Introduction To Omani Business Law PDF

BUSINESS LAW: Introduction to Omani Business Law POLS4945 Prepared by Wadhah Al Hinai  INTRODUCTION TO OMANI BUSINESS LAW Business Law is dedicated to regulate commercial transactions and relationships. This law is specialized in traders and commercial activ...

BUSINESS LAW: Introduction to Omani Business Law POLS4945 Prepared by Wadhah Al Hinai  INTRODUCTION TO OMANI BUSINESS LAW Business Law is dedicated to regulate commercial transactions and relationships. This law is specialized in traders and commercial activities, i.e. it is different from the other branches of the law which have different characters. In order to know the meaning of business law and the nature of this law, we have to specify the position of this law among the other branches of the law. This requires defining the law, in general, as a first step, and getting a glance about the divisions of the law. What is law and why is it necessary and needed? What is ‘law’ and how is it different from other kinds of rules? What is law ? 1. A citizen may think of ‘law’ as a set of rules which he must obey. 2. A lawyer who practices ‘ law’ may think of law as a vocation. 3. A legislator may look at ‘law’ as a something created by him. 4. A judge may think of ‘law’ as a guiding principles to be applied in making decisions. Law includes all those rules and regulations which regulate our relations with other individuals and with the State. 1- Law means a set of rules. 2- It may be defined as the rules of conduct recognized and enforced by the State to control and regulate - the conduct of people, - to protect their property and contractual rights with a view to securing justice, peaceful living and social security. Definition of the law 1- The law is a body of rules and regulations, enforceable by the courts, which govern the relationship between the State and its citizens and between one citizen and another. 2- Law is a set of rules and principles that govern and control the behavior of the member of a society. The law defines the rights and obligations and the penalty imposed on those who violate these rules and also shows how the government apply the rules and sanctions. In this class, we are concerned with one specific area of law: The rules which affect the business world. In order to understand the legal implications of business activities, it is first necessary to examine some basic features of the Law. Imperative and suppletive rules: The legal rule divided in to imperative and suppletive rules. It is imperative whenever the matter is related to public interests, and it is suppletive when the matter is related to private interests without compromising the public interests. Ex: Parties can agree to conclude a sale any way they see fit, or the “reasonable” duration of a notice period for termination of a contract. The law is general and abstract : The Law is set of rules that are abstract, and does not concern particular or a specific person. It is applicable to any person when the conditions are eligible for application at any time. It is very general and abstract, unlike other types of rules such as agreements The law is binding: Binding means that the law should be respected and implemented by all addressees. The Law may impose multiple obligations and all person concerned should implement it, whenever it is Imperative. If it is suppletive, persons may agree otherwise by contract. Continuity of the law: The Law shall be applicable officially on the date of its publication in the Official Gazette and its application shall end officially on the date of its cancellation in the Official Gazette. Divisions of the Law The law is divided into two sections; public law and private law. The public law means the law which regulates the legal relationships in which the state is a party. Meanwhile, the private law is defined as the law which regulates the legal relationships among citizens and individuals. Thereby, the criterion which distinguishes between the public law and the private law is the existence of the state in the relationship, i.e. if the state is a party in the legal relationship, the rules of public law are applied. Meanwhile, if the state is not a party in the legal relationship, the rules of private law are applied. Divisions of Public Law: Public law contains several sections. They are: Public International Law: It is the law which regulates the relations among states. It also regulates the relations with the international organizations. It is interested in several points such as; the elements of the states, the state sovereignty, how to form the international treaties, the effects of the international treaties, termination of the international treaties, international organizations, etc. Constitutional Law: It is the law which regulates the form of the state, regime of the state, the public authorities in the state, the relation among these public authorities, the rights of the citizens, etc. Thus, it clarifies if the state is kingdom, republic, or sultanate. It also clarifies if the state is democratic or non- democratic. Besides, this law regulates the three authorities inside the country; judiciary, legislature and the government. Administrative Law: It is the law which regulates the performance of the government, the bodied inside the state, the rights and the duties of the employees, etc. Financial Law: It defines the financial management rules for the state, which includes the state budget, taxes, the public expenditures and revenues. Criminal Law: This law contains rules and regulations for the crimes and the sanctions for these crimes. This law contains a famous and known principle provides “no crime and no sanction without a provision”. Thus, this law is interested in crimes and criminals. It regulates the elements of these crimes and the sanctions for them. Criminal Law is divided into the Penal Code and the Code of Criminal Procedure. Penal Code: is the set of rules that determine the types of crimes of a felony or offences or violations, and show the elements of crime and penalties. The legislation is the sole source of criminal law. (no crime without a text). Code of Criminal Procedure: deals with the procedures to be followed from the time of the crime until the punishment. It shows the special procedures relating to adjusting, arresting, inspections and prevention detention of the accused, the criminal investigation, trial and the punishment of the accused and procedures of appeal. Divisions of Private Law: Private law contains several sections. They are: Civil Law: It is the law which regulates the relationships among individuals. It is considered a background to the all issues which are not regulated by a special law. Therefore, if there is no rule regulates a specific issue, the Civil Law is a reference. for example, in the commercial law, if there is legal vacuum, we have to refer to the civil law to search for a rule regulates that vacuum. Civil Law regulates two types of issues; the first type is the issues which relate to private aspects of the individuals such as marriage, divorce, inheritance, etc. The second type is the issues which relate to financial transactions such as the contract and the negligence. The second type is the main axis in Omani Civil Law. In Oman, the Civil Law, which takes the number 29, was issued in 2013. It contains 1086 Articles. They are distributed among four books and preface. While the first book regulates the sources of obligations, the second book regulates the nominated contracts. The third and the fourth books are dedicated to regulate the rights in rem. Commercial Law: It is the business law. It is defined as the body of rules which regulates the commercial activities and the relationships among traders, or among traders and their dealers. This shows that the main axes in commercial law are the traders and their activities. Omani Commercial Law Number 55 was issued in 1990. It contains 786 Articles distributed in five books. The first and the second books regulate the activities of the trader and his trade- house (shop). While the third book regulates the commercial contracts, the fourth book is assigned to the bills of trade. The fifth book is devoted to the rules of bankruptcy. Beside this law, there are some other laws which are considered supplementary laws. The followings are the supreme: Company Law No. 18 of 2019. Commercial Registry Law No. 3 of 1974. Commercial Agency Law No. 26 of 1977. Insurance Companies Law No. of 12 of 1979. Maritime Law No. 35 of 1981. Capital Market Law No. 53 of 1988. Intellectual Property Law No. 67 of 2008. Thus, Omani Commercial Law No. 55 of 1990 and these laws are assigned to regulate the trader relationships and transactions. Accordingly, the sum of these laws is the business law. Private International Law: It is the body of the rules which governs the relationships which contain a foreigner element, i.e. this law appears as a result of existence of relations between national person and foreigner person. For example, if an Omani trader sold goods to an Egyptian trader, which law governs this relation? Is it Omani Law or Egyptian Law? In addition, if a dispute arises between the parties, which court is competent to judge? Private international law focuses on these two questions; which law should be applied and which court is competent to judge. Besides these two questions, this law regulates the issue of nationality and the issue of domicile. Code of Civil Procedure Sets of rules regulates the civil litigation proceedings, and the Civil Procedure of the judiciary. It also outline the jurisdiction of the various courts, and the procedures to be followed before it, and the procedures of appeal. Labour Law Set of rules governing the legal relations arising from the employment contract and regulates the labour rules and the rights and duties of workers. Sources of the Law: After we got a glance about the division of the law, a question arises; where are the rules of the law come from? In other words, if a dispute arises between two parties, how can the court find the rule which should be applied between them? In order to answer this question, it is important to mention that there are several sources to the rules of the law and each of these sources has position different from the other. Accordingly, some sources take the main role and others take secondary role. They are as follow: 1) Legislation: Legislation is considered the main source in Oman and also in Arabic countries. It means: setting the legal rules in a written form by the competent authority. This procedure should be done according to the rules which are mentioned in the constitution of the state. Legislation is divided into three types. The first one is the constitution. It is the most important law in the country. All other laws must agree with it. If there is any rule in any law contradicts with the constitution, that rule must be canceled or amended. The second type is the normal legislation which is issued by the legislature. The third type is the regulations which are issued by the government. 2) Islamic principles and jurisprudence Omani legislature sets the Islamic principles and jurisprudence as a secondary source. This is mentioned in Art (1) of Omani Civil Law. It is also mentioned in Art (5) of Omani Commercial Law. But this Art mentions Islamic principles as a forth source after the contract, legislation and custom. 3) Custom: It is the binding habits which people accustomed to do. Thus, the custom comes from habits. But the difference between them is that the custom takes an obligatory character, i.e. if any person does not follow its rules, he will be punished. This source is also mentioned in Art (1) of Omani Civil Law. These three sources are considered general sources for the law. However, Omani Commercial Law arranged them in a different manner. This appears clearly in Art (4 and 5) of this law which arranged them as follow: the first source is the contract, the second source is Omani Commercial Law and its supplementary laws, the third source is custom, the fourth is Islamic jurisprudence and the last is the rules of justice. Thus, the contract is the first source in Omani Commercial Law. The legislature in Oman steps out of the general policy in other countries which usually sets the legislation before the contract. Besides, the mentioned Articles render the rules of justice as a last source to which the court may refer if there is no rule in the other sources. Summary of Omani Legal System: Oman is a civil law jurisdiction. Legislation is the primary source of its laws, not judicial precedent. Royal Decrees form the bedrock of Oman’s legislative framework, and are often supplemented by secondary/delegated legislation in the form of Ministerial Decisions. The courts take a purposive approach to the construction of contracts, and will seek to identify the intention of the parties to a contract. Broadly speaking, a party exercising rights under a contract will be expected to act reasonably and in good faith. The Basic Law of the State RD 6/21 (the Basic Law) essentially serves as Oman’s constitution. Under the Basic Law, judicial power is independent and vested in the courts, which operate in accordance with the rule of law. The judiciary consists of the Primary Courts (otherwise known as the Courts of First Instance), the Appeal Courts and the Supreme Court (Oman’s highest Court). Differences between Civil Law and Common Law Common Law System Countries following a common law system are typically those that were former British colonies or protectorates, including the United States. Features of a common law system include: There is not always a written constitution or codified laws; Judicial decisions are binding – decisions of the highest court can generally only be overturned by that same court or through legislation; Extensive freedom of contract - few provisions are implied into the contract by law (although provisions seeking to protect private consumers may be implied); Generally, everything is permitted that is not expressly prohibited by law. A common law system is less prescriptive than a civil law system. A government may therefore wish to enshrine protections of its citizens in specific legislation related to the infrastructure program being contemplated. There may also be legal requirements to imply into a contract in equal bargaining provisions where one party is in a much stronger bargaining position than the other. There are few provisions implied into a contract under the common law system – it is therefore important to set out ALL the terms governing the relationship between the parties to a contract in the contract itself. This will often result in a contract being longer than one in a civil law country. Civil Law System Countries following a civil law system are typically those that were former French, Dutch, German, Spanish or Portuguese colonies or protectorates, including much of Central and South America. Most of the Central and Eastern European and East Asian countries also follow a civil law structure. The civil law system is a codified system of law. It takes its origins from Roman law. Features of a civil law system include: There is generally a written constitution based on specific codes (e.g., civil code, codes covering corporate law, administrative law, tax law and constitutional law) enshrining basic rights and duties; administrative law is however usually less codified and administrative court judges tend to behave more like common law judges; Only legislative enactments are considered binding for all. There is little scope for judge-made law in civil, criminal and commercial courts, although in practice judges tend to follow previous judicial decisions; constitutional and administrative courts can nullify laws and regulations and their decisions in such cases are binding for all. In some civil law systems, e.g., Germany, writings of legal scholars have significant influence on the courts; Courts specific to the underlying codes – there are therefore usually separate constitutional court, administrative court and civil court systems that opine on consistency of legislation and administrative acts with and interpret that specific code; Less freedom of contract - many provisions are implied into a contract by law and parties cannot contract out of certain provisions. A civil law system is generally more prescriptive than a common law system. However, a government will still need to consider whether specific legislation is required to either limit the scope of a certain restriction to allow a successful infrastructure project, or may require specific legislation for a sector.  Summary of Differences Feature Common Law Civil Law Written constitution Not always Always Not binding on 3rd parties; however, administrative and constitutional court Judicial decisions on laws and regulations binding on decisions Binding all Writings of legal Significant influence in some civil law scholars Little influence jurisdictions Extensive – only a few provisions Freedom of implied by law into contractual More limited – a number of provisions implied contract relationship by law into contractual relationship Court system Most Public-Private Partnership applicable In most cases contractual arrangements (e.g. concessions) are seen as to Public-Private relationship is subject to private law relating to a public service and subject to Partnership and courts that public administrative law administered by projects deal with these issues administrative courts