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20 January 2016

New arbitration centre reflects growth of Oman as investor centre

The recent pronouncements made by the Oman Chamber of Commerce and Industry ("OCCI") that Oman intends to establish its own centre for commercial arbitration in the Sultanate at the beginning of 2016, recognises that Oman's growth as a business community within the region has necessitated the opening of a dispute resolution centre that can offer investor security without the need to commence cases in dispute resolution centres in neighbouring countries (or even further afield).

In some respects Oman has arrived late to this party, with alternative centres already open in Qatar, Dubai and Bahrain supported by bespoke national arbitration laws passed by the respective legislatures to support the local court enforcement of arbitral awards.

Oman itself has had its own arbitration legislation in place for nearly twenty years (the Omani Law of Arbitration in Civil and Commercial Disputes 1997) but until recently such arbitrations had not had a facility, such as was to be found in the neighbouring jurisdictions, to act as an appropriate venue for the hearings of such arbitration cases.

Traditionally the GCC Commercial Arbitration Centre in Bahrain has benefitted from this lack of a facility in Oman and has attracted the majority of Omani cases (although other traditional arbitration centres such as London, Paris and the United States had also attracted some of the larger cases).

Despite the lack of a specialist Arbitration Centre, Omani state entities and private businesses have nevertheless recognised the benefits of arbitration for many years.

By way of example, the Omani Telecommunications Regulatory Act & Amendments 2015 (at Article 51) requires disputes between the Regulator and Licensees to be adjudicated through an arbitration process that closely mirrors the model clauses set out by such institutions as the London Court of International Arbitration.

This trend is replicated in similar provisions in other technically complex GCC legislation where the benefits of expert adjudication is recognised, ie the Bahrain Telecommunications Act 2002.

The relative late arrival of the new Omani Arbitration centre is not, however, a reason that the centre might struggle to attract cases from its more established competitors.

Within the last three weeks there has been the highly publicised news that Oman's State General Reserve Fund (SGRF) has taken the state of Bulgaria to arbitration at the Washington-based International Centre for Settlement of Investment Disputes following the collapse of Bulgaria's fourth largest Bank (on 27 October 2015), and that Oman had successfully defeated an arbitration claim brought in the International Centre for Settlement of Investment Disputes (ICSID) from an investor in a limestone quarry operation.

Both of these cases indicate that whilst the Omani Arbitration centre may be new, there is no lack of familiarity with the processes and procedures of arbitration and that consequently there will be no delay in local parties availing themselves of the new centre as and when it is available.

This familiarity with the processes of arbitration may also be the reason why no announcement has been made in relation to amending the 1997 law to provide updated legislative support for the centre (as was done in Bahrain, Saudi Arabia and elsewhere).

One change that current investors in Oman may wish to consider is amending their current contractual dispute resolution provisions to select the new Arbitration Centre as the venue in the case of any dispute (as this relatively minor amendment could result in significant cost savings should any such dispute occur).

This article was written by Gareth Mills; it was originally published by The Oath on January 2016 and is reproduced here with kind permission.

For further information, please contact Gareth on +973 17 133208 or