The expansion of the Omani economy has coincided with the growth of arbitration as the dispute resolution mechanism of choice for many businesses. This has led to an increase in the Oman courts of cases seeking to enforce foreign arbitral awards in the Sultanate.
The Omani legal system takes a progressive and pro-arbitration stance. Hence, successful litigants can have confidence in the laws in place to facilitate the enforcement of foreign arbitral awards. As in any jurisdiction, there are however certain practical considerations that must be considered when seeking to enforce a foreign arbitral award.
FOREIGN ARBITRAL AWARDS VS DOMESTIC AWARDS
The procedural framework for the enforcement of arbitral awards in Oman falls under one of two statutes, being:
< >Royal Decree No. 47/1997 On the Promulgation of the Law of Arbitration in Civil and Commercial Disputes (Arbitration Law); orRoyal Decree No. 29/2002 Promulgating the Law of Civil and Commercial Procedure (Civil Procedure Law).
SUBSTANTIVE LAW OF THE CONTRACT VS ARBITRATION
Confusion sometimes arises as to whether an arbitral award will be regarded as a foreign award if the substantive law of the contract is that of Oman.
It is perfectly acceptable for the parties to agree the relevant contract is to be governed by the substantive law of Oman and specify that the arbitration is to be seated abroad. Such scenario often arises where an Omani entity contracts with a foreign entity, and there is a desire for any arbitration to be seated in a 'third party' jurisdiction which may be perceived as a more neutral location.
To use a common example from the construction industry, a FIDIC contract (via the 'Contract Data') may provide that the governing or substantive law of the contract is that of Oman. Simultaneously, the parties may agree that any arbitration arising under the contract is to be seated in London. In such scenario, any arbitral award arising from the contract would still be classed as a foreign arbitral award as the seat is overseas, irrespective of the contract itself being subject to the (substantive) law of Oman.
Arbitral tribunals seated abroad, including those convened under the ICC, SIAC and LCIA institutions amongst others, regularly hear Omani law governed disputes with the assistance of Omani law expert witnesses.
The global recognition and enforcement of foreign arbitral awards is facilitated by the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, conventionally referred to as simply the 'New York Convention.'
Oman ratified the New York Convention over two decades ago in 1998, reflecting the Omani legal system's generally pro arbitration outlook. Further, a litigant in Oman may also, concurrently with the New York Convention, seek to rely on judicial cooperation agreements entered into between Oman and certain jurisdictions when enforcing a foreign arbitral award. Such agreements are given legislative effect in Oman via Royal Decree and provide a framework for facilitating the recognition and enforcement of commercial and civil judgments between Oman and the signatory nation.
At present, Oman has entered into judicial agreements (formally known as 'legal and judicial cooperation agreements') with a number of countries, including with the following nations:< >Arab Republic of Egypt (as of 2002);Kingdom of Morocco (as of 2012);Republic of India (as of 2020); and Republic of Turkey (as of 2008).
AWARDS ARISING FROM ASYMMETRICAL OR SPLIT ARBITRATION CLAUSES
Leading arbitral institutions, such as the ICC and LCIA amongst others, offer model arbitration clauses.
Parties should be conservative when deviating from the model wording. That said, it is still important for parties to carefully consider the wording of an arbitration clause for each transaction. The facts and circumstances of the underlying transaction, the place of incorporation or nationality of the parties and location of respective assets must all be considered. Specialist legal advice should always be sought in the drafting of arbitration clauses to mitigate the risk of any uncertainty that may frustrate the enforcement of any arbitral award.
One emerging trend is for parties to agree to 'split' or 'hybrid' arbitration clauses, where it is agreed certain disputes will be subject to international arbitration, and others to local Omani courts. Often the deciding criteria for which mechanism applies is the value of the dispute. The intention behind such clauses is often noble: to allow the parties to opt for the most cost effective dispute resolution mechanism.
Such hybrid arbitration clauses may also be prudent if the parties may wish to seek to take advantage of expedited arbitration proceedings: such as the ICC Expedited Procedure Provisions of the ICC Rules of Arbitration for disputes not exceeding US$ 2,000,000 or US$ 3,000,000. This expedited process allows for an arbitration to be conducted without lengthy hearings and 'on the papers.'
The absence of traditional arbitral hearings under the expedited process has given rise to concerns as to the enforceability of arbitral awards which have been rendered in such an expedited manner. Some welcome clarity was provided by a 2020 Omani Court of Appeal decision upholding a foreign arbitral award issued via the ICC's Expedited Procedure Provisions.
Notably in that case, the parties expressly agreed to a process whereby certain disputes would be subject to a fast-tracked arbitration procedure without hearings. It is an open question whether a different outcome would have arisen if such wording was not present.
CHALLENGES TO ENFORCEMENT AND RECOGNITION
As in any jurisdiction, a party in Oman subject to a foreign arbitral award can, on relatively narrow grounds, object to an award's recognition in Oman. These grounds are outlined under Article 352 of the Civil Procedure Law, which provides (as translated) that an order for execution of an arbitral award will not be effected unless:
A. The concerned judgment or order is issued by a competent judicial authority in accordance with the international jurisdiction rules applicable in the country in which the said judgment or order is issued, and becomes final according to that law and does not grounded on deception.
B. The parties to the said judgment or order are summoned to attend and legally represented.
C. The judgment or order does not include any request breaches the laws of the Sultanate.
D. It does not contradict any judgment or order previously issued by the Sultanate of Oman courts, and it must not include anything contravening the public order or conduct.
E. The country in which the said judgment or order to be executed accepts execution of judgments and orders issued in the Sultanate of Oman within its territories.'
In practice and based on our experience, Omani courts will read and apply the above provisions narrowly. An unsuccessful litigant will commonly encounter difficulty invoking Article 352 to facilitate the non-recognition of a foreign award where such award is issued via the rules of a reputable arbitral institution and there is clear evidence the counterparty was informed of the proceeding.
At the time of writing, a total of 168 countries have ratified the New York Convention, albeit with some caveats. Hence, foreign arbitral awards that are seated in most countries should generally be deemed to satisfy the reciprocity criteria mentioned under Article 352.
Notably, the Omani courts, as is the practice across the GCC, usually only award nominal amounts for legal costs. As such, an unsuccessful litigant that seeks to oppose the recognition of a foreign arbitral award will not run the risk of an adverse costs order. This means there may be little disincentive for a party with an adverse arbitral award against it not to challenge an award's recognition under Article 352, despite the narrow prospects of success.
PRACTICAL CONSIDERATIONS WHEN SEEKING ENFORCEMENT
A party seeking to enforce a foreign arbitral award in its favour should note:
- The Award: It will be necessary to obtain an original hardcopy certified arbitral award from the issuing arbitral institution or panel.
- Apostille: Once the original signed arbitral award has been obtained, the award should be apostilled by the relevant authority in the seat of the arbitration (usually the Ministry of External or Foreign Affairs). Notably, Oman is a signatory to the Apostille Convention which streamlines the international certification and recognition of official documents. Not all nations are signatories to the Apostille Convention, including the United Arab Emirates. Arbitral awards issued in non-Apostille Convention countries will therefore need to be 'legalised' by that nation's foreign ministry. Once the arbitral award has been attested or legalised, it should be presented to the relevant Omani consulate or embassy for further certification.
- Nullification proceedings outside of Oman: It is not uncommon for an unsuccessful party to an arbitration to commence nullification proceedings in the courts of the seat of the arbitration. Unless the courts in the seat of the arbitration have issued a final judgment setting aside or nullifying the award, the existence of such proceedings is unlikely to inhibit the recognition and enforcement of the foreign arbitral award in Oman.
- Power of attorney: Local counsel in Oman will be required to have been issued a power of attorney by the relevant authorised signatories of the successful litigant (if a corporate entity). Such power of attorney, if issued in Oman, must comply with procedural requirements and be sworn in the presence of an Omani Notary. Different procedures apply if the power of attorney is to be sworn outside of Oman.
- Official translation: An Arabic translation of the authenticated award must be filed in the Court of Appeals, given all Omani court proceedings are conducted in the Arabic language. An Oman-based translator should be used and a stamp containing the translator's particulars affixed to the translation.
With the recent inauguration of the Oman Commercial Arbitration Centre, parties may in the long term increasingly opt for Oman seated arbitrations.
In the meantime, investors can have confidence that the legal framework for the recognition and enforcement of foreign arbitral awards in the Sultante remains firm.