OMAN Law and Practice Contributed by: Sultan Al Ghafri, Nasser Al Riyami, Abdullah Al Aufi and Joud Lashko, Al Khalili, Al Ghailani & Co. LLP (K&Co.)
Al Khalili, Al Ghailani & Co. LLP (K&Co.) Al Maaridh Street Qatar Airways Building 8th Floor Muscat Oman
Tel: +968 24 494 816 Email: info@kco.om Web: kco.om
1. General 1.1 Prevalence of Arbitration
ated in two different states at the time the arbitration agreement is concluded (where a party has several places of business, the one most closely connected with the subject matter of the agreement, and where it has none, its habitual residence); (ii) the parties have agreed to resort to a permanent arbitral organisation or arbitration centre, whether seated inside or outside Oman; (iii) the subject matter of the dispute covered by the arbitration agreement is connected with more than one state; or (iv) the principal places of business of the parties are in the same state, but the place of arbitration designated in or determinable under the arbitration agreement, the place of performance of a substantial part of the obligations arising out of the parties’ commercial relationship, or the place most closely connected with the subject matter of the dis - pute lies outside that state. That statutory definition is the starting point for determining whether an arbi - tration connected with Oman falls to be treated as international, and it applies irrespective of whether the seat of the arbitration is in Oman or abroad. International arbitration is widely recognised as an effective means of resolving cross-border and high- value commercial disputes in Oman, particularly in the construction, energy, real estate, tourism and banking sectors. Although litigation before the Omani courts remains the preferred option for many purely domes - tic disputes due to its familiarity and relatively lower cost, arbitration is routinely adopted in major com - mercial transactions involving foreign investment, joint ventures, EPC contracts, concession agreements and project finance.
Recourse to determination by a neutral third party is not a recent import into Omani legal culture. For centuries, Omani communities resolved disputes ami - cably through consultation and mediation in the maj - lis, where tribal leaders, elders and other respected community figures would assist the parties towards a mutually acceptable settlement. The emergence of a formal system of commercial arbitration therefore represented an evolution of that established practice rather than a departure from it. Arbitration was in due course given official standing by the state itself: the Sultanate’s Standard Documents for Building and Civil Engineering Works, in the edition issued in July 1981, adopted arbitration as the principal mechanism for the resolution of disputes arising under government con - tracts, and that approach came to be followed widely across public procurement. A comprehensive statu - tory framework followed with the Law of Arbitration in Civil and Commercial Disputes, promulgated by Roy - al Decree No. 47/1997 and published in the Official Gazette on 1 July 1997, as subsequently amended by Royal Decree No. 3/2007 (“Arbitration Law”). The Arbitration Law governs both domestic and international arbitration, and Article 3 defines when an arbitration is to be considered “international” for its purposes: an arbitration is international where its subject matter is a dispute relating to international trade and any one of four conditions is satisfied: (i) the principal places of business of the parties are situ -
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