Welcome to our Guide to Arbitration in the Middle East.
In the last decade, the Middle East has seen both domestic and regional developments in arbitration that are reflective of international best practice. Many States have introduced new Arbitration laws, based on the UNCITRAL Model Law on International Commercial Arbitration, a model already used by many other countries throughout the world. In addition, the regional arbitral institutions in the region have been at the forefront of many of these developments, with many revising their rules to reflect both innovation and reform. As a result, the Middle East now offers not only various options for arbitration friendly seats, but also various institutional options that can administer the resolution of international and domestic disputes.
In the various Country Guides, we provide an overview and copy of the legislative framework applicable in each State, key recent developments and a comparison of the rules of the leading regional arbitral institutions in order to assist clients in choosing the correct forum and seat for any future disputes, as well as providing guidance on how to manage existing disputes.
Overview of Arbitration in Oman
1. The relevant legislations governing arbitration in Oman are:
a. The Convention on the Recognition and Enforcement of Foreign Arbitral Awards ("the New York Convention");
b. The GCC Convention for the Execution of Judgment, Delegations and Judicial Notification 1996 ("the GCC Convention"); and
c. Oman Sultani Decree No. 47/1997 on the Promulgation of the Law of Arbitration in Civil and Commercial Disputes ("Decree No. 47/1997"); and
d. Royal Decree No. 29/2002 Promulgating the Law of Civil and Commercial Procedure ("Decree 29/2002").
2. In 1996, Oman ratified the GCC Convention through Sultani Decree No. 17/1996. According to the GCC Convention, the Arbitration Awards shall be enforced by any of the member states in accordance with the procedures applicable to judgments. And each of GCC countries shall execute the final judgments issued by the courts of any member state in civil, commercial and administrative cases and personal affairs cases in accordance with the procedures as provided under the treaty, provided that the court that issued the judgment has the jurisdiction under the international jurisdiction as applicable in the member state where the judgment is required to be executed or has the jurisdiction following the provisions of the treaty.
3 Decree No. 47/1997 governs awards in which Oman is the seat or where the parties agreed that it would govern the arbitration. Decree 47/1997 was largely modelled after the UNCITRAL Model law but is distinct in several ways. For example: proceedings will be conducted in Arabic unless the parties agree otherwise; the Decree offers parties slightly broader grounds for nullifying an award relative to the New York Convention; and tribunals are, by default, required to issue an award within 12 months of the arbitration's start date unless the tribunal decides to extend that date by an additional 6 months or if the parties had agreed otherwise and the parties may request from the competent court an extension of time not more than 6 more months. This extension is granted in case the Award was not issued by the Arbitration Tribunal within the stipulated time frame.
4 In 1999, Oman ratified the New York Convention through Sultani Decree No. 36/1998. Oman is also party to other conventions such as the Riyadh Convention on Judicial Cooperation between States of the Arab League ("Riyadh Convention"). Unless an award's subject matter concerns a commercial agency agreement, awards rendered in a country party to the Riyadh Convention may be recognized in Oman. Nevertheless, despite Oman's comprehensive arbitration laws, Oman only opened its first arbitration center in 2018.
Oman Commercial Arbitration Center
1. Prior to 2018, parties were required to arbitrate their disputes outside of Oman, such as in the (now abolished) DIFC-LCIA Arbitration Centre due to the lack of an arbitral institute in Oman . As such, Oman established the Oman Commercial Arbitration Center ("OCAC") through Sultani Decree No. 26/2018. The OCAC Arbitration Rules were issued in 2020 ("OCAC Rules") through Decision No. 8/2020. However, arbitration remained common within the country even prior to the establishment of an official arbitral institute in the form of the OCAC. Therefore, enforcing an award in Oman requires a nuanced understanding of the relevant laws.
Enforcement of Domestic & Foreign Awards
1. The rules governing the enforcement of an award in Oman vary depending on whether the award is domestic or foreign. An award is domestic insofar as it was issued in Oman and/ or the parties agreed to apply Decree 47/1997 to their arbitration. Conversely, an award is foreign where: Oman is not the seat; the award concerned an arbitrable matter under Omani law; and the award is enforceable in the country of the seat of the arbitration. Enforcement of foreign awards in Oman is governed by Decree 29/2002. In general, according to the Decree 29/2002 judgments issued in a foreign country may be enforced under the same conditions stipulated in the law of that country for the enforcement of Omani judgments, where the endorsement is carried out pursuant to a lawsuit called "a lawsuit requesting a ruling to enforce a foreign award." The foreign award cannot be enforced within the territory of Oman without a ruling issued by the Omani courts.
2. Awards issued according to Decree 47/1997 are not subject to appeal. Awards may however be nullified within 90 days after the date on which the losing party was notified of the award. Depending on whether the parties' contract was administrative or commercial in nature, a party would need to submit its nullification claim to either the Administrative Court's Appeal or the Civil & Commercial Court's Appeal.
3. The grounds based on which a lawsuit may be filed for an annulment of an arbitration award include:
a. If there is no arbitration agreement or if this agreement is invalid, voidable, or lapses upon expiry of its term.
b. If any of the arbitration agreement parties was, at the time of its conclusion, incapacitated in accordance with the law governing his capacity.
c. If one of the arbitration parties is unable to submit his defense due to failure to properly announce the appointment of an arbitrator or the arbitration procedures or for any other reason beyond his control.
d. If the arbitration award excludes the application of the law that the parties agreed to apply to the subject matter of the dispute.
e. If the arbitration jury was formed or the arbitrators were appointed in violation of the law or without the agreement of the two parties.
f. If the arbitration award decides on matters not covered by the arbitration agreement or exceeds the limits of this agreement. However, if it is possible to separate the parts of the ruling pertaining to the arbitration matters from the parts pertaining to matters not relevant to the arbitration, then the annulment shall only apply to the last latter parts alone.
g. If there is an annulment in the arbitration award, or if the arbitration procedures are invalid in a way that affected the arbitration award.
4. Regardless of the court, the grounds for nullifying an award focus on a number of specific grounds, that are largely similar to the grounds for refusing to recognize an award under Article V of the New York Convention. Therefore, while Omani courts often interpret these provisions narrowly, they will likely apply consistent reasoning when refusing to enforce an award regardless of whether that award is foreign or domestic.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.