Omani Supreme Court allows review of London arbitral award

The ruling of the Omani Supreme Court overturned a decision by the Muscat Court of Appeal declining jurisdiction over the challenge to the validity of an arbitral award rendered by a prominent London-based arbitrator, Veronique Buehrlen KC.

Arbitration experts Clea Bigelow-Nuttall and Jed Savager of Pinsent Masons said that the decision created uncertainty for those arbitrating against Omani entities. 

“It gives room for Omani entities to challenge awards seated in different jurisdictions, despite Oman having ratified the New York Convention since 1999,” said Savager.

The ICC award was challenged by Omani engineering company Vijay Tanks, which was required under the award to pay 1.8 million riyals (US$0.5 million) plus costs to a Qatari subcontractor, Cape East. The contract in question involved the installation of six tanks – four for jet fuel and two for water storage – at the Hamad International Airport in Doha. The contract was governed by Qatari law and referred disputes to ICC arbitration seated in London. 

Cape East filed for arbitration in 2021, claiming against Vijay for wrongfully terminating the subcontract and invoking performance guarantees after the delivery of the tanks was delayed. Vijay argued that Cape East breached the subcontract and counterclaimed for 3.6 million riyals (US$1 million).

Buehrlen held a three-day hearing in London last March and issued her award three months later. She upheld Cape East’s claims for unpaid work and costs for idle personnel and equipment and storage, ordering Vijay to pay the full US$1.8 million plus costs.

She also found that Vijay was entitled to terminate the subcontract due to Cape East’s refusal to “remobilise” the installation work but awarded no damages for the counterclaims. On this basis, she also ordered Vijay to pay costs. 

Vijay first applied to the Muscat Court of Appeal to declare the award invalid. It argued that the arbitrator had effectively excluded the law agreed between the parties by refusing to apply a contractual provision. It also contended that the arbitrator had failed to comply with principles of impartiality and due process.  

The Court of Appeal in January declined jurisdiction over Vijay’s challenge, citing the foreign seat of the arbitration.

However, the Supreme Court held that under the Omani Arbitration Act and the Code of Civil Procedure, the sultanate’s courts had jurisdiction because Vijay was a defendant in the arbitration and was an Omani entity.  

The court therefore annulled the ruling without addressing the substantive issues raised in Vijay’s challenge, and sent the matter back to the lower court to be remanded.

“The decision by the Omani Supreme Court to review a request for annulment of an arbitral award rendered in London in circumstances where the only factor connecting the dispute to Oman was the nationality of the defendant in the arbitration is a development that many of our clients will wish to take note of. It raises questions regarding the integrity of arbitral awards and their enforcement in circumstances where disputes involve an Omani party,” said Bigelow-Nuttall.