carefully not just to be open for business today, but for generations to come.

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Prescription under Omani Law

For persons debating whether to bring a claim under Omani law, it is important to know that, for some matters, Courts will not permit the claim if too much time has elapsed since the event giving rise to the claim occurred. Similarly, companies that are concerned about potential litigation over an event may wonder at what point they can finally lay the matter to rest and be certain that no litigation will ensue.

The legal concept dealing with when a claim must be brought is known as “prescription” in civil law jurisdictions such as Oman. Prescription sets forth a maximum period of time after an offense occurs within which legal proceedings may be initiated. If the claim is not brought within the prescription period, the Court is unlikely to accept the case regardless of how strong it may be. This concept also is recognized in common law jurisdictions such as England and the United States under the term “statute of limitations”.

Prescription periods vary from case to case based on several factors such as the severity of the alleged offence. For example, in severe criminal matters there often is no prescription period and a person may be prosecuted no matter how much time has elapsed since the crime occurred. In contrast, for simple commercial matters the prescription period may be much shorter. In a commercial context, short prescription periods encourage parties to raise complaints in a timely fashion, which promotes certainty in commercial dealings.

Some typical examples of prescription in Omani law include:

• Article 7 of the Oman Labor Law states that employee rights shall lapse after one year of becoming due. The Courts, however, have ruled that such rights shall lapse after one year of the termination date of the employment relationship.


• Article 11 of the Consumer Protection Law states that consumers shall have the right within a period of ten days from the date of purchase of any commodity to have the commodity replaced or returned or to recover its value if it is defective.


• Article 16 of the Law Regulating Engineering Consultancy Offices states that the owner of a consultancy office shall be jointly responsible with the contractor for the faults and flaws that may occur in the project designed by or executed under the supervision of his office for ten years from the date of the handing over of such installations.


• Article 16 of the Law Regulating Engineering Consultancy Offices also states that claims filed after the lapse of three years from the date of discovering the fault or flaw without instituting an action within the aforesaid period shall not be considered by the Courts. This is an interesting example of prescription in which it is the discovery of a condition on which one wishes to initiate a legal claim, rather than a particular event, that starts the prescription clock ticking.

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