Abdolrahim Hamid Tajalli Maritime and Commercial Legal Consultant at Al-Alawi Law Firm, Muscat, Oman
Oman’s maritime sector has undergone a significant transformation with the shift from the Maritime Law of 2 1981 to the comprehensive update in 2023.3 This update marks a crucial step toward enhancing the regulatory framework of this vital sector. In this article, we provide a comparative analysis of key aspects addressed in the new law, highlighting updates and differences that contribute to shaping the future of maritime shipping in Oman.
The old maritime law lacked organization and structure, with insufficiently clear divisions and precise definitions necessary for addressing the complexities of modern maritime operations. General terms like “ship” and “navigation” were used without specific definitions, leaving some provisions open to interpretation.
Conversely, the 2023 law represents a qualitative shift in this field, adopting a more organized and accessible structure with clear chapter divisions. These updates include new, well-defined terms, such as differentiating between “ship” and “marine unit,” reflecting the complexities and demands of the modern maritime industry.4 The new law is more suited to regulating different types of vessels, including smaller marine units that were inadequately covered under the previous law.
The 1981 law placed limited emphasis on environmental protection or establishing safety standards for maritime operations. Provisions related to marine pollution and environmental protection were either absent or insufficient, reflecting the limited environmental awareness at that time. Safety measures mainly focused on handling incidents rather than preventing them. In contrast, the 2023 law introduces comprehensive regulations on environmental protection, including pollution control and waste management. These regulations are integrated with international standards, such as those governed by the International Maritime Organization (IMO), positioning Oman as a country committed to environmental responsibility. These updates are essential to ensure the sustainability of maritime operations and the protection of Oman’s coastal environment.5
The 1981 law provided limited protection for the rights and working conditions of seafarers. Contracts and conditions related to wages and working hours were not defined clearly according to international standards. The 2023 law addresses these issues comprehensively, aligning with international labor laws like the Maritime Labour Convention (MLC). The new law includes clear regulations on employment contracts, wages, working hours, and repatriation rights, enhancing Oman’s appeal as a destination for international maritime operations.6
While the 1981 law offered a basic framework for addressing maritime debts and liens, it lacked sufficient detail to protect creditors’ rights. There was no clear prioritization among creditors, leading to complications in resolving financial disputes. The 2023 law expands the scope of maritime claims to include passenger claims and environmental damage, enhancing creditor protection and clarifying the order of priority in cases involving multiple debts on a ship. This update not only provides better protection for creditors but also makes Oman a more attractive environment for maritime investment.7
One of the weaknesses of the 1981 law was the lack of clarity on penalties for violations, which made effective enforcement of maritime law challenging. The 2023 law introduces an integrated system of fines and penalties, enhancing the enforceability of the new maritime regulations related to safety, environmental protection, and workers’ rights. This improvement represents a significant step toward ensuring compliance with maritime regulations.8
Under the 1981 law, there was no comprehensive system for investigating maritime incidents. The law focused on handling incidents post-occurrence without clear investigative mechanisms, and investigative authority was limited, leading to a lack of understanding of the root causes of maritime incidents and the necessary preventive measures. In the 2023 law, significant improvements have been made in this regard. The new law includes a comprehensive framework for investigating maritime incidents, including collisions, rescue operations, and pollution-related incidents. The provisions are logically and practically organized, with a focus on investigating causes to prevent recurrence in the future.9 The new law includes detailed provisions for investigations, such as summoning witnesses and analyzing physical evidence related to the ship and incident, which were missing in the old law.10
Despite providing a strong framework for investigations, Oman’s regulatory bodies, such as the Ministry of Transport, Communications, and Information Technology, may face challenges in their administrative capabilities. There may be a need to increase human and technical resources to effectively implement the complex investigative procedures outlined in the new law. Without capacity building, investigations may be delayed or inadequate, reducing the law’s effectiveness and potentially leading to repeated incidents due to unresolved root causes.
Although the new law aligns with international standards, challenges may arise in coordinating with international authorities if foreign vessels are involved in incidents within Omani waters. If the flag states of foreign vessels or international regulatory bodies are not fully engaged, investigations may face bureaucratic delays or jurisdictional disputes. This could complicate investigations, particularly in cases involving large international shipping companies or vessels registered in foreign countries. Oman may find it difficult to impose penalties or achieve full cooperation from international operators, diminishing the effectiveness of its regulatory authority.
Investigations, particularly those requiring technical analyses and reports, can be costly and time-consuming. Local small businesses may struggle to meet the requirements of detailed investigations due to limited financial or human resources. High costs and long investigation times could burden small operators, and delays in completing investigations may lead to financial or legal issues for affected parties, such as victims or insurance companies.
The absence of specialized maritime courts in Oman’s legal system may complicate the handling of investigations and related legal proceedings. Although the law includes penalties and dispute resolution mechanisms, the lack of a specialized legal body or maritime law experts could slow down legal processes, particularly in cases involving disputes or claims related to investigations. This could lead to prolonged legal proceedings or inconsistent judgments, making it difficult to deliver justice effectively and promptly.
Recommendations: Oman needs to invest in enhancing the administrative capacities of its maritime regulatory bodies. This includes specialized training for investigators, hiring technical experts, and establishing a dedicated unit within the ministry to manage maritime investigations. To overcome challenges in international cooperation, Oman could establish bilateral agreements with major maritime nations and actively participate in international maritime forums. These steps would improve collaboration in investigations involving foreign vessels. To reduce the financial and administrative burden on small operators, Oman could consider setting up a fund to support maritime accident investigations. This would assist small operators in covering investigation costs and ensure compliance without jeopardizing their financial stability.
Marine Insurance: Expanding Coverage and Protecting Assets
Under the 1981 law, marine insurance was not adequately detailed. Provisions related to insurance were limited and did not provide sufficient protection for companies operating in the shipping sector. The 2023 law significantly improves these aspects by dividing marine insurance into separate chapters covering hull insurance, cargo insurance, and liability insurance. The obligations of both the insurer and the insured are clarified, providing a more secure framework for participants in the maritime sector. This update is critical to ensuring the continuity of maritime operations and protecting businesses against potential risks. However, the challenge lies in ensuring effective regulatory oversight by authorities to ensure compliance with the new conditions.
The new law requires all vessels to have comprehensive insurance coverage, including hull, cargo, and liability insurance. While this is essential for asset protection and accountability, compliance costs may be high for local small operators. Marine insurance policies, particularly those concerning environmental liabilities, are costly, which may push some small companies out of the market or lead to non-compliance. This could result in market monopolization by large companies and reduced competition in the maritime sector.
The law introduces detailed provisions on processing and settling insurance claims, particularly in disputes involving liability for incidents, cargo damage, or environmental pollution. However, the administrative complexity may discourage some shipowners from fully complying or may lead to delays in receiving compensation, causing financial strain for operators after incidents.
The success of the law largely depends on effective regulatory oversight. Oman’s regulatory bodies, like the Ministry of Transport, Communications, and Information Technology, may need to enhance their expertise and administrative capacity to monitor compliance with the insurance provisions. Without strong oversight, insurers and shipowners might find ways to under-insure or avoid full compliance, which could compromise maritime safety and environmental protection.
The marine insurance market in Oman is relatively small compared to major global maritime hubs. Shipowners may need to seek insurance coverage from international markets, which could lead to coordination challenges between Omani regulatory bodies and foreign insurers, particularly in dispute resolution or enforcing Oman-specific legal requirements. The lack of smooth coordination between Omani authorities and international insurers may cause delays in claim processing or lead to legal disputes in incidents involving foreign insurers.
The law outlines procedures for resolving disputes between insurers and insured parties, including arbitration or judicial proceedings. However, Oman may lack specialized maritime courts or dedicated dispute resolution bodies for marine insurance, which could delay claim settlement processes. The absence of specialized legal frameworks for maritime insurance disputes could lead to delays and inefficiencies, impacting the financial stability of companies awaiting insurance payouts post-incident.
While the marine insurance provisions in Oman’s 2023 maritime law aim to protect the maritime sector and ensure accountability, they introduce challenges, especially for small operators. The complexity, cost, and need for robust regulatory oversight may pose obstacles to effective implementation, and without adequate support, the insurance framework may not function as intended.
The 1981 Maritime Law lacked organization in defining the roles and responsibilities of maritime agents and brokers. Its general provisions addressed these actors superficially, without providing a clear legal framework for their responsibilities toward ships and cargo. In the 2023 Law, significant improvements were made in this regard. The provisions for maritime agents have been divided into separate chapters covering ship agents, cargo agents, and brokers. This comprehensive legal system now defines the rights and duties of these intermediaries, improving the organization of maritime operations and ensuring transparency in contractual relationships. However, maritime brokers may find it challenging to adapt to these new regulations without sufficient guidance and training on the updated legal requirements.
The new law imposes detailed regulations on ship agents, brokers, and freight service providers, with clear definitions of their roles and responsibilities. While these improvements aim to enhance transparency and accountability, they increase the regulatory burden on these groups, particularly small businesses. These entities are now required to comply with more complex documentation and legal reporting requirements. Small businesses may struggle to keep up with the complexity of the law, which could lead to non-compliance or increased operational costs, thus reducing their competitiveness.
In the context of international shipping, brokers and freight service providers often operate across multiple jurisdictions. While the new law clarifies their roles domestically, it does not fully address the potential conflicts with foreign regulations. This could create legal ambiguity for companies dealing with international partners. Ship agents and brokers may find it challenging to navigate international regulations, leading to disputes or inefficiencies in operations when dealing with foreign vessels or clients.
Absence of Specialized Dispute Resolution Mechanism
The law provides detailed provisions regarding the roles of brokers and agents, but it does not clearly define specialized mechanisms for resolving disputes between these parties and their clients. While these disputes can be handled in general maritime courts, the lack of a specialized framework may slow down dispute resolution. This could lead to delays in shipments or financial pressure on agents or brokers facing legal challenges.
Lack of Training and Guidance
Many ship agents and brokers, especially those working in small companies, may not have the knowledge or resources to fully understand the new legal requirements. Transitioning to more organized operations can be challenging without adequate training and guidance from relevant authorities. Unintentional non-compliance could lead to penalties, putting small businesses at risk. Additionally, a lack of clarity may increase operational risks and decrease efficiency.
Proposed Solutions
Regulatory bodies could consider simplifying certain regulatory aspects for small businesses or providing a phased implementation of new rules. This would give businesses time to adapt to the new requirements without imposing excessive burdens. This solution would help small brokers and agents transition smoothly, reducing the likelihood of non-compliance and maintaining healthy competition within the sector.
To address ambiguity in international operations, the law could include clearer provisions on how Omani agents and brokers should handle transactions involving international partners. Alternatively, Oman could pursue bilateral agreements or align its laws with international maritime conventions. This would reduce conflicts between domestic and international regulations, improving operational efficiency for agents and brokers working with global shipping companies.
Establishing a Specialized Arbitration Mechanism
A specialized mechanism, such as a dedicated arbitration panel for resolving disputes related to brokers and freight service providers, could be established. This would provide a faster and more efficient way to resolve disputes without resorting to lengthy court proceedings. Faster dispute resolution would ensure smooth operations, reducing financial and operational risks for companies facing legal challenges. The government should offer comprehensive training programs, guidance, and resources to educate brokers and agents about their new obligations under the law. These programs could include workshops, manuals, or online educational platforms that simplify the legal framework. Proper training would reduce the likelihood of unintentional non-compliance, improve efficiency, and ensure that all parties, including small operators, meet the legal requirements without facing unnecessary penalties.
Oman’s new Maritime Law of 2023 provides clarity and structure for the roles of ship agents, brokers, and freight service providers. However, the complexity of the law, potential gaps in international coordination, dispute resolution, and support for small businesses may present challenges. Addressing these issues through simplification, specialized frameworks, and educational support will ensure a smoother transition and greater competitiveness for the maritime sector.
Supporting Shipbuilding and Marine Tourism: Driving Economic Growth
The 1981 law did not provide explicit support for shipbuilding or the development of marine tourism, as regulations focused more on port management and maritime traffic than on promoting sea-related economic activities like shipbuilding or marine tourism. The 2023 law introduced improvements aimed at encouraging shipbuilding and expanding the marine tourism sector. This new law includes provisions for international oversight of shipbuilding, which enhances the quality of ships produced and increases investor confidence in Oman’s maritime sector. Additionally, regulations governing maritime tourism transport were introduced, elevating Oman as a maritime tourism destination. These updates align with Oman’s vision for economic diversification, but a comprehensive strategy is needed to ensure small and medium enterprises (SMEs) receive support in this transformation.
Shipbuilding Provisions in the Omani Maritime Law 2023
An analysis of the shipbuilding section in the new Omani Maritime Law 2023 reveals several points, particularly regarding construction regulation and oversight. The following points and proposed solutions are suggested to enhance effectiveness:
1. Responsibility for Approvals and Ship Registration (Article 22): Responsibility for obtaining preliminary approvals and registering the ship during construction lies with the requesting party. However, the law does not clarify who is accountable for delays, errors, or incidents during construction, nor does it specify accountability when construction deviates from approved technical specifications. This lack of clarity may lead to disputes between shipbuilders and clients over responsibility in case of errors or delays. The law should provide clearer guidelines on allocating responsibilities during the construction phase, indicating that responsibility could be shared between shipbuilders and clients. Detailed guidelines are also needed to address cases where construction deviates from agreed technical specifications.
2. Supervision by a Maritime Classification Authority (Article 23): While the law mandates that shipbuilding must be supervised by a maritime classification authority, it lacks criteria or qualifications for these authorities. There are no detailed provisions on inspection frequency or comprehensiveness. Without stringent standards for classification authorities and inspection procedures, supervision inconsistencies may arise, potentially resulting in substandard shipbuilding, which could impact ship safety. The law should specify qualifications and standards required for classification authorities, along with regular inspections at critical construction stages to ensure compliance with technical specifications and safety standards.
3. Hidden Defects Guarantee (Article 25): The contractor is obligated to ensure the ship is free of hidden defects for two years post-delivery. However, the law lacks details on the process of detecting and addressing these defects and does not specify how long ship owners have to report defects or what procedures are to be followed if defects are discovered after the warranty period. Shipowners may find it challenging to prove the existence of defects and secure compensation if reporting and handling processes are unclear or if issues arise after the warranty period. The law should include a clearer process for identifying and addressing hidden defects, outlining steps for shipowners to follow when reporting defects. An option to extend the reporting period for delayed discoveries could also be beneficial.
4. Lack of Flexibility for Modifications During Construction: The law does not address modifications that may be necessary during construction due to changing requirements or unexpected technical issues. There are no provisions for approving these modifications or for the classification authority’s oversight. This lack of flexibility could lead to conflicts between shipbuilders and clients when unexpected changes are required, potentially causing delays and increased costs. A formal process for requesting approval for modifications during construction should be introduced, involving the client and classification authority to ensure smooth construction and avoid unnecessary disputes.
5. Absence of Financial Guarantees for Delays or Incomplete Construction: The law does not provide clear financial guarantees or compensation mechanisms for shipowners if construction is delayed or incomplete, nor does it impose penalties on shipbuilders who fail to meet agreed deadlines or quality standards. Without financial guarantees, shipowners may face significant financial losses due to delays or incomplete work. The law should include financial guarantees for shipowners, such as penalty clauses for delays or incomplete work, and compensation mechanisms if agreed construction standards are not met.
Overall, the shipbuilding section in the Omani Maritime Law 2023 provides a structured framework but lacks clarity in key areas like construction responsibilities, supervision standards, and financial protection for shipowners. By introducing clearer guidelines, enforcing stricter supervision standards, and providing financial guarantees, Oman could strengthen its ability to build a robust, safe, and responsible shipbuilding industry.
Fines, Penalties, and Law Enforcement
An analysis of fines, penalties, and law enforcement provisions in the new Omani Maritime Law reveals the following weaknesses and proposed solutions, with reference to specific articles and chapters:
1. Maximum Limit for Administrative Fines (Article 386, Chapter 9): The law sets a maximum fine limit of 20,000 Omani riyals for violations, even in severe cases such as environmental damage or safety breaches. This limit may reduce the deterrent effect on large corporations that may not be significantly impacted by these fines. A graduated fine structure could allow higher fines for more severe violations, such as environmental pollution or safety-related risks, increasing the deterrent effect, especially on larger companies.
2. Ministerial Discretion (Article 386, Chapter 9): The minister has the authority to impose and double fines for repeated offenses within two years. However, there is no clear guidance on the criteria for determining fine amounts or how to exercise this discretion. The law should provide detailed guidelines for using ministerial discretion to ensure consistency, transparency, and fairness in imposing penalties.
3. Prison Sentences (Article 381, Chapter 9): The maximum prison sentence for some violations, such as unauthorized ship direction, is only one year. This duration may not be sufficient for serious offenses that could cause significant harm to public safety or the environment. Increasing maximum prison terms for violations posing severe safety or environmental risks would reflect the seriousness of these crimes and strengthen law enforcement.
4. Reliance on Settlement Mechanisms (Article 387, Chapter 9): Article 387 allows offenders to settle maritime offenses before prosecution by paying half the maximum fine. This provision could enable wealthier offenders to avoid stricter penalties through financial settlement. Restricting the types of offenses that can be financially settled would ensure greater accountability for more serious offenses, particularly those involving environmental harm or endangering lives.
5. Focus on Financial Penalties: The law predominantly emphasizes financial fines as the primary punitive measure but does not explore other corrective measures such as suspending operations or mandatory training for offenders. Non-financial penalties, like suspending operating licenses or requiring offenders to undergo training, should be introduced, especially for repeat or negligence-related offenses. This would contribute to improved overall compliance.
Alignment with Oman Vision 2040
To evaluate how the new Omani Maritime Law, Royal Decree 19/2023, aligns with Oman Vision 2040 and its modernity compared to maritime laws in developing and developed nations, the focus can be on several key areas:
1. Support for Innovation and Technological Advancement: Although the law supports maritime activities like shipping, shipbuilding, and logistics services, it does not adequately focus on fostering innovation and technological advancement—crucial elements for Vision 2040’s goal of transforming the economy into a knowledge-based economy. The law needs provisions that encourage research and development (R&D) in the maritime sector, such as incentives for developing new technologies or supporting maritime startups. In contrast, developed nations like Singapore promote maritime innovation through public-private partnerships and funding for technological advancements.
2. Promotion of Green Technology: Although the law includes environmental protection provisions, like controlling maritime pollution, it lacks specific measures to promote green technologies in shipbuilding and operations. Vision 2040 emphasizes sustainability, yet the law does not provide incentives for adopting eco-friendly maritime practices. Countries like Norway have mandated low-emission technology for ships, whereas the Omani law does not yet enforce or incentivize carbon footprint reduction among maritime operators.
3. Development of Skilled Workforce: Vision 2040 strongly emphasizes developing a skilled workforce, but the maritime law lacks provisions that encourage education or continuous professional development for Omani citizens in the maritime sector. The law does not include the establishment of maritime academies or vocational training centers, which are necessary for building a modern workforce capable of handling the increasingly technological nature of maritime operations. Comparatively, nations like the Netherlands and South Korea have advanced maritime academies aligned with industry requirements.
Comparative Modernity of Maritime Law
Compared to Developing Nations
1. Digital Integration Deficiency: The Omani maritime law does not sufficiently address digital integration. Modern maritime laws are moving towards incorporating digital processes like electronic documentation, digital ship registration, and real-time shipment tracking. While the law includes some provisions on ship registration and documentation, it does not mandate digital platforms for administrative processes. Developing nations like Malaysia have already implemented digital solutions for ship registration and port operations, enhancing efficiency and transparency.
2. Lack of Incentives for Private Investment: The law does not offer specific tax incentives or subsidies for private sector investors, especially SMEs in the maritime sector, limiting the potential for local maritime industry growth and entrepreneurship. In contrast, countries like Vietnam and Indonesia provide tax exemptions and financial incentives for maritime startups, encouraging both domestic and foreign investment in their maritime sectors.
Compared to Developed Nations:
1. Delay in Green Shipping Initiatives: The Omani law lacks clear directives to adopt eco-friendly shipping initiatives, such as reducing carbon emissions or using renewable energy in shipbuilding and operations. Developed nations are implementing strict regulations and goals to lower emissions in maritime transport. The European Union, for example, has imposed stringent carbon reduction targets in maritime transport as part of the European Green Deal, while the Omani law does not yet enforce any binding green practices.
2. Limited Dispute Resolution Mechanisms: Although the law stipulates dispute resolution (Article 384), the process is not as advanced or specialized as in developed nations, where international maritime arbitration centers address complex maritime disputes efficiently. Developed countries like the United Kingdom and
Singapore have specialized maritime arbitration systems providing quick and tailored processes for resolving maritime disputes, a feature lacking in the Omani law.
3. Global Competitiveness: While the Omani law covers many aspects, it lacks provisions that would enhance Oman’s global maritime competitiveness, such as incentives for international partnerships or participation in global supply chains. Countries like the UAE have established maritime free zones and developed ports, positioning themselves as global competitors. The Omani law does not include similarly ambitious incentives to provide competitive advantages.
The new Omani maritime law lays a strong foundation, but it does not fully align with Oman Vision 2040’s ambitious objectives, especially in sustainability, technological innovation, and workforce development. Additionally, compared to both developing and developed nations, the law lacks modern elements such as digital integration, green initiatives, and robust dispute resolution mechanisms. To improve its status as a progressive maritime law, Oman needs to introduce amendments focusing on digitalization, sustainability, and enhancing global competitiveness.
2 https://qanoon.om/p/1981/rd1981098/
3 . https://qanoon.om/p/2023/rd2023019/
4 Royal Decree No. 19/2023 issuing the Maritime Law / Maritime Law Chapter One Definitions and General Provisions Article 1
5 Chapter Three Investigation of Maritime Accidents Article 276
6 Chapter Three: Real Rights on the Ship Chapter One: Privilege Rights Article 39
7 Chapter Two Maritime Mortgage/Article 63
8 Chapter Three / Real Rights on the Ship Chapter One Privilege Rights Article 39
10 Chapter Three / Investigation of Maritime Accidents / Article 276