On 12 November 2020, His Majesty Sultan Haitham bin Tarik issued Royal Decree 125/2020, with the intention of simplifying the litigation process in Oman for certain types of dispute.
The new law introduces a new summary trial process to streamline litigious matters where possible and avoid prolonged, expensive court processes for those cases which are most frequently referred to the Courts.
The accompanying Regulations will be issued by the Chairman of the Council for Administrative Affairs of the Judiciary in due course and will assist in the application and interpretation of the new law. In the interim, this article sets out the key changes that Royal Decree 125/2020 introduces to certain areas of the Omani litigation procedure and how the changes will work in practice.
Fast track cases
The application of Royal Decree 125/2020 is restricted to certain types of dispute, although the mentioned areas cover many common sources of disputes. The core dispute areas administrated under the new law are listed below (collectively referred to in this article as the Core Dispute Areas):
- Commercial disputes involving investment projects which is subject to Oman's Foreign Capital Investment Law (FCIL)
- Tenancy disputes relating to both residential and commercial leases
- Individual employment disputes
- Disputes arising out of deb creating instruments
- Penal cases related to cheques not related to any other criminal act
Royal Decree 125/2020 establishes preliminary, fast-track hearings for these Core Dispute Areas. Before the introduction of the new law, the courts were struggling to cope with the large number of cases which had been commenced following the Covid-19 crisis, exacerbated by the closure of government offices during Oman's period of heightened restrictions.
This legislation introduces a new 30-day timeline within which judgements must be handed down from the date of submission of the case. This 30 day period may be extended to a further 30 days should the circumstances of case require, but not longer. There is exception to this 60-day deadline for any judgements relating to commercial disputes which are subject to FCIL and construction cases. The judgement timeline for these cases may be extended up to 4 months from the date of referral.
The new law has also radically changed the Appeals process for any cases in the Core Dispute Areas. The starkest change being that the Appeal Court decision will be final and cannot be subject to further appeal to the Supreme Court.
The timescales and grounds for appeals are much more stringent too. Parties will have up to 15 days from the date of Primary Court's judgement to appeal to the Appeal Court, who must then list, hear and issue its Appeal judgement within 30 days of the date of the referral to the relevant Appeal Court. Though again, this does not apply to construction cases or commercial disputes subject to the FCIL, where the Appeal Court may also benefit from the extension of up to 4 months to hand down the Appeal judgement.
In addition to the rigid timescales and lack of further appeal, Royal Decree 125/2020 sets strict conditions to be met for a case to be allowed to be appealed at the Appeals Court.
Article 11 states that, provided the value of the dispute exceeds OMR 2,000, any final judgement handed-down by the Primary Courts may be appealed in the Appeal Courts in accordance with the provisions of the Civil and Commercial Procedures Law (RD 29/2002 as amended) (CPL), provided that it meets one of the circumstance listed in Article 12.
The 5 specific circumstances where an appeal of a Primary Courts judgement will be considered are as follows:
- Where there is a violation of the rules of public order
- Where the judgement is procedurally null or void
- Where the judgement issued varies from a previous judgement that lacks the relevant jurisdiction or powers
- Where the judgement involves the dismissal of a worker
- Where the judgement is issued in cases concerning contracts, or investment projects subject to the FCIL but which have no estimated value
Once decided by the Appeal Court, these cases cannot be further appealed, save where an Appeal Court judgement is issued in a commercial dispute concerning investment projects which are subject to the FCIL: Provided the case value is over OMR 150,000, such a case may be appealed to the Supreme Court.
How will this work in practice?
According to the new legislation, a special circuit will be constituted in each Primary Court comprising one judge only. The single judge at the Primary Court will have sole jurisdiction to make orders relating to any of the Core Dispute Areas irrespective of the cases' value. The single judge at the Primary Court will also have authority to order provisional and precautionary measures (e.g. injunctions and specific performance orders).
An Appeal Circuit will also be constituted in every existing Court of Appeal to appeal judgements handed down by the Primary Courts, as the new law permits.
Litigants may enter pleas challenging the jurisdiction of the summary process. Decisions on jurisdictional pleas are also subject to strict timelines of 8 days for the Primary Court and 15 days for the Appeal.
In terms of cases in the Core Disputes Areas currently under review at the Primary Courts across the country, Article 20 requires that those cases are immediately referred to the fast track judge pursuant to the provisions of Royal Decree 125/2020. The exception are those cases which have already been decided or are reserved for judgment prior to Royal Decree 125/2020 coming into effect.
Another major change is the introduction of electronic notification. Article 18 provides that court documents may be served on parties via text message, or any other form of electronic communications that is capable of being saved and retrieved. Article 18 however does caveat this provision by stating that the Chairman of the Council of the Administrative Affairs of the Judiciary will issue a decision specifying the other methods of electronic notice.
This is in contrast to the current regime under the CPL which requires court notice to be executed via hard copy delivered at the litigant's physical address. This therefore addresses the issues litigants face when an opponent's physical address is unknown (more common with individual litigants).
Enforcement – what's new?
Articles 15 to 18 establishes an enforcement division in the each of the Primary Courts to enforce and uphold the judgements, orders and decisions made by both the Primary and Appeal Circuits of the summary processes. The enforcement division will be responsible for making final decisions on enforcement disputes in relation to judgements, orders and decisions issued under Royal Decree 125/2020. Any enforcement dispute will not suspend enforcement proceedings unless the enforcement judged issues a suspension order.
Decisions on enforcement disputes are also subject to strict timelines of 15 days for both the initial decision of the enforcement judge and the Appeal.
Custodial sentences for debt cases
One significant change introduced by the new legislation is in relation to custodial sentences given against debtors for failing to abide by a final judgment for the payment of a sum of money. Article 17 provides that the enforcement judge will not order arrest of a debtor pursuant to Article 418 of the CPL unless:
- the debtor, or those acting for them (e.g. authorised signatories of a juristic entity) has been notified physically; and
- it is evident that the debtor willingly refrained from payment in spite of being able to pay.
In other words, insolvent persons or persons with financial difficulties may be able to avoid imprisonment if he/she demonstrates an inability to satisfy the debt subject of the judgment under enforcement. Article 17 of the new law comes in direct conflict with Article 418 of the CPL which gives enforcement judges the power to issue custodial sentences in similar instances. It therefore remains to be seen how Article 17 will be applied in practice.
Employment and Labour Law considerations
Under Article 7, all labour disputes must first go through the normal mediation process via the Ministry of Labour. While not a new requirement, the mediation process has now been further formalised by deeming any settlement reached during the mediation process full and final by the force of law. Settlement agreements executed during the mediation process are now capable of receiving the enforcement seal. Under the old regime, only enforceable court judgments were given enforcement seals. This new provision may avoid litigation all together for many labour cases. Litigants may simply resort to the enforcement department to summarily execute the settlement agreement.
For cases where no settlement is reached, the Ministry of Labour is required to refer the dispute to the Primary Circuit.
Debt recovery cases
Article 9 provides that persons having instruments creating a debt (including agreements signed by the relevant parties, or deeds executed via the Notary), may obtain an enforcement seal directly on the instrument creating the debt. The potential effect of the new provision is the ability to avoid litigation all together and, as for labour cases, to request that the enforcement department summarily execute the instrument and recover the debt.
Royal Decree 125/2020 however, does not set out or indeed clarify what type of instrument would fall under the ambit of "instruments creating debt", which may cause difficulties particularly as the counterparties to the "instrument" have no right of challenge. Furthermore, it is still not clear whether this provision does in fact allow parties to circumvent litigation all together and resort to enforcement immediately.
Similar to debt recovery cases, Article 8 also states that lease agreements (residential, commercial and industrial) are instruments capable of receiving the enforcement seal, provided that the lease agreement is concluded in accordance with the provisions of Royal Decree No. 6/89. Article 8 goes further allowing parties to seek intervention from the president of the fast track circuit at the Primary Court in the event that the enforcement department fails to grant the seal.
Article 8 however does not clarify the purpose or indeed the effect of this and whether it will result in litigants being able to go to the enforcement department directly.
The new law will also apply to criminal cases related to cheques not related to any other criminal act, and which were previously referred to the competent Misdemeanour Court. Cases relating to cheques will still be heard by the Misdemeanour Court, but in a fast track process. Article 23 provides that the Misdemeanour Court must issue its judgement within 30-days from the date of the case's referral unless it is suspected that the cheque is forged or stolen. Again, the 30-day period can be extended to no more than 60-days if the circumstances require. There is a possibility of appeal for anyone convicted through this route.
Another major change in relation to cases involving cheques is that in the event that the presiding judge orders a conviction of the accused, the same judge is granted powers to rule on any civil matter arising from the criminal case and must do so. In other words, the misdemeanour judge may not under Royal Decree 125/2020, refer the corresponding civil case to another Court which has been the practice under the old regime, resulting in claimants having to go through another separate litigation process to be able to obtain any decision relating to the recovery of the funds and/or damages.
The introduction of the summary process is a radical change to the existing court litigation process which has been long anticipated particularly in relation to labour and rents disputes (which already had emergency status under the old regime pursuant to the CPL). On the other Core Dispute Areas (particularly disputes involving foreign investment, construction and complex commercial issues) the promise of more rapid resolution of disputes will surely be welcomed by businesses in Oman. Despite the restrictions on appeals, there remains route to the Supreme Court (where disputes exceed RO 150,000), as well as opportunity to raise jurisdictional challenges.
There are various issues in the new law that require clarification, particularly in relation to the areas where disputes can avoid the courts entirely and head straight for enforcement. The upcoming regulations will presumably provide clarity on these new approaches.