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Retrieved from: Addleshaw Goddard

Since December 2019, the coronavirus has continued to cause varying degrees of concern around the world. Whilst the economic consequences may take time to be fully understood, disruptions to supply chains are already emerging.

For commercial entities that have been or may be impacted by such disruption, now is a prudent time to consider what avenues of relief may be available in Omani law governed contracts. Namely, the concepts of Force Majeure and Unforeseen Circumstances. Whilst these concepts are often overlooked at the time of contracting, they can have important consequences in times of disruption and turmoil.

FORCE MAJEURE IN OMAN

At its simplest, the principle of force majeure can be defined as an unforeseen circumstance preventing a party from fulfilling its contractual obligations.

Force Majeure is a longstanding feature of both civil and common law jurisdictions. Even prior to the enactment of the Oman Civil Code[1]  (Civil Code) in 2013, force majeure was recognised in Omani jurisprudence[2].  The Omani courts had held that an event of force majeure was any event that prevented a party from performing its obligations under the relevant contract for reasons outside its control, and which could not reasonably have been foreseen by the party asserting the claim.

The Civil Code and the resulting codification of commercial law principles brought further clarity. Article 339 of the Civil Code (Impossibility of Performance) provides:

‘The Obligation shall be extinguished if the debtor proves that the fulfilment thereof become impossible due to a foreign cause beyond his will’

The word ‘impossible’ requires a high threshold to be established by the party asserting a force majeure event under the Civil Code. Accordingly, the mere fact a contractual obligation has become more onerous due to an unforeseen event will not provide a basis to invoke Article 339.

However, relief may be obtainable via other provisions of the Civil Code (discussed below).

COMMON CONTRACTUAL PROVISIONS

More commonly, force majeure is typically addressed in the express provisions of a contract. Such provisions may or may not provide a broader definition of force majeure than contemplated by Article 339.

For example, many standard form contracts in the construction industry seek to define force majeure events broadly, by providing express examples of such events. The FIDIC standard suite of contracts that are commonly used for private sector projects in the GCC refers to ‘Exceptional Events,’ meaning an ‘event or circumstance which:

  • is beyond a Party’s control; 
  • the Party could not reasonably have provided against before entering into the Contract;
  • having arisen, such Party could not reasonably have avoided or overcome; and
  • is not substantially attributable to the other Party.'[3]  

Public health events are not among the examples expressly defined to amount to an ‘Exceptional Event.‘ However this is of limited consequence as the definition is not limited to solely such examples.

As an interesting aside, early irritations of Omani Standard Conditions of Contracts, many of which are still in use, expressly state events such as ‘plague, quarantine’  and ‘epidemics,’[5]may constitute force majeure events.

UNFORESEEN CIRCUMSTANCES

Entities experiencing adverse impacts from the disruption caused by the Coronavirus would be well advised to contemplate the Civil Code’s treatment of ‘unforeseen circumstances.’

Article 159 of the Civil Code provides:

‘If general exceptional accidents that were unforeseen at the time of contracting occur and result in that the execution of the contractual obligation, even if not impossible, become burdensome to the debtor and threaten the latter with serious loss, the court may, according to the circumstances and after balancing the interests of both parties, reduce the burdensome obligation to a reasonable limit. Any other agreement to the contrary shall be void.’

Notably, Article 159 is one of a handful of provisions of the Civil Code that cannot be contracted out of by parties. Initially, it may seem that this principle and force majeure are similar concepts. This is not the case. There are important differences.

Unlike the treatment of force majeure in the Civil Code, where the relevant contractual obligation can be deemed ‘extinguished’ (i.e. terminated), Article 159 merely provides for the relevant contractual obligation to be reduced or in other words, lessened. The underlying contractual obligation itself will continue, albeit with some form of alteration to ease the burden on the obligor.

Whether or not performance has become oppressive due to an ‘unforeseen event’ and threatens a party with ‘serious loss’ is a matter of fact in each case. A court or arbitral tribunal considering an application for relief under Article 159 would need to determine, amongst other things, a causal link between the unforeseen event and that performance has become unduly burdensome. The financial capacity (or incapacity) to the obligor to absorb the effect the unforeseen event will be integral. The resulting impact on the counterparty will also be considered.

Given the reference to ‘serious loss,’ an objective assessment of the obligor’s overall financial standing would be relevant. A mere dent in an obligor’s balance sheet due to increased costs in performing an obligation will be unlikely to suffice. A degree of exorbitance is arguably required.

PRACTICAL STEPS

Parties that are experiencing adverse impacts due to a suspected event of force majeure or unforeseen circumstance should:

  • Promptly obtain legal advice to explore what avenues for relief may be available under the contract and the Civil Code;
  • Not assume force majeure clauses will give rise to relief in every instance; and
  • Maintain detailed records to justify the financial consequences of any such events.

Ultimately, the speed of the Coronavirus is a timely reminder of the importance of ensuring due consideration is given to how sudden events can displace the contractual bargain.

For any questions on the above article please contact Nic Henderson, Managing Associate at n.henrikson@aglaw.com

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Retrieved from: RA Logistics

RA Logistics has a Global Network of 185 Registered offices around the world, specializing in International Logistics & Forwarding, Supply Chain Solutions, Consultancy and Projects across many industry sectors.

Despite on-going challenges, RA logistics can assist with international shipping requirements, including FTA related matters. 

  • Services include Airfreight — customers can still use Freighter Services into Oman despite all passenger flights being canceled from the 29th March 2020. 
  • RA Logistics also specializes in FTA shipments and has practical hands-on experience working closely with their clients, Oman Customs and U.S. suppliers to ensure all aspects are properly in order for smooth clearance.

RA’s consultancy and projects across industry sectors include:

  • Oil and Gas / Energy
  • Oil and Gas / Energy
  • Engineering and Construction
  • Environmental
  • Government
  • Safety & Security
  • Pharmaceuticals
  • Engineering and Construction
  • Environmental
  • Government
  • Safety & Security
  • Pharmaceuticals
  • More

The advanced logistic solutions that Resource Allocations provides not only stretches across a number of industries, it is proven, reliable, and certified. Some of the features associated with our import and export logistics includes:

  1. Highly experienced team in all aspects of International Transportation Services
  2. Key Relations & Partnerships with all major Sea freight and Airfreight Carriers
  3. Competitive Market Rates
  4.  Airfreight: Direct / PO Consolidation / Lower Deck / Main Deck Freighter / Charter
  5. Sea freight: LCL / FCL / PO Consolidation / Break-bulk / Ro-Ro / Project / Heavy Lift / Charter
  6. Dangerous Goods / Hazardous
  7.  Road Transportation
  8. Shipment visibility & Status Reporting
  9. Purchase Order Management & Expediting
  10. Customs Clearance & Compliance
  11. Project Management
  12. On-Site Shipment Coordination
  13. Marine Cargo Insurance
  14. Total Transportation & Supply Chain Services and Solutions
  15. Network Partners in all key International Locations
  16. Registered Member of World Partner Alliance www.ourwpa.com

 

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Without a doubt, we are in a world a crisis due to Covid-19. The events of the past few weeks affect our countries, our businesses, our families, and our personal lives. When it comes to making decisions, we as human beings notoriously bad making decisions under normal conditions. This is due to several reasons, including cognitive biases, cognitive traps, and misperceptions about the world around us. The pressure of making decisions in crises multiplies this problem. For example, one of the reasons for bad decision-making is that we do not generate enough options to find a good solution. But in a crisis, the freeze/fight/flight response forces us to limit the possibilities even more, leading to even worse solutions.

What can we do?

The good news is that there are some scientific solutions to making better decisions under pressure. I want to share three suggestions that scientists who study decision making under pressure say will help leaders make better decisions. The ideas are: don’t make decisions alone, don’t forget the human element, and don’t try to control the uncontrollable. We will look briefly at each of these.

1. Don’t make decisions alone

Science has much to teach us from the ultimate high-pressure situation: airline disasters. Under normal conditions, the captain is in charge of everything, and he or she is the final decision-maker. In a crisis, captains who considered the flight crews’ ideas fared much better.

The captain’s communication style also mattered. When the captains asked open-ended questions and listened, they found better solutions. Some of these questions included, “How do you assess the situation?”; “What options do you see?”; and “What do you suggest?”

Scientists suggest that leaders not try to control everything but to seek order over control. “Order” means that everyone understands what their job is and what they can expect from others. Leaders in crises must reduce the number of decisions they make on their own and delegate as many decisions as possible.

Research from McKinsey and Company highlights this idea. “Amid uncertainty generated by a crisis, leaders often feel an urge to limit authority to those at the top, with a small team making the big decisions while huddled behind closed doors. They should reject the hierarchical model that they might be more comfortable with in normal times and instead involve many more stakeholders and encourage different views and debate. This approach can lead to smarter decisions without sacrificing speed.”

The Take-Aways

Involve colleagues as equal decision-makers, ask open-ended questions, and delegate as many decisions as possible.

2. Don’t Forget the Human Elements

A leader must always remember that critical situations affect people, and people are emotional. Leaders must never  forget the psychological impact of uncertainty. While profits, revenue, sales, and costs are always essential, the people in the company and their emotions also affect all of these metrics.

The purpose of all organizations is to accomplish together what an individual cannot do alone. We do this in a crisis when each individual knows his or her contribution, and we as leaders recognize that contribution. A crisis is an excellent time for being the leader who coaches the team through the crisis Good coaching will certainly help your team deal with the psychological trauma caused by uncertainty.

As a leader during a crisis, you must do all you can to minimize fear and uncertainty that your colleagues feel and bring healing to the situation. Clearly articulating the mission and the accomplishments of each member of the team will help.

The Take-Aways

Take the psychological needs of your team into consideration and give them as much psychological safety as possible. We do this by helping them see the big picture, recognizing their accomplishments, coaching them through the situation, and clearly articulating the mission.

3. Don’t Try to Control the Uncontrollable

We cannot control everything in our lives. Every factor in our life is not under our management, and in a crisis situation, this is even more true. According to scientist in the field of positive psychology, to develop a healthy level of personal control we must understand our own limits of control and not try to manage the things beyond our control. Psychologists call this the “paradox of surrender.”

PositivePhychology.com explains this idea well. “Surrendering means letting go of unproductive efforts to control the uncontrollable. It involves accepting that there is nothing one can do to change the situation. Surrendering is not the same as becoming a victim and passively being overtaken without choice. Surrendering means you decide to let go of things that you cannot control and focus on the things you can control.”

Surrender, then, does not mean giving up and giving in. It involves dealing with the uncontrollable in different, “non-active” ways. We understand better how to deal actively with problems we can control. But how do we deal with the things we cannot control in “inactive” ways?

I will suggest three ideas

First, deal actively with the emotions involved in being out of control. This includes such things as giving yourself the space to feel the feelings, not fixating on the negative feelings, and realizing that this situation is not permanent.

Second, reframe the situation. We do this by taking the bigger view of the situation and seeing it in a broader perspective. It also helps to question your underlying assumptions and changing them.

Last, practice coping behaviors. Some of these include reading a good book, prayer and meditation, and physical activity.

The Take-Aways

Here are some concrete steps you can take to help deal with the uncontrollable:

1. Identify what you can control and what you cannot.

2. Deal effectively in “active” ways with the things you can control.

3. Stop trying to directly control the things that are beyond your control and deal with them in “inactive” ways, including dealing with emotions, reframing, and employing coping mechanisms.

When your team sees you positively dealing with the uncontrollable, it will encourage them to do the same.

Conclusion

Times of crisis are hard on everyone. Fortunately, scientists have studied this subject at great length and have several precise methods to help us deal with these situations. Three important ones are: don’t make decisions alone, don’t forget the human element, and don’t try to control the uncontrollable. Your team is looking to you for leadership in times of crisis By being a great leader in “moments like these,” we can and will be more effective in our leadership after the crisis has passed.

If you want more information on these topics or want to read the underlying research, please write to me at MikeW@PGC-Oman.com.

Mike with Tie Small

ACC WEB email

 

Dr. Mike Williams

Professional Gulf Consulting

MikeW@PGC-Oman.com

www.PGC-Oman.com

 

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Retrieved from: Crowe Oman

The New CCL will create a more robust and transparent corporate governance regime in Oman. The new provisions would be applied in practice when an Executive Regulation will be published in the coming months.

On 18th April 2019, a New Commercial Companies Law (New CCL) entered into force in the Sultanate of Oman. The New CCL has 312 articles split into 5 parts:

1. General Provisions (Article 1 to 20)
2. General Partnerships, Limited Partnerships and Joint Venture Companies (Article 21 to 87)
3. Joint Stock Company (Article 88 to 233)
4. Limited Liability Company (Article 234 to 297)
5. Inspection, Penalties and Final Provisions. (Article 298 to 312)

In this article, we shall be covering specific areas related to Joint Stock Companies on how the companies need to gear themselves to comply with the new Commercial Companies Law.

 

Establishment

The founders of a public joint stock company may subscribe to no less than 30% of the shares of the company and no more than 60% of the shares. However, if a company is converted into a public joint stock company, the maximum is 75%. Some cases the authority may permit a higher percentage. Companies fully owned by the government and holding companies shall also be exempt from the prescribed percentage. The founders may not dispose their shares
before the company has published financials for two consecutive years from its registration date. The period may be extended to additional one year by the relevant authority. As per the new law, a holding company will take the form
of a joint stock company unlike the previous situation where the holding company had the options to be a limited liability company or a joint stock company.

 

Joint Liability

The Board of Directors and the auditors of a Joint Stock Company will be jointly liable for damages caused by their failure to take necessary measures to safeguard the company’s capital. In case the company loses 25% of its capital,
the Board of Directors need to take necessary measures to remove the reasons causing such loss and restore the company’s profitability. If the company loses 50% of its capital, an extraordinary general meeting must be convened to take the necessary decision in this regard. The meeting must be convened within a maximum of 30 days from the date on which the Board has verified the loss in capital.

 

Board of Directors

Directors and management of Joint Stock Companies must now notify the company in writing of any interest they have in the company within a maximum of 5 days from the date of his/her acquisition of membership or appointment. A director may not participate in the management of another company engaged in identical business. The members of the Board of Directors shall not be less than:

• five for public joint stock companies,
• and less than three for closed joint stock companies.
In closed and public Joint Stock Companies, the number of Board of Directors cannot exceed 11 members. In the repealed law the maximum members were 12. A director is deemed to have legally resigned if he or she fails to attend
3 consecutive meetings, unless there is an acceptable excuse provided to the Board.

 

Annual General Meeting

The Board shall send to the attendees at least 15 days before the AGM the following documents:
• Invitation for attending the meeting
• Board Reports
• Audited Financial Statements In the repealed law the notice period was 2 weeks.

 

Minority Shareholders

A general meeting shall be convened whenever required or if requested by holders representing at least 10% of the capital (in the repealed CCL it was 25%). The meeting should be held within a maximum of 30 days from the date of necessity or request. If the Board fails to convene the meeting within that period, the auditor shall convene it within
30 days from the expiry of the aforementioned period. A shareholder representing 5% of the capital can include an item on the meeting agenda (in the repealed CCL it was 10%). Additionally, if a shareholder representing 5% of the capital is of the opinion that management’s handling of the company affair’s are detrimental to their interest, they have a right to submit a request to the Concerned Body and take legal proceedings before the competent court. These
revisions in the new CCL, will better protect the
rights of minority shareholders.”

 

Quorum and Minutes of the Meetings

Quorum of shareholder meetings:
• Annual General Meeting – 50% share capital represented
• Extraordinary General Meeting – 75% share capital represented
The Minutes of the shareholders meeting now have to be filed within 7 days with competent authority. In the repealed law it was 15 days. The minutes of the meetings shall be prepared by the secretary appointed by the general
meeting. The minutes shall specify the number, percentage of share capital represented, the deliberations of the meeting, the resolutions adopted, the number of votes supporting such resolutions and anything which the shareholders want to be endorsed in the minutes.The minutes shall be signed by the secretary, the auditor and the legal advisor of the company and approved by the Chairman of the meeting.

 

Timeline

Companies have less than a year to comply with the provisions of the new CCL. It is vital for companies to review their existing governing policies and systems to ascertain whether they comply with the New CCL. The Memorandum of Association may require to be amended to incorporate the new governance processes, meeting timelines and related party reporting procedures. The coverage of list of offences have been substantially increased and non-adherence to the New CCL would result to greater penalties and sanctions.

For details on this article, please contact Paul Kallukaran at paul.kallukaran@crowe.om

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Jisser internship platform was created by the support and guidance of OABC and Al Daud Foundation, you can learn more about this initiative here: https://www.aldaud.com/portfolio/al-daud-foundation/
.
As a kind gesture, Jisser has opened the platform for all OABC members to have a free account which will allow them to:
.
  • Post any internship openings in the company for an entire year
  • Build a pool of talented young graduates
  • No obligation to employ interns after the internship period
  • No obligation for payment as long as the intern agrees.

For more details contact Kalthoom Al Khamayasi at ko0ola@live.com

 

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During a time of social distancing and remote working, the OABC canceled or postponed many spring 2020 events.
Other events moved online. On March 17 and 19, members attended a webinar with PWC about the impacts of COVID-19 on the MENA region.  
 
Attendees heard from PwC advisors on the key issues all businesses are working through and the longer-term impacts of COVID-19 on business continuity. This webinar was organized in partnership with AmCham Bahrain.
 
The OABC continues to wish all its members and partners the best of health and safety in the weeks ahead.
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OABC Members were invited to Bait Al Reem to to attend to a short presentation by the National Training Fund, while enjoying coffee and donuts. The NTF has highlighted their apprenticeship and training for employment initiatives in their presentation.

Members from different companies came to learn from the NTF about how to meet Omanization goals through new flexible funding programs, including SME development and support. Attendees enjoyed the donuts sponsored by 3rd Street Donuts while networking in this event.

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Alya Al-Shanfari is a young Omani entrepreneur and recent graduate of GUTech. Alya and her colleagues showcaed their “Bee” application at a global competition of young innovators in Seattle, Washington this summer. “Bee” is retail shopping application connected with Beacons technology, capable of analyzing the shopping experiences of users to affect future shopping decisions. The app also received honors

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Food-pairing is a unique method for identifying which foods and drinks go well together. Becoming an annual OABC event, this year’s gathering took place at the Intercon’s Tiki Bar and enabled guests to sample a delicious variety of snacks and beverages.

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