Conectivos l´ogicos

Decree 47/97 provides that the parties to an arbitration agreement can choose the law to be applied to their disputes by the arbitrators.158 Article 6(2) of the Decree reads: „If the two parties to the arbitration agree to make the legal relationship between them subject to the provisions of a model- format contract, an international convention or any other text, effect shall be given to the provisions of such text, including any provisions relating to arbitration which it contains.‟

Specifically regarding the substantive law of arbitration, Article 39(1) of Decree 47/97 provides that the arbitrators must apply to the subject- matter of the dispute the terms and conditions agreed upon by the parties. In Rotana Hotel Management Corporation Limited v. Gulf Hotels (Oman) Company Limited, Article 14.13 of the arbitration agreement provided that „This Agreement and the rights and obligations of the parties hereto shall be governed by and co nstrued and given effect to in all respects in accordance with the local law‟.159

In the above case, the arbitrators not only applied the relevant provisions of Omani law, but also when there was no such provision relating to the dispute, they referred to the jurisprudence of the Omani Court.160 Under Omani law, if the parties have chosen the law of a country to be applied to their disputes, it is the substantive rules of such law that apply to the dispute, and not its conflict of laws rules, unless the parties agree otherwise.161

158 _{Article 6(1), Dec ree 47/97.}

159 _{Rotana Hotel Management Corporation Limited v. Gulf Hotels (Oman) Company Limited , (2000)} Case No. 10521/OL/ ESR (3), ICC International Court of Arbit ration.

160

For instance, see Rotana Hotel Management Corporation Limited v. Gulf Hotels (Oman) Company Limited, (2000) Case No. 10521/ OL/ ESR (6), ICC International Court of Arb itration. The arbitration tribunal re ferred to Omani Court decisions on the termination or rescission of contracts. 161

Therefore, under Decree 47/97, the parties can make their disputes subject to foreign law. In this way, Oman follows some other GCC countries, such as Kuwait162 and Bahrain,163 in allowing the application of foreign laws on disputes referred to arbitration in the country, without being considered as a foreign arbitration. Authorising the contracting parties to stipulate for a foreign law to govern their agreement, on the condition that it is not contrary to public order, was also confirmed in a BSCD ruling.164 It can be considered as a shortcoming of the Omani law of arbitration that it does not stipulate a situation where the parties‟ choice of the applicable law is implicit.

In the absence of an agreement by the parties on the applicable law to the substance of the dispute, the arbitration tribunal shall apply the law that it finds „very much relevant to the dispute.‟165

When deciding on the substance of the dispute, the tribunal must take into consideration the terms of the agreement as well as the commercial customary laws which are relevant to the subject-matter of the dispute.166 The latter requirement can be interpreted as the need for the agreement to comply with the current trade customs and usages prevailing in the similar type of transactions. The Omani law of contracts plays an important role in determining the proper law applicable to the contract, indicating the type of the contract, which can be the sale of goods or real property, the terms of employment, and ownership of intellectual property developed as part of a work for hire, and the like.

162

The Kuwa iti Conflict of La ws Code No. 5 of 1961.

163 _{Article 237, the Bahra ini La w No. 12 of 1971 on Civil and Co mmerc ia l Procedures.}

164 _{In Case 642/1989, BSCD Judgment, Majmou’a, vol. VI, at 280, the BSCD held that it was legal to} govern a loan agree ment and a guarantee respectively by Kuwa iti and English la ws, but did not find sufficient evidence of agree ment upon the laws in the case.

165

Article 39(2), Dec ree 47/97. Th is is equivalent to Article 28(2) o f the UNCITRA L Model la w on International Co mmerc ia l Arbitration. However, the latter specifies that the tribunal „shall apply the law determined by the conflict of laws rules wh ich it considers applicable.‟

166

It is an important feature of the Omani law of arbitration that, following the UNCITRAL Model Law, it allows the tribunal to decide ex aequo et bono or as amiable compositeur, and to facilitate conciliation between the parties, if the parties expressly authorise it to do so. In other words, if authorised, the tribunal may settle the dispute on the basis of equity, fairness and proportionality, without being restricted to the provisions laid down by the law.167 On such occasions, the tribunal can „take a lenient view of the legal rules, but cannot totally disregard them.‟168

This paves the way for choosing non- lawyer arbitrators, who can bring their professional expertise and experience to arbitration, without strictly following the rules of law. This is important, because the law is developed by legislators who are not fully familiar with the subtle details of the business in question. Similar position is taken by Egyptian law. In Case No. 41, the Cairo Court of Appeal ruled that since the parties empowered the arbitrators to act as amiable compositeur, the tribunal was allowed to apply an interest rate above the maximum rate set by the law, and, more importantly, the tribunal‟s decision was not contrary to public order, as it was claimed by the losing party.169 Such position can be compared to the Kuwaiti provision according to which the arbitrators can arrive at an amiable composition, only if they are named in the arbitration agreement. In such a case, the only restriction for the arbitrators in issuing the award would be public policy. Abul Wafa, an Egyptian legal writer, argues that since confidence in the person acting as

167

Artic le 39(4), Dec ree 47/ 97. Artic le 39 of the Decree is similar to Article 28 of the UNCITRAL Model law on International Co mme rcia l Arb itration. Under the CSCD quasi-arbitra l system, the Co mmittee was required to decide upon disputes, according to statutes in force, the parties' contracts, on the condition of not being contrary to the statutes and public policy, trade custom, and the principles of fairness and equity (Article 178, the Co mmerc ia l Co mpanies Law No. 4/1974). The order indicates which substantive rules prevailed over others (Sa leh, Commercial Arbitration in the Arab Middle East, at 383).

168

Indira Ca rr, International Trade Law, 3rd ed., (London: Cavendish Publishing Ltd., 2005), at 628. 169

amiable compositeur is crucial to the effectiveness of such a solution, it is important that such a person is known to the parties.170

An important misgiving about arbitration by amiable composition is that, in some Arab jurisdictions, it is sometimes confused with mediation or conciliation (sulh) by a nominated third party.171 This is so particularly in the Gulf states, and even in those jurisdictions where the two settlement methods are defined and provided for separately. In the case of Oman, the wording of the Omani provision authorising the arbitrators to settle a dispute as amiable compositeur reinforces the above mentioned confusion. It states that if the disputants expressly authorise the tribunal to reach conciliation between the parties, the tribunal may settle the dispute on the basis of equity and fairness, without being restricted to the applicable law. There can be two reasons for such a chronic confusion within Arab legislation. First, since under the Shari'a, only disputes are arbitrable that can be subject to compromise or conciliation, there has been a tendency among Islamic law experts to take the two methods identical. Moreover, as seen before, according to some versions of the Shari'a, so far as no award is issued, the arbitrators' mandate may be revoked. This makes arbitration similar to a conciliation process. However, as we know, there are fundamental differences between arbitration and conciliation. The least is that the award of arbitrators acting as amiable compositeur is binding, whereas conciliators can only recommend a solution. As mentioned before, the Shari’a is clear that arbitration is not a diplomatic dispute resolution method, but an adjudicative one whose outcome is binding on the parties, as it is clear from the Quranic Verse 35 of the Sura Al Nisa‟. Another reason for such confusion might be traced to the fact that

170

Ba llantyne, “Arbitration in the Gu lf States: „De localisation‟: A Short Co mpa rative Study”, at 51. 171

See Saleh, "the Settlement of Disputes in the Arab World, Arbitration and Other Methods: Trends in Legislat ion and Case Law". This may be due to the close link between sulh and arbitration in the Shari’a.

modern commercial law has come to the Arab world through few channels, the most important of which is Egypt. Consequently, such a mistake has spread throughout the Arab world.

Hence, it is said that the Western concept of arbitration by amiable composition has not yet fully assimilated into Arab legal systems; and that the concept of equity, in Arab legal thinking, is not linked to adjudication but to mutual concessions.172 Nevertheless, there is nothing inherent in the legal systems of Arab states and even the Shari’a that prohibits arbitration by amiable composition. On the contrary, Shari’a law itself provides for this type of arbitration.173

The aforementioned difficulties can be addressed by modification of the law and the expansion of doctrinal works.