Recourse to determination by a neutral third party is not a recent import into Omani legal culture. For centuries, Omani communities resolved disputes amicably through consultation and mediation in the majlis, 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 contracts, and that approach came to be followed widely across public procurement. A comprehensive statutory framework followed with the Law of Arbitration in Civil and Commercial Disputes, promulgated by Royal 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 situated 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 dispute lies outside that state. That statutory definition is the starting point for determining whether an arbitration 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 domestic disputes due to its familiarity and relatively lower cost, arbitration is routinely adopted in major commercial transactions involving foreign investment, joint ventures, EPC contracts, concession agreements and project finance.
In most cases, arbitration arises from a clause included in the parties’ contract rather than from a separate agreement concluded after a dispute has arisen. Oman is also increasingly selected as the seat of arbitration for regional disputes, supported by its modern legislative framework, its accession to the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“New York Convention”), and the availability of institutional arbitration through the Oman Commercial Arbitration Centre. The Omani courts have generally adopted a supportive approach to arbitration and regularly deal with applications for the recognition and enforcement of both domestic and foreign arbitral awards. This combination of legislative support, judicial practice and institutional infrastructure has strengthened Oman’s position as an arbitration-friendly jurisdiction in the region.
It is now standard practice for Omani government entities, state-owned enterprises, government-related companies and sophisticated private-sector parties to agree to arbitration when contracting with foreign counterparties, and arbitration clauses are routinely included in major construction, engineering, energy, oil and gas, infrastructure, mining, procurement, telecommunications, technology and project finance agreements. Litigation before the Omani courts remains the principal method of dispute resolution for purely domestic and lower-value commercial claims, employment matters, real property disputes, consumer claims and matters that are not arbitrable under Omani law. Where the value or international character of the transaction justifies it, domestic parties prefer arbitration because it offers a neutral forum, procedural flexibility, the ability to appoint arbitrators with relevant technical or industry expertise, proceedings in a language other than Arabic where the parties so agree, confidentiality of the proceedings and of the award, and finality, since awards rendered under the Arbitration Law are not subject to appeal on their merits.
International arbitration is most commonly encountered in Oman as the mechanism selected by the parties in their contracts, whether by reference to a foreign seat, most commonly London, Paris, Geneva, Dubai or Singapore, or, increasingly, an Omani seat administered by the Oman Commercial Arbitration Centre. It is also significant in the context of the recognition and enforcement of foreign arbitral awards against assets located in Oman, Oman having acceded to the New York Convention by Royal Decree No. 36/1998, and the Convention having entered into force in respect of the Sultanate in 1999. Although Oman is increasingly positioning itself as a regional arbitral seat, many contracts connected with Oman continue to provide for a foreign seat while selecting Omani substantive law, with any resulting award subsequently recognised and enforced in Oman under the Convention. Equally, the Omani courts recognise and enforce awards rendered in international arbitrations seated outside Oman and to which no Omani party was a party, pursuant to the New York Convention, provided that assets or another basis for enforcement exist in the Sultanate. That approach has been reinforced by the establishment of the Investment and Commerce Court under Royal Decree No. 35/2025, since when the Omani judiciary has become increasingly pro-arbitration in its treatment of arbitration-related applications.
International arbitration in Oman is concentrated within a relatively small number of sectors characterised by high-value, technically complex and internationally financed projects. By some margin, construction, engineering and infrastructure account for the largest volume of arbitration, reflecting the scale of the public and private development projects undertaken in the Sultanate, including large-scale integrated tourism, real estate and energy-related developments along the coast, and the widespread use of FIDIC-based contracts, which almost invariably provide for arbitration as the parties’ chosen method of dispute resolution. Disputes commonly arise from EPC and design-and-build contracts, joint development agreements, delays, variations, extensions of time, defects, payment claims and termination, as well as from non-circumvention and non-disclosure arrangements between developers and their international partners.
The oil and gas sector, historically the dominant source of Omani arbitration, has likewise generated a significant body of arbitral disputes, albeit in fewer numbers than construction. Those disputes tend to be of considerably higher value and frequently arise under concession and production sharing agreements, joint operating agreements, EPC contracts, drilling and services contracts, and long-term supply arrangements. Similar trends may be observed in the power and utilities sector, particularly as Oman continues to expand its investment in renewable energy and green hydrogen projects pursuant to Vision 2040. Banking and finance, real estate development, and shareholder or joint venture disputes are also increasingly arbitrated.
The prevalence of arbitration within these industries is unsurprising. Their projects typically involve substantial capital expenditure, extended contractual relationships, multiple contractors and subcontractors, complex technical issues and, in many instances, foreign investors, lenders or contractors who insist upon arbitration clauses. Arbitration offers a neutral forum capable of accommodating these features, keeps technical, high-value and often confidential matters out of public court proceedings, and ensures that any resulting award is readily enforceable across jurisdictions. The incorporation of arbitration clauses into internationally recognised standard forms, particularly the FIDIC suite of contracts, has further entrenched arbitration as the default mechanism for resolving disputes in these sectors.
Beyond these traditional industries, arbitration is becoming increasingly common in technology, telecommunications and digital infrastructure projects as Oman continues to diversify its economy under Vision 2040. Indeed, arbitration is now encountered in almost every sector, although the intensity of arbitral activity varies considerably from one sector to another: shareholders’ agreements, joint venture arrangements and even contracts concluded between individuals frequently contain arbitration clauses, adopted in large part so that the parties may take advantage of the near-worldwide enforceability of arbitral awards under the New York Convention.
The International Chamber of Commerce (ICC) remains the arbitral institution most frequently selected to administer international commercial arbitrations connected with Oman. Its prominence reflects the nature of the disputes typically arising in the Sultanate, being high-value construction, infrastructure, energy and industrial projects involving international contractors, lenders and investors, and the fact that the FIDIC General Conditions commonly used on major Omani projects themselves provide for arbitration under the ICC Rules unless the Particular Conditions provide otherwise. International contractors, consultants and financiers active in Oman are accordingly well acquainted with the ICC Rules, and parties value the institution’s established procedural framework, its experienced case management and the international recognition of its awards.
The London Court of International Arbitration (LCIA), the Singapore International Arbitration Centre (SIAC) and the Dubai International Arbitration Centre (DIAC) are likewise encountered with some frequency. The choice between them is generally driven less by the nature of the dispute than by the commercial background of the transaction, the location of the parties and their financiers, and the seat agreed in the contract: LCIA arbitration has traditionally been favoured where English law and a London seat are chosen; SIAC is regularly encountered in transactions involving Asian investors or financing; and DIAC remains a common choice for projects with a broader GCC dimension. Ad hoc arbitration, most commonly under the UNCITRAL Arbitration Rules, also continues to feature in certain government and state-related contracts, although institutional arbitration remains the prevailing approach for complex international disputes.
Within Oman itself, the Oman Commercial Arbitration Centre, established under Royal Decree No. 26/2018 and affiliated with the Oman Chamber of Commerce and Industry, is the Sultanate’s sole dedicated arbitral institution. The Centre has assumed an increasingly prominent role in the domestic arbitration landscape and has become the prevailing choice in arbitration clauses agreed by government and government-related companies and, increasingly, by local private companies. It is also favoured where the cost of the proceedings is a material consideration, since the Centre’s fees are lower than those charged by regional and other international arbitration centres. In June 2026, the Centre unveiled a new corporate identity together with a revised set of Arbitration Rules for 2026, alongside its 2025 Annual Report, reflecting a broader institutional modernisation effort aimed at improving procedural efficiency and aligning the Centre’s practice with international standards. This followed an earlier update of the Centre’s arbitration rules by Decision No. 8/2020 of its Board of Directors. The rebranded Centre has also been expanding its roster of registered arbitrators, mediators and experts, and its network of co-operation agreements with regional and international bodies. Nevertheless, for the largest and most complex cross-border disputes, parties continue to favour the long-established international institutions, particularly where financing arrangements, multinational participants or enforcement considerations extend beyond Oman.
No new arbitral institution has been established in Oman in the last 12 months. The Centre therefore remains the Sultanate’s only permanent arbitral institution, the developments of the past year having consisted of its rebranding and the revision of its rules rather than the creation of a new body.
Oman has not adopted the model of establishing a dedicated arbitration court, or an international commercial court with exclusive jurisdiction over arbitral matters, comparable to those established in some neighbouring jurisdictions. The supervisory jurisdiction exercised by the national courts in support of arbitration is instead vested in a specialist commercial bench, with the result that arbitration-related matters are heard by a specialised court but are not determined by a separate arbitration court as such. However, a significant development took place in 2025 with the issuance of Royal Decree No. 35/2025, which established the Investment and Commerce Court. The Court has jurisdiction over a broad range of commercial and investment disputes, including matters relating to arbitration.
Judicial supervision of arbitration is not, however, a recent development in Oman. Even under the former court structure, and before the specialised commercial courts were absorbed into the unified judiciary in 2003, the Omani courts reviewed arbitral awards, supervised the arbitral process from the appointment of the arbitrators onwards, particularly in ad hoc arbitrations where the parties had made no institutional provision, and enforced the resulting awards. What Royal Decree No. 35/2025 has altered is not the existence of that supervisory function but its allocation: the Investment and Commerce Court is now the court competent for arbitration and arbitral procedure, including the appointment of arbitrators and the supervision of the arbitral process.
The Investment and Commerce Court is designated as the competent court for the purposes of the Arbitration Law. Its role is not to determine the substantive dispute between the parties, which remains the exclusive province of the arbitral tribunal, but to exercise the limited judicial functions reserved to the courts under the Arbitration Law. Those functions include applications concerning the appointment or replacement of arbitrators where judicial intervention is required, together with other arbitration-related disputes and applications falling within the powers conferred by the Arbitration Law. The establishment of this specialised court reflects Oman’s continued efforts to strengthen its commercial dispute resolution framework through greater judicial specialisation.
The Court also hears applications for interim measures in support of arbitration, actions to set aside arbitral awards, and applications for the recognition and enforcement of domestic and foreign arbitral awards. These matters are determined in accordance with the Arbitration Law and, where the Arbitration Law is silent, the Law of Civil and Commercial Procedure (Royal Decree No. 29/2002).
In recent years, Omani judges dealing with commercial and arbitration matters have developed increasing familiarity with international arbitration principles. This is reflected in a number of Supreme Court decisions concerning the recognition and enforcement of foreign arbitral awards, demonstrating the judiciary’s increasingly arbitration-friendly approach and its commitment to internationally recognised standards. Although the Sultanate has not created a standalone arbitration court, the concentration of arbitration-related applications before a specialist commercial forum promotes greater consistency in judicial oversight of arbitral proceedings and reinforces Oman’s broader policy of facilitating arbitration as an effective mechanism for the resolution of commercial disputes.
International arbitration in Oman is governed principally by the Arbitration Law. Oman’s first arbitration statute was itself drafted on the model of the 1985 UNCITRAL Model Law on International Commercial Arbitration: from its original enactment in 1997, and not merely as a result of the later amendments, the Arbitration Law has been closely modelled on the Model Law, and it adopts its core structure, covering the arbitration agreement, constitution of the tribunal, conduct of proceedings, interim measures, and recognition, enforcement and annulment of awards. While the overall framework mirrors the Model Law, Omani legislation diverges in certain respects, including a requirement that proceedings be conducted in Arabic unless the parties agree otherwise, a more prescriptive approach to the form and content of the award, and the involvement of the Omani courts at the enforcement or annulment stage in a manner shaped by the general Law of Civil and Commercial Procedure, which applies in areas the Arbitration Law does not expressly address.
There has been no amendment to the text of the Arbitration Law itself in the past year; the last substantive legislative amendment remains Royal Decree No. 3/2007. However, the institutional framework surrounding arbitration in Oman has continued to develop. In June 2026, the Oman Commercial Arbitration Centre introduced an amended set of Arbitration Rules for 2026 under a decision of its Board of Directors, alongside a rebranding of the Centre, reflecting an effort to modernise institutional procedure and bring it further into line with international best practice. In parallel, the Supreme Court has continued to develop and refine Omani case law on the enforcement of foreign arbitral awards, including notable decisions clarifying that foreign awards should generally be enforced in the same manner as domestic awards. A legislative amendment to the Arbitration Law is, however, now in prospect. Both chambers of the Council of Oman, namely the State Council and the Shura Council, have approved a set of amendments to the Arbitration Law, which have been referred to His Majesty the Sultan. The amendments have not yet been promulgated and their text has not been published, with the result that their scope and content are not yet known. Practitioners should therefore monitor the Official Gazette for their issuance, as well as whether the judicial and institutional developments described above prompt a more comprehensive statutory update in due.
Under Article 10 of the Arbitration Law, an arbitration agreement must be in writing, failing which it will be treated as invalid. Writing is broadly construed: the requirement is satisfied where the agreement is contained in a document signed by both parties, or is evidenced by an exchange of correspondence, telegrams or other means of written communication between the parties, including by reference in a contract to a separate document containing an arbitration clause, provided the reference is clear enough to make that clause part of the contract. The parties must also have legal capacity to agree to arbitration, and the core subject matter of the dispute must itself be arbitrable under Omani law, so that an agreement to arbitrate a matter which the law reserves to the courts, or which is not susceptible of compromise, will not be enforced. Nor may the arbitration agreement, or the subject matter it covers, contravene public order and public policy in Oman. These two limits correspond to the grounds on which recognition and enforcement may be refused under Article V(2) of the New York Convention, with the result that an arbitration agreement which satisfies them is enforceable not only before the Omani courts but, on the same footing, in the other Contracting States. Beyond these formal and capacity requirements, Omani courts have generally shown a supportive approach towards enforcing properly concluded arbitration agreements and referring parties to arbitration where a valid clause exists.
Omani law does not contain an exhaustive statutory list of non-arbitrable matters, but certain categories of dispute are generally accepted as falling outside the scope of arbitration because they concern matters of public order or exclusive state jurisdiction. These include criminal matters, personal status and family law disputes, tax disputes, matters relating to public administrative concessions in certain circumstances, and disputes that by their nature cannot be the subject of a settlement between private parties. As a general principle, Omani courts and commentators consider a dispute arbitrable where it concerns rights that the parties are free to dispose of by agreement, consistent with the general rule under the Arbitration Law that arbitration is permitted in respect of any dispute arising from a defined legal relationship, whether contractual or not, save where the law expressly reserves the matter to the state courts or where arbitration would offend a rule of Omani public policy.
Labour disputes warrant separate mention. The Labour Law (Royal Decree No. 53/2023) does provide for arbitration as a mechanism for the resolution of certain labour disputes, but that mechanism operates on a different basis from arbitration under the Arbitration Law. The arbitrators are appointed by the Ministry of Labour rather than nominated by the parties, the procedure is prescribed by the labour legislation itself, and the resulting decision takes effect and is enforced by the route laid down in that legislation rather than under the recognition and enforcement provisions of the Arbitration Law. Statutory labour arbitration of this kind therefore falls outside the scope of the Arbitration Law, and a decision rendered in such proceedings would not ordinarily qualify as an arbitral award for the purposes of the New York Convention.
Omani courts apply the Arbitration Law to determine questions concerning the law governing the arbitration agreement, generally giving effect to the law chosen by the parties either expressly or by reference to institutional rules, and falling back on Omani law, including the law of the seat, where no such choice has been made. In practice, the courts have shown a supportive and pro-enforcement approach towards arbitration agreements, dismissing court proceedings brought in breach of a valid arbitration clause and referring the parties to arbitration, provided the clause meets the formal writing requirement discussed above. This supportive stance has been reinforced in recent years by Supreme Court decisions clarifying the enforcement regime for both domestic and foreign awards, which reflect a broader judicial trend towards treating arbitration as the parties’ chosen and binding method of dispute resolution rather than as a mechanism to be narrowly construed against enforcement.
Omani law recognises the principle of separability, under which an arbitration clause contained within a broader contract is treated as an independent agreement, separate from the other terms of the contract. Consequently, the invalidity, termination or rescission of the main contract does not automatically render the arbitration clause invalid or deprive the tribunal of jurisdiction to determine the dispute, including disputes as to the validity of the underlying contract itself. This principle is fundamental to the competence-competence doctrine applied in Oman, allowing an arbitral tribunal to rule on its own jurisdiction, including any objection concerning the existence or validity of the arbitration agreement, without that determination being automatically undermined by a finding that the main contract is void, voidable or otherwise defective, save where the defect alleged goes specifically to the arbitration clause itself, such as fraud vitiating the parties’ consent to arbitrate.
The Arbitration Law affords the parties broad autonomy to agree on the number of arbitrators and the method of their selection, subject to a requirement that the tribunal be constituted of an odd number of arbitrators, failing which the arbitration may be treated as invalid. Parties are generally free to specify qualifications for arbitrators, such as nationality, professional background or language ability, and to adopt institutional rules, such as those of the Oman Commercial Arbitration Centre, that provide for a particular appointment mechanism. The principal limits on this autonomy are that the arbitrator must accept the appointment in writing and, at that time, disclose any circumstances that might raise doubts as to their independence or impartiality. Beyond the odd-number requirement and these disclosure obligations, Omani law does not otherwise restrict the parties’ freedom to select arbitrators of their choosing, including arbitrators who are not Omani nationals or qualified Omani lawyers.
Where the parties’ chosen method for selecting arbitrators fails – for example, because a party does not nominate an arbitrator within the agreed or statutory period, or because the party-nominated arbitrators cannot agree on a presiding arbitrator – Article 17 of the Arbitration Law provides a default mechanism under which the competent court will make the necessary appointment upon application by the interested party, and it governs the manner of the court’s intervention in any dispute over the appointment of arbitrators. In the case of a three-member tribunal, if one party fails to appoint its arbitrator within 30 days of being called upon to do so, or if the two party-appointed arbitrators fail to agree on a chairperson within a further specified period, the competent court will appoint the outstanding arbitrator or chairperson. A similar default procedure applies to multiparty arbitrations, although in practice such situations are more commonly addressed through the tribunal’s own procedural directions or the rules of the chosen arbitral institution, with recourse to the courts remaining as a fallback where consensus cannot be reached.
The court’s default power under Article 17 is of particular practical importance in ad hoc arbitration, where there is no arbitral institution to act as appointing authority. If the parties, or the arbitrators they have nominated, fail to complete the tribunal, it is the competent court that selects the missing arbitrator. Where the court makes the appointment, it will ordinarily select from among the arbitrators registered with it, and registration is subject to published requirements. Chief among these is that the candidate hold recognised arbitration qualifications, in the form of certificates or accredited courses from reputable arbitration bodies, or alternatively that the candidate submit substantial evidence of practical experience in arbitration. Parties contemplating an ad hoc arbitration seated in Oman should bear in mind that any arbitrator appointed by the court will be drawn from that register.
A court can intervene in the selection of arbitrators, but only within the confines set by the Arbitration Law. The circumstances in which the competent court may be called upon to make an appointment are addressed at 4.2 Default Procedures. What matters for present purposes is the character of the court’s involvement and the limits upon it. The court’s role is supportive and administrative rather than substantive: it acts to complete the constitution of the tribunal so that the arbitration may proceed, and not to review the merits of any party’s choice of arbitrator. It may act only upon the application of an interested party, and only where the mechanism agreed by the parties has failed. Its powers are confined to what the Arbitration Law expressly permits, so that it cannot unilaterally reconstitute a validly appointed tribunal in the absence of a proper challenge, and any arbitrator it appoints remains subject to the same requirements of independence, impartiality and disclosure as one nominated by the parties. That supervisory jurisdiction over the composition of the tribunal extends also to applications for the challenge, removal or replacement of an arbitrator, but no further: where the mechanism agreed by the parties has functioned, the constitution of the tribunal is a matter for the parties alone.
Under Article 18(1) of the Arbitration Law, an arbitrator may be challenged only where circumstances exist which give rise to serious doubts as to their impartiality or independence. Article 18(2) provides that a party may not challenge an arbitrator whom it appointed, or in whose appointment it participated, save for a reason of which it became aware after that appointment was made. Under Article 19(1), the challenge must be made in writing to the arbitral tribunal, stating the grounds relied upon, within 15 days from the date on which the challenging party learned of the constitution of the tribunal or of the circumstances justifying the challenge. If the challenged arbitrator does not withdraw, the arbitral tribunal itself, and not the court, determines the challenge at first instance. A challenge is inadmissible if brought by a party which has previously challenged the same arbitrator in the same arbitration (Article 19(2)). Where the tribunal rejects the challenge, the applicant may appeal against that decision to the court designated in Article 9 of the Arbitration Law within 30 days of being notified of it, and the judgment of that court is final and not subject to appeal by any means (Article 19(3)). Neither the making of a challenge nor an appeal against its rejection suspends the arbitral proceedings; if, however, the challenge succeeds, whether before the tribunal or on appeal, everything done in the arbitration up to that point, including any award already rendered, is deemed never to have taken place (Article 19(4)). Arbitrators may also be removed by agreement of the parties, or where they become unable to perform their duties, fail to act within a reasonable time, or withdraw or are otherwise removed by the court.
Article 16 of the Arbitration Law addresses both eligibility to sit as an arbitrator and the arbitrator’s disclosure obligations. Under Article 16(1), an arbitrator may not be a minor, a person under interdiction, or a person deprived of civil rights by reason of a conviction for a felony or for a misdemeanour involving moral turpitude or breach of trust, or by reason of an adjudication of bankruptcy unless rehabilitated. Article 16(2) provides that an arbitrator need not be of any particular sex or nationality, unless the parties have agreed otherwise or the law provides to the contrary. Under Article 16(3), acceptance of the appointment must be in writing, and on accepting it, the arbitrator must disclose any circumstances liable to give rise to doubts as to their independence or impartiality. The same provision imposes a continuing obligation: where such circumstances arise after the appointment or in the course of the arbitral proceedings, the arbitrator must move promptly to disclose them to both parties and to the other arbitrators. Beyond these statutory disclosure obligations, the Arbitration Law does not prescribe a detailed conflicts code comparable to the IBA Guidelines, although tribunals and Omani courts frequently have regard to generally accepted international standards of independence and impartiality when assessing a challenge. Where the parties adopt institutional rules, such as those of the Oman Commercial Arbitration Centre, additional requirements as to arbitrator independence, disclosure and conduct set out in those rules will apply in addition to the statutory minimum.
The principle of competence-competence is recognised under Omani law. Article 22(1) of the Arbitration Law empowers the tribunal to determine pleas that it lacks jurisdiction, including pleas that no arbitration agreement exists, that it has lapsed or is void, or that it does not extend to the subject matter of the dispute. Any such plea must be raised no later than the time for service of the respondent’s defence under Article 30(2), and is not waived by a party’s appointment of, or participation in the appointment of, an arbitrator; a plea that the agreement does not cover a matter raised in the course of the proceedings must be made immediately, failing which it is waived, though the tribunal may admit a late plea where the delay is justified. Under Article 22(3), the tribunal decides the plea before the merits or joins it to the merits for determination together. This power derives both from the general international acceptance of the principle, reflected in the UNCITRAL Model Law on which the Arbitration Law is based, and from the doctrine of separability under Article 23, which allows the tribunal to assess the validity of the arbitration clause independently of the underlying contract. A tribunal’s decision upholding its own jurisdiction is not final in the sense of being immune from judicial scrutiny: where the tribunal rejects the plea, Article 22(3) provides that it may be raised again only by way of an action to annul the final award under Article 53.
Omani courts can address issues of jurisdiction of an arbitral tribunal principally in two contexts: first, under Article 13(1) of the Arbitration Law, where a party commences court proceedings notwithstanding an arbitration agreement, the court must declare the claim inadmissible if the defendant raises the arbitration agreement before submitting any other request or defence on the merits; and second, following the rendering of an award, where a party applies under Article 53 to annul it on jurisdictional grounds, including that no arbitration agreement existed or that it was invalid or had lapsed (Article 53(1)(a)), that the tribunal was improperly constituted (Article 53(1)(e)), or that the tribunal exceeded the scope of the matters referred to it (Article 53(1)(f)). Consistent with the general pro-arbitration stance of the Omani judiciary, the courts have generally shown a degree of restraint in intervening on jurisdictional questions, respecting the tribunal’s competence-competence under Article 22 and being reluctant to second-guess an arbitral tribunal’s assessment of its own jurisdiction in the absence of one of the exhaustive statutory grounds. Omani courts do review negative jurisdictional rulings, that is, decisions where a tribunal declines jurisdiction, since Article 13(2) confirms that the pendency of court proceedings does not itself prevent a party from pursuing its claim, and a party affected by a negative ruling retains the right to bring its claim before the ordinary courts.
A party’s ability to challenge the jurisdiction of an arbitral tribunal before the Omani courts principally arises after an award has been rendered, through an action to annul the award under Article 53 of the Arbitration Law, brought within 90 days of notification of the award under Article 54(1), before the competent Court of Appeal identified in Article 9. The exhaustive grounds available under Article 53(1) include the invalidity or lapse of the arbitration agreement and the tribunal exceeding the scope of matters submitted to it. Where court proceedings are instead commenced in breach of an arbitration agreement, Article 13(1) requires the objecting party to raise the existence of that agreement before submitting any other request or defence, so that the court can decline jurisdiction in favour of arbitration; Article 13(2) confirms that the mere filing of such proceedings does not prevent the arbitration from commencing or continuing, or prevent an award being rendered. It is not generally possible under Omani practice to bring a free-standing application to the courts challenging a tribunal’s jurisdiction while the arbitration is ongoing and before an award, or partial award on jurisdiction under Article 22(3), has been issued, save in the limited circumstances described above concerning the constitution of the tribunal itself under Articles 17 to 21.
Omani courts do not apply a uniform, codified standard of review comparable to a formal “de novo” or “deferential” test familiar in some other jurisdictions. In practice, where jurisdiction or admissibility is raised in the context of an application to annul an award under Article 53 of the Arbitration Law, the court’s review tends to focus narrowly on whether one of the grounds enumerated in Article 53(1)(a) to (g) is made out – for example, whether a valid arbitration agreement existed, whether the tribunal exceeded the scope of the parties’ agreement to arbitrate under Article 53(1)(f), or whether the tribunal was properly constituted under Article 53(1)(e) – rather than re-examining the merits of the tribunal’s reasoning on jurisdiction generally. Article 53(2) additionally obliges the court to annul an award of its own motion where it conflicts with Omani public order, but this too is a narrow, public-policy-driven inquiry rather than a substantive re-hearing. This approach is, in substance, closer to a limited or supervisory review than to a full re-hearing of jurisdictional questions, reflecting the exhaustive and narrowly framed nature of the Article 53 grounds and the courts’ general reluctance to interfere with an arbitral tribunal’s competence-competence under Article 22.
Where a party commences court proceedings in breach of a valid arbitration agreement, Article 13(1) of the Arbitration Law requires the Omani courts to declare the claim inadmissible, provided the defendant raises the existence of the arbitration agreement before submitting any other request or defence on the merits of the case. This reflects a general willingness on the part of the national courts to give effect to the parties’ contractual choice of arbitration rather than to allow a party to circumvent that choice by resorting to litigation. That said, the willingness of the courts to decline jurisdiction depends on the arbitration agreement satisfying the writing requirement under Article 12 and covering the dispute in question; where there is genuine doubt as to the existence, validity or scope of the arbitration agreement, the courts may need to consider that threshold question before applying Article 13. Article 13(2) further confirms that the filing of court proceedings in these circumstances does not itself prevent the arbitration from commencing or continuing, or prevent an award being rendered in parallel.
The Arbitration Law is principally premised on consent, defining an arbitration agreement under Article 10(1) as an agreement between its parties to refer disputes between them to arbitration, and Omani law does not contain a broad general doctrine allowing a tribunal to assume jurisdiction over parties that are neither signatories to that agreement nor otherwise bound by it through recognised legal principles. That said, non-signatories may in certain circumstances be bound by, and therefore subject to, an arbitration agreement, including through “group of companies” principles, agency, assignment or succession, or where a party’s conduct demonstrates clear acceptance of the arbitration agreement notwithstanding the absence of its signature; Article 12’s requirement that the agreement be evidenced in writing, including through an exchange of correspondence, is applied by the courts to assess whether such acceptance can be established in writing. Omani courts approach such questions cautiously and typically require clear evidence of consent or a recognised legal basis for extending the agreement before treating a non-signatory as bound. Where such a basis can be established, Omani law does not draw a formal distinction between domestic and foreign non-signatory third parties, provided the general requirements of Omani law and public policy are otherwise satisfied.
An arbitral tribunal seated in Oman is permitted to order preliminary or interim measures under Article 24(1) of the Arbitration Law, which allows the parties to agree that the tribunal may, on the application of either of them, order the other to take such interim or precautionary measures as the nature of the dispute requires, and to require the provision of adequate security to cover the costs of the measure ordered. Because this power arises “by agreement of the parties”, it is generally treated as based on the parties’ consent, whether express or through adoption of institutional rules that confer such a power on the tribunal, rather than as a power the tribunal enjoys automatically in every case. Such measures are binding on the parties as a matter of the tribunal’s authority; where the party against which the order is made fails to comply, Article 24(2) allows the tribunal, on the other party’s application, to authorise that party to take the necessary steps to give effect to the measure, without prejudice to that party’s right to apply to the president of the competent Court of Appeal for an order of enforcement. The types of relief available under Article 24 are broadly framed and can include measures for the preservation of assets or evidence and orders restraining a party from taking a particular step pending the award.
The Omani courts play a supporting role in relation to preliminary and interim relief in arbitral proceedings. Article 14 of the Arbitration Law empowers the court referred to in Article 9 to order interim or precautionary measures, on the application of a party to the arbitration, either before the arbitration proceedings begin or while they are ongoing, independently of the tribunal’s own power under Article 24. This court-ordered relief is particularly significant where the measure sought requires the coercive power of the state, such as attachment of assets or measures directed at third parties that are not bound by the arbitration agreement and therefore fall outside the tribunal’s own authority. Article 14 is not expressed to be limited to arbitrations seated in Oman, and an application for interim relief in support of an arbitration, including one seated outside Oman, is not generally treated as inconsistent with the parties’ agreement to arbitrate. The Arbitration Law does not contain a dedicated statutory regime addressing emergency arbitrators; the use of emergency arbitrator mechanisms in Oman-seated arbitrations is therefore a function of the institutional rules the parties have adopted rather than of the Arbitration Law itself, and enforcement of an emergency arbitrator’s decision may in practice still require recourse to the competent court under Article 14 or, by analogy, Article 24(2).
The Arbitration Law does not contain a general, freestanding provision empowering the courts or an arbitral tribunal to order a claimant to provide security for the respondent’s costs of the arbitration as a whole. The closest statutory analogue is Article 24(1), under which a tribunal, where the parties have so agreed, may require a party to which it has directed an interim or precautionary measure to provide adequate security to cover the costs of that specific measure – a narrower concept tied to the measure ordered, rather than a general security-for-costs regime protecting a respondent against the risk of an unsuccessful claimant being unable to satisfy an eventual costs award. Where the parties have adopted institutional rules that expressly permit broader orders for security for costs, tribunals seated in Oman may make such orders as part of their general procedural authority derived from the parties’ agreement to those rules. Given the absence of detailed statutory guidance beyond Article 24(1), parties concerned about the availability of security for costs in an Oman-seated arbitration are well advised to address the tribunal’s power to grant such relief expressly in the arbitration agreement or the applicable institutional rules.
The Arbitration Law itself governs the procedure of arbitrations seated in Oman, setting out mandatory and default rules concerning matters such as the constitution of the tribunal, the conduct of the hearing, the taking of evidence, and the form of the award. Subject to these mandatory provisions, the Arbitration Law affords the parties significant autonomy to agree on the procedure to be followed, including by adopting institutional rules such as those of the Oman Commercial Arbitration Centre, whose Arbitration Rules were most recently updated in 2026, or the rules of an international institution such as the ICC. In the absence of party agreement, the tribunal itself has the power to determine the procedure it considers appropriate, having regard to the provisions of the Arbitration Law. Where the seat is in Oman, the language of the proceedings will default to Arabic unless the parties agree otherwise, which is an important practical consideration for foreign parties structuring their arbitration agreements.
Certain procedural steps in Oman-seated arbitrations are mandated by the Arbitration Law rather than left entirely to party autonomy. These include the requirement that the arbitration agreement be in writing, that the tribunal be constituted of an odd number of arbitrators, that arbitrators accept their appointment in writing and disclose any conflicts at that time, and that each party be given a full and equal opportunity to present its case, reflecting the due process guarantees embedded in the Law. The award itself must satisfy specific formal requirements, including being in writing, signed by the arbitrators (or a majority, with reasons given for any missing signature) and dated, and stating the seat of arbitration, a summary of the parties’ claims and evidence, and the reasoning for the tribunal’s decision. Certain procedural steps relating to enforcement, such as the deposit of the award with the competent court, are also expressly required as a precondition to enforcement.
Arbitrators seated in Oman are vested by the Arbitration Law with broad powers to conduct the proceedings, including determining the applicable procedure in the absence of party agreement, deciding on the admissibility, relevance and weight of evidence, ordering the production of documents and, where the parties have so agreed, ruling on interim measures. Correspondingly, the Arbitration Law imposes clear duties on arbitrators, foremost among them the duty of independence and impartiality, coupled with an ongoing disclosure obligation, and a duty to conduct the proceedings fairly, ensuring that each party has an equal and full opportunity to present its case. Arbitrators are also under a duty to render the award within the time limit agreed by the parties, or as fixed by the Arbitration Law in the absence of such agreement, failing which the mandate of the tribunal may lapse unless the parties or the court agree to extend it. Arbitrators are further required to state the reasons for their award, save where the parties have agreed otherwise or the applicable rules do not require this.
Omani law does not impose a general requirement that legal representatives appearing in an Oman-seated arbitration be licensed to practise before the Omani courts or be Omani nationals, which is a notable point of flexibility compared with litigation before the domestic courts, where representation is generally reserved to lawyers registered with the Omani Ministry of Justice. Parties to arbitration are, in general, free to appoint representatives of their choosing, including foreign qualified counsel, reflecting the private, consensual nature of arbitration and the broader international character of the arbitration agreements typically seen in Oman. This flexibility applies equally to domestic and international arbitrations, in contrast to the position before the ordinary Omani courts. That said, where enforcement or annulment proceedings subsequently move to the Omani courts, representation before those courts will generally need to be undertaken, or at least formally lodged, by counsel admitted to practice in Oman.
Arbitral proceedings in Oman do not generally follow the broad, US-style discovery model; instead, the collection and submission of evidence tends to be more closely aligned with the civil law tradition, relying principally on documentary evidence submitted by the parties in support of their pleadings, together with witness statements and expert reports where relevant. The Arbitration Law affords the tribunal considerable discretion to determine the manner in which evidence is presented and assessed, including whether to permit cross-examination of witnesses at a hearing, which is common in practice, particularly in more internationalised arbitrations. There is no comprehensive statutory privilege regime specific to arbitration comparable to those found in some common-law systems, and issues of privilege and confidentiality of documents are generally addressed by reference to the law applicable to the underlying relationship, the tribunal’s own procedural directions or, increasingly, international soft-law instruments such as the IBA Rules on the Taking of Evidence, where the parties or tribunal choose to apply them.
The Arbitration Law does not import the formal, technical rules of evidence that apply in ordinary Omani civil and commercial litigation; rather, it grants the arbitral tribunal broad discretion to determine the rules of evidence applicable to the proceedings, subject to the fundamental requirement that each party be given a full and equal opportunity to present its case. In practice, this means that tribunals seated in Oman frequently adopt more flexible, internationally recognised approaches to evidence, including reliance on written witness statements, party-appointed and tribunal-appointed experts, and document production, rather than being bound by the more prescriptive evidentiary rules that apply before the domestic courts. This flexibility is one of the practical advantages of arbitration over litigation for parties involved in complex, technical or cross-border disputes, since it allows the tribunal to tailor the evidentiary process to the nature and value of the dispute rather than applying a uniform procedural code.
Arbitral tribunals do not themselves possess coercive powers of compulsion over parties or, especially, non-parties; such powers rest with the competent Omani courts, which can assist an arbitration by compelling the production of documents or the attendance of witnesses upon application by a party or the tribunal, in a manner analogous to the court’s role in ordinary litigation. This distinction is significant in the case of non-parties, who cannot generally be compelled to produce documents or give evidence directly by the tribunal, since the tribunal’s authority derives from the parties’ consent to arbitrate and does not extend to third parties; recourse to the court is therefore necessary where evidence held by a non-party is required. As between the parties themselves, a party’s failure to comply with a tribunal’s order for production of documents may instead be addressed through the tribunal’s power to draw adverse inferences, or through its ultimate assessment of the evidence and the merits of the dispute.
The Arbitration Law does not contain an express, comprehensive statutory confidentiality regime covering all aspects of an arbitration; however, arbitral proceedings in Oman are, in practice and by broad legal and institutional convention, treated as confidential, including the pleadings, the evidence submitted and the award itself, particularly where the parties have adopted institutional rules, such as those of the Oman Commercial Arbitration Centre, that expressly impose confidentiality obligations on the parties, the tribunal and the institution. In the absence of an express confidentiality agreement or applicable institutional rule, the position is less certain, and parties concerned to preserve confidentiality are well advised to address the point expressly in their arbitration agreement or terms of reference. Information from an arbitration may, in certain circumstances, need to be disclosed in subsequent court or arbitral proceedings, for example where the award or the underlying agreement is placed before the courts in enforcement or annulment proceedings, since court filings and judgments are generally treated as a matter of public record.
An arbitral award seated in Oman must satisfy a number of formal requirements under the Arbitration Law to be valid and enforceable. It must be issued in writing and signed by the arbitrators; where the tribunal comprises more than one arbitrator, a majority signature suffices, provided the award records the reasons why the remaining arbitrator or arbitrators did not sign. The award must state the seat of the arbitration and the date on which it was made, must set out a summary of the parties’ claims, submissions and evidence, and must state the reasoning underlying the tribunal’s decision, save where the parties have agreed that reasons need not be given or where the applicable procedural law or rules do not require them. There is a general time limit within which the award must be rendered, whether agreed by the parties or, in the absence of agreement, fixed under the Arbitration Law, subject to any extension agreed by the parties or ordered by the competent court.
The Arbitration Law does not set out a prescriptive, closed list of remedies available to an arbitral tribunal; tribunals seated in Oman generally have the power to award the range of remedies within the scope of what the parties have agreed to submit to arbitration and what is permissible under the law governing the merits of the dispute, including damages, specific performance and declaratory relief. Certain remedies are, however, generally regarded as unavailable or restricted as a matter of Omani public policy, most notably punitive damages, which are not a recognised feature of Omani civil and commercial law, which is compensatory in nature. Any award purporting to grant a remedy considered contrary to Omani public policy, including punitive damages, would be vulnerable to challenge on enforcement or annulment. Equitable-style remedies such as injunctive relief and rectification may be available where the underlying contract and applicable law support them, but tribunals should exercise caution to ensure the remedy granted remains within the recognised bounds of Omani substantive and public policy.
Parties to an Oman-seated arbitration are generally entitled to recover interest and legal costs, although the basis for doing so, and the rate and calculation of interest in particular, must be considered carefully in light of Omani law, including restrictions derived from Sharia principles that can affect the recoverability and characterisation of interest in certain contexts. Tribunals typically have discretion to allocate the costs of the arbitration, including the parties’ legal costs, tribunal fees and institutional charges, between the parties. In practice, Omani tribunals and courts do not apply a rigid, universal “costs follow the event” rule; the tribunal will generally exercise its discretion having regard to the relative success of the parties, the conduct of the proceedings, and any agreement between the parties on costs, meaning outcomes can range from a straightforward “costs follow the event” approach to a more nuanced apportionment reflecting the extent to which each party succeeded or failed on the various issues in dispute.
There is no right of appeal on the merits against an arbitral award under Omani law; the Arbitration Law instead provides an exclusive remedy of annulment, under Article 53, on a closed and exhaustive list of procedural and jurisdictional grounds, such as the invalidity of the arbitration agreement, a defect in the constitution of the tribunal, the tribunal exceeding the scope of the matters submitted to arbitration, a failure to observe the parties’ agreed procedure or fundamental due process, or the award’s being contrary to Omani public policy. An application to annul the award must be filed before the competent Court of Appeal within a limited period from notification of the award, and the grounds available do not extend to a substantive review of the correctness of the tribunal’s factual findings or its application of the law to the merits. Where no ground for annulment listed in Article 53 is established, the courts will decline to interfere with the award, and there is no alternative avenue by which a dissatisfied party may otherwise obtain a substantive re-hearing of the dispute.
The grounds on which an award may be annulled under Article 53 of the Arbitration Law are generally treated as an exhaustive statutory list rather than a default regime that the parties are free to expand or narrow by agreement. Omani courts and practitioners have consistently taken the position that alleged evidentiary or other defects falling outside this exhaustive list cannot be relied upon to set aside an award, even where the parties might otherwise wish to widen the scope of review. Correspondingly, there is limited scope under Omani law for parties to contract out of, or waive in advance, their right to apply for annulment on the statutory grounds, given the public policy character of certain of those grounds, in particular the requirement that the award not conflict with Omani public order. Parties seeking a broader or narrower standard of review than that provided by the Arbitration Law should therefore be aware that Omani courts are likely to apply the statutory grounds strictly, regardless of any contrary agreement.
Consistent with the position on jurisdictional review discussed above, the Omani courts do not conduct a de novo review of the merits of an arbitral award when considering an application for annulment; their role is confined to determining whether one of the exhaustive grounds set out in Article 53 of the Arbitration Law is established, such as a defect in the arbitration agreement or the constitution of the tribunal, a failure to observe fundamental procedural guarantees, or a conflict with Omani public policy. This is, in substance, a deferential and narrowly circumscribed standard of review: the courts will not substitute their own assessment of the facts or the correct application of the substantive law for that of the tribunal, and an award will not be annulled merely because the court might have reached a different conclusion on the merits. This approach reflects the general policy of Omani law to treat the arbitral tribunal’s decision on the merits as final and binding, subject only to the limited statutory safeguards.
Oman acceded to the New York Convention by Royal Decree No. 36/1998, and the Convention has since formed a central part of the framework for the enforcement of foreign arbitral awards in the Sultanate, operating alongside the Arbitration Law and the Law of Civil and Commercial Procedure. Oman’s accession did not include reservations that would materially narrow the scope of the Convention’s application in the manner seen in some other Contracting States. In recent years, the Supreme Court has issued a series of decisions clarifying and, in some respects, streamlining the practical application of the New York Convention framework, including confirming that foreign arbitral awards should generally be enforced through the courts in a manner analogous to domestic awards, reinforcing Oman’s standing as a jurisdiction supportive of the recognition and enforcement of foreign arbitral awards.
An application for the enforcement of an award seated in Oman is made to the competent court, generally following the deposit of the original award and the arbitration agreement with the court, and is subject to the grounds for refusal set out in Article 53 of the Arbitration Law; no application for enforcement is admissible until the period for applying to annul the award has expired. Foreign arbitral awards are enforced under the framework of the New York Convention and the Law of Civil and Commercial Procedure, and recent Supreme Court decisions have confirmed that such awards can generally be enforced through a direct petition process akin to that applicable to domestic awards, rather than requiring a full re-litigation of the underlying dispute. Where an award has been set aside by the courts of the seat, Omani courts will generally decline to enforce it, although the Supreme Court has also indicated a willingness, in certain circumstances, to consider the status of ongoing set-aside proceedings at the seat before determining whether to proceed with, or suspend, enforcement in Oman. A state or state entity seeking to resist enforcement on the basis of sovereign immunity will generally need to demonstrate that the relevant assets or conduct fall within a recognised immunity, since Omani courts have shown limited sympathy for immunity defences raised simply to avoid an otherwise valid arbitral obligation.
Omani courts have, in recent years, adopted an increasingly supportive and pragmatic approach towards the recognition and enforcement of both domestic and foreign arbitral awards, reflecting the Sultanate’s broader policy commitment to positioning itself as an arbitration-friendly jurisdiction. Refusal of enforcement on public policy grounds is treated as an exceptional remedy, generally reserved for awards that would offend fundamental principles of Omani law or morality, such as awards granting remedies not recognised under Omani law, for example punitive damages, or awards procured through fraud, rather than being used as a vehicle for a broader review of the correctness of the tribunal’s decision. Omani courts distinguish in this respect between domestic public policy in the narrow sense and the more limited concept of international public policy typically applied when considering the enforcement of foreign awards, generally applying the latter, narrower standard so as to avoid inappropriately refusing enforcement of foreign awards on the basis of purely domestic legal peculiarities.
Omani law does not contain a dedicated statutory framework providing for class action arbitration or group arbitration in the manner recognised in some common-law jurisdictions. Arbitration under the Arbitration Law is fundamentally a consensual, bilateral or multiparty mechanism rooted in the parties’ specific arbitration agreement, and there is no general procedural vehicle under Omani law by which a representative claimant may bring, or a tribunal may certify, a class-wide arbitration on behalf of an undefined or open class of claimants who have not themselves agreed to arbitrate. Where multiple parties with related claims wish to proceed together, this is generally achieved through multiparty arbitration clauses agreed at the outset, or through consolidation of related proceedings where the parties and the tribunal agree, rather than through a class action mechanism. Parties seeking a mechanism to resolve multiple, similar claims collectively in Oman should therefore address this expressly in their arbitration agreements, since no default statutory class arbitration procedure is available to fall back upon.
There is no single, comprehensive statutory code of ethics specifically applicable to arbitrators and counsel conducting arbitral proceedings in Oman, in contrast to the position for advocates appearing before the domestic courts, who are subject to the professional conduct rules of the Omani Ministry of Justice and the Oman Bar Association. Arbitrators are, however, subject to the statutory duties of independence, impartiality and disclosure imposed by the Arbitration Law itself, which operate as the principal source of ethical obligation specific to the arbitral process. Where the parties adopt institutional rules, such as those of the Oman Commercial Arbitration Centre, those rules typically incorporate their own codes of conduct or ethical standards for arbitrators registered with, or appointed through, the institution. In the absence of a bespoke Omani ethical code, practitioners frequently have regard to internationally recognised soft-law instruments, such as the IBA Guidelines on Conflicts of Interest, as a benchmark of good practice, even though these instruments are not directly binding as a matter of Omani law.
Omani law does not contain a dedicated statutory regime specifically regulating third-party funding of arbitration, whether by way of express permission, prohibition, or a bespoke disclosure and licensing framework, as has been adopted in some other jurisdictions. The absence of specific legislation means that third-party funding arrangements are, in principle, assessed by reference to general contract law principles and, where relevant, professional conduct considerations, rather than a dedicated funding-specific code. This is an evolving area of practice in Oman, and market use of third-party funding for arbitration remains relatively limited compared with more mature funding markets, although interest is increasing alongside the broader growth of high-value arbitration activity in the Sultanate. In the absence of clear rules, parties considering funded arbitrations seated in Oman should exercise caution and ensure that the funding arrangement does not raise issues under general principles of Omani law, including as to champerty-like concerns, disclosure to the tribunal, and potential cost consequences.
The Arbitration Law does not contain an express, general statutory power for either an Oman-seated tribunal or the Omani courts to order the consolidation of separate arbitral proceedings in the absence of the parties’ agreement. Consolidation is therefore generally only available where the arbitration agreements in question, or the institutional rules the parties have adopted, expressly provide for it, or where all parties to the separate proceedings subsequently agree to consolidate them. Where parties anticipate the possibility of related, multi-contract disputes, for example in complex construction or development projects involving a chain of related agreements, it is advisable to address consolidation and the joinder of related proceedings expressly in the arbitration clauses, including through institutional rules, such as those of the Oman Commercial Arbitration Centre, that contain their own consolidation mechanisms, since the default statutory position under Omani law does not provide a court or tribunal with an independent power to compel consolidation without such agreement.
An arbitration agreement, and consequently an award, generally binds only the parties to it, reflecting the consensual foundation of arbitration under Omani law. Third parties may, however, become bound in certain recognised circumstances, including through assignment or succession to a party’s rights and obligations under the underlying contract, through agency, or where their conduct demonstrates clear acceptance of, or reliance on, the arbitration agreement, such that it would be inequitable to allow them to disclaim it. Omani courts approach the binding of non-signatory third parties cautiously and require a clear legal or factual basis before extending the effect of an arbitration agreement or award to a party that did not sign it. Where such a basis is established, Omani law does not draw a formal distinction between binding domestic and foreign third parties, and the same underlying principles of consent, assignment, agency or estoppel would in principle apply irrespective of the third party’s nationality or place of establishment.
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Between Settlement and Arbitration: How Do Companies Make the Right Decision in Disputes?
One of the central challenges companies and their legal counsel face in commercial disputes involving arbitration clauses is determining the right strategy from the outset. The decision rarely presents itself as a straightforward choice. It demands careful analysis of the potential outcomes, the costs involved, and the broader commercial and legal consequences that may follow.
In practice, dispute resolution is not governed by preference alone. It requires a sober assessment of cost versus return, likely outcomes and market conditions. While there is no shortage of alternative dispute resolution mechanisms available, whether negotiation, mediation, arbitration, or recourse to local courts, selecting the appropriate path remains a genuinely complex undertaking. That complexity deepens when the decision reaches senior management, where financial exposure, shareholder interests and the impact on the company’s cash flow all come into play, particularly when weighing a settlement against pursuing full arbitration proceedings.
I. A Dispute is a process, not a single decision
Most experienced practitioners understand that a commercial dispute is not an isolated event but rather a process unfolding across several interconnected stages: the pre-dispute phase, the negotiation phase, the pre-arbitration stage and arbitration itself. Each stage carries its own dynamics, risk profile and range of possible outcomes, yet none of them exists in isolation. Decisions made at one stage have a direct bearing on what options remain available later. Managing a dispute well therefore requires a coherent, long-term perspective oriented towards minimising overall losses, not simply resolving the immediate problem.
It is also worth noting that the arbitration clause itself, as drafted, can significantly shape the options available once a dispute arises. The seat of arbitration, the governing law, the number of arbitrators, the language of proceedings, and whether expedited or consolidated procedures are available all influence the duration, cost, procedural flexibility and even the negotiating leverage of the parties. In many situations, strategic advantages or constraints are effectively locked in before the dispute ever materialises.
II. Challenges at every stage of a dispute
Commercial disputes typically begin with disagreements over contractual performance. These disagreements tend to escalate through correspondence and discussion until one or both parties find themselves contemplating the activation of an arbitration clause. But this point is rarely the decisive moment it may appear to be. It is instead the beginning of a chain of strategic choices, each carrying its own difficulties and consequences.
At this early stage, companies face a fundamental question: should the dispute be contained through negotiation or escalated to arbitration? The answer depends on a range of factors including the likely cost of arbitration, the strength of the legal position, the effect on the ongoing commercial relationship, and practical considerations around timing and operations.
One of the more common pitfalls here is entering into unstructured or open-ended negotiations without defined objectives. This can drain time and resources, and it sometimes results in the unintentional disclosure of the company’s position or internal documents that later prove damaging in arbitration proceedings. Poorly managed negotiations can also create impressions about the company’s intentions that were never meant to be communicated.
There is also the perennial difficulty around partial payments and settlement offers. Many companies hesitate to make any payment or enter into settlement discussions out of concern that doing so will be interpreted as an implicit admission of liability. At the same time, an entirely inflexible stance risks escalating the matter into a lengthy, expensive arbitration with no guaranteed outcome. The real challenge lies in protecting the legal position while managing financial exposure with equal care.
Arbitration costs are also sometimes weaponised at this stage, with one party deliberately inflating the expected expense of proceedings to pressure the other into settling regardless of the merits of the case. This dynamic can push companies towards decisions driven by cost avoidance rather than any objective assessment of risk and opportunity. A structured approach to dispute management, one that involves continuous legal and financial evaluation, clear objectives for each round of negotiation and a deliberate effort to avoid reactive decision-making, is the only reliable way to navigate this stage effectively.
III. Settlement: between risk management and the fear of admission
Settlement, when handled properly, can serve as a meaningful tool for limiting potential losses compared to the full cost of arbitration, which includes not only legal fees and arbitrators’ remuneration but also the considerable expense of expert witnesses, administrative costs, and the time consumed over months or years of proceedings.
That said, many companies remain reluctant to settle out of concern that it will be perceived as an acknowledgement of responsibility and that this perception could create additional legal or financial disadvantage down the line.
While that concern is not without merit in certain circumstances, it should not lead to the automatic rejection of settlement as an option. Settlement is not inherently an admission of anything. When approached within a clear legal framework and executed through a considered negotiation strategy, it can provide the kind of certainty and stability that an unresolved dispute, by definition, cannot. The real distinction lies not in the fact of settling but in how it is managed, when it takes place and how the agreement is drafted. A settlement reached at the right moment, with appropriate legal oversight, can bring genuine relief from the uncertainty that disputes impose on a business.
IV. Using arbitration strategically
Arbitration costs are frequently viewed in purely accounting terms: the arbitrators’ fees, the institutional charges, the lawyers, the experts. But this view misses something important. The cost of arbitration is not merely a line item; it is an active force that shapes the behaviour and decisions of both parties throughout the life of the dispute.
A claimant may inflate its demands precisely because it anticipates that the other side will prefer to settle rather than absorb the expense of defending a full arbitration. A respondent, meanwhile, may offer concessions not because its legal position is weak but because the financial uncertainty of protracted proceedings is itself too costly to bear. Arbitration costs, in other words, should be understood not as a fixed factor but as a dynamic one that continuously influences the balance of power and the prospects for negotiated resolution.
This reality points towards a broader shift in how companies ought to think about disputes: not as legal questions to be resolved by lawyers alone, but as investment decisions requiring a proper weighing of probabilities, costs and expected returns. Rather than asking simply whether the company will win, the more useful questions are: what is the realistic probability of success; what will it cost in total to reach a final award; what is the likely loss if the case fails; and what does the risk-adjusted return actually look like?
To take a concrete example: if a company estimates a 60% chance of success in arbitration with a potential recovery of USD10 million, but the expected cost of the proceedings is USD2 million and there are meaningful enforcement risks, settling for USD5 million may well represent the better commercial outcome. This is the logic of expected value, a framework that weighs probabilities, costs and outcomes against one another without displacing legal analysis but rather integrating it into a wider decision-making process.
V. Conclusion
The choice between settlement and arbitration is ultimately not a purely legal question. It reflects the company’s capacity to manage a dispute as both a strategic and a commercial matter. Success in dispute resolution depends not only on the strength of the legal position but on a genuine understanding of cost, timing, and the effect of the dispute on the business and its relationships.
The right decision may also shift as circumstances change. What appears to be the optimal course during negotiations may no longer be so as arbitration approaches, and the reverse is equally true. Effective dispute management therefore demands flexibility, continuous reassessment and the willingness to adjust strategy as the facts develop.
In the end, the goal is not simply to escalate or to settle. It is to reach the best available outcome at the lowest overall cost and with the greatest possible degree of commercial certainty.
Al Maaridh Street
Qatar Airways Building
8th Floor
Muscat
Oman
+968 24 494 816
info@kco.om kco.om