Debt Collection in Oman

The debt collection process in Oman begins with an assessment of the debtor’s solvency, their business sector, the history of the business, the availability of documentary evidence of the debt, ongoing court cases and enforcement proceedings, and the possibility of disputing the debt. This assessment determines the strategy that will be used on behalf of the client in the collection process.

If the debtor has no ongoing court cases or outstanding judgments for debt collection and is actively engaged in commercial activities, then it is advisable to use the out-of-court debt collection stage.

This stage involves active negotiations with the debtor in order to reach an agreement on payment of the creditor’s claims or other possible settlement options (e.g. return of goods, transfer of the debt to a third party, exchange of services or goods).

Interaction with the debtor begins immediately after sending a notice by mail, email, phone or instant messengers. This process involves intensive communication with the debtor in order to exert constant pressure. The main objective is to establish contact with key decision makers to achieve the fastest possible debt recovery.

The average time for informal extra-judicial collection is up to 60 days (except in cases where a debt repayment installment plan is agreed upon). If this stage does not bring the expected results or after an initial analysis it becomes clear that it is not applicable, it is necessary to proceed to collection through the courts.

Before initiating judicial collection, it is worth paying attention to the limitation period. The general limitation period is 15 years. The limitation period for the collection of commercial debts between business entities is 10 years. The consequences of the expiration of the limitation period are applied in the court of first instance and the appellate court only at the request of the debtor. The limitation period is interrupted by the explicit or implicit recognition of the creditor’s claims by the debtor. After the interruption, the limitation period begins to count anew.

Omani law provides for judicial collection of debts through the ordinary court procedure and through the order for payment.

The ordinary court procedure begins with the filing of a statement of claim with the court. The court registry registers the claim on the day of filing in a special register in the order of receipt. A separate file is opened for each claim, which is then transferred to the chairman of the court or a judge appointed by him to determine the date of the hearing. The date of the hearing is recorded in the original statement of claim and its copies in the presence of the plaintiff or his representative.

The following day, the registry transfers the original and copies of the statement to the bailiff service to notify the debtor and return the original claim to the court. The bailiffs are obliged to notify the claim within twenty days of its receipt, unless the hearing is scheduled within this period. In such a case, the notification must be made before the date of the hearing, observing the deadlines for appearance.

The deadline for the defendant to appear in court is eight days from the date of notification of the defendant. The defendant must file his objections with the court registry, along with the documents, no later than three days before the scheduled hearing date.

The parties must appear at the scheduled hearing in person or through a representative appointed from among their lawyers. If the defendant is absent from the first hearing and the statement of claim was served on him in person, the court shall render a decision on the case. If the statement of claim was not served on him in person, the court, except in urgent cases, shall postpone the hearing to the next hearing, of which the defendant shall be notified. In both cases, the decision shall be deemed to have been rendered in the presence of the defendant. If the defendant appears before the end of the hearing, any decision rendered in his absence shall be annulled.

The court shall begin the first hearing by inviting the parties to enter into a settlement agreement. If reconciliation is not reached, the case shall be considered at the same hearing. The case may not be postponed more than once for the same reason caused by one of the parties, and the period of postponement shall not exceed two weeks. During the consideration of the case, the court hears the positions of the parties, interrogates witnesses if necessary, examines written evidence and, after the parties have debated, makes a decision at the same hearing or postpones its delivery to the next hearing.

The procedure for issuing an order for payment is applied in cases where the creditor’s right is confirmed in writing, is immediately enforceable, and the amount of the debt is precisely determined. To do this, the creditor must send the debtor a demand for payment, and if the debtor does not comply with it within eight days, the creditor has the right to file an application with the court for the issuance of an order. Documents confirming the existence of the debt and the fact of the demand are attached to the application. After the application is filed, the court issues an order for payment within three days. If the court cannot satisfy the application, a hearing is scheduled. The court registry is obliged to notify the defendant of the date of the hearing.

The application and the order must be served on the debtor within six months from the date of issuance of the order, otherwise it loses force. The debtor may file a complaint against the order within 15 days from the date of its receipt. The complaint must be substantiated, otherwise it will be recognized as invalid. The complaint is considered in the same manner as the consideration of a statement of claim. If the defendant fails to lodge a complaint within the prescribed period, the order for payment becomes a final judgment.

The judgment of the court of first instance may be appealed to the Court of Appeal within 30 days from the date of notification of the contested judgment. The judgment of the Court of Appeal may be appealed to the Supreme Court of Oman within 40 days from the date of notification of the contested judgment. Filing an appeal to the Supreme Court does not stay the execution of the contested judgment. However, the court may order that the execution of the judgment be temporarily stayed if so requested by the applicant in the appeal and if there is a threat of significant damage that cannot be remedied if the execution continues. If the court stays the execution of the judgment, it may order the posting of security or take other interim measures. The judgment of the Supreme Court is final and cannot be further appealed.

Once the judgment has entered into legal force, the creditor must initiate enforcement proceedings. The judgment may be brought for enforcement for 15 years. The period for filing a judgment in a commercial dispute is 10 years. Within the framework of the compulsory execution of a judgment, the creditor’s claims may be satisfied by seizing and writing off funds from the debtor’s accounts; seizing the movable and immovable property of the debtor with their subsequent sale; seizing and confiscating securities; seizing and confiscating company shares, seizing and confiscating the debtor’s property held by third parties.

An alternative option for collecting debt from a company and an entrepreneur is the bankruptcy procedure of the debtor. According to the Omani Bankruptcy Law, any creditor with an undisputed commercial debt that has become due and payable may demand that the debtor be declared bankrupt if the latter has stopped paying the debt. A creditor with a deferred commercial debt may seek bankruptcy if the debtor has no known place of residence in Oman, goes into hiding, closes his shop or starts liquidation, or commits acts detrimental to creditors, provided that he provides evidence of the cessation of payments on commercial debts. At this stage, if the debtor’s assets are insufficient to fully satisfy the creditors’ claims, it is possible to set aside the debtor’s transactions that were made with the intention of causing detriment to creditors. Such transactions or acts made after the cessation date but before the bankruptcy order is issued include, but are not limited to: donations of any kind, with the exception of small gifts that are considered customary; settlement of debts before their maturity, regardless of the method of payment; settlement of debts in a manner not provided for by agreement of the parties; any provision of collateral or other security to cover a debt that existed before the bankruptcy was declared; any transaction that causes detriment to creditors, provided that the debtor’s counterparty knew about the cessation of payments. Claims for invalidation of the above transactions or actions may be filed within two years from the date of the bankruptcy decision. As a result of the cancellation of the above transactions, it is possible to return back to the debtor what he lost from such transactions and thereby increase the liquidation estate to satisfy the claims of creditors and cover the costs of implementing the bankruptcy procedure.

If you have any questions or need support for international debt collection in Oman, our company is ready to provide its expert assistance to effectively resolve your financial issue. Contact us to get additional information and professional support from specialists of the leading debt collection agency.

# DEBT COLLECTION AGENCY OMAN

07.11.2024

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