Shipping 2024 Comparisons

Maritime claims and shipping claims in the UAE are not assigned to specific courts or chambers. Instead, these claims are treated as commercial suits and are heard by the ordinary judiciary. To regulate these claims, Federal Law No 43 of 2023 regarding Maritime Law governs the applicable local laws and procedures. These laws are aligned with the Federal Civil Procedures Law established by Federal Law No 42 of 2022.

Regarding common maritime claims, they encompass insurance on ships and claims arising from losses during maritime transport operations, including loading, unloading, and delivery to the rightful owner. Jurisdiction over these matters lies with the commercial chambers of the local courts.

In Article 68 of Federal Law No 43 of 2023 on Maritime Law, the legislator outlined the following in item (b) of paragraph 1:

“1- To enforcing international and national requirements related to maritime security, safety, and environmental preservation, the ministry and the competent authority shall, within their respective jurisdictions, undertake the following:

a- Take all necessary measures to ensure the compliance of national ships with the requirements and conditions stipulated by the International Maritime Organization and other relevant organizations, as well as the laws in force in the country.

b- Exercise control and inspection of foreign ships in the waters and ports of the country to ensure compliance with internationally ratified agreements and the provisions of applicable legislation. The ministry shall establish guidelines and procedures for this inspection.

c- Verify the commitment of ports, classification societies, companies, and maritime facilities operating in the country to international requirements, conditions, and the laws in force in the country, as well as the decisions and circulars issued by the ministry in the conduct of their activities.

d- Collaborate with federal and local government entities in taking necessary actions to fulfill the duties of the coastal state in accordance with internationally ratified agreements and the provisions of applicable legislation. The ministry shall specify these duties and obligations.

2- The ministry shall specify the security, safety, and marine environmental preservation requirements that must be met by maritime facilities and ships not subject to the provisions of international agreements.

3- The ministry has the authority to exempt ships from complying with some requirements and conditions in accordance with the powers outlined in internationally ratified agreements and applicable legislation. The ministry shall establish guidelines and cases for such exemptions.”

The ministry mentioned throughout this text pertains to the Ministry of Energy and Infrastructure, as clearly outlined in the definitions section, specifically Article 1, of this decree.

In Chapter 1 of the Second Section of Federal Law No 43 of 2023, the legislator outlines the requirements for registering a ship in the Ship Register. The government entity responsible for this process is the Ship Registration Administration, which has been appointed by the Ministry of Energy and Infrastructure.

In order for a registered ship to be listed in the Ship Register and meet the necessary criteria, there are five conditions that the legislator has established. These conditions are clearly stated in the opening paragraph of Article 13 of Federal Law No 43 of 2023, which pertains to Maritime Law. The opening paragraph outlines these requirements as follows:

“a- The ship shall be normally intended for navigation in the State’s waters, coastal navigation between the Country’s ports, or navigation on the high seas.

b- The majority of the ship shares shall be owned by natural or legal persons who have the nationality of the Country or the nationality of one of the GCC Countries for the Gulf Arab States or shall be owned by natural or legal persons who have a domicile, business centre, or ship management office in the Country.

c- The ship shall not be more than (20) years old from the date of shipbuilding completion in accordance with the shipbuilding contract, except for passenger ships, which shall not be more than (10) years old.

d- The ship’s drawings and specifications shall be approved by the Ministry or its authorized representative upon the ship inspection.

e- The ship shall have valid international certifications indicating that the ship is appropriate for maritime navigation.

The certifications shall be issued by a classification society authorized by the Ministry or whose certifications are approved by the Ministry.”

Foreign ownership is permitted according to item (b) in paragraph 1 of Article 13 of Federal Law No 43 of 2023 on Maritime Law. Additionally, ships that are under construction cannot be registered, a detail which is not mentioned in the registration criteria stated in the initial paragraph of Article 13 of Federal Law No 43 of 2023 on Maritime Law.

Temporary or dual registration of ships is not permitted, and there are no provisions that allow for such registrations.

According to the provisions stated in Article 24, paragraph 4 of Federal Law No 43 of 2023 on Maritime Law, all legal transactions and rights, including mortgages, that affect a ship must be documented in the Ship Register. The responsibility for maintaining the registration of maritime mortgages lies with the Ministry of Energy and Infrastructure, as mentioned in Article 13, paragraph 1 of the same law.

In terms of the documentation required for registering a maritime mortgage, the legislator has specified in Article 41, paragraph 3 of Federal Law No 43 of 2023 on Maritime Law that the executive regulations of this law have set out the necessary guidelines and procedures for recording mortgages in the Ship Register.

Article 41 explicitly states:

“3- A ship may be mortgaged while it is under construction, and the executive regulations specify the controls and procedures for registering the mortgage in the Register.”

Additionally, Article 42 of the same law stipulates:

“1- The ship is mortgaged with a security accompanied by the certification of the signatures of the parties therein, otherwise it is invalid, in implementation of the provisions of Article (24) of this Law.

2- It is permissible to mortgage the ship and carry out all transactions related to the mortgage through modern technological means.”

Instead of being accessible to the public, the ownership register and maritime mortgages register are official records administered by the Ministry of Energy and Environment. The Cabinet holds the power to delegate the responsibility of creating this register to any competent authority in charge of registration or deletion, and said authority takes on the Ministry’s role accordingly. These provisions are outlined in paragraphs 2 and 3 of Article 7 of Federal Law No 43 of 2023 concerning Maritime Law, which states:

“2- The Ministry shall create the ‘Ship Register’ to record ships and maritime transport. The register includes type, size, classification, navigation purposes, and sailing areas of ships and maritime transport, as determined by the executive regulations.

3- The Cabinet may entrust the creation of the register stipulated in Clause (2) of this Article to any of the competent entities within the limits of its jurisdiction. The provisions applicable to the register established in the Ministry shall apply also to this register. In this event, the Competent Entity shall notify the Ministry of all the data recorded in this register and any amendments made thereto in accordance with the controls and requirements determined by the Cabinet.”

Access to the ship’s records is strictly limited to the owners themselves unless it is obtained through proper channels via a decision or official documentation from a duly authorised entity.

In relation to international agreements, there exists an international convention along with its accompanying annexes that pertain to intervening on the open seas in the event of an incident that causes or has the potential to cause oil pollution. This convention was concluded in Brussels on 29 November 1969. Additionally, there is an international convention, annex, and resolutions that address the issue of civil liability for damage caused by oil pollution, which was also concluded in Brussels on 29 November 1969.

Concerning legislation, the UAE legislator has outlined in Articles 221–234 of Federal Law No 43 of 2023 the specific regulations pertaining to the obligations and responsibilities of ship-owners and their operators in regard to covering the costs of removing maritime debris and the associated consequences. Article 233 of this law specifically addresses these obligations and responsibilities. Paragraph 3 of the article stipulates the following:

“In all cases, the shipowner or operator shall remain liable for all expenses and consequences related to the removal of marine debris and any compensations arising therefrom.”

On 20 October 1972, the General Assembly of the International Maritime Organization released the International Regulations for Preventing Collisions at Sea. These regulations set the guidelines for safe navigation and collision avoidance between vessels in international waters. Similarly, in Federal Law No 43 of 2023 regarding Maritime Law, the UAE legislator has outlined the specific duties and obligations of ship-owners and other relevant entities in Articles 236, 237, 238 and 239. These provisions are aimed at promoting responsible practices and accountability within the maritime industry.

Federal Law No 43 of 2023 is the governing legislation in the UAE that addresses the allocation of liability for maritime claims within its jurisdiction.

The Compensation fund arises from a request submitted by the ship-owner or those acting on their behalf to the court within whose jurisdiction the incident occurred, unless otherwise agreed upon. This is expressly stipulated in paragraph 1 of Article 85 of Federal Law No 43 of 2023 regarding Maritime Law, which stipulates:

“1- If the debts emerging from a single accident vary, the Operator or whoever is acting in his capacity may request the creation of a compensation fund in front of the court within whose jurisdiction the accident occurred, unless otherwise agreed.”

The responsibility for establishing the Fund lies with the court within whose jurisdiction the incident occurred. This is explicitly stated in paragraph 2 of Article 85 of Federal Law No 43 of 2023 regarding Maritime Law, which specifies:

“2- The court shall establish a compensation fund as soon as the motion for its establishment is lodged according to the terms set forth in the Executive Regulations.”

As for compensation, it is calculated according to the conditions specified in paragraph 1 of Article 83 of Federal Law No 43 of 2023 regarding Maritime Law.

In terms of the deposit and whether it is required, this point has also been clarified in the text of paragraph 4 of Article 85 of Federal Law No 43 of 2023 regarding Maritime Law. It states that:

“The court shall determine the guarantees that it accepts and their values.”

Therefore, the provision of a deposit or otherwise occurs only if the court decides to require it as security.

Indeed, the Maritime Labour Convention is applicable in the UAE. Federal Law No 43 of 2023, which pertains to Maritime Law, specifically covers the well-being and entitlements of seafarers in Chapter Three of the Fifth Section. This Chapter, comprising Articles 93 to 104, outlines the rights and safeguards afforded to seafarers.

The United Arab Emirates has not ratified any of the Hamburg Rules, Rotterdam Rules, Hague-Visby Rules, or Hague Rules. However, the pertinent sections of the Maritime Code (Federal Law No 26 of 1981) are mostly based on the Hague-Visby Rules. Articles 256–302 of the Maritime Code cover matters relating to carriage by sea and bills of lading. In the new Maritime Code (Federal Decree Law No 43 of 2023), effective as of 29 March 2024, Articles 155–187 cover carriage of goods by sea and bills of lading.

In the UAE, the bill of lading serves as proof of the carriage contract involving the shipper, carrier and the consignee. The holder of the bill of lading, whether the consignee, last endorsee, designated holder or the party that takes lawful delivery of the goods, holds the right to initiate legal action.

The carrier’s liability for loss or damage to the goods is limited to an amount not exceeding SDR 835 (eight hundred and thirty five Special Drawing Rights) for each package or unit used as the basis for calculating the freight, or, alternatively, not exceeding (2.5) two and a half Special Drawing Rights for each kilogram of the total weight of the goods, whichever is higher. The value of Special Drawing Rights as declared by the International Monetary Fund from time to time shall be applied and the liable party shall be obliged to pay in equivalent United Arab Emirates dirham (AED). However, in the following instances, the aforementioned limitation may not apply.

• If it is proven that the damage resulted from an act or omission committed by the carrier, or one of their servants or agents, with the intention of causing harm or with indifference accompanied by the awareness that damage could occur.
• If the carrier issues a bill of lading without reservations, despite the existence of circumstances necessitating their mention in the bill, with the intent to harm bona fide third parties.
• If the goods are loaded on deck in violation of an explicit agreement stipulating that they should be loaded in the ship’s hold.
• If the shipper provides a statement before shipment regarding the nature of the goods, their value and the special importance of their preservation, and includes this statement in the bill of lading.

The contractual carrier shall remain liable for all damages occurring throughout the implementation of the carriage contract. However, the actual carrier is only accountable for damage arising during the segment in which they perform the carriage, and the liability of the actual carrier for such damages is jointly with the contract carrier. The actual carrier and the contract carrier can avail the limitation of liability prescribed by the law and their joint liability for loss or damage to goods is limited to the limitation prescribed by the law as stated above.

Under UAE law, the shipper is liable to the carrier for any misdeclaration of the cargo and the carrier can establish a claim for compensation if any damage is suffered due to such misdeclaration. If misdeclared cargo that is not specified in the bill of lading is discovered aboard the ship, the Master of the ship has the right to either offload said cargo at the port of origin or levy a charge that is commensurate with the highest freight rate paid for the cargo of a similar nature to deliver at the discharge port stated in the bill of lading, without prejudice to the entitlement of compensation.

A claim arising out of a contract of carriage or bills of lading for damaged or lost cargo is time-barred after one year from the date of delivery or on the date on which the delivery ought to have been made. If the consignee refuses to take delivery or abandons the cargo, the time bar is calculated from the date of arrival of the vessel. A liability in tort is time-barred after three years.

It is advisable to file the claim within the time prescribed by law. However, the courts may accept a challenge to the time bar, if the party entitled to plead the time bar waives their right. Any extension of time bar should be agreed upon by all parties who are entitled to raise the plea of time bar.

The United Arab Emirates is neither a party to the International Convention on Arrest of Ships 1999 or the International Convention Relating to the Arrest of Sea-Going Ships 1952, despite the latter being substantially incorporated into domestic law. Federal Law No 26 of 1981 currently covers ship arrests in UAE. This law is being replaced by Federal Decree Law No 43 of 2023, effective as of 29 March 2024. According to the new law, vessels may be arrested to satisfy a “maritime debt”, which is a claim regarding a right resulting from any of the following reasons:

• damage caused by the ship due to the operation of the ship;
• loss of life or personal injury occurring in direct connection with the operation of the ship;
• salvage operations or salvage agreements, even if the ship or its cargo causes imminent damage to the environment;
• damage that the ship may cause to the environment, the coastal strip, or the interests related to them, and the resulting expenses and costs related to avoiding, reducing or eliminating the damage;
• costs of salving a sunken, wrecked, stranded or abandoned ship and those related to transporting them, restoring them, stopping their harmful effects or destroying them;
• any agreement relating to the use of a ship, whether contained in a charterparty or other document;
• any agreement relating to the carriage of goods or passengers on board a ship, whether contained in a bill of lading, travel ticket or other document;
• loss or damage to cargo or personal effects transported on board a ship;
• general average losses;
• towing the ship;
• piloting the ship;
• supplying products or supplying the ship with fuel or tools necessary for use, maintenance or preservation of the ship, in whichever place the supply is made;
• building, rebuilding, repairing or equipping the ship and the costs of its mooring in docks;
• fees for ports, canals, basins, harbours and other waterways;
• wages due to the Master and members of the marine crew on board the ship, including costs of their repatriation and social insurance contributions payable on their behalf;
• amounts paid on behalf of the ship-owner or operator;
• the insurance premiums for the ship and its takaful insurance contributions that are obligated to be paid by the ship-owner, charterer or their representative;
• any commissions, brokerage or agency expenses payable by the unequipped ship-owner, charterer or their representative;
• any dispute over ownership or possession of the ship;
• any dispute over the joint ownership of the ship, or the right to the profits arising out of the use thereof;
• mortgage of the ship or any other real insurance that burdens it; and
• any dispute arising from the ship sale contract.

The United Arab Emirates does not recognise the common law concept of maritime liens. Nevertheless, maritime law acknowledges certain claims as priority debts on a vessel. These priority debts shall be on the vessel irrespective of its ownership. Such priority debts on the vessel shall extinguish only upon a judicial sale of the vessel or by following the prescribed sale formalities provided in the law to extinguish priority debts.

The following claims, including injuries to crew, are recognised as priority rights under maritime law.

• Legal expenditures incurred for the preservation, sale and distribution of the ship, along with loading charges, port fees, lighthouse fees, and similar levies and taxes. This includes compensation for damage to port facilities, docks and navigational routes, expenses related to the removal of navigational obstacles caused by the ship, and maintenance costs incurred from the ship’s entry into the last port.
• Rights arising from the employment contract of the Master, seafarers, and other persons who are bound by a maritime employment contract on the ship.
• Compensation owed for assistance and salvage, as well as the ship’s contribution to general average losses.
• Compensation due for marine accidents and physical injuries sustained by passengers and crew, excluding compensation for loss or damage to cargo and personal effects.
• Debts arising from contracts executed by the ship’s agent on behalf of the operator or contracts entered into by the Master outside the ship’s port of registration within the bounds of his legal authority.
• Debts arising from loading, unloading, pilotage and towing operations.
• Liabilities for failure and damage necessitating compensation on behalf of the ship’s charterers.
• The total insurance premiums taken out on the ship’s hull and equipment due for the last insured voyage if the insurance was taken out for a voyage or for the end of the insurance period if the insurance was taken out for a specific period, provided that in both cases the total does not exceed one year’s premiums.       

Liabilities resulting from the contract of chartering the vessel is listed as one of the maritime debts under the law, for which the vessel can be arrested. In the case of bareboat charter, the charterer is responsible for the maritime debt and the creditor may request the imposition of arrest on the vessel or on any other vessel owned by the charterer.

The UAE distinguishes between priority debts on the vessel and maritime claims, with the former being a priority debt that attaches to the vessel from the moment the claim arises and follows with the vessel even in the change of ownership, subject to specific conditions outlined in the law.

As for vessel arrest, a claimant in the UAE may arrest not only the vessel to which the claim relates but also, in some instances, any sister vessel owned by the defendant at the time the claim arose.

A vessel can be arrested regardless of its owners’ personal liability on the merits. In claims of priority debts listed in the law, the claims attach to the vessel even in the change of ownership, and the vessel could be arrested whether during its operation by the owner or the charterer. The vessel can be arrested irrespective of the personal liability of its owners or demise charterers as long as the claim constitutes a recognised priority debt.

In demise charter, either the chartered vessel (being the vessel in respect of which the claim arose) or any other vessel owned by the demise charterer may be arrested for maritime debt. However, in such instances, other vessels owned by the owner of the chartered vessel cannot be arrested.

A bunker supplier can arrest a vessel in connection to unpaid bunkers supplied to the vessel. Supplying products or supplying the ship with fuel or tools necessary for the use, maintenance or preservation of the vessel is listed as a maritime debt that allows the claimant to seek an arrest of the vessel.

The contractual supplier can arrest the vessel if they can evidence the underlying bunker supply contract entered with either the owners, charterers, the Master or the agent, and the proof of delivery of bunker. In case of actual suppliers, their claim of non-payment for the supply of bunkers may fail if the owner or charterers are able to evidence payment to the contractual supplier for the supply. Instances have been seen where the actual supplier managed to arrest the vessel based on bunker delivery confirmation issued by the Master but claims on merits were dismissed as proof of payment to the contractual supplier was submitted by the owners.

The UAE courts usually uphold the right of the bunker supplier to arrest the vessel though the charterer, not the owner, has entered into the contract for supply of the bunker to the vessel.

To arrest a vessel, a written application to arrest the vessel with relevant documents, such as those evidencing the maritime debt, must be submitted to the competent court.

Advocates who are licensed to practise in the UAE courts must be retained to institute proceedings in court and a notarised Power of Attorney (PoA) needs to be issued by the arresting party. If the PoA is executed outside the United Arab Emirates, it must be by the UAE Embassy/Consulate in the country of execution and counter-attested by the Ministry of Foreign Affairs/Justice.

Arabic is the official language of the United Arab Emirates, including its onshore courts. All proceedings in admiralty matters before the competent courts are conducted in Arabic and all documents that are filed must be translated into Arabic by a translator licensed by the Ministry of Justice. Recent amendments to civil procedure laws allow some matters to be conducted in English; however, it is unclear whether those provisions extend to admiralty matters. Therefore, all documents supporting the arrest application must be translated into Arabic.

The process surrounding the payment of security in arrest matters was less defined and different UAE courts had varied practices; some required the arresting party to provide an indemnity undertaking from a UAE entity, while others mandated a bank guarantee from local courts. However, Article 56 of the new Maritime Law (Federal Decree Law No 43 of 2023) has brought a significant change. The law mandates the arresting party to submit a financial guarantee for the safety of the vessel and its crew. Any amount spent from such financial guarantee shall be considered as judicial expense and shall be considered as a priority debt in the event of the sale of the vessel.

In the UAE, bunkers can be arrested under the Civil Procedure Law – Federal Decree Law No 42 of 2022 (CPL) rather than the maritime law. According to Article 252 CPL, a creditor can seek court-ordered confiscation of the debtor’s property, including bunkers, by demonstrating valid reasons, such as the debtor residing outside the UAE or the risk of losing the security.

The arrest of bunkers requires careful adherence to procedural requirements and thoughtful presentation of evidence that prima facie establishes the debt, and the bunkers belong to the debtor.

The arrest of sister ships is possible under UAE maritime law. The law allows a claimant to arrest a sister ship owned by the debtor, provided that the vessel was owned by the debtor at the time the maritime debt arose. However, such arrests are not allowed if the maritime debt relates to a dispute regarding the ownership or joint ownership of a vessel or related to the use or rights of profit arising out of a vessel. In maritime mortgage claims, the arrests are allowed on the mortgaged vessels only.

In the UAE, besides ship arrests, attachment orders can be obtained under Articles 247 and 252 of the CPL. Attachment orders, as per CPL, cover a range of assets, including bank accounts, real estate, equipment, cargoes, vehicles, furniture, shares, and office equipment of the debtor. The attachments under Article 252 extend to assets held by third parties, and the court may impose conditions for enforcement, such as providing proof of ownership. The specific type of attachment is determined by the nature of the debtor’s assets and the particulars of the case.

In the context of releasing an arrested vessel, the established practice mandates specific forms of security by way of cash deposit, a manager’s cheque or a bank guarantee issued by a licensed bank in the UAE. Notably, a letter of undertaking (LOU) from P&I Clubs is not recognised by the court unless the arresting party willingly acknowledges and requests the vessel’s release based on such LOU. However, there have been noteworthy developments in the new maritime law recognising letters of undertaking issued by P&I clubs or a financial institution. The competent court will have the discretion to accept such LOUs as sufficient security to release the vessel. The law will be effective by 29 March 2024 and implementing regulations are still awaited to provide more clarity on the procedure.

The court must issue its final judgment before the execution proceedings in which an order for the judicial sale of the vessel can be sought. A notification will be issued by the court advising the parties regarding the judicial sale by auction. The notice of judicial sale of the vessel must be published in a widely circulated local newspaper. In addition, the vessel registry and any other place specified by the court needs to be notified.

The court will appoint an expert for the appraisal of the vessel to fix the reserve price for the sale. The auction will be held in three rounds at seven-day intervals. The highest bid of each round will be the reserve price for the next round and the vessel will be sold to the highest bidder on the last round of bidding upon confirmation of the sale by the court. If there are no bidders, or the bid on the first round is less than the reserve price, the auctioneer can approach the court for a reduction of the reserve price.

The awaited implementing regulations of the new maritime law will provide more clarity on the procedures for publishing the order for sale through public auction and the requisite information to be incorporated in the notice of judicial sale. The arresting party is liable for maintaining the vessel from its arrest and until sold by the court. If any expenditure for the maintenance of the vessel is incurred by the port authorities or the vessel’s agent, such expenses can be claimed as a priority debt from the sale proceeds.

The priority debts and mortgage will have priority over other claimants in the following order.

1 Legal expenditures incurred for the preservation or sale of the ship.

2 Rights arising from maritime employment contract on the ship.

3 Compensation owed for assistance, salvage and contribution to general average losses.

4 Compensation due for marine accidents, excluding compensation for loss or damage to cargo and personal effects.

5 Debts arising from contracts executed by the ship’s agent on behalf of the operator or by the Master outside the ship’s port of registration.

6 Debts arising from loading, unloading, pilotage and towing operations.

7 Mortgages.

8 Liabilities for failure and damage necessitating compensation on behalf of the ship’s charterers.

9 The total insurance premiums up to one year’s premiums.

The court usually determines the priority rights of claimants and often appoints an expert to determine the order of priority in which the sale proceeds are to be distributed. Upon judicial sale of the vessel, all the priority rights including crew wages shall not follow the vessel and all mortgages are extinguished.

The rules on bankruptcy analogous to Chapter 11 of the United States Bankruptcy Code are set out in the Federal Decree Law No 51 of 2023 on the issuance of the Financial Restructuring and Bankruptcy Law, according to which ship arrest ordered by the competent commercial court, as there is no admiralty court in UAE, cannot be made after the opening of bankruptcy proceedings. The competent bankruptcy court handling the debtor’s bankruptcy can order the stay of any individual lawsuit filed by any creditor seeking satisfaction of its debt after the opening of the bankruptcy proceedings.

There is no provision in the UAE maritime law for claiming wrongful arrest and there is no history of claims for compensation because of wrongful arrest in the UAE. Thus, the UAE courts would not ordinarily award damages for wrongful arrest unless the party who claims damages for wrongful arrest proves that the arrestor has obtained a ship arrest based on forged documents. The burden of proof in relation to a wrongful arrest rests on the party who claims it.

The UAE enacted a new Maritime Law, Federal Decree Law No 43 of 2023, coming into force on 29 March 2024, six months from its publication in the Gazette, and repealing the 1981 Commercial Maritime Law.

Under the current applicable commercial maritime law, the time limit for filing claims related to death or injury of passenger during maritime transportation is two years. The time limit for a late arrival claim is six months.

The limitation on liabilities in respect of a passenger’s claim is specified by Article 296 of the current commercial maritime law of 1981, which states as follows.

“1. The liability of the carrier for death or injury of a passenger shall be determined by the amount of blood money defined by Sharia law in the Criminal Code.

2. It shall be permissible to agree that liability should be limited to an amount not exceeding that stated in the foregoing sub-section.

3. It shall not be permissible for the carrier to rely on limitation of liability if it is established that there was some fraud or unpardonable error on the part of the carrier or those working under him, and an error shall be deemed to be unpardonable if an act was done recklessly and was accompanied by realization of the probability that damage would result.”

Pursuant to the UAE arbitration law and commercial maritime law, the transfer of the bill of lading to the consignee implies the transfer of all the rights and actions of the shipper except for any arbitration clause, which requires the express and written consent of the consignee. Thus, the arbitration clause is to be deemed null and void if it is negotiated separately and individually with the carrier. Furthermore, UAE courts ruled that for an arbitration clause contained in the bill of lading to be enforceable, it must be written on the front side of the bill of lading with the same size of fonts and in the same manner as other information such as the name of the shipper and the carrier.

If the incorporation into a bill of lading of an arbitration clause by reference to a charterparty containing the said clause is made expressly by stating that such a clause is binding on the holder of that bill of lading, the charterer may invoke that clause against the holder.

The UAE ratified the New York Convention of 1958 on the Recognition and Enforcement of Arbitral Awards on 31 August 2006 without any reservation. In addition, the UAE also signed the Convention on the Settlement of Investment Disputes Between States and Nationals of Other States of 1966 (the “ICSID Convention”) on 23 December 1981, which entered into force on 22 January 1982.

The general rule is that even foreign arbitral awards issued in a non-contracting state shall be recognised and enforced in the UAE under the New York Convention. This is, however, exempted in a few statutory cases set forth in Article 222 of the Civil Procedural Law of 2022.

In terms of enforcement, the UAE laws distinguish between domestic arbitral awards seated in the UAE and foreign arbitral awards seated outside the UAE. The confirmation and enforcement of domestic arbitral awards is governed by the Federal Arbitration Law No 6 of 2018 as amended by the Federal Law No 15 of 2023.

Although the UAE is not a member of the International Convention on Arrest of Ships of 1999, UAE courts may order the arrest of vessels in UAE territorial waters, regardless of whether they have jurisdiction to adjudicate the substantive claim.

There is no specialised domestic arbitration institute in maritime claims active in the UAE. However, if the parties to a maritime contract wish to refer the matter to arbitration, they may appoint one arbitrator or more who are expert in the field to adjudicate their dispute.

If proceedings are commenced in breach of an arbitration clause, the defendant must raise the issue of the arbitration agreement at the first hearing to prevent any accidental waiver of the arbitration agreement. If the challenge of the jurisdiction is raised at the first hearing, the court would dismiss the case without examining the merits.

If proceedings are commenced in breach of a foreign jurisdiction clause, the sooner the defendant raises the issue of lack of jurisdiction, the better.

There has been no corporate tax income in the UAE but in January 2022 the Ministry of Finance announced that it will introduce federal corporate tax on the net profits of businesses. The tax is applicable either on 1 June 2023 or on 1 January 2024, depending on the financial year followed by the business. However, in practice, these tax decrees have not yet been applied.

UAE law does recognise the concept of force majeure. There is some case law on the recognition of COVID-19 as a force majeure or a contractual relief. UAE courts have defined the legal concept of force majeure: the event which, if it occurs in the terms binding on both sides in the contract, makes the implementation of the obligations contained in the contract impossible as stated forth in paragraph 1 of Article 273 of the Civil Transactions Law. Based on this, UAE courts provided that the situation resulting from the COVID-19 pandemic in the period from 1 April 2020 until 31 July 2021 is considered an emergency financial crisis in accordance with the provisions of Federal Decree Law No 9 of 2015 regarding bankruptcy and its amendments.

Starting from 1 January 2020, marine fuels with High-Sulphur Fuel Oil (HSFO) content exceeding 0.50% mass by mass cannot be used as a bunker fuel for vessels within the UAE territorial waters. However, vessels refuelling with HSFO within UAE ports must submit a copy of an International Air Pollution Prevention certificate, proving that the vessel is equipped with scrubber, which is an exhaust cleaning system that allows the vessel to burn HSFO without breaching IMO regulations.

The Ministry of Energy and the port authorities are the responsible bodies for the enforcement of the sulphur content limitation. Although the ports authorities are very active in the supervision of sulphur contents limitation in marine fuel oils, there are no known enforcement actions, nor any known sanctions because of the breach of such limitation.

The UN Security Council sanctions resolutions are implemented in the UAE. However, the UAE has not adopted any specific international trade sanctions against Russia as part of its domestic law. Thus, the sanctions have no direct impact on Russian citizens carrying out business in the UAE.

While the UAE central bank monitors compliance with sanctions to prevent violations of international law, there is no known information on entities in the UAE having been subject to any trade sanctions.

Since the outbreak of the Russia-Ukraine conflict, a negative impact on the supply of raw material to the UAE has been noticed. Although there is no available public data reflecting the impact, there is some case law for breach of contract before UAE courts between Russian or Ukrainian suppliers and UAE buyers of raw materials such as seeds and agricultural by-products.

One of the topics that could be of interest and that has not been dealt with above would be the enactment of the new UAE maritime law, which will come into force six months from its publication in the Gazette. The new law will allow up to 100% foreign ownership of maritime companies as opposed to the current one. The new law introduces extensive provisions for maritime debts, liens, and ship mortgage foreclosure.