Legal developments in the Sultanate of Oman have generally kept pace with legal developments across the wider GCC. This is also true of the Oman Arbitration Law. With the issuance last year of the Rules of the Oman Commercial Arbitration Centre, further impetus has gone into the progressive development of the Oman Arbitration Law.
Arbitration as an alternative dispute resolution mechanism was first introduced in the Sultanate of Oman in 1997. In that year, the Oman Arbitration Law was issued through Sultani Decree 47/97 which paved the way for the parties to settle their disputes through arbitration instead of taking them to courts. The Oman Arbitration Law makes it mandatory for Omani courts to uphold an arbitration award. Put another way, if an arbitration award has been rendered through arbitration, Omani Courts will not adjudicate over the matter (as specified under the Oman Arbitration law).
Unlike litigation before a court where a judge presides over a dispute, arbitration is a private dispute resolution method in which an arbitrator or panel of arbitrators determine the final outcome of a dispute. Usually, matters referred to arbitration are kept confidential in nature and may include commercial details and secrets protected from being disclosed to the public.
Arbitration offers several benefits over court litigation. If the parties to the dispute choose an arbitrator with expertise over the subject matter, it gives rise to certainty of outcome specially when the dispute involves complex technical issues. Arbitration generally guarantees a speedier outcome because it does not involve the appellate tiers of court litigation. Moreover, arbitration is generally a less formal process than litigation and enables the parties to deeply engage with one another – something that also allows parties to explore amicable resolution of the dispute.
A further step towards further implementation of the Oman Arbitration Law was having a formal arbitration body in Oman. This was done through Sultani Decree No. 26/2018 which set up the Oman Commercial Arbitration Centre (OAC) - an independent and financially autonomous body that operates under the Oman Chamber of Commerce and Industry.
With the issuance of the Rules of the OAC (Decision No. 8/2020), further momentum has gone into the progressive development of Oman’s Arbitration Law.
There are some benefits for companies, traders, and merchants that arbitrate their disputes under the Rules of the OAC. The parties can choose subject-matter experts who can add value towards the resolution of the dispute. Parties have the right to be represented in the arbitration by their authorised representatives. A party represented by a team of professional lawyers has better prospects of securing a favourable arbitration award. Furthermore, parties have the right to combine disputes or claims raised by more than one contract in a single arbitration request provided that certain conditions are met. Another evident benefit is the guarantee of a speedier outcome. Each party is given a short period of time to submit their claims and counter claims. Additionally, a procedural timetable for arbitration can be set by an agreement of both parties. This allows the parties to overcome technical hurdles.
Earlier, despite having an Arbitration Law, Oman did not have a formal arbitration body for resolving disputes in Oman. As a result, contracting parties often have to arbitrate their disputes under regional arbitration bodies such as the Dubai International Financial Centre. This was an expensive proposition for the parties besides presenting logistical difficulties. This can now change because of the OAC Rules which provide an entire ecosystem for the parties to settle their disputes outside courts. In the future, one can expect that arbitration as an alternate dispute resolution will grow in the Sultanate of Oman.
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This article is a snapshot of Oman’s Arbitration Law and the Rules of the OAC. If you have any questions or would like our further assistance, please feel free to reach out to our Oman team.
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