Companies proposing to do business in Oman are often concerned about the impact of sharia (Islamic law) on their commercial dealings. While modern legislation has governed transactions in the sultanate since 1970, sharia re-entered the business world with the launch of two Islamic banks and the opening of sharia banking windows in conventional banks in 2012.
The development of Omans modern legal and court system has eclipsed the previously dominant system of sharia, a set of divine principles that guide all aspects of Muslim life, including daily routines, familial and religious obligations, and financial dealings. Sharia law is derived primarily from the Quran and the Sunnah, the sayings, practices and teachings of the Prophet Mohammed. A personal status law was introduced in 1997, codifying many of the sharia principles governing family law and traditional Omani fiqh (Islamic jurisprudence) rules in an effort to iron out differences of interpretation.
In contrast to family law, business relations, criminal matters and government affairs in Oman are regulated by a sophisticated body of modern legislation based on European civil and commercial codes, in particular the Napoleonic Code. Disputes are adjudicated by a modern hierarchical court system with Omans Supreme Court at its apex. In 2011, Omans bi-cameral parliament was granted new powers to approve, reject and amend legislation.
For 25 years after the emergence of Omans commercial law system, the role of sharia was acknowledged in legislation only as a residuary source applicable in the absence of a relevant legislative provision, local custom or general custom. In 1996, however, the Basic State Law came into force, declaring sharia to be the basis of all legislation and requiring all existing and future laws to adhere to its provisions.
Several Supreme Court decisions have confirmed that sharia principles will come into play in commercial transactions only where there are gaps in the legislation. For companies entering the Omani market, legal provisions as to the applicability of sharia are likely to remain of theoretical interest only. References in statute to sharia norms reflect public discourse on how to reconcile modernity and business practices with the profoundly-held religious beliefs of the population.
Mansoor Malik is founder and managing partner of Al-Busaidy Mansoor Jamal & Co. Sulaiman al-Salmi is an associate in the firms corporate and commercial transactions team.
Tel: (+968) 2 481 4466 Web: www.amjoman.com
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