Personal Guarantees in Omani Law: What Does Guaranteeing a Debtor Mean?

Signing as guarantor for a relative or friend is not a passing courtesy: it joins your assets to the debtor’s obligation. But Omani law does not leave the guarantor unprotected. It restricts the creditor’s recourse, discharges the guarantor in defined situations, and secures his right to recover from the debtor what he paid. Said Ibrahim Ambusaidi Advocates (SIA), a law firm in Muscat, explains the suretyship rules of the Civil Transactions Law issued by Royal Decree 29/2013.

What is a guarantee and what does it cover?

Suretyship is the joining of one liability to another in the claim for performance of an obligation, under Article 736 of the Civil Transactions Law, and it is concluded by the guarantor’s offer alone unless the beneficiary rejects it, under Article 737. Beware its reach: the guarantee covers the debt’s accessories and the costs of the claim unless otherwise agreed, under Article 745. A guarantee may be absolute, conditional, deferred or limited in time, under Article 739, and a time-limited guarantor answers only for obligations arising within its period, under Article 770.

Does the creditor start with you or with the debtor?

The law gives the non-joint guarantor two protections: the creditor may not pursue the guarantor alone before pursuing the debtor, under Article 762, and may not execute against the guarantor’s assets before exhausting the debtor’s assets — a right the guarantor may invoke, under Article 763. Where the debt was secured by a real security predating the guarantee, the guarantor’s assets cannot be executed against before the secured assets, under Article 750.

These protections fall away in practice if you sign a joint (solidary) guarantee, which is the norm in banking. Guarantors in judicial or statutory guarantees are always jointly liable, under Article 755, and a guarantee arising from backing or endorsing commercial paper remains commercial, under Article 744. Read the description of the guarantee before signing: the word “joint” changes your entire legal position.

When is the guarantor discharged?

The guarantor is discharged to the extent of any securities for the debt lost through the creditor’s fault, under Article 757: a creditor who squanders a mortgage or security that could have satisfied the debt bears the consequence. If the debt falls due and the creditor does not pursue the debtor, the guarantor may serve notice requiring proceedings against the debtor; if the creditor fails to act within six months of the notice, the guarantor is discharged, under Article 758. On the debtor’s insolvency or bankruptcy the creditor must lodge the debt in the estate, or lose recourse against the guarantor to the extent of the harm caused by the delay, under Article 759. Both principal and guarantor are also discharged if the creditor accepts something else in satisfaction of the debt, under Article 756.

What are the guarantor’s rights after paying?

A guarantor who pays may recover from the debtor where the guarantee was given at the debtor’s request or with his consent, under Article 760, and also recovers the expenses incurred in performing the guarantee, under Article 766. Where the guarantor settled with the creditor for part of the debt, he recovers what he actually paid, under Article 764. On payment, the creditor must hand the guarantor all documents needed to exercise recourse against the debtor, under Article 761. And where joint debtors were all guaranteed by one person, he may recover the whole of what he paid from any one of them, under Article 767.

Key facts

• Suretyship joins liability to liability and covers the debt’s accessories and claim costs unless otherwise agreed, under Articles 736 and 745 of Civil Transactions Law RD 29/2013.
• By default the guarantor is pursued only after the debtor, whose assets must be exhausted first, under Articles 762 and 763.
• A joint guarantee removes those protections in practice, and is the banking norm.
• The guarantor is discharged to the extent of securities lost by the creditor’s fault, under Article 757.
• A notice requiring the creditor to pursue the debtor discharges the guarantor if the creditor does nothing for six months, under Article 758.
• A paying guarantor has recourse against the debtor, with the documents to pursue it, under Articles 760, 761 and 764.

When to involve a lawyer

Involve a lawyer before signing any guarantee, especially a joint bank guarantee, to understand its scope, ceiling and duration; when you face a claim on a guaranteed debt and want to plead exhaustion or discharge; when you have paid a debtor’s debt and want it back; or when you are a creditor who needs a tightly drafted guarantee that survives the defences.

At Said Ibrahim Ambusaidi Advocates we review guarantees before signature, defend guarantors against claims, and pursue guarantors’ recourse actions against debtors before the courts across Oman. The first consultation is free by phone or WhatsApp on +968 9706 3030. We are based in Al Khoudh, Seeb, Muscat, and work Sunday to Thursday, 9:00 to 13:00 and 14:00 to 17:00, in Arabic and English.

This article is general legal information, not legal advice.