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Introduction
When looking at a new market, one question tends to come up early: What happens if the state needs the land or the project?
In Oman, the position is clear. The Foreign Capital Investment Law (Royal Decree 50/2019) sets out the main protection for investors, while the Expropriation for Public Benefit Law (Royal Decree 71/2023), together with its Executive Regulation (Ministerial Decision 1016/2024), explains how expropriation and compensation are being handled.
Read together, these rules give a clear picture of how things are dealt with in practice.
Protection against direct interference and license cancellation
The Investment Law draws a clear line when it comes to project assets. As Articles 23 to 25 deal with confiscation, freezing of assets, and license cancellation.
Article 23 makes it clear that any action affecting project assets must go through the courts. In simple terms, authorities cannot step in and take control without a legal process. Article 25 covers license cancellation and requires notice, an explanation of the issue, and time for the investor to respond.
However, these steps may seem straightforward, but they help reduce the risk of sudden disruption.
Expropriation and compensation under the law
Article 24 of the Investment Law deals with expropriation. It allows expropriation for public use, but only if there is fair compensation, assessed at the time of expropriation and paid without delay.
Under the Expropriation Law (RD 71/2023), expropriation covers not only land ownership but also related rights, including usufruct. And this fits with how many projects in Oman are set up, especially where land is leased rather than owned.
The process itself is set out in the Executive Regulation (MD 1016/2024). Articles 7 to 10 deal with identifying affected properties, while Articles 11 to 16 deal with valuation and how compensation is calculated.
From these provisions, compensation is linked to the value of the property and what is on it at the time the expropriation decision is issued. The valuation considers factors such as the nature of the property, how it is used, and where it is located. In reference to Article 15 which deals with development projects and looks at the nature and components of the project when assessing compensation.
Contractual considerations at the structuring stage
Even with this level of clarity, this is often where a different type of discussion begins.
For longer-term or operational projects, these points tend to come up during negotiations. It is not just about what the law says, but how it is dealt with between the parties from the outset. Thus, focuses on the practice more.
In that context, a practical question may arise as to whether certain aspects of compensation can be addressed differently at a contractual level, whether in terms of scope or valuation approach, within the limits of the law. This is often part of how a project is structured, especially where the parties want more clarity on risk allocation or future scenarios.
In that sense, drafting the investment agreement is not just about current obligations. It is also about dealing with issues that may only become relevant later.
Conclusion
Oman offers a clear and organised approach to investment protection. There are defined rules on how assets are protected and how expropriation and compensation are handled.
For investors, the key is to understand how these rules fit into the project from the start. Once that is clear, it becomes much easier to plan with confidence.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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