Insurance Subrogation in Oman: Key Risks, Limits, and Strategies

Subrogation is a cornerstone of insurance law and practice. 

It enables insurers to “step into the shoes” of the insured and pursue recovery from third-party wrongdoers responsible for the insured’s loss.

While subrogation is widely recognised and codified in many jurisdictions, its treatment under Omani law differs from neighboring jurisdictions. Insurers, particularly foreign entities, must therefore be mindful of important nuances before instigating any subrogated recovery actions in the Sultanate.

 

Absence of Codified Subrogation in the Insurance Law

Oman’s primary insurance legislation, Royal Decree 12/79 Promulgating the Insurance Companies Law (the Oman Insurance Law), governs the operation of insurance entities and the contractual relationships between insurers and insureds.

Notably absent from this law is any express codification of subrogation rights. This differs from the legislative frameworks of other jurisdictions, where subrogation is explicitly defined and regulated. Notably, Royal Decree 29/2013 Issuing the Civil Transactions Law (Omani Civil Code) uses the term subrogation, most significantly in the context of the assignment of debts¹. However, the Omani Civil Code also stipulates that it shall not apply to insurance, which “shall be regulated by the provisions of the special laws thereof”². So the Omani Civil Code does not codify any right of subrogation in an insurance context.  

Despite this absence, subrogation rights are not unrecognised in Omani legislation. Specific legislative instruments governing marine and motor vehicle insurance do enshrine subrogation principles. For example:

• Royal Decree 34/94 Issuing the Vehicle Insurance Law (Oman Motor Law) provides insurers with the right to recover from third parties responsible for motor vehicle accidents³; and
• Royal Decree 19/2023 Issuing the Maritime Law (Oman Maritime Law) incorporates subrogation provisions consistent with international maritime norms⁴.

Hence, Omani legislation does not provide for a codified right of subrogation for claims arising outside of non-motor vehicle or marine insurance.

 

Judicial Recognition of Subrogation Rights

Despite the absence of an express, general codified  subrogation right in the Oman Insurance Law, Omani courts have recognised that an insurer may pursue recovery from a third-party following indemnification, provided that there is a clear contractual basis for doing so and that the insured’s rights against the third party are transferred or preserved. This position has been authoritatively clarified by the Supreme Court of Oman in Appeal No. 1212/2020 (2020 Case). In that case:

• An insurer indemnified its insured for property damage and subsequently sought recovery from a third party alleged to be responsible for the loss. The insurer brought proceedings in its own name, relying on the insurance policy, a transfer of the insured’s rights, and a loss adjuster’s report; and
• The Supreme Court dismissed the claim, not because subrogation was unavailable in principle, but because the insurer failed to establish that the defendant was legally responsible for causing the damage.

Helpfully however, the judgment provided a detailed insight into the application of (uncodified) subrogation principles under Omani law in respect of insurance. The Supreme Court held that the correct legal foundation for an insurer’s recourse against a third‑party wrongdoer is “contractual subrogation”. Such right arises from the insurance policy itself, rather than (i) tortious liability asserted by the insurer in its own right, or (ii) “legal subrogation” under the provisions of the Omani Civil Code governing assignment or subrogation of debts. The Court held that, when an insurer pays an indemnity, it is merely performing its own contractual obligation to the insured in return for the premiums paid; such payment does not constitute “damage” suffered by the insurer so as to enliven a claim in tort. Accordingly, an insurer cannot properly base its recourse on the rules of tortious liability as if it were itself the injured party.

The Supreme Court further rejected the insurer’s reliance on the provisions of the Omani Civil Code relating to legal subrogation, confirming that those provisions are not engaged where the insurer has discharged its own contractual liability under an insurance policy. This was unsurprising, given Article 735 of the Omani Civil Code effectively excludes its application to insurance. Instead, the insurer’s right of recovery, if any, must derive from the contractual arrangements between insurer and insured, typically through an express subrogation clause in the policy and a written transfer or confirmation of the insured’s rights against the third party.

Importantly, the decision also underscores that the existence of contractual subrogation does not, of itself, entitle an insurer to recovery. The insurer must still prove, in accordance with ordinary principles of evidence, that the defendant third party was responsible for causing the insured loss. In the 2020 Case, although the insurer established the existence of the policy, the payment of the indemnity, and a letter transferring the insured’s rights, the claim ultimately failed because the insurer did not prove that the defendant was the party responsible for the damage. The Court placed particular emphasis on the fact that the loss adjuster’s report relied upon by the insurer addressed quantum only and did not constitute technical or expert evidence capable of establishing causation or liability.

The Supreme Court’s reasoning confirms that, for non‑marine and non‑motor claims, subrogation under Omani law is principally contractual in nature and is closely scrutinised by the courts. Insurers seeking to pursue subrogated recoveries in Oman must therefore ensure not only that their policies contain clear and effective contractual subrogation provisions, but also that any claim against a third party is supported by robust evidence capable of proving liability and causation, and not merely the existence and value of the insured loss. However, judicial recognition of a right of subrogation is not automatic in all Omani cases. Courts assess subrogation claims on a case-by-case basis, considering factors such as the clarity of policy wording and the subrogation clause therein.

 

Comparison with English Law

From an insurer’s perspective, the distinction between Omani and English law is material. Under English law, subrogation is generally treated as an equitable incident of indemnity insurance that arises by operation of law upon the insurer’s payment of an indemnity, subject to the terms of the policy. The insurer is thereby entitled to enforce the insured’s rights against third parties to prevent double recovery by the insured and unjust enrichment of the wrongdoer.

In procedural terms, English subrogated claims are commonly pursued in the name of the insured (or with the insured joined as a co‑claimant). This reflects the fact that the underlying cause of action remains vested in the insured, with the insurer exercising those rights for its own benefit.

The position articulated by the Court in the 2020 Case differs in emphasis. Rather than characterising subrogation as an automatic consequence of indemnification, the Court framed the insurer’s right of recourse principally as a matter of contract, derived from the insurance policy and any accompanying transfer of rights. The Court further confirmed that the insurer must independently establish third‑party liability with appropriate evidence in order to succeed.

For insurers accustomed to English law subrogation, this underscores the importance of front‑end policy drafting and early claims strategy in Oman. This includes the timely instruction of appropriate technical experts and the careful assessment of whether a viable recovery claim exists before incurring significant costs.

 

Practical considerations

• Identity of the claimant: As in other civil jurisdictions, a court claim invoking a right of subrogation in Oman must be filed in the name of the insurer. This differs from the position in common law jurisdictions where the subrogated claim is generally brought in the name of the insured. Filing a subrogated claim in the name of the insured could otherwise give rise to allegations of double recovery or unjust enrichment if the insured has already been compensated by the insurer for its loss.
• Jurisdiction: Insurance policies issued in Oman often opt for arbitration to resolve disputes as opposed to local courts. In common with the other jurisdictions, consent is a cornerstone of a valid arbitration agreement. This principle is codified in Omani law⁵. Hence, an arbitration agreement in an insurance policy will generally not bind third parties. An insurer pursuing a subrogation claim against a third party must therefore commence proceedings in the Omani Courts, unless such third-party consents to arbitration (which, in practice would be unlikely). As of 2026, most insurance disputes involving commercial enterprises and not subject to arbitration will be heard by the newly established Investment and Trade Court⁶, which provides expedited processes.
• Limitation periods: Insurers must also have regard to limitation periods when considering pursuing a subrogation action in Oman. Rather than being specified in one specific statute, limitation periods for different causes of action are specified across different statutes. Accordingly, expert advice should be sought at the earliest to ensure a subrogation claim is not time barred.
• Policy wording: The insurance contract must clearly articulate the insurer’s right to subrogation. Ambiguous or poorly drafted clauses may be deemed unenforceable or otherwise insufficient to give rise to a right of subrogation. This differs from common English‑law assumptions that subrogation follows automatically from indemnification, and highlights the need for insurers operating in Oman to treat subrogation as a matter of enforceable contract, rather than presumption.
• Powers of Attorney: In common with other civil law jurisdictions, court proceedings in Oman cannot be commenced without a power of attorney issued to the lawyers acting for the claimant. The authorised person to issue such power of attorney will vary depending on the type of corporate entity and its place of incorporation. Additional formalities will apply where the insurer is incorporated outside Oman. The power of attorney will need to be apostilled (if located in a Hague Apostille Convention signatory jurisdiction) which usually requires the involvement of a notary and foreign ministry or alternatively legalized via the Omani consulate or embassy. As such, ensuring a power of attorney is in place early is essential if a proceeding must be commenced quickly to preserve a limitation period.
• Translations: Under the Oman Insurance Law, all policies must be issued in the Arabic language or otherwise accompanied by an Arabic translation⁷. For subrogation related actions arising from insurance policies issued outside Oman, such policies will need to be translated into Arabic along with any other exhibits filed in the Omani court proceeding.
• Waiver of subrogation clauses: It is not uncommon for Omani law contracts to stipulate that insurance policies procured by one party contain a waiver of subrogation in favour of the other. Nothing in Omani law prohibits such clauses or would render them unenforceable as a matter of public policy. In practice, however, it is not unusual for contractual parties to overlook the inclusion of such waivers in the insurance policies subsequently obtained If a party fails to secure an insurance policy with a waiver of subrogation, the insurer may still pursue a claim against the wrongdoer. The wrongdoer could then seek damages from the insured for breach of contract, though this would be an issue more for the insured, rather than the insurer.

 

Conclusion

Subrogation remains a vital tool for insurers in Oman, enabling them to recover losses from third-party wrongdoers and maintain the integrity of the indemnity principle.

While legislative support exists in certain insurance classes, and judicial recognition has been granted in select cases, insurers must navigate a complex legal terrain to assert subrogation rights effectively. Most critically, it is essential that clear and robust subrogation rights are stipulated in policy wordings in alignment with Omani law and practice.

 

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¹Omani Civil Code, Articles 772-780.
²Omani Civil Code, Article 735.
³Oman Motor Law, Article 14.
⁴Oman Maritime Law, Article 308.
⁵Royal Decree 47/97 Issuing the Law of Arbitration in Civil and Commercial Dispute, Article 12.
⁶Royal Decree No. 35/2025 On the Establishment of the Investment and Trade Court and the Issuance of its Law, Article 4(4).
⁷Royal Decree 12/79 Promulgating the Insurance Companies Law, Article 60.