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Significant amendments to Oman’s Commercial Agencies Law become effective in July 2014 by Sultani Decree 34/2014

Sultani Decree 34/2014, effective from 21 July 2014, has brought in the most significant amendments to the Commercial Agencies Law (Sultani Decree 26/77) since amendments in 1996 allowing multiple agents to be appointed on a non-exclusive basis.

Prior to the amendments, article 10 of the Commercial Agencies Law, or CAL, gave important protections to Omani agents with regards to renewal and termination of agency agreements. In short, when a foreign principal terminated or did not renew an otherwise viable, profitable agency without showing a specific legal cause for doing so, the agent could proceed to the Oman court or arbitration to claim compensation for the loss of the agency. Article 10 has been repealed and so arguably the parties to commercial agency agreements are now free to decide the terms of renewal and termination of those agreements. However, this is subject to the retention of article 18 of the CAL. Article 18 states that the courts shall decide all matters and disputes between agents and principals regarding the agency contract and may decide on appropriate compensation depending on the commercial and local practices (unless the parties choose arbitration). It seems that the term ‘suitable compensation’, which used to be linked with article 10, will need to be interpreted differently. It leaves some uncertainty hanging over the repeal of article 10…

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