Compensation claim in Oman

The Omani legislator has aligned with what is stated in the noble Islamic Sharia regarding compensation. Judicial claims for compensation have been defined as a means to demand protection of a right or legal position that has been violated. A claim for compensation has three main elements:

1. The element of fault.
2. The element of damage.
3. The element of causal relationship linking the two.

The Civil Transactions Law, in Articles 176 and 181, states:

“Anyone who causes harm to another is obligated to compensate, even if they are not of sound mind.”

It also states:

“Compensation is estimated in all cases according to the damage suffered by the injured party and the loss of profit, provided that such damage is a natural consequence of the harmful act.”

The element of fault is established by an act that deviates from the behavior of a reasonable person in similar circumstances and falls outside the limits of the law. Fault in contracts occurs when the terms of the contract are violated, which is known as contractual liability. In the behavior of natural individuals, fault appears in the form of tortious liability, such as harming another person intentionally or unintentionally. Legally, the mere existence of fault is not sufficient to obligate compensation; there must also be damage caused to the claimant by that fault. Damage is the second element of a claim for compensation.

Damage has two forms:

1. Material (or financial) damage
2. Moral (or non-material) damage

Material damage refers to harm that affects tangible, physical things with a clear independent existence, which can be quantified in monetary terms. Examples include:

• The plaintiff’s lost earnings and incurred losses.
• Deprivation of the plaintiff’s money or legal rights.
• The plaintiff being forced to borrow money with interest to cover financial shortfalls caused by the damage.
• Expenses incurred by the plaintiff in resorting to the courts to claim their rights.

Moral damage refers to harm affecting a person’s feelings, emotions, or reputation among others, causing them distress or anguish.

Regarding the third element of a compensation claim, it is the causal link, which is the connection between the wrongful act and the damage, and represents the inevitable result of the initial act.

Third: Applications and Precedents of the Omani Supreme Court

The rulings of the Supreme Court in this regard have consistently held that:

“Any act or statement that merely constitutes a breach of any legal duty is considered a deviation from the legal obligation imposed on all and requires compensation.”

 (Appeal No. 85 of 2009 – Civil, Supreme Court)

The Supreme Court has also ruled that:

“Compensation is for the direct damage resulting from the error. The standard for its assessment is what the injured party lost in earnings and the loss suffered.”

 (Appeal No. 397 of 2006 – Civil, Second Supreme Court, session 18/3/2007)

Furthermore, the Supreme Court has ruled in this regard that:

“Compensation for material damage – its condition – is the breach of a financial interest of the injured party, and the damage must be either actual or probable.”

 (Appeal No. 24 of 2004 – Civil, Supreme Court)

Prepared by: Dr. Mohammed Gharbawi
Al-Alawi & Co – Lawyers and Legal Consultants
Muscat, Sultanate of Oman