Sultani Decree 34/2014, effective from 21 July 2014, has brought in the most significant amendments to the Commercial Agencies Law (Sultani Decree 26/77) since amendments in 1996 allowing multiple agents to be appointed on a non-exclusive basis.
Prior to the amendments Article 10 of the CAL gave important protections to Omani agents with regards to renewal and termination of agency agreements. In short, when a foreign principal terminated or did not renew an otherwise viable, profitable agency without showing a specific legal cause for doing so, the agent could proceed to the Oman court or arbitration to claim compensation for the loss of the agency. Article 10 has been repealed and so arguably the parties to commercial agency agreements are now free to decide the terms of renewal and termination of those agreements. However, this is subject to the retention of Article 18 of the CAL. Article 18 states that the courts shall decide all matters and disputes between agents and principals regarding the agency contract and may decide on appropriate compensation depending on the commercial and local practices (unless the parties choose arbitration). It seems that the term "suitable compensation" which used to be linked with Article 10 will need to be interpreted differently. It leaves some uncertainty hanging over the repeal of Article 10.
SD 34/2014 also repealed Article 7 of the CAL. Article 7 prohibited the foreign principal from selling or distributing its products, goods or services itself or through a third party in the Sultanate other than the agent and compelled the principal to pay the agent the profit or commission in the agency contract if it breached the prohibition. Clearly, the repeal of Article 7 intends to remove the statutory protection granted to agents against direct sales by foreign principals or through intermediaries. Principals are now at liberty to sell directly to customers in Oman, and may also sell through other non agent merchants, without any liabilities towards the registered agent. The registered agent will now be in a disadvantaged position in that it is still under a statutory obligation to provide the original manufacturer's guarantee and after sale services as required by the CAL, which other non-agent sellers will not have, but at the same time the Agent has no protection against direct or parallel sales.
The second part of Article 5 has also been repealed. This gave power to the Minister of Commerce & Industry to ban the import of goods which were the subject matter of a registered agency if the principal cancelled the agency without acceptable reasons. However, Article 5 had actually become ineffective, and not applicable since the Sultanate of Oman acceded to the WTO. It contradicted the Sultanate's international obligation not to place bars on the freedom of contractual trade with WTO member countries. In any event we note that the Minister of Commerce and Industry has never used his powers under this provision.
Finally, Article 14, which previously allowed the Council of Ministers to determine the number and kinds of agencies permitted for each agent was replaced with a new provision requiring the Council of Ministers to determine the number and types of agencies permitted to each agent in the event of domination by an agent in the market for specific types of goods and services adversely effecting supply and demand leading to unjustified increases in prices where it has received a recommendation from the Public Authority for Consumer Protection or the Ministry of Commerce & Industry. Such decisions by the Council of Ministers will prevent registration of agency contracts exceeding in number the ceilings imposed. The decisions may also lead to cancellation and deregistration of existing agencies which are over and above the ceiling. It is not clear whether the relevant agent will have a choice or not as to which agency he wants to maintain where the ceiling has been exceeded.