Potential Advantages of a Specialized Real Estate Regulator

Focus on Real Estate Series

Oman’s prudent approach to real estate development has been well rewarded over the few past years, as the Sultanate’s selective focus on sustainable, mainly high-end projects has enabled Oman’s real estate and tourism sectors to thrive while other countries in the region have struggled. As the Sultanate continues to develop its real estate sector, one possible future addition to consider would be a specialized regulatory authority for the real estate sector. Properly structured, a specialized regulator could further increase coordination, efficiency, and responsive oversight across the sector. Generally, a real estate authority is a specialized body that is actively involved in all aspects of the real estate sector and has close working relationships with both higher governmental officials on the one hand, and private participants in the real estate sector (e.g., developers, landlords and tenants) on the other hand. Functions that a real estate regulatory authority may perform include:

• drafting regulations in accordance with the broader laws (e.g., Royal Decrees) that carry out the government’s objectives while also being attuned to issues facing market participants “on the ground”;
• certifying and licensing property developers to help maintain the integrity of the sector;
• adopting streamlined, unified processes that make the sector more user-friendly to all market participants and provide comfort to investors;
• coordinating and providing centralized access to real estate records and data; and
• helping to promote housing quality standards and carry out other governmental objectives, such as access to affordable housing.

In the UAE, some of the Emirates, such as Dubai and Ras al-Khaimah, recently have established regulatory authorities to revitalize their real estate sectors in the wake of domestic real estate downturns. Over the coming months and years, other jurisdictions may choose, instead, to establish specialized regulators as a preemptive measure, to help make their real estate sector more robust, sustainable, and better able to withstand any future market turbulence. With its recent successes in privatizing the water and electricity sectors, Oman has gained valuable experience in establishing specialized sector regulators, such as the Telecom Regulatory Authority and the Authority for Electricity Regulation. As Oman’s real estate sector continues to develop in the coming years, one option worth considering to help manage the growth of that sector would be a specialized real estate regulatory authority.

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Focus on Labour Law: Mediation Hearings

In Oman, as in other jurisdictions, labour disputes are a common occurrence. A key, but often overlooked, part of any labour dispute is the mediation process.

Under Omani law, labour disputes are first referred to mediation with a mediator from the Ministry of Manpower. The dispute may proceed only to the court system once the mediator takes the view that irreconcilable differences exist between the employer and the employee.

The mediator’s role is to facilitate discussion and negotiation between the employer and the employee. He or she may encourage the parties to try to resolve their differences and may even express views regarding who is in the right and who is in the wrong. The mediator has no power to force a party to change its position or to bind the parties to a resolution of the dispute. However, it is important to bear in mind that the mediator wields influence by means of its reporting role. At the end of the mediation process, the mediator writes a private report to the Primary Court explaining what the dispute is about and what both parties' respective positions are, and may state who the mediator feels is the culpable party.

Accordingly, any company involved in a labour dispute would be well advised to take the mediation process seriously and to come to the mediation sessions well prepared, even if the company is convinced that mediation will not resolve the dispute. Ideally, both an HR staff member and a lawyer should be present to represent the company at the mediation sessions. Before the first session, the company should collate all paperwork relating to the employee and the dispute so that the company’s HR staff member and the lawyer can carefully analyze these materials, discuss the case in depth, and formulate their strategy for the mediation hearings.

Another reason for companies to approach the mediation process seriously and preparedly is that while the mediation will not necessarily be dispositive of the suit, it may raise information and lines of argument and defense that can carry through to and ultimately affect any subsequent court proceedings.

For example, one difficulty a company may have to contend with is when the employee fails to properly articulate his claim during the mediation process. In this event, the company generally should refrain from offering a detailed defense to the employee’s anticipated claim. Such a course of action may commit the company to a fact pattern or line of defense it may wish to avoid during any subsequent court proceedings. In other words, at the mediation stage, the company generally should respond only to the information presented by the employee and the mediator, and not go into further detail than necessary. The general principle to bear in mind is that a court will look unfavorably upon, and will be much more likely to find against, an employer that has set forth inconsistent information and defense arguments during the court proceedings compared with during the mediation process.

In sum, the mediation process in a labour dispute is an important step that a company must handle attentively and skillfully in order to best protect its interests. Companies involved in a labour dispute would be well advised to consult with a lawyer to help them navigate this process.

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Clause 67 Still Causing Issues in Engineering Sector

It is over 28 years since the Standard Documents for Building and Civil Engineering Works (Third Edition) were introduced - and yet, after all these years, they still create legal issues which necessitate analysis and discussion. For parties who have differences of opinion in respect of a contract governed by the Third Edition, it is inevitably clause 67 which is scrutinized. Clause 67 states that any issue shall be referred to the Engineer who must give a written decision to the Employer and Contractor within 90 days of being requested to do so by either party. The Engineer's written decision is final if the aggrieved party fails, within 90 days from receipt of the Engineer's decision, to state in writing (to the Engineer and the other party) that it requires arbitration. Moreover, if the Engineer fails to render his written decision within 90 days of being requested to do so, the aggrieved party must write to the Engineer and the other party in the 90 days following the expiry of the first 90-day period, stating that arbitration is required. The above sounds straightforward but - in reality - things move less smoothly. Before writing to the Engineer for a decision, the aggrieved party should draft in detail all the arguments for its position, and the request should be very precise and state exactly that which is sought from the Engineer. A failure in this regard would make it all too easy for an Engineer to make a decision refusing the request, especially as clause 67 does not require the Engineer to give reasons for his decision. It should also be noted that clause 67 does not give room for maneuver, or for friendly talks between the parties. Basically, once you request an Engineer's decision, you are under the auspices of the procedural machinery set out in clause 67. You really have no option but to adhere to that contractual machinery. Having said that, there is nothing to stop an aggrieved party from trying to find an amicable settlement after having rendered a notice requiring arbitration. Clause 67 does not specify any time-frames beyond the time when the aggrieved party renders its written notice requiring arbitration, although of course the aggrieved party cannot delay indefinitely. This scenario inevitably gives a window of opportunity for the parties to negotiate after the arbitral notice has come into existence. In essence, an aggrieved party invoking clause 67 should remember the following:

a) do not violate any of the time periods stated in clause 67, b) make sure that the requests to the Engineer give all the detailed reasoning and documents underpinning the request, c) the requests themselves must be precise and very well-drafted, and d) the time to hold friendly talks is only after you have rendered an arbitral notice.

In all of the above, lawyers can give cost-effective advice as the chances of avoiding a full-blown arbitration are much higher if legal input is obtained (behind the scenes, without the other party's knowledge) right from the start of the clause 67 process. The friendly talks after the arbitration notice of course also can take place without involvement of lawyers.

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Focus On: Mining in Oman

Oman has vast mineral resources which could provide project opportunities for both foreign companies and Omani companies and individuals. Specifically, Oman’s mineral resources include chromite, copper, dolomite, zinc, limestone, marble, gypsum, silicon, gold, cobalt and iron.

There are several projects either planned or already underway in the mineral sector, including plans to establish a “Minerals-City” to serve as a hub for a number of minerals based downstream processing projects. The Minerals City is planned by Takamul Investment Company, a majority Omani government-owned investment vehicle having Oman Oil Company as the majority shareholder. The projects will include a US$450 million salt/soda ash project in partnership with the Tata group, an Indian business conglomerate. The Minerals City will also include a silicon carbide processing facility at a cost of US $40 million, in partnership with SNAM Abrasives of India.

In addition, Brazil-based Vale International has established a subsidiary in Oman that is constructing a pelletizing plant in Sohar. The plant will produce high grade iron ore pellets that will supply the direct reduction facilities of the steel industry in MENA. Vale is also performing exploration studies in Oman to determine what minerals are suitable for potential development.

Several studies in the mining sector are also underway, including an economic feasibility study on silica and another on the exploitation of gold and copper ores in the Ghaizeen area. Gold in particular has tremendous potential in Oman, which is the only Gulf country with substantial gold reserves other than Saudi Arabia. In fact, the United States Geological Survey estimates that gold production in the Middle East will more than triple in 2009 from 2006 levels.

For those seeking to engage in mining activities in Oman, there is a comprehensive legal framework laid out in Oman’s Mining Law (Royal Decree 27 of 2003). The mining law includes provisions relating to the issuance of mining licenses, dispute resolution in the mining sector and environmental protection.

Joint ventures may be a good option for those seeking to get involved in the mining sector, as local license holders can partner with foreign investors to get the benefit of their technology and resources. In such a case, the Ministry of Commerce and Industry may issue a mining concession or license to an Omani company or individual for a particular site. If the license holder lacks the technology and resources to fully exploit the site, a foreign company can bridge that gap. The parties will enter into a mine exploitation agreement, in which the foreign company will assist with or execute mining operations under the local partner’s license. At a minimum, the Mining Law requires any mine exploitation agreement to include: (i) provisions relating to the payment of fees and taxes, and other financial matters; (ii) provisions relating to environmental conservation; and (iii) a dispute resolution mechanism that complies with the provisions of the Mining Law.

In addition to these minimum provisions, the parties also may consider the inclusion of market disruption clauses that provide for the consequences of any substantial changes in the market for the mining product. This is essential as prices for different minerals can change dramatically over the term of an agreement.

Further, the Mining Law requires that any dispute arising regarding a mining concession or license, or in relation to the drilling or exploitation of a mine, be resolved through arbitration rather than through the courts of Oman or another jurisdiction. The mine exploitation agreement should specify the location, language, governing law and applicable rules of the arbitration.

Oman’s mineral resources are expected to be a large source of revenue and growth for the Omani economy outside the oil and gas sector, presenting a wide array of project opportunities for investors.

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Focus On: Maritime Piracy and the Law

A series of spectacular attacks by Somali pirates over the last year has attracted enormous attention to the timeless, and now resurgent, problem of maritime piracy. For a time, the problem seemed limited to the waters off the Horn of Africa, but last month, pirates struck close to Oman in dramatic fashion. Armed with heavy weapons and night-vision capabilities, Somali pirates hijacked the German cargo ship MV Charelle 60 nautical miles off the coast of Sur. This attack was the first instance of Somali pirates seizing a ship outside of their normal area of operations.

The international attention is more than a passing fancy. Maritime piracy has had very real costs for shippers, as well as exporting countries and industries. The world has watched as pirates have hijacked vessels of increasing size and value, including a super-tanker carrying 2 million barrels of oil worth US$100 million. The total economic cost of maritime piracy has been estimated at over US$10 billion.

For a nation like Oman whose fortunes rest in part on a healthy shipping and export sector, security of shipping vessels and cargo is imperative. Perhaps the most significant determinant of security is how the law is used by both governments and private actors to combat and prevent maritime piracy.

International law creates a framework through which coordinated, collective action by states against maritime piracy is possible. Domestic civil law, on the other hand, provides a range of mechanisms through which businesses may protect their interests by taking preventative action.

The International Legal Response
The recent spike in attacks has sparked an unprecedented level of multinational anti-piracy activity; namely, the creation of an anti-piracy armada including ships from more than twenty countries. These joint patrols find legal authorization under the U.N. Convention on the Law of the Sea (the “U.N. Convention”). The United Nations Convention deals with the rights and responsibilities of nations in their use of the world’s oceans. Oman is a signatory to the U.N. Convention and ratified it in Royal Decree 67 of 1989. Recently, the U.N. Security Council has also issued a series of resolutions expanding the legal basis for the use of force on Somali pirates.

The result of this coordination has been, in the words of U.N. Secretary General Ban Ki Moon, “one of the largest anti-piracy flotillas in modern history.”

This cooperation has included many Gulf nations, including Oman. On June 29, Omani naval commanders participated in a conference in Riyadh with representatives from eleven other Arab states in the Gulf and the Red Sea aimed at coordinating a regional response. Out of this meeting came decisions to establish a joint naval task force and strengthen naval forces in the region.

In addition to providing a framework for joint action, international law has helped direct the criminal prosecution of suspected pirates. In the 18th century, it was determined that maritime piracy constituted a universal crime that could be prosecuted in any jurisdiction, regardless of geographic connection to the criminal act, the defendant or the victim. This concept became known as “universal jurisdiction.”

While universal jurisdiction allows any nation to prosecute a maritime pirate, in practice, most nations are loathe to spend time or resources prosecuting and incarcerating pirates from far away lands for crimes widely considered to be beyond the deterrent effect of limited judicial prosecution.

As a result, interested nations have increasingly entered into bilateral agreements on the prosecution of suspected pirates. In recent months, Kenya has signed memorandums of understanding with the U.S., the European Union and Britain to prosecute suspected pirates in Kenya.

The Domestic Legal Response
In Oman, there have been concerns about more pirates crossing into the territorial waters of Oman. Territorial waters, as defined in the U.N. Convention, consist of the coastal waters extending no more than twelve nautical miles from Oman’s coasts. These territorial waters are regarded as the sovereign territory of Oman.

While international law plays a crucial role in organizing the governmental response to piracy, businesses and individuals in Oman may consider a preventative approach by looking to domestic laws to protect their interests.

Specifically, exporting industries and businesses involved in shipping will secure their goods and vessels through contracts with insurers and private security contractors. In that regard, private maritime security companies are considering the establishment of business operations in Oman.

War insurance may be desirable, as may ransom and kidnapping coverage. The Oman Maritime Law (Royal Decree 35 of 1981, as amended) states that certain war risks, which may include piracy, are not included in a policy unless it has been agreed otherwise between the insurer and the insured. Therefore, it would be important for those seeking war insurance coverage for piracy in Oman to clearly agree what events are covered.

Some may seek new physical deterrents to employ onboard their vessels, while others may prefer to hire armed escort vessels to repel would-be pirates.

In instances where shipments have been hijacked, private individuals will need to ensure that the payment of ransom does not run afoul of the law in any jurisdiction in which they operate. While it is not typically illegal to make a ransom payment, it is illegal in many jurisdictions to make payments to parties determined to be involved in acts of terrorism. Given the murky relationships between Somali pirates and terrorist organizations active in Somalia, it must be determined whether any relevant domestic anti-terrorism laws would be implicated in the payment of ransom.

The legal issues created by maritime piracy underscore the need for internationally experienced legal counsel. In under a decade, the 21st century has shown with alarming frequency that domestic concerns, such as instability in Somalia, can give rise to global problems as significant as maritime piracy.

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Focus on: Litigation in Oman

Summer time is when the Oman Courts almost go into hibernation; very few hearings take place between July 1 and September 30.

However, in many ways it is the most crucial time in Omani litigation, because the Court-appointed experts are often writing their reports to the Courts over these three months.

It is probably true to say that, about 90% of the time, the Omani Courts rubber-stamp and approve the report conclusions reached by the experts who have been appointed by those Courts.

The Courts in Oman choose to appoint experts in most cases, and they frequently turn to local private-sector accountants when monetary compensation is claimed.

In these cases, it is not the Oman Courts that must be persuaded - rather, one must convince the experts appointed by the Courts. Experts meet with the parties separately to hear arguments and receive documents. These meetings are central to determining who wins and loses in Oman Court cases.

Lawyers play an important part in assisting and guiding their clients in meetings with experts. Good preparation is a prerequisite, as is an ability to answer all the enquiries made by the experts in these face-to-face scenarios.

The general rule in Omani law is that an aggrieved party will be compensated for its direct losses, as opposed to indirect losses.

However, there is no clear-cut Omani judicial definition of “direct“ and “indirect“, and it should be borne in mind that most of the experts do not have qualifications in law in any event. Accordingly, it is the lawyers who need to convince the experts whether a specific head of claim should be perceived as direct or indirect.

It should also be remembered that Omani law includes a duty to mitigate one’s losses and, equally, Egyptian case law is highly persuasive to experts and the Courts in Oman.

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Focus on: Labor Unions

In 2006, an amendment to the Labor Law was issued that permits the establishment of trade unions in Oman. Since then, the number of labor unions in Oman has steadily increased. Currently, there are more than 55 labor unions across the Sultanate according to the General Federation of Oman Trade Unions (GFOTU). This represents a dramatic increase over 2007 and 2008 levels.

Trade unions are organizations of employees that work together to achieve common goals. In Oman, trade unions may work to defend employee rights, improve financial and social situations, and represent employees in work-related matters. The trade unions have also formed the GFOTU, which is an independent body that oversees labor unions in Oman established under the new law, and which promotes labor rights and the interests of unions.

As the number and visibility of labor unions increases in Oman, there are several issues for employers and employees to consider.

Employers should make themselves aware of the laws and what actions are permitted and prohibited with respect to trade unions. For example, it is unlawful for an employer to terminate an employee based on the employee’s membership or role in a trade union. In addition, employers may be subject to fines or imprisonment if they interfere with an employee’s right to carry out trade union activities.

Conversely, employers may look to trade unions as a resource for facilitating communication between the employer and the employee. Trade unions have the advantage of organization, which means an employer can communicate information about company policy, safety matters or other work matters to the union, which can disseminate this information to all employee members.

Employers have taken different approaches to the increase in labor unions in Oman. Some employers, seeking to gain the communication and policy benefits of labor unions, have actually sought to help employees form labor unions. Other employers have taken a more passive approach and waited to see the impact of the labor unions rather than actively promoting their formation.

Similarly, employees should consider the legal requirements for forming a union, as well as the rights and restrictions associated with trade unions under Omani law. For example, while trade unions have the right to bargain collectively or engage in peaceful strike action in order to improve their financial or employment situation, there are limits on what actions the employees may take. Specifically, employees planning to engage in a peaceful strikes must notify the employer at least three weeks prior to the date of the strike. Further, employees working at establishments that provide basic services to the public are not permitted to strike.

With the rapid increase in labor unions in the Sultanate, employers and employees should consult the law before taking any steps to form a union or before setting union-related policy. While labor unions can provide substantial benefits to both employers and employees, it is important to ensure that the correct laws and regulations are followed in order to achieve the maximum benefits.

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Focus On: Copyrights and Fair Use

Under the Law of Copyright (Royal Decree 65 of 2008), it is necessary to obtain the permission of a copyright owner in order to use, copy, publish, or broadcast a copyrighted work such as a book or audio recording. However, the Copyright Law does provide certain narrow exceptions to this rule which permit the use of a copyrighted work without the author’s permission.

For example, in the following circumstances it is permissible to use the copyrighted work without the owner’s permission:

1. Individuals may quote from a publicly available copyrighted work for clarification, explanation, or criticism purposes but only to the extent necessary for the clarification, explanation, or criticism;
   
   
2. Educational institutions may use a copyrighted work for clarification purposes during face-to-face instruction, but only to the extent necessary for the clarification and also provided there is no direct or indirect compensation;
   
   
3. Public libraries, educational establishments, and scientific and cultural institutions may make a single copy of a published article or short work for study or research, provided there is no purpose of direct or indirect financial gain.

Although the above uses are permitted without the owner’s permission, the user of the copyrighted work must still mention the source of the work and the author’s name. Further, the above uses are permitted only if they do not conflict with the copyright owner’s normal exploitation of the work.

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Focus On: Corporate Governance

There is widespread confusion in Oman about the applicable standards for companies with respect to transparency and conflicts of interest. A conflict of interest arises when a person has an interest that may compromise his reliability. For example, if company A is negotiating a contract with company B, and a director of Company A has a close relative working at Company B, this would be a conflict of interest. The director has a duty to act in the interests of his company, but he has a personal interest that may conflict with that duty. Even if there is no improper result, conflicts of interest can sometimes give the appearance of impropriety. For this reason, the government of Oman has issued several regulations related to conflicts of interest, or related party transactions, as they are also known.

In Oman, there are different laws and regulations applicable to different company structures. Specifically, there are different requirements for publicly traded companies (SAOGs), closely held companies (SAOCs), and limited liability companies (LLCs).

For SAOGs, Article 108 of the Commercial Companies Law states that members of the board or related parties shall not have any direct or indirect interest in the transactions or contracts concluded in respect of the company except when such transactions or contracts are in accordance with the regulations issued by the Capital Market Authority.
The Capital Market Authority has issued the Code of Corporate Governance (Circular 11/02) which defines related party transactions and the disclosure rules that apply to such transactions and contracts.

For SAOCs, the applicable rule is provided in Ministerial Decision 92 of 2003 titled “Rules regulating the Election of Board of Directors and the liabilities of Board Members”. These rules state that the Ministry of Commerce & Industry shall investigate violations that undermine the rights of shareholders in a closed joint stock company that are committed by members of the board of directors.

Sometimes, corporations operating in Oman are concerned about which standard applies, and particularly whether they need to comply with the Code of Corporate Governance. In some instances, there have been attempts to force SAOCs to comply with the Code. The Code of Corporate Governance only applies to SAOGs in Oman. SAOCs do not fall under the requirements of the Code of Corporate Governance because they are not publicly listed. Similarly, LLCs are not subject to the requirements of the Code of Corporate Governance.

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Focus on: the Salalah Free Zone

On June 20, 2006, the Sultan of Oman, Qaboos bin Said, promulgated Royal Decree No. 62/2006 creating the Salalah Free Zone (SFZ), furthering progress toward the Sultanate’s goal of being a desirable and advantageous place to do business. A ‘Free Zone’ is a territorial carve-out in which business-friendly laws may be instituted to promote foreign direct investment, trade, entrepreneurship and business development.

The 19 million square metre SFZ is endowed by the government with world-class infrastructure and support services providing start-to-end-function facilities for both multinationals and start-ups. Other advantages include close proximity to the ‘Super Hub’ port at Salalah, one of the world’s largest container terminals. Strategically positioned on the Indian Ocean, the port at Salalah accommodates the world’s largest container ships, is equipped with the world’s largest container-handling cranes, and can handle up to 4.4 million TEU/year.

Apart from its strategic location and well-developed infrastructure, a whole host of other investment-friendly incentives are available to businesses operating at SFZ, including a competitively low initial cost of setting up, and a one-stop-shop arrangement for licenses, permits, visas, customs clearances, etc. Businesses at SFZ will even be able to participate in existing export guarantee arrangements provided to Omani companies by Omani financial institutions.

The specific activities permitted in the free zone are:

• • Trading
• • Distribution and Warehousing
• • Manufacturing and Assembling
• • Processing and Packaging
• • Logistics
  

The array of special incentives offered includes:

• • A lease for 50 years (renewable for another 50 years)
• • 100% foreign ownership
• • Zero customs duties on imports and exports
• • No minimum capital investment requirement
• • No taxes on profits or dividends for 30 years and no taxes on personal income
• • No restrictions on repatriation of capital, profits and investments
• • Citizen employment requirement level of only 10%
• • Flexible customs procedures
  

Businesses may apply for the following kinds of licenses from the SFZ:

• • General Trading License. Allows the holder to import, export, distribute, and store all items as per the Free Zone rules and regulations;
  
  
• • Trading License. Allows the holder to import, export, distribute, and store items specified on the license;
  
  
• • Industrial License. Allows the holder to import raw materials, carry out the manufacture of specified products, and export the finished product to any country;
  
  
• • National Industrial License. Allows the holder the same status as an Arabian Gulf Cooperation Council (AGCC) company inside Oman. This license is designed for manufacturing companies with at least 51% AGCC ownership or shareholding. The value added to the product in the Free Zone must amount to a minimum of 40%; and
  
  
• • Service License. Allows the holder to carry out the services specified in the License, within the Free Zone. The type of service must conform to the parent company’s License, issued by the economic department or municipality of the relevant region.
  

It should be noted that for all types of businesses located in SFZ, sales in Oman must be carried out through a distributor or any company based in Oman that holds a valid trade license with the same business activity.

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Focus On: Hormuz Oil Spill

In the early morning of March 20, 2009, two U.S. Navy vessels, the USS New Orleans (an amphibious assault ship) and the USS Hartford (a nuclear powered submarine), collided in a highly unusual incident in the Strait of Hormuz, between Oman and Iran. Both ships were damaged, and 15 soldiers were injured, though none of them seriously.

Neither ship was disabled by the damage sustained and the nuclear reactor aboard the Hartford remained uncompromised. The USS New Orleans, however, ruptured its fuel tanks and spilled 25,000 gallons of diesel fuel into the Arabian Gulf.

While diesel fuel was visible from the surface shortly after the accident, an aerial search conducted by the U.S. Navy that day found that the spill had disappeared from view. A Navy spokesman suggested that due to its low density, the fuel had likely dissipated.

Others sources speculated that the spill could have taken a trajectory toward Musandam, a popular resort destination in Oman considered by some to be an ecotourism treasure.

At this point in time, there have been no reports of environmental damage in the area around Musandam. Nevertheless, the incident raises the question: who may be held liable for environmental or ecological damage resulting from accidents at sea?

This question is a particularly relevant one for countries and companies with assets located along busy waterways.

Liability of Military Ships
The United Nations Convention on Law of the Sea (UNCLOS) provides that military ships are generally immune from all liabilities.

There are, however, exceptions to immunity for certain events and activities in territorial seas. Specifically excluded from immunity is loss or damage resulting from non-compliance with the laws or regulations of a coastal state concerning passage through the territorial sea or any act of willful and serious pollution contrary to the convention.

These exceptions to immunity, however, are applicable only in territorial seas, not in straits used for international navigation, such as the Strait of Hormuz. Significantly, the U.S. is not a party to UNCLOS, meaning that these exceptions could not be applied to attach liability to a U.S. military vessel.

Liability of Commercial Vessels
The liability of commercial vessels is an even more complex matter, subject to international conventions and a wide range of domestic laws, both of the flag nation of the commercial vessel and of any affected nation. Moreover, countries whose shores have suffered pollution have often taken matters into their own hands by bringing civil suits and/or criminal charges locally and abroad.

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Focus on: Teaming Agreement

A company submitting a bid for a technical project may need to subcontract parts of the project to another company having expertise in a given area. A teaming agreement can be an essential part of the tender process, enabling both the primary company and the subcontracting company to clarify their rights and responsibilities in submitting the tender. The teaming agreement may cover topics such as timing of the tender submission, allocation of responsibilities if the bid is awarded, exclusivity, and price terms.

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Focus on: Secondment of Employees

Foreign companies doing business with local partners in Oman or that own shares in local companies may consider “seconding” an employee to the local company. There are a number of factors that the local and foreign companies should consider when arranging to second an employee.

First, the Oman Labour Law issued by Royal Decree 35/03 (as amended) does not recognize the concept of secondment. However, it is a fairly common practice that is effected through a private agreement between the employee, foreign company, and the local company. Through the years, certain principles have evolved which do not have the force of law but are followed by many companies in respect of secondment. Some of them include:

1. The secondee usually remains the employee of the foreign company irrespective of any agreement that the local company enters into with the secondee for the purpose of obtaining employment permits;
2. The local company and the foreign company should enter into a secondment agreement setting forth the terms of the secondment and providing essential safeguards for both parties;
3. The local company often acts as the local sponsor for the secondee for the purpose of procuring visas and permits; and
4. The foreign company will be expected to withdraw the secondee immediately in case of misconduct or breach of any provision of the local laws.

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Focus on: Mulkiya

In Oman, the ownership of real property or personal property is evidenced by a title deed recorded in the public records known as Mulkiya. Title to personal property is generally shown by possession when no proof or strong evidence exists showing that the property belongs to another. In the case of automobiles and other vehicles, title is registered with the relevant government department (Royal Oman Police) which issues a Mulkiya for the vehicle.

For real property, the Mulkiya describes the status of title to the property, including a property description, names of the titleholders and how title is held (joint tenancy, etc.), encumbrances (mortgages, liens, deeds of trusts, recorded judgments), and real property taxes due. In Oman, the Ministry of Housing maintains records of real property.

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Focus on: Recent Amendment to the Tenancy Law

In response to rapidly rising rents, the Law Regulating the Tenancy of Residential, Commercial & Industrial Premises issued by Royal Decree 6/89 was recently amended by Royal Decree 72/08. Some of the significant features of the amended law are as follows:

• Landlords may not increase rents for three years from the date of commencement of the lease or from the date of the last rental increase;

• Thereafter, rent increases are capped at 7% per year;
  

• If the landlord performs any improvements of the leased premises at the tenant’s request, then a commensurate increase in rent is permitted;

• The landlord may not evict the tenant without a valid legal ground for four years for residential premises and for seven years for commercial/industrial premises from the date of the tenancy agreement; and
  

• The lease will be deemed renewed during the period when a tenant cannot be evicted even if the landlord does not renew the registration;

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