Arbitration in Administrative Disputes in

Oman
By Amel Abdallah
(Assistant professor at College of Law Sultan Qaboos University-Oman)
Sultanate of Oman has shown an increased willingness to attract foreign investment by updating
its legal environment. In particular, Omani courts have recognized that public entities can validly
enter arbitration agreements with private entities. In doing so, any disputes arising out of a
contract underlying the arbitration agreement will be subject to arbitration rather than to the
Omani courts.
The first step in changing the legal landscape was in 1994, with the adoption of Article 14 of the
Omani Foreign Capital Investment Law (OFCIL). This law permitted disputing parties to settle
their disputes by arbitration (Art. 14 Royal Decree No. 102/1994: It may be agreed to refer any
dispute between the foreign investment projects and third parties to a local or international
arbitration tribunal.). Moreover, the new law was an exception to Omani civil and commercial
procedure law OCCPL, which required all disputes with Omani nationals to be resolved by
Omani courts (see Art. 29 Omani civil and commercial procedure law Royal Decree 29/2002).
The second step taken was in 1997, when Oman issued both the Omani Arbitration Law and
adopted the UNCITRAL Model law 1985 (Royal Decree No. 47/1997). Article 1 of the Omani
Arbitration Law states that this Law will apply to any arbitration between persons under public
or private law, irrespective of the legal relationship on which the dispute is based. Article 14 of
OFCIL and Article 1 of the Arbitration Law asserted the validity of arbitration clauses in any
contract whether public or private law applied to that contract, and irrespective to the nature of
disputing parties.
The third step occurred in 1999, when Oman ratified both the ICSID (Convention of
International Centre for Settlement of Investment Disputes of 1965.) and New York conventions
(New York Convention of recognition and enforcement of international arbitral award of 1958).
These ratifications satisfied foreign investors and entitled them to settle their disputes with the
Omani government by international arbitration.
By 2009 the Omani judiciary began to play an important role in avoiding contradictions between
Omani laws concerning the validity of arbitral clauses in administrative contracts concluded with
state owned entities. For example, the validity of arbitral clauses in contracts between investors
and state owned entities was a question due to Article 6 of the Law of Administrative Courts and
Article 1 of Omani Arbitration Law (Royal degree No. 91/1999). In particular, Article 6 of the
Administrative Courts law (Royal degree No. 91/1999) gave conclusive jurisdiction to the
Administrative Court in disputes involving administrative contracts. Conversely, Article 1 of the
Omani Arbitration Law (Royal Decree No. 47/1997) permits disputing parties to settle their
dispute by arbitration, irrespective of the legal relationship on which the dispute is based.

Electronic copy available at: http://ssrn.com/abstract=2364323

In settling this issue, the Appeals chamber in the Omani Administrative Court asserted the
validity of an arbitral clause in a contract between a private company and the Omani Public
Authority of Electricity and Water (Administrative court Appeals chamber 05-01-2009).The
Court based its decision on the broad meaning of Article 1 of the Omani Arbitration Law. Also,
the Court interpreted that, when Article 6 of the Law of Administrative Courts stated the
conclusive jurisdiction of Administrative Courts, in disputes related to administrative contracts,
it referred to the distinction between the scope of jurisdiction of administrative courts and of civil
courts, but it did not to prevent disputing parties in administrative contracts from settling their
dispute by arbitration (see Journal of arbitration (in Arabic) No. 2 p. 282:289 April 2009).
That decision was not the first one. The administrative court asserted the validity of arbitral
clause and dismissed a suit in a dispute between the Ministry of oil and gas and a construction
company in 2006 (Administrative court, dated 25 June 2006).
Disputes concerning the validity of arbitration clauses in administrative contracts compelled
Omani legislators to modify the law of administrative courts in 2009 (Royal Decree No.
[3]/2009). This extended the scope of the Omani Arbitration Laws application to disputes
arising out of administrative contracts. Accordingly, any arbitral clause in administrative contract
will be valid as long as it complies with the requirements of the Omani Arbitration Law.

Electronic copy available at: http://ssrn.com/abstract=2364323