Oman Issues New Legal Framework for State Contracts and Financial Commitments

On 19 November 2024, His Majesty the Sultan issued Sultani Decree No. 59/2024, establishing the System for Signing Contracts and Financial Commitments of the State. The decree was published few days after its issuance and introduces a modernized and comprehensive framework for financial contracting by Oman’s state administrative units and public legal entities.

The new system governs agreements that impose financial burdens on the state treasury, covering contracts with foreign governments, international organizations, private entities (Omani or foreign), and others. It emphasizes transparency, accountability, and adherence to fiscal appropriations.

 

Key Features of the New System

Effective Date

The system takes effect on 25 December 2024, 30 days after its publication in the Official Gazette.

Repeal of Previous Law

The new framework replaces the outdated Sultani Decree No. 48/76, ensuring alignment with current administrative and financial practices.

Scope of Application

The decree clearly defines contract categories and signing authorities:

• Construction works and related services, to be signed by the head of the concerned government body.
• Procurement of goods or real estate:
• Below OMR 1 million: to be signed by a Director-General or delegate.
• Between OMR 1 million and 3 million: to be signed by the Undersecretary, Secretary-General, or Director-General.
• Above OMR 3 million: to be signed by the head of the concerned government body.
• Bonds, guarantees, and state-linked investments: to be signed by the Minister of Finance or by way of delegation.

 

Exemptions

The system excludes specific contracts, such as those authorized by the Sultan, military or security-related agreements, and those involving the Central Bank of Oman or exempted by law.

 

General Provisions

• Financial Approvals
  All contracts must align with the state budget. Unauthorized contracts are void, with the state bearing no financial liability.

• Legal Compliance
  Contracts must adhere to the Tender Law, Financial Law, and other applicable laws, including conflict-of-interest regulations.

• Mandatory Review
  Contracts exceeding OMR 5 million or those involving borrowing must be reviewed by the Ministry of Justice and Legal Affairs.

*This article was written by Hamood Al Rawahi, Legal Director of Al Lawati Law, a collaboration firm of DLA Piper based in Oman.