The legal, regulatory, and accounting systems in Oman remain less than fully transparent and new policies are often ambiguous. There are no regulatory processes managed by community organizations or private sector associations. Ministries or regulatory agencies do not solicit comments on proposed regulations from the general public and do not conduct impact assessments of proposed regulations. There is no requirement for periodic review of regulations.
Although reforms enacted in 2011 expanded the policy review function of the Majlis Oman, or Council of Oman (Oman’s parliamentary body), its powers remain limited. Omani community organizations and private sector associations do not play a significant role in the regulatory environment.
The Ministry of Legal Affairs (MOLA) prepares and revises draft laws, drafts royal decrees, and negotiates international agreements and contracts in which the GoO is one of the involved parties. MOLA also gives legal opinions and advice on matters from other ministries and government departments. Its website contains copies of actual royal decrees and some ministerial decisions, mostly in Arabic, but some have English translations. It also publishes Oman budget documents within a reasonable period of time. Oman’s Capital Market Authority (CMA) is in the process of developing an updated legal framework for the capital markets sector. The new Commercial Companies Law (CCL) promulgated in 2019 seeks to create a more transparent and robust corporate governance system by imposing rules on shareholders and boards of directors. The government expects to release executive regulations for the CCL in July.
Oman’s budget is widely and easily accessible to the general public, including online on MOLA’s website and via the Official Gazette. The government maintains off-budget accounts, including sovereign wealth funds. Their portfolios are opaque, and transfers to and from these funds are only included in the debt-financing section of the budget as a debt financing mechanism. Limited information on debt obligations is publicly available.
International Regulatory Considerations
As a member of the GCC, Oman largely follows its regional regulatory system. In 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.
As a member of the GCC, Oman largely follows its regional regulatory system. In 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. 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.
Oman has a written commercial law and specialized commercial courts. Oman’s Commercial Court is responsible for resolving business disputes. 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.
Oman’s judicial system is independent and reliable, though the procedures can be long and many steps are required to initiate a case. Oman’s multi-level court system has an appeals process. The Supreme Court is the court of last resort for appeals of regulations and enforcement actions.
Laws and Regulations on Foreign Direct Investment
The new FCIL removed the minimum share capital requirement, which was RO 150,000 (about $390,000) under the old law. The FCIL also eliminated the 70 percent limit on foreign ownership of an Omani company. While the GoO has not issued any ministerial decisions or executive regulations to clarify the new FCIL, MOCI released an unofficial “negative list” of 37 commercial activities that are prohibited to foreign investors.
“Invest Easy” (http://business.gov.om/ ) is an online portal that enables business owners and investors to get the business procedures done easily in a short time. According to the website, the main purpose of “Invest Easy” is to provide citizens, entrepreneurs, and prospective businesses and investors with the services and information they need quickly and efficiently.
Competition and Anti-Trust Laws
Oman does not screen investments for competition considerations, and Oman does not have an active competition commission. The Competition and Anti-Monopoly Law (Royal Decree No. 67/2014), promulgated in December 2014, aims to combat monopolistic practices by prohibiting anti-competitive agreements and price manipulation. It includes a reporting requirement for any activity, such as mergers and acquisitions, which results in a dominant market position for one firm. A 2018 royal decree established a Competition Protection and Monopoly Prevention Center.
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.
In June 2018, Oman sued U.S. mining company owner Adel Hamadi Al Tamini in Massachusetts federal court for a $5.6 million arbitration award issued against him by ICSID. In 2011, Al Tamini filed a claim against the Government of Oman alleging that it improperly ended limestone mining leases that violated his rights under the FTA. The Tamini case was the first ICSID case filed against Oman and the first case filed under the bilateral FTA. An ICSID tribunal dismissed the claim and rendered an award for Oman, which the government is now seeking to enforce.
Investor-State Dispute Settlement
Oman has a modern arbitration law that 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 make the determination. 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, since arbitration is considered a more efficient and reliable mechanism than court processes. An arbitral award is usually rendered in Oman within 12 months after the aggrieved party states in writing that a dispute has arisen. In contrast, court processes can often be much lengthier, particularly where technically complex issues are involved. Cases normally go through three tiers of justice (Primary, Appeal, and Supreme), lengthening the 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, to resolve it by arbitration. In such cases, however, the agreement has to specify the underlying issues that the parties have agreed to resolve by arbitration.
The Omani government recognizes binding international arbitration of investment disputes with foreign investors, though the government has increasingly challenged rulings in favor of foreign companies in payment collection cases. The government has been slow in the payment of some arbitration awards to foreign companies. 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 introduced a new Bankruptcy Law in 2019 under a royal decree. The main provisions of the new law involve the concepts of restructuring and preventive compositions. Other provisions of the new law prescribing expert input and instituting strict timelines into bankruptcy proceedings will be beneficial to both businesses and investors in avoiding liquidation. The Bankruptcy Law will apply to foreign agencies and branches of foreign companies established in Oman, but exclude entities licensed by the Central Bank of Oman and insurance companies. The new law will come into force in July 2020 and implementing regulations will provide greater clarity. According to the World Bank, it takes on average three years to complete foreclosure proceedings in Oman, and the cost of resolving bankruptcy as a percentage of the estate (3.5 percent) is lower in Oman than elsewhere the region. In 2019, the World Bank ranked Oman 97th in the world for resolving insolvency, up three slots from the previous year. Oman ranks higher than many other countries in the region for resolving insolvency.
According to the World Bank, it takes on average three years to complete foreclosure proceedings in Oman, and the cost of resolving bankruptcy as a percentage of the estate (3.5 percent) is lower in Oman than elsewhere the region. In 2019, the World Bank ranked Oman 97th in the world for resolving insolvency, up three slots from the previous year. Oman ranks higher than many other countries in the region for resolving insolvency.