Precautionary Measures

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An issue which often causes a lot of concern is injunctive relief.

From time to time, bank accounts may be frozen and other precautionary measures put in place by the Omani court. Application is often made to the Judge in charge of Emergency Measures, which is an ex parte, paper application which involves no court hearings.

A typical scenario works like this: a Claimant sues a Defendant and becomes worried that the Defendant may have meagre assets against which to enforce a final, non-appealable court judgment.

This fear is perhaps justified given that it may take one or two years from the date of filing a case to actually obtaining a court judgment which can be enforced.

In such circumstances, the Claimant applies in writing to the Judge in charge of Emergency Measures, explaining the circumstances, and the traditional request is for all the bank accounts of the Defendant in Oman to be frozen, so that monies can flow into those accounts, but not out.

The Judge makes a decision on this application without informing the Defendant.

Indeed, it is often the case that the Defendant's first knowledge of an injunction being granted is when a representative of the Defendant attends the Bank to perform a routine transaction and is alerted by the Bank that an injunction has been put in place by court order.

However, the injunction can be challenged by the Defendant, but to do so, a fresh court case has to be filed against the Claimant, and in the meantime, the injunction remains in place.

A Claimant may also seek an injunction as regards property in the hands of a third party. For instance, if A sues B and comes to know that C is about to pay a large sum of money to B, a request might be made to the Judge in charge of Emergency Measures to injunct the monies so that C has to retain them and cannot pay them over to B.

Lawyers are often asked what is the standard of proof required to convince a Judge to issue an injunction order? The answer, unsatisfactory as it is, is that what is required is whatever documentary evidence and skilled written argument it takes to persuade the Judge! From experience, it does seem that the Judges are especially concerned about litigant parties who could be perceived to be a "flight risk" or who have strong ties with overseas countries, especially with countries outside the GCC region. It could well be that the Judges are mindful that an Omani court judgment may not be enforced by countries outside the GCC.

So, what is the first thing to do if your assets are injuncted? The starting point is for a lawyer to go to court to peruse the file and to obtain a copy of the injunction order.

The next step is to file a court case against the beneficiary of the injunction.

There are a number of statutory provisions which provide technical, procedural reasons as to why the injunction should be cancelled by the judiciary.

By way of example, Article 375 of Royal Decree 29/02 (as amended) states: "The judgment debtor should be notified of the attachment minutes and the relevant order within ten days from the date of levying it, otherwise it shall be considered null and void."

Accordingly, the Courts have a right to cancel the injunction if a Court official does not serve the injunction order on the affected party within 10 days after the Judge in charge of Emergency Measures signed that order.

In conclusion, the area of injunctive relief and precautionary measures under Omani law is an intricate and complex subject. It is also little-known that a party can still apply to the Omani courts for injunctive relief even when the contract in question states that any dispute will be settled by arbitration. This is because courts always have the right to make injunction orders because an injunction request is considered to be an ancillary request, which is separate and distinct from the issue of which body has jurisdiction over the substantive dispute.

-James Harbirdge, Partner (Oman)

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Courts versus Arbitration

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There is often a lack of understanding about how Oman’s Arbitration Law (Royal Decree 47/97 as amended) works. The truth is that this law provides a viable alternative to having a dispute heard by the Omani courts.

The fundamental difference between the Omani court system as opposed to the Omani arbitration system is that an Omani court case may go through three tiers of justice (Primary, Appeal and Supreme), whereas an arbitral award is final, with no right of appeal, and it is extremely unlikely that the Omani Courts would nullify an arbitral award. This means that almost certainly an arbitral award will lead to the end of the dispute, without any ability to appeal or overturn the arbitral award.

The best time to agree on arbitration is in the contract at the start of the relationship with your counter-party. For instance, if party A desired to have any dispute heard by an arbitral panel, using Omani Arbitration Law as the procedure for such arbitration, it is best for the contract to state: “Any dispute will be finally settled via arbitration in accordance with Omani Arbitration Law (Royal Decree 47/97 as amended).”

However, the above clause can be further fine-tuned to states how many arbitrators will be on the arbitral panel. Article 15 of Oman’s Arbitration Law states that if the parties have not agreed on the number of arbitrators, the number of them will be three. Accordingly, if the parties wanted a sole arbitrator to hear any dispute, they should say so in the contract.

It is worth bearing in mind that with a panel of three arbitrators, a majority 2-1 decision is sufficient, unless the parties had agreed otherwise in writing before the commencement of the arbitration.

Article 17 states that the Court would decide the identity of the sole arbitrator, if the parties cannot agree on whom it should be. If the panel is to consist of three arbitrators, one party states his nominee as arbitrator, and the other party must then state his nominated arbitrator within the following 30 days. The two arbitrators thus chosen should select a third arbitrator within 30 days after the nomination of the second arbitrator. However, either party can apply to Court if these 30 day deadlines are breached.

An important part of the Omani Arbitration Law is what it states about the time procedural framework for an arbitration case. It is often forgotten that Article 27 says that – unless the parties have agreed otherwise - the arbitration clock starts ticking on the day the defendant receives a letter from the claimant stating that a dispute exists and that, as per the contract, it must be resolved via the agreed arbitration procedures. Article 45 requires that the arbitral award must be forthcoming within 18 months after the clock started to tick, unless the arbitral panel and the parties agree otherwise.

Another salient aspect of Omani arbitration is that the arbitral panel can appoint one expert or more to present a written or verbal report. The Law states that the parties will be afforded the opportunity to present their views on the expert reports. In addition, each party has the right to examine the documentation upon which the expert based his report. The parties are also granted the right to bring their own experts to an arbitral hearing, to present their views on the contents of the reports prepared by the expert appointed by the arbitral panel.

As mentioned at the start of this article, an arbitral award should be viewed as final as there are no rights of appeal and very limited scenarios where an application can be made to the Omani courts to try to have the arbitral award nullified. To the best of my knowledge, the Oman courts have never nullified an Omani arbitral award.

What, then, drives certain parties to agree in their contract to arbitration? The decision may be due to enforceability issues or due to a desire to have the dispute heard by specific arbitrators. The time frame is perhaps also more certain in arbitration as compared with Omani court cases. But weighing up the advantages and disadvantages of the courts as opposed to arbitration is always a complex matter which can only be determined after careful legal study of the specific facts in question at the time of contract preparation.

-James Harbirdge, Partner (Oman)

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