Transparency of the Regulatory System
The legal, regulatory, and accounting systems in Oman remain less than fully transparent and new policies are often ambiguous. Commercial registration and licensing decisions often require the approval of multiple ministries. Although a new law expanded the policy review function of the Majlis Oman, or Council of Oman (Oman’s quasi-parliamentary body), its powers remain limited. Omani NGOs and private sector associations do not play a role in the regulatory environment.
The Ministry of Legal Affairs prepares and revises draft laws, drafts royal decrees, and negotiates international agreements and contracts in which the GoO is one of the involved parties. It also gives legal opinions and advice on matters put before it by other ministries and government departments. Its website contains copies of royal decrees and some ministerial decisions, mostly in Arabic, but some have English translations.
International Regulatory Considerations
As a member of the GCC, Oman largely follows its regional regulatory system. In December 2013, GCC Member States issued regulations on the GCC Regional Conformity Assessment Scheme and GCC “G” Mark in an effort to “unify conformity marking and facilitate the control process of the common market for the GCC members, and to clarify requirements of manufacturers.” U.S. and GCC officials continue to discuss concerns about consistency of interpretation and implementation of these regulations across all six GCC Member States, as well as the relationship between national conformity assessment requirements and the GCC regulations, with a view to avoiding inconsistencies or unnecessary duplication.
As Oman is a member of the WTO, it is committed to update the WTO Committee on any Technical Barriers to Trade (TBT). Oman’s Trade Facilitation Agreement (TFA) with the WTO entered into force on February 22, 2017.
Legal System and Judicial Independence
Oman’s legal system is code-based, but incorporates elements from a variety of legal traditions, most notably modern English and French law as well as Islamic law in the Ibadhi interpretation. Despite its reliance on English law as a model for some legislation, however, Oman should not be considered a “common-law” jurisdiction, as there is no reliance on judicial precedent as a source of law.
Business disputes within Oman are resolved through the Commercial Court. The Commercial Court has jurisdiction over most tax and labor cases, and can issue orders of enforcement of decisions. The Commercial Court can accept cases against governmental bodies, but can only issue, and not enforce, rulings against the government. The Commercial Court replaced the Authority for Settlement of Commercial Disputes.
Laws and Regulations on Foreign Direct Investment
The Foreign Capital Investment Law (Royal Decree No. 102/94) provides the legal framework for non-U.S. and non-GCC foreign investors. Oman amended this law in 2000 as part of its WTO accession and in 2009 to implement the United States-Oman FTA. The Council of Oman has held hearings and readings for a new foreign capital investment law that would remove the minimum Omani ownership requirement for all investors. U.S. investors are not currently subject to that restriction, due to the FTA. It will only become effective after all due legal and governmental processes are completed.
Competition and Anti-Trust Laws
Investments are not screened for competition considerations, and Oman does not have an active competition commission. The Competition and Anti-Monopoly Law, promulgated in December 2014, aims to combat monopolistic practices by prohibiting anti-competitive agreements and price manipulation, and includes a reporting requirement for any activity, such as mergers and acquisitions, which results in a dominant market position for one firm.
Expropriation and Compensation
Oman’s interest in increased foreign investment and technology transfer make expropriation or nationalization unlikely. In the event that a property is nationalized, Article 11 of the Basic Law of the State stipulates that the Government of Oman must provide prompt and fair compensation. There are no recent examples of expropriation or nationalization.
ICSID Convention and New York Convention
Oman is a party to the International Convention for the Settlement of Investment Disputes between States and Nationals of other States (ICSID) and the United Nations New York Convention of 1958 on the Recognition and Enforcement of Foreign Arbitral Awards.
Investor-State Dispute Settlement
Oman has a modern arbitration law which is largely based on the United Nations Commission on International Trade Law (UNCITRAL) model. Pursuant to its arbitration law, an arbitration agreement must be in writing, and it can be in one or more instruments. The parties are free to choose any law relating to the arbitration agreement and, in the absence of an explicit law, the courts are given the power to determine it.
Additionally, there are specific dispute resolution mechanisms through the FTA that can assist Omani and U.S. companies in resolving disputes outside of the Omani legal system.
International Commercial Arbitration and Foreign Courts
Many corporate entities in Oman are increasingly turning to arbitration to resolve their disputes, as arbitration is considered to be a more efficient and reliable mechanism. An arbitral award is usually rendered in Oman within 12 months of the aggrieved party stating in writing that a dispute has arisen. In contrast, court processes can often be much lengthier, particularly where technically complex issues are involved. The fact that cases normally go through three tiers of justice (Primary, Appeal, and Supreme) also naturally means a longer process.
The Omani Arbitration Law (Royal Decree 47/97 as amended) defines the term “arbitration” as a dispute resolution mechanism agreed to by parties of their own volition. Usually, the parties will state in their initial contract that any dispute will be resolved by arbitration pursuant to, for instance, the Omani Arbitration Law. The Law mandates that an arbitration agreement should be in writing. It is also permissible for parties to agree in writing, once a dispute has arisen, that it will be resolved by arbitration. In such cases, however, the agreement has to specify the underlying issues that the parties have agreed to resolve by arbitration.
Binding international arbitration of investment disputes between foreign investors and the Omani government is recognized, though the government is increasingly challenging rulings in favor of foreign companies in payment collection cases. Oman’s legal framework provides for the enforcement of international arbitration awards and most foreign companies elect for dispute resolution by arbitration. Arbitration is generally cheaper, quicker, and easier than settling commercial disputes in the normal court system, where judges often lack expertise on technical commercial issues.
Oman has written and consistently applied commercial and bankruptcy laws. However, insolvency laws currently allow only for complete dissolution rather than restructuring, and many businesses opt to simply shut their doors rather than go through the insolvency process. The focus of Omani laws is on protecting creditors as much as possible and ensuring the insolvent company is liquidated efficiently. Private credit bureaus first opened in 2009 to enable banks to make more informed lending decisions, thus providing advantages to both consumers and financial institutions.
According to the World Bank, it takes on average four years to resolve bankruptcy filings, and the cost of resolving bankruptcy as a percentage of the estate (3.5 percent) is lower in Oman than elsewhere the region. In 2017, the World Bank ranked Oman fourth out of the nineteen countries in the region in resolving insolvency, and 98th in the world.