CURRENCY
The official currency is the Omani Rial which is divided into 1,000 Baizas. Omani courts and tribunals will enforce judgments in foreign currency.
GOVERNMENT AND LEGAL SYSTEM
On 23 July 1970, His Majesty Sultan Qaboos bin Said acceded to the throne of the Sultanate of Oman and launched radical reforms in government administration and the judicial system. His Majesty established a modern government structure and introduced major development programmes to build the infrastructure of the country and for building a prosperous future for the people of Oman.
In November 1996, Basic Statute, Oman’s first written constitution, was issued by Royal Decree 101/96. It prescribes the legal framework for governance and codifies the legal order of Oman. It provides rules for the royal succession, principles guiding state policies, functions of different authorities, individual rights and the structure of the Government.
Basic Statute characterizes the country as an independent, Arab, Islamic, fully sovereign state with Muscat as its capital and sets the political, economic, social, cultural and security principles of state policies. Political principles are stated to be: (i) preserving the State’s independence and sovereignty, and defending it against all forms of aggression; (ii) reinforcing cooperation and ties with all countries on mutual respect, common interest, noninterference in internal affairs and in compliance with generally recognised principles of international law for the promotion of world peace and security; (iii) laying foundations for the establishment of Shura consultation, based on the national heritage and Shariah; and (iv) establishing a good administrative system that guarantees justice, peace and equality for citizens, ensures public order and safeguards the interests of the State. Basic Statute provides for an independent judiciary and the right to a fair trial. It guarantees to individuals the right to life and liberty and freedom of speech and expression within limits of the law. It recognises the principle of due process of law and guarantees the right to defence in courts of law.
The Government structure comprises His Majesty the Sultan as the head of State and the council of ministers, functioning as a cabinet that consists of ministers appointed by the Sultan. The bicameral parliament or “Majlis Oman” comprises Shura council “Majlis Al Shura” or Consultative Council and “Majlis Al Duwlah” or State Council. Members of the State Council are appointed by His Majesty. The Shura council is a representative council whose members are elected by the people and it has mandate to review legislation pertaining to economic and social development prior to its becoming law.
Basic Statute contemplates the establishment of a higher council to oversee the running of courts and auxiliary bodies. The court system comprises courts of first instance, courts of appeal, and the Supreme Court.
Legislation consists of primary legislation and secondary legislation. Primary legislation is issued by and known as Royal Decree (“RD”) and published in the fortnightly Official Gazette. RD may be amended by RD only. Secondary or interstitial legislation is issued by Ministerial Decision (“MD”). Decisions and implementing regulations by a relevant executive body or ministry are also published in the Official Gazette.
Oman has civil law jurisdiction. All laws are required to be in conformity with Basic Statute. Laws become effective from the date of publication in the Official Gazette.
In 1975, the Diwan of legislation was formed to review all laws and to draft RDs, international agreements and Government contracts. The Ministry of Legal Affairs, established in 1994, is responsible for the preparation of RD and for reviewing all draft laws, regulations and MDs before they are promulgated and published in the Official Gazette. It issues the Official Gazette and gives legal opinions and advice to the Government on interpretation of RDs and laws.
RD 75/08 promulgated the State of Emergency Law authorising the declaration of emergency when the State’s security or public order is threatened by war, internal disturbance, general crisis or spread of epidemic. RD 76/08 promulgated the General Mobilization Law authorising the announcement of mobilization upon outbreak of war or of its revocation by Royal Orders.
HOLIDAYS
The Hejira calendar is the official calendar of Oman. Based on this, there are five official holidays: Eid Al-Fitr, Eid Al-Adh’ha, Milad-Un-Nabi, new Heira year and Al Isra and Al Miraj. In addition, based on the Gregorian calendar, official holidays are also declared on 23 July – Renaissance Day, marking His Majesty’s ascendance to the throne, and National Day, which falls on 18 November.
LANGUAGE
The official language is Arabic. All documents, correspondence and agreements submitted to the Government and its instrumentalities must be in Arabic. Omani courts and tribunals will consider and construe only documents submitted in Arabic or in Arabic translation as translated by a duly licenced translator. Although unofficial English translations of many Omani regulations are available, the authoritative text is Arabic text. Omani court proceedings must be in Arabic. However, parties may agree on any other language for arbitration.
OFFICE HOURS AND TIME ZONE
Oman is in GMT +04.00 hours. Office hours vary widely by business, but in general are from 8:00 AM to 1:30 PM Saturday through Thursday and 4:00 PM to 6:30 PM Saturday through Wednesday. In 2008, on the recommendation of the Oman Chamber of Commerce and Industry, many companies adopted the five-day workweek of Sunday through Thursday with official hours of business increased by one hour on weekdays. Official working hours for Government offices are from 7:00 AM to 2:00 PM Saturday through Wednesday. Banks are open to the public from 8:00 AM to 1:00 PM from Sunday to Thursday.
Wednesday, June 25, 2008
The Oman Law Digest 2009 - INTRODUCTION
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The Oman Law Digest 2009
BUSINESS ORGANISATIONS
The Oman Law Digest 2009
AGENCY Foreign natural or juridical persons must engage in commercial activities through a locally registered commercial agent in Oman. Accordingly, foreign manufacturers or suppliers who do not have legal presence in Oman must appoint a local agent to sell, promote or distribute a product or commodity or to provide service. The relationship between the foreign principal and commercial agent in Oman is governed by Law of Commerce [RD 55/90] and Commercial Agencies Law [RD 26/77 as amended]. Law of Commercial Agencies defines commercial agency as an agreement whereby a foreign producer or supplier who has no legal presence in Oman assigns to one or more Omani natural or corporate persons the right to sell, promote or distribute a commodity or product or to provide service for profit or commission. The Law does not draw a distinction between commercial agent, representative, distributor or any other intermediary. The agent may be a natural or juridical person. If the agent is a natural person, he must be an Omani national and resident of Oman; if a juridical entity, the Omani shareholding must be more than 51% and commercial agency must be stated as the business object of the agent. Following Oman’s accession to WTO, companies with up to 70% shareholding are permitted to be commercial agents. Agencies may be non-exclusive and more than one agent may be engaged by foreign principals. An agency agreement must be in writing and registered with the Agency Registrar at the Ministry of Commerce and Industry (“MCI”) [MD 11/85 as amended]. Agreements signed abroad must be duly legalised by the Omani embassy. If the agency agreement is not in Arabic, a duly authenticated Arabic translation must be provided for registration of the agency. The approximate Government fee for agency registration is US $400 which includes the cost of registering the agency with the Ministry of Commerce and Industry and with the Oman Chamber of Commerce and Industry. Registration must be renewed every three years. Except in respect of goods for the Ministry of Defence, a principal cannot sell products directly to a customer without involvement of an agent. A duly appointed agent is entitled to commission even if the principal has resorted to direct selling of products or services to customers in contravention of the law and the agency agreement. Products manufactured abroad may be imported by customers without an intermediary or agent for private use which is not intended for a commercial purpose.
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The Oman Law Digest 2009
CORPORATIONS
The Oman Law Digest 2009
Commercial Companies Law [RD 4/74 as amended] provides for the formation, regulation, merger, conversion, liquidation and dissolution of general partnerships, limited partnerships, joint ventures, closed joint stock companies, public joint stock companies, holding companies and limited liability companies. Subject to licencing and other restrictions, foreign natural and juridical persons can invest in a joint venture, closed or public joint stock company and limited liability company. Foreign investment in local companies is authorised pursuant to Foreign Capital Investment Law [RD 102/94]. Joint venture is an unincorporated association in the nature of a consortium of two or more commercial entities, usually to execute a project. There is no registration requirement but a foreign company participating in a joint venture must be a licenced entity. In its functioning, a joint venture can be considered to be a de facto general partnership between participants in such joint venture. Entities in a joint venture must have a written agreement on sharing of profits and other common issues. Limited liability company must have at least two natural or juridical shareholders referred to as partners or members. Share capital must be at least RO 20,000 if shareholders are Omanis and RO 150,000 if there are one or more foreign partners. Capital is divided into shares of equal nominal value that are not available for public subscription. Members’ liability is restricted to shareholding in the capital. The limited liability company cannot engage in the business of banking, insurance, financial guarantees or commercial aviation. Shareholders have an effective right of preemption and right of first refusal before a shareholder sells its shares to a third party. Shares confer equal voting rights. Share certificates are not issued and shareholding is evidenced by incorporation documents including a contract of incorporation called a constitutive contract. The limited liability company must keep a membership register giving names of members and other relevant particulars. Any proposed shareholders’ action which increases financial liability requires unanimous approval of shareholders. Management of a limited liability company is entrusted to one or more managers or a board of managers. The manager may perform acts for the company’s objects unless restricted by constitutive contract or law. Accounts must be maintained and audited in accordance with international accounting standards. Companies with a capital of over RO 50,000 or having more than ten shareholders, or so required by the contract of incorporation, must have an internal auditor. A joint stock company with at least three shareholders must have authorized and issued share capital. The Memorandum and Articles of Association must be approved by the MCI before incorporation. Joint stock companies may be public or closed. Public joint stock company is authorised to issue stocks to the public and must have a minimum share capital of RO 2,000,000. It is subject to a code of corporate governance and other regulations issued by the Capital Market Authority (“CMA”). Besides the MCI, registration must also be made with the CMA, Muscat Security Market (“MSM”) and Muscat Depository and Securities Registration Company SAOC (“MDSRC”). Share transfers must be effected through MSM. Closed joint stock company is not permitted to offer shares to the public. It must have a minimum share capital of RO 500,000. Registration with MCI, which is the relevant authority for its corporate matters, is mandatory for commencement of business. Share transfer must be effected through MSM. Nominal value of a share in a public or closed joint stock company should not exceed RO 1 and at least half of the nominal value must be paid up on subscription and the full value within three years from the date of incorporation. Joint stock companies cannot be established without prior authorization from MCI. Application for authorisation must be signed by at least three founder members. Founder members of a public joint stock company must subscribe for not less than 30% but not more than 60% of shares and no single shareholder may own more than 20% of shares without prior authorisation from CMA. Management of a joint stock company must be entrusted to a board of directors comprising at least three directors for closed and five for public, who must draft bylaws for management, business and personnel affairs within one year of registration of the company. A board of directors of the company must be elected by shareholders for a renewable term of three years according to rules for electing the board issued by MCI or CMA. The board may perform all functions except selling all or substantial parts of the company’s assets; mortgaging the company’s assets; guaranteeing third-party debts; or making donations which require authorisation from shareholders or the Articles of Association. Holding company may be a limited liability or joint stock company exercising financial and administrative control over one or more companies in which it has at least 51% shareholding. Share capital must be at least RO 2,000,000. Its objectives should be to manage its subsidiaries; invest funds in stocks; provide loans, guarantees, etc. to subsidiaries; and acquire patents, trademarks, concessions and other intangible assets. Pursuant to a recent amendment to the Law of Income Tax on Companies [RD 47/81 as amended], companies with up to 70% foreign shareholding are charged income tax at a rate of 12%, similar to wholly Omani owned companies. Omani law on the accountancy and auditing professions provides that accounts of companies must be prepared according to International Accounting Standards (now the International Financial Reporting Standards) (IFRS). Incorporation of banks and insurance companies requires additional approvals from Central Bank of Oman and CMA, respectively. They are required to be incorporated as joint stock companies.
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The Oman Law Digest 2009
FOREIGN CAPITAL INVESTMENT
The Oman Law Digest 2009
In order to do business in Oman, it is necessary for a foreign natural or juridical person to comply with laws governing foreign business activity, which includes Foreign Capital Investment Law [RD 102/94] (“FCIL”), Commercial Register Law [RD 3/74 as amended], Commercial Agencies Law [RD 26/77 as amended], Commercial Companies Law [RD 4/74 as amended] and Law of Commerce [RD 55/90]. According to FCIL, foreign companies seeking to do business in Oman are required to form a locally registered company with local equity participation of at least 55%. A foreign capital investment licence is granted by MCI to foreign entities upon satisfying capital and other requirements. The licence permits a foreign company to have shareholding in a local registered company. Although FCIL restricts foreign ownership in Omani companies to 45%, pursuant to Oman’s accession to WTO in 2002, foreign shareholding up to 70% in all sectors is permitted without need for approval from the cabinet or the Council of Ministers. Foreign ownership of 100% is permitted for certain types of businesses in Oman such as brokerage services and for projects which are deemed by the Council of Ministers to contribute to the development of the national economy. The minimum capital requirement for such companies is RO 500,000. Minimum capital requirements for different types of companies with foreign equity participation are: (i) limited liability companies, RO 150,000 although Oman had committed to abolish this requirement as of January 2001; (ii) closed joint stock company, RO 500,000; and (iii) public joint stock company, RO 2,000,000. There is no restriction on repatriation of foreign funds. There are no foreign exchange controls. The Omani Rial is pegged to the US Dollar at a fixed rate of US $2.59/RO 1. BRANCH OFFICE A foreign company may establish a branch office for the purpose of performing a government or quasi-government (including partly owned government companies) contract. Tenure of a branch office is restricted to the terms of the contract and may be extended for additional terms if the contract is extended for further periods or there is another government or quasi-government contract for longer duration. The branch cannot do business other than the performance of the contract for which it is established. Branches are subject to a high rate of taxation starting from 30% on taxable income of over RO 30,000. REPRESENTATIVE OFFICE A foreign company may form a representative office for the limited purpose of marketing and promotion of products. It is prohibited from directly engaging in sale or doing any other activity deemed to be commercial activity. It is authorised to recruit employees. Pursuant to the Free Trade Agreement between Oman and the US effective 1 January 2009 (“FTA”), American investors will be accorded preferential treatment in business. US companies seeking to conduct business in Oman will get an unprecedented level of openness and access to the Omani services market. The FTA guarantees national and most favoured nation treatment for services including production, distribution, marketing and sale of services and includes benefits for service providers across a range of fields, including banking, insurance, securities, and asset management. The FTA also offers a comprehensive dispute resolution mechanism. The MCI has issued MD 102/08 on registration of branches of American establishments and companies. Similarly, Omani companies seeking to do business with the US will now have open access to the world’s largest economy. Details of how it will work in practice are still emerging. It remains to be seen how current Omani procedures will adapt to the provisions of the FTA, but it is clear that the FTA will encourage strong economic relations between the US and Oman. Additional provisions provide for state-of-the-art protection of intellectual property, as well as protections for the environment and domestic labour laws. The US has a FTA with only one other GCC country (Bahrain), although more are expected in upcoming years.
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The Oman Law Digest 2009
TAXATION
The Oman Law Digest 2009
Personal income is not subject to tax in Oman. Tax is payable by companies and establishments if they have permanent establishment in Oman. Tax is charged on income, from all sources, which is realised or has arisen in Oman. All allowable deductions, such as business costs or depreciation, are defined in Law of Income Tax on Commercial Companies [RD 47/81 as amended] (“Tax Law”). Permitted depreciation rates are set out in the Tax Law. In practice, tax is charged on what is substantially a profit calculation. The tax regime is administered by the Secretariat General of Taxation under the Ministry of Finance. Tax rates depend upon the legal status of the entity. All companies registered in Oman, wholly Omani owned or with up to 70% foreign participation, and branches of wholly GCC owned companies are subject to a uniform rate of 12% on taxable income over RO 30,000. Other entities, including branches of foreign companies, are taxed as follows:| Taxable Income | Tax Rate | |
| | 0 – 5,000 | Nil |
| | 5,001 – 18,000 | 5% |
| | 18,001 – 35,000 | 10% |
| | 35,001 – 55,000 | 15% |
| | 55,001 – 75,000 | 20% |
| | 75,001 – 100,000 | 25% |
| 100,001 – and above | 30% | |
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The Oman Law Digest 2009
INSURANCE
The Oman Law Digest 2009
Insurance in Oman is regulated by Insurance Companies Law [RD 12/79 as amended] and Executive Regulations [MD 5/80] (together, “Law”). Jurisdiction of insurance was transferred from MCI to CMA [RD 90/04]. Since taking over the functions of insurance, CMA has issued: (i) the Code of Corporate Governance for Insurance Companies and (ii) the Code of Practice for Insurance Business. For conducting insurance business in Oman, an insurance company must satisfy certain conditions: (i) it should be commercially registered in Oman; (ii) the minimum capital should not be less than that prescribed for insurance companies; (iii) it should be a joint stock company; (iv) it should be licenced by CMA to carry on all or some classes of insurance business specified by the Law; and (v) it should deposit requisite guarantees and maintain a required margin of solvency. Licenced companies, both local and foreign, must comply with reporting requirements and must establish and maintain reserves and deposits as required by the Law. For foreign insurance companies operating through agents, branch offices or other local service units, the Law stipulates: (i) all policies covering risks situated in Oman and/or originating in Oman and/or connected with property in Oman or long-term policies insuring Omani residents against risks must be issued in Oman; (ii) a record of all policies issued with respect to Oman must be maintained in a local office; (iii) the accounts of the local office should be audited annually by an independent auditor; (iv) the parent company should have been established in accordance with laws of the country of origin; (v) local office is subject to tax laws of Oman; (vi) RO 150,000 must be deposited with CMA for doing business in any class of insurance and not less than RO 300,000 for more than one class; (vii) an amount not exceeding 25% of each insurance policy issued in Oman must be reinsured with a national insurance company; and (viii) provisions of the Law in respect of margin of solvency, principal manager, actuary and accounts are applicable. Except life insurance, the Law prohibits insurance contracts with foreign companies which are not commercially registered in Oman. This prohibition is applicable to the Government, public authorities, public sector companies and natural and juridical entities registered with the commercial register for doing business in Oman. Insurance companies may reinsure part of the risk with offshore insurance companies and are required to maintain transparency in reinsurance placements. Customers may be involved in negotiations with brokers and underwriters. Insurance companies underwriting businesses must retain at least a small portion of the total risk on its net account. Following CBO Circular BM 908 issued by Central Bank of Oman (“CBO”) dated 21 January 2001, licenced banks are authorised to collaborate with licenced insurance companies, brokers and agents to sell insurance products subject to conditions: (i) banks must be diligent in selecting insurance companies for association; (ii) formal agreements must be concluded; (iii) banks must assume no liability for acts of insurance companies; (iv) all terms of agreement should be fair and transparent and diligence should be exercised with respect to related party transactions; and (v) the core business of banking should not be affected by the insurance business. The CMA issued a decision amending the Executive Regulations of Insurance Companies Law, increasing the solvency margin for insurance companies. MOTOR VEHICLE INSURANCE It is compulsory for all vehicles in Oman to have third-party insurance which must cover death, bodily injury and material damage to third parties. SOCIAL INSURANCE Pursuant to Social Insurance Law [RD 72/91 as amended], subscription to the social security system is mandatory for all employers employing Omani employees, who must subscribe on behalf of them and pay a subscription premium of 10.5% of basic salaries of Omani employees towards social insurance, and employees have to contribute 6.5% of basic salary. Social insurance is administered by the Public Authority for Social Insurance. Employers cannot contract out of this liability. Contributions are made by the employer, the employee and the Government to cover death, disability, old age, and occupational hazards (injuries and illnesses caused by work). This law is amended periodically to specify the percentage of basic wage contributable to social insurance and to set limits on basic pay to be used for determining employer and employee contributions.
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The Oman Law Digest 2009
BUSINESS REGULATION AND COMMERCE
The Oman Law Digest 2009
The Law of Commerce [issued by RD 55/90] regulates commercial activities in Oman. The Law covers all aspects of business including sale, purchase, agency, lease, insurance, charge and guarantee. The Law defines “commercial act” as an act effected by a person with entrepreneurial intent even if he is not a merchant and gives a non-comprehensive list of commercial acts which includes: sale and purchase of goods; lease of equipment; contracts of supply; public and private banking; commercial agency; transactions involving negotiable instruments; incorporation of commercial companies and sale and purchase of securities; extraction of natural resources; insurance; carriage of goods by land, sea and air; construction contracts; and maritime and aerial navigations. Sale of immoveable property, sale of business, agency, real estate lease, and mortgage are required to have formal written contracts and require registration. Sale and purchase contracts of moveable property do not require registration. Non-Omani persons cannot engage in commerce unless appropriately authorised by law. In sale and purchase transactions, parties must agree on goods and price, and the principle of caveat emptor applies. Consideration must be in proportion to prevailing standards in trade. All types of sales including sale of business, sale by delivery on board, sale at port, Cost, Insurance and Freight (CIF) and Free on Board (FOB) are covered by this law. A commercial agency is defined as a contract whereby a principal assigns to another person the task of carrying out a specific legal act for remuneration unless it is agreed to be gratuitous. If remuneration is not agreed in writing then it must be according to prevailing trade standards. Merchants are required to maintain two types of commercial books: day books, in which all day-to-day transactions must be entered, and inventory books, which must be updated at least once a year. In private sector transactions, negotiable instruments may be prepared and negotiated in English. Bills of exchange must contain: (i) the term “bill of exchange” written in the text of instrument; (ii) an unconditional order to pay specified sum; (iii) the name of the drawee; (iv) the name of the payee; (v) the date of maturity; (vi) the place of payment; (vii) the date and place of making; and (viii) the signature of the drawer. Bills of exchange may be drawn payable at sight or on a specified date or specific time from making or from sight. Endorsements must be unconditional and partial endorsements are void. An endorsement to a holder shall be deemed to be an endorsement in blank. The holder may fill the blank with his name or that of another person; further endorse in blank to another person; or deliver it to another person without completing or endorsing it. Acceptance of a bill of exchange shall evidence that provision for payment is held by the acceptor which cannot be rebutted by drawee or holder. If a bill of exchange is not accepted, the burden of proof will be upon drawer to prove that drawee held provision for payment on the date of maturity. Order promissory notes must contain: (i) the term “Order Note” written in text of note; (ii) an unconditional promise to pay specified sum; (iii) the date of maturity; (iv) the place of payment; (v) name of the payee; (vi) the date and place of making; and (vii) the signature of the maker. Provisions with respect to bills of exchange in relation to endorsement, maturity, payment, recourse by reason of non-payment, prohibition on granting of time for payment, conservatory attachment, protest, calculation of time limits and working days, recourse by drawing, payment by way of intervention and extinctive prescription are expressed to be applicable to order promissory notes as well. A demand order promissory note must be presented for payment within one year after the date of making it. Cheques must contain: (i) the term “cheque”; (ii) an unconditional order to pay the specified sum; (iii) the name of drawee; (iv) the place of payment; (v) the date and place of making; (vi) the name of person to whom or to whose order payment is made; and (vii) the signature of the maker. Cheques must be drawn on a bank, and may be expressed to be payable to the bearer. Cheques made payable to a person are negotiable by endorsement. Issuance of cheques without sufficient funds on account is a criminal offence. Cheques drawn in Oman must be presented for payment within six months but, in practice, these limitations are not strictly adhered to. The Law also contains provisions on crossed and account payee cheques. The Unified Industrial Organisation Law for GCC Countries [RD 61/08] is applicable to companies undertaking industrial activities. The law ratifies GCC policy on industrialization to further regional economic development plans and programs and emphasizes use of local raw materials; installation of modern technology most suited to the local industrial environment; and recruitment and training of local manpower and deals with health, safety and environment standards and standards approved by the WTO for trade and export.
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The Oman Law Digest 2009
COMMERCIAL REGISTER
The Oman Law Digest 2009
Every natural or corporate person conducting business in Oman must register with the Commercial Register at MCI. Under Commercial Register Law [RD 3/73 as amended], the certificate of registration would include the commercial registration number, the registrant’s name, its legal form, principal office address, registered activities, the name(s) of manager(s) and directors, and the date and place of registration. Information registered in the Commercial Register is available for public inspection. TRADE NAME The Law requires every business to have a trade name which must be different from other registered names. It must not misrepresent its nature of business. According to internal regulations of MCI on name, commercial names must consist of meaningful Arabic words. Foreign names are permitted for companies with foreign shareholders having similar registered names abroad and for companies with recognised international names. Trade names must be registered in the Commercial Register. If a trade name is used by a competing business, the interested party may seek a ban on such usage and claim compensation. Usage of names of countries and places such as Muscat and Oman and terms such as “Financial” and “investment” have minimum capital requirements. Trade names and commercial and municipality registration numbers must be displayed on the front of the commercial premises. All stationery and trade documentation must contain the trade name and the commercial registration number. TRADEMARKS Law on Trademarks, Trade Secrets and Protection against Illegal Competition [RD 38/00] and laws relating to Industrial Designs, Topographic Designs, Geographical Indications and Patents [RDs 39/00, 40/00, 41/00 and 82/00] have been repealed by the Law of Industrial Property Rights [RD 67/08]. This Law provides for the protection and registration of trademarks, patents, industrial designs, topographic designs and inventions. Upon registration of industrial property rights, owner gets full protection of the law and exclusive rights. Unregistered trademarks get limited protection under Law of Commerce [RD 55/90] which prohibits deception, fraud and dissemination of misleading information in relation to sale of products. The Law regulating Production of Compact Discs and Accessories was introduced by RD 66/08. COPYRIGHTS Copyright and Related Rights Law [RD 37/00] was repealed by RD 65/08 which secures rights of authors of literary, artistic and scientific works. Copyright works include (i) computer programs (complying with TRIPS requirement for protecting computer programs like literary works); (ii) audio and audio-visual works; (iii) literary works and drawings; (iv) dance, drama, musical and motion picture productions and (v) lectures and speeches. The law provides for (i) exclusive rights for authors of copyrighted works; (ii) civil and criminal proceedings for violation of the law; and (iii) precautionary measures including injunction, seizure of infringing materials and closure of premises used for copyrights infringement.
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The Oman Law Digest 2009
CONTRACTS
The Oman Law Digest 2009
Attainment of majority, soundness of mind and no infirmity in relation to the intended commercial transaction are stated to qualify a person for entering into commercial transactions. Persons declared insolvent or convicted of fraud, theft, cheating, breach of trust, forgery, etc. are disqualified from entering into contracts. There is sufficient latitude to agree to terms of a contract if the purpose of the contract is lawful. Contracts are binding on parties and, if not in writing, may be proved by any means. If there is no valid contract, provisions of law would apply. If the law does not address a specific aspect of commercial transaction then custom, Shari’ah or principles of equity in that order would prevail. Electronic Transactions Law [RD 69/08] validates electronic transactions agreed by parties to be conducted electronically. Electronic transaction includes contracts performed or concluded wholly or in part by electronic messages. It excludes from its purview certain transactions such as those pertaining to personal law; court proceedings like service of summons, etc.; and documents required to be attested by a Notary Public. DAMAGES Proven direct damages are awarded for breach of contract. Indirect or consequential damages are not excluded as a matter of law but have limited applicability. There must be a nexus between loss suffered and damages claimed. Secondly, there must be a degree of foreseeability, i.e., damage must not be too remote. Consequential loss is generally contractually excluded but Omani courts are known to assess and award loss of profit. EXCUSE FOR NONPERFORMANCE Force Majeure and impossibility of performance and, in some projects, government risk events are recognised grounds for non-performance. APPLICABILITY OF FOREIGN LAW Contracts may be subject to foreign law applicability. However, an Omani court would generally construe and apply only Omani law. Hence, foreign law applicability if supported by an arbitration clause enhances its enforceability in an Omani court as Oman is a signatory to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards and written agreements providing for arbitration for dispute resolution exclude jurisdiction of Omani courts. Pursuant to Arbitration Law [RD 47/97], Omani courts enforce validly issued arbitral awards. GOVERNMENT CONTRACTS Contracting with the Government is subject to Tender Law and its Regulations. A new Tender Law was issued by RD 36/08 repealing and replacing the old law (RD 86/84 as amended). It defines public, international and local tenders and regulates public bid requirements, direct purchases, bid submission rules, contract award rules and also specifies the Tender Board functions. Standard forms of pubic works contracts are used for government and quasi-government contracts. These include Standard Conditions for Construction of Building and Civil Work; Standard Condition for Mechanical and Electrical Works; and Standard Conditions for Civil Consultancy Works. These contracts are modeled on standard FIDIC contracts. Financial signatory powers of ministers and government officials in relation to government contracts are stipulated in RD 48/76 as amended. Public sector or quasi-government companies (where their Articles of Association provide for it) have internal tender committees, or executive committees for awarding contracts up to specified value. Contracting parties require bid, performance and, where applicable, advance payment guarantees issued by approved local banks. Oman is not a signatory to Convention on International Sale of Goods.
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The Oman Law Digest 2009
INTEREST
The Oman Law Digest 2009
Commercial Banks and other enterprises routinely charge interest. Periodic circulars are issued by Government on commercial interest rates. Pursuant to the Banking Law [RD 114/00], CBO has the power to regulate interest rates in banking transactions. CBO sets interest rates chargeable by banks. Omani courts have consistently upheld payment of interest in commercial suits. Number of laws and regulations, including Law of Commerce [RD 55/90], Banking Law [RD 114/00], Civil and Commercial Procedure Law [RD 29/02] and Law of Commercial Companies [RD 4/74], specifically refer to interest being chargeable and enforceable. Interest rates and currency hedging arrangements are recognised and commonly used in project financing in Oman. Forward transactions are permitted under Omani law provided they are not exclusively for speculative purposes. The MCI periodically issues a decision on the maximum interest rate chargeable for commercial loans.
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The Oman Law Digest 2009
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