The United Arab Emirates (UAE) does not have specialised admiralty courts, so maritime claims are treated as commercial disputes and handled by the general judiciary. These claims are governed by UAE Federal Decree-Law No 43/2023, which introduces the Maritime Law (ML), effective from 29 March 2024. The ML establishes the legal framework and procedures applicable to maritime matters in the UAE. Common maritime claims, as listed in Article 53 of the ML, include ship arrests, ship mortgages and ship mortgage foreclosure, cargo claims, marine accidents, hull and machinery (H&M) insurance, general average and disputes over bills of lading (B/L) and charterparties. Such claims are adjudicated by the commercial chambers of local courts.

In the UAE, the system of port state control is governed by Articles 68–76 of the ML. These articles outline the roles and powers of the UAE port authorities and the Ministry of Energy and Infrastructure (the “Ministry”), the competent authority responsible for enforcing maritime regulations.

According to the ML, the Ministry has the authority to implement both international and national requirements related to maritime security, safety and environmental protection. Specifically, the Ministry is empowered to:

• inspect foreign ships – the Ministry ensures that foreign vessels in UAE waters and ports comply with internationally ratified agreements, as well as national legislation, and the Ministry establishes guidelines and procedures for conducting such inspections;
• monitor local maritime operations – the Ministry verifies the compliance of ports, classification societies, companies and maritime facilities with international standards, national laws and any relevant decisions or circulars issued by the Ministry;
• collaborate with government entities – the Ministry works in co-ordination with federal and local authorities to fulfil the coastal state’s duties, as outlined in international agreements and national legislation;
• specify security and environmental standards – the Ministry specifies the safety, security and environmental preservation requirements for maritime facilities and ships, even those not covered by international agreements; and
• grant exemptions – the Ministry has the discretion to grant exemptions to ships from certain requirements based on the provisions of internationally ratified agreements and national laws, establishing guidelines for such exemptions.

Regarding marine casualties, including seafarer fatalities, grounding, pollution or wreck removal, the Ministry, through the port authorities, is responsible for co-ordinating the necessary actions in line with international treaties and local legislation. It exercises regulatory oversight and may act in response to marine casualties to ensure compliance with safety and environmental protocols.

The key pieces of domestic legislation governing ship registration in the UAE are Articles 7 to 21 of the ML. These Articles establish the requirements for registering a vessel in the ship register. The authority responsible for managing the registration process is the Ship Registration Administration, which operates under the Ministry of Energy and Infrastructure.

Articles 9, 10 and 11 address the registration process for vessels under construction, specifically through the registration of the relevant shipbuilding contract. Article 9(1) stipulates that the specifications for a new building vessel must be approved by the Ministry. The Ministry will then establish a special register, known as the “under construction ships register”, where shipbuilding contracts are to be recorded pursuant to Article 9(3). Notably, under Article 9(4), it is the shipbuilder, rather than the “shipbuilding seeker” (buyer), who is responsible for registering the shipbuilding contract in this register.

Articles 10 and 11 briefly touch on the transfer of title, payment terms and guarantees for defects. These are generally considered commercial matters and are expected to be addressed within the shipbuilding contract itself.

Article 12(3) grants the Cabinet the authority to confer UAE nationality on a vessel owned by a legal entity, provided the entity is established under an international agreement between shareholders from different jurisdictions, including the UAE.

To be registered in the ship register, a vessel must meet five key conditions outlined in Article 13 of the ML. These conditions are as follows:

• intended use – the ship must be intended for navigation in UAE waters, coastal navigation between UAE ports or on the high seas;
• ownership requirements – the majority of the ship’s shares must be owned by natural or legal persons who are either nationals of the UAE or another Gulf Cooperation Council (GCC) country, or by individuals or entities that have a domicile, business centre or ship management office in the UAE;
• age limit – the ship must not be older than 20 years, measured from the completion of its construction, with the exception of passenger ships, which must not be more than ten years old;
• approved specifications – the ship’s drawings and specifications must be approved by the Ministry of Energy and Infrastructure or its authorised representative upon inspection; and
• valid certifications – the ship must hold valid international certifications verifying its suitability for maritime navigation, issued by a classification society authorised or recognised by the Ministry.

Foreign ownership of vessels is now permitted under Article 13(1)(b) of the ML, which allows vessels owned by foreign entities or individuals to be registered under the UAE flag, a privilege that was historically reserved for UAE nationals and companies with a majority of Emirati shareholders.

Vessels can now be registered under the UAE flag not only when the majority of shares are held by UAE nationals or companies from other GCC countries, but also when owned by individuals or entities with a domicile, business centre or office managing the vessel within the UAE. This broadens the scope of who can register vessels under the UAE flag, making it accessible to foreign nationals and GCC companies residing in the country. As a result, under the new ML, coastal service providers and supply vessels, which previously had the option to operate under foreign flags, will now be required to register under the UAE flag.

Bareboat Charter In

Article 18(1) of the ML allows the charterer of a ship registered abroad, which meets the registration criteria for a UAE-flagged vessel (as outlined in Article 13), to request its registration with the Ministry provided that (i) the ship is “not equipped” and (ii) the charter period lasts at least six months.

Bareboat Charter Out

Article 19(1) grants the owner of a UAE-flagged vessel the licence to have the ship fly the flag of another country if the owner wishes to lease it “unequipped” to a charterer who intends to register the ship abroad. At a minimum, the licence application must include (i) the bareboat charter agreement for the unequipped vessel and (ii) a letter from the ship’s registration authority abroad confirming that the charterer’s state has approved the ship’s registration and the flag under which it will sail as stated in Article 19(2) of the ML.

The laws of the UAE do not permit the temporary or dual registration of vessels. There are no provisions in the applicable legislation that allow for such registrations.

The authority responsible for maintaining the registration of maritime mortgages in the UAE is the Ministry of Energy and Infrastructure, as stated in Article 13(1) of the ML. According to Article 24(4) of the same law, all legal transactions and rights, including mortgages, affecting a ship must be documented in the ship register.

The documentary requirements for registering a maritime mortgage are outlined in Articles 41 and 42 of the ML. Article 41(3) specifies that a ship may be mortgaged even while under construction, and the executive regulations establish the procedures for registering such mortgages. Additionally, Article 42 stipulates that a ship mortgage must be accompanied by certified signatures from the parties involved to be valid. The law also allows the use of modern technological means for carrying out mortgage transactions.

The maritime mortgage register maintained by the Ministry is an official record, and access to it is restricted to owners unless authorised by official documentation.

The registers are official records maintained by the Ministry of Energy and Infrastructure. As outlined in Article 7 of the ML, the Ministry is responsible for creating and managing the ship register, which includes detailed information about ships such as type, size, classification, navigation purposes and sailing areas.

The Cabinet may delegate the responsibility for creating and maintaining the register to a competent authority, and in such cases, that authority would assume the Ministry’s role. However, any changes or updates made to the register must be reported to the Ministry.

Access to the ship’s records is generally restricted to the ship-owners unless permission is granted through official channels or documentation from an authorised entity.

The liability of owners and interested parties in events of pollution and wreck removal in the UAE is influenced by both international conventions and domestic legislation.

Internationally, two key conventions address pollution and wreck removal:

• the International Convention on Civil Liability for Oil Pollution Damage (CLC) establishes the civil liability of ship-owners for damage caused by oil pollution – this convention also includes related annexes and resolutions that set out the legal framework for liability and compensation; and
• the International Convention Relating to Intervention on the High Seas in Cases of Oil Pollution Casualties (Intervention Convention) provides a legal basis for intervention in cases where oil pollution from ships threatens the marine environment, outlining the powers and responsibilities of states to take action.

Domestically, the ML governs the obligations of ship-owners and operators in relation to pollution and wreck removal. Specifically, Articles 221–234 address the responsibilities of ship-owners for the removal of maritime debris and related consequences.

Article 233(3) of the ML ensures that the ship-owner or operator bears full responsibility for the costs and liabilities associated with pollution and wreck removal operations.

The liability of owners and interested parties in events of collision and salvage is governed by both international conventions and domestic laws.

International Conventions

International Regulations for Preventing Collisions at Sea (COLREGs) establish the rules for preventing collisions between ships. They provide guidelines for safe navigation, ensuring that vessels take the necessary actions to avoid accidents while at sea.

The International Convention on Salvage (1989) sets out the legal framework for the salvage of ships and their cargo. It addresses the rights and obligations of the parties involved in a salvage operation, including the entitlement to salvage rewards and the liabilities related to the salvage process.

Domestic Legislation

Under the ML, the UAE has established specific provisions concerning collisions and salvage. Articles 235–241 of the ML address the assistance and salvage of sea vessels in peril, and Articles 242–253 outline the duties and responsibilities of ship-owners, operators and other relevant parties in ensuring the safety of navigation and the proper conduct of salvage operations. These provisions aim to promote accountability and responsible maritime practices, setting out the legal framework for managing collision incidents and salvage activities within the UAE.

The 1976 Convention on Limitation of Liability for Maritime Claims (LLMC) is applicable in the UAE. This international convention, which sets out the framework for limiting liability for certain maritime claims, has been incorporated into the ML.

Furthermore, the UAE’s recent ratification of the 1996 Protocol to the 1976 LLMC, which entered into force on 23 May 2021, has additional important implications for maritime liability in the UAE. The 1996 Protocol increases the limits of liability for maritime claims, reflecting the growing costs of maritime incidents, and ensures enhanced financial protection for ship-owners, charterers, managers, operators and salvors.

• Increased limitation of liability: The 1996 Protocol raises the limits of liability, aligning them with modern economic realities. This increase in liability limits has a significant impact on the scope of compensation available for incidents such as marine pollution, cargo loss, personal injury, etc.
• Applicability of liability limits: With the ratification of the 1996 Protocol, the liability limits now extend not only to ship-owners but also to charterers, managers, operators and salvors, allowing these parties to limit their liability in the event of maritime claims.
• Impact on claims against ship-owners: Ship-owners, including operators, charterers and managers, can now limit their liability for various maritime casualties, such as personal injury, cargo damage and pollution. This limitation applies unless the claim arises from gross negligence or intentional misconduct, providing a financial ceiling for these parties.
• Impact on salvors: The 1996 Protocol also benefits salvors by allowing them to limit their liability in claims arising from salvage operations, while ensuring fair compensation for their efforts.
• Harmonisation with international standards: The ratification of the 1996 Protocol brings the UAE’s maritime liability framework in line with international standards set by the International Maritime Organization (IMO), ensuring smoother interactions in cases involving foreign parties or international incidents.

In summary, the ratification of the 1996 Protocol strengthens the legal framework for maritime liability in the UAE, offering enhanced financial protection and clearer liability limits for ship-owners, charterers, operators, managers and salvors, while aligning the country’s maritime laws with international conventions.

Procedure and Requirements

The procedure for establishing a limitation fund in the UAE is outlined in the ML. The process is initiated by a request from the ship-owner or their representative, who submits it to the court with jurisdiction over the area where the incident occurred, unless otherwise agreed upon.

Request for establishment

The ship-owner or their representative must file a request for the creation of a compensation fund with the court. This is detailed in Article 85(1) of the ML.

The court’s role

The court with jurisdiction over the incident is responsible for establishing the compensation fund. This is specified in Article 85(2) of the ML.

Compensation calculation

Compensation from the fund is calculated based on the conditions set out in Article 83(1) of the ML, though the exact methodology is detailed further in the executive regulations. For instance, to calculate the limitation fund for a ship with a tonnage of 20,000 GT based on Article 83(1) of the ML, the formula provided can be used, with an exchange rate of 1 SDR = AED4.84 (as of 10 December 2024), following the rules step-by-step.

• Step 1: identify the compensation limit based on tonnage – concerning the initial compensation for loss of life and physical damage, the basic amount is 1,000,000 Special Drawing Rights (SDR) for vessels with a tonnage not exceeding 2,000 tons. Concerning vessels with a tonnage exceeding 2,000 tons, the ship in question has a tonnage of 20,000 tons, so it falls into the second category. For this category, the compensation increases by 400 SDR for each additional ton above 2,000 tons (up to 30,000 tons).
• Step 2: calculate the additional SDR for the vessel – since the vessel has a tonnage of 20,000 tons, the additional compensation based on the additional tonnage above 2,000 tons must be calculated: (i) tonnage above 2,000 tons, 20,000 − 2,000 = 18,000 tons; (ii) compensation for additional tonnage (18,000 tons), 18,000 × 400 = 7,200,000 SDR.
• Step 3: calculate the total compensation in SDR – the total compensation is the sum of the base compensation (1 million SDR) and the additional compensation for the 18,000 tons above 2,000 tons: 1,000,000 SDR + 7,200,000 SDR = 8,200,000 SDR.
• Step 4: convert SDR to United Arab Emirates dirham – given that the exchange rate is 1 SDR = AED4.84, the total compensation in United Arab Emirates dirham can now be calculated as 8,200,000 SDR × 4.84 AED/SDR = AED39,688,000. The maximum compensation for a vessel with a tonnage of 20,000 GT is 8,200,000 SDR, which is equivalent to AED39,688,000.

Deposit and guarantees

The requirement for a deposit depends on the court’s determination, as clarified in Article 85(4) of the ML. The competent court may require a deposit as security for the fund, but this is at its discretion and based on the guarantees deemed necessary.

Who can establish the fund?

The responsibility for establishing the limitation fund rests with the court in the jurisdiction where the incident occurred. This ensures that the fund is tied to the legal proceedings and jurisdictional context of the maritime incident.

In summary, the procedure for establishing a limitation fund is initiated by the ship-owner or their representative, with the court overseeing its creation. Compensation is calculated according to specified guidelines, and the requirement for a deposit is subject to the court’s decision. However, since the ML was recently implemented, there is currently uncertainty regarding the establishment of the limitation fund within the UAE judicial system. The concept of creating a limitation fund in the UAE has yet to be tested by its legal and litigation systems.

The UAE has not ratified the Maritime Labour Convention (MLC) of 2006, but many of its provisions have been informally integrated into the UAE’s legislative framework, and the Ministry of Transport has expressed its commitment to aligning with the core principles of the MLC. In this regard, the ML imposes specific obligations on vessel operators, including owners and charterers, to ensure seafarers’ well-being while on board. Articles 93 to 104 of the ML establish the rights, entitlements and safety measures for seafarers, addressing their working conditions, welfare and protections in line with both international standards and domestic regulations.

The UAE has not ratified any international conventions concerning bills of landing, such as the Rotterdam Rules, Hamburg Rules, Hague-Visby Rules or Visby Rules. However, the ML includes provisions that are largely based on the Hague-Visby Rules. Specifically, Articles 155–187 of the ML address issues related to carriage of goods by sea, and B/L and Articles 188–198 govern the multimodal carriage of goods and B/L.

The lawful holder of the B/L – whether that is the consignee, the last endorsee or the designated holder – has the right to bring a lawsuit. The UAE courts also recognise the assignment of title to sue, such as the assignment in favour of the cargo insurer.

Pursuant to Article 177 of the ML, the carrier’s liability for damage or loss to cargo is limited to an amount not exceeding 835 SDR for each package or unit used to calculate the freight, or alternatively not exceeding 2.5 SDR per kilogram of the total weight of the goods, whichever is greater. The value of the SDR, as determined by the International Monetary Fund, is applied, and the payment must be made in United Arab Emirates dirham. However, this limitation may not apply in certain situations, including:

• if the damage results from an act or omission by the carrier or their agents, with the intent to cause harm or with recklessness, knowing that harm could occur;
• if the carrier issues a B/L without reservations, despite circumstances requiring such reservations, with the intent to harm bona fide third parties;
• if goods are loaded on deck in violation of an agreement stipulating that they should be loaded in the hold; and
• if the shipper provides a statement before shipment about the goods’ nature, value and special preservation needs – this statement is included in the B/L.

As for liability between carriers, the contractual carrier is fully responsible for all damages occurring during the carriage process. In contrast, the actual carrier is only liable for damages occurring during the portion of the journey they handle. The actual carrier and the contractual carrier share joint liability, and their liability is subject to the limitations outlined in the foregoing pursuant to Article 186(2) of the ML.

Pursuant to Articles 159, 165, 169, 170 and 172(3) of the ML, the shipper can be held liable for any misdeclaration of cargo, and the carrier has the right to claim compensation for any damage resulting from such misdeclaration. If cargo is discovered onboard that was misdeclared and not specified in the B/L, the ship’s Master has the authority to either offload the cargo at the port of origin or impose a charge equivalent to the highest freight rate applicable to similar cargo for delivery to the discharge port, as stated in the B/L.

The foregoing is without prejudice to the carrier’s right to seek compensation. As the ML is newly implemented, there have been no recent rulings from UAE courts addressing or confirming claims under its provisions. This matter remains untested in the courts in the context of the new ML. However, in a previous case, the Dubai court’s ruling in Cassation No 612/2006 denied compensation for cargo loss to a B/L assignee, reasoning that the loss was attributable to the shipper.

A claim for damaged or lost cargo arising from a sea carriage contract or a multimodal carriage contract is subject to a one-year time limit, starting from the date of delivery or the date when delivery should have occurred, as outlined in Articles 187(1) and 198(1) of the ML. If the consignee refuses to accept delivery or abandons the cargo, the time limit is calculated from the date the vessel arrives. For tort liability, the time limit is three years.

It is recommended that a claim be filed within the time limits set by law. However, the courts may allow a challenge to the time bar if the party entitled to invoke it waives their right. Any extension of the time bar must be mutually agreed upon by all parties who are entitled to raise this defence.

The UAE is not a party to either the International Convention on Arrest of Ships 1999 or the International Convention Relating to the Arrest of Sea-Going Ships 1952, although the latter has been largely incorporated into UAE domestic law. Ship arrests in the UAE are primarily governed by Article 53 of the ML.

Under the ML, vessels can be arrested to satisfy a “maritime debt”, which is a claim arising from any of the reasons listed in Article 53(2).

The new ML remains clear and succinct, emphasising the key provisions while preserving the original intent. It expands the definition of “maritime debt” to encompass claims related to environmental damage caused by the vessel, coastline harm, wreck removal and port charges.

The UAE does not recognise the traditional concept of maritime liens as seen in common law. However, under the ML, certain claims are acknowledged as privileged debts, which remain attached to the vessel regardless of ownership. These privileged debts can only be extinguished through a judicial sale of the vessel or by following the prescribed sale procedures outlined in the ML.

Privileged debts under the ML arise in eight specific categories (Article 29(1) to (8)). While these debts are not subject to formal procedures or special proof requirements (Article 30(1)), there are certain instances where privileged debts can be registered in the ship register, provided the contract is notarised. These instances include debts related to failure or damage that require compensation for the ship’s charterers (Article 29(7)) and insurance premiums (Article 29(8)).

The privileged debts recognised under the ML include:

• legal costs associated with the preservation, sale and distribution of the ship, as well as port fees, lighthouse fees and other similar taxes and levies;
• claims arising from the employment contracts of the Master, seafarers and other maritime personnel;
• compensation for salvage operations and assistance, along with the ship’s contribution to general average losses;
• claims for compensation arising from marine accidents and injuries sustained by passengers and crew (excluding claims related to cargo damage);
• debts resulting from contracts executed by the ship’s agent on behalf of the operator or contracts entered into by the Master outside the vessel’s port of registration;
• liabilities related to loading, unloading, pilotage and towing operations;
• liabilities arising from failure or damage requiring compensation on behalf of the ship’s charterers; and
• total insurance premiums for the ship’s hull and equipment for the last insured voyage or insurance period, limited to one year’s premiums.

Liabilities arising from a chartering contract are considered maritime debts under UAE law, and a vessel can be arrested to satisfy such debts. In the case of the bareboat charter, the charterer assumes responsibility for these maritime debts, and creditors can seek to arrest the vessel or any other vessel owned by the charterer.

The ML makes a clear distinction between privileged debts and general maritime debts. Privileged debts are claims that follow the vessel regardless of changes in ownership and are given priority for satisfaction. General maritime debts, on the other hand, do not enjoy such priority status.

Regarding vessel arrests, under the ML, a claimant can arrest not only the vessel directly related to the claim but also, under specific circumstances, any sister vessel owned by the same entity at the time the claim arose. Article 30(2) of the ML sets out a clear procedure for the registration and enforcement of privileged debts.

Article 37 of the ML establishes a time bar for maritime claims. Specifically, these claims are subject to a one-year limitation period. However, if the vessel cannot be seized within UAE waters, this period may be extended for up to three years. An exception is made for lawsuits related to privileged debts securing debts arising from the contracts referred to in Article 29(5), which are subject to a six-month time bar from the maturity date of the debt.

Privileged creditors must assert their claims within a specified period after the sale of the vessel, and they have 30 days from the publication of the sale notice to make their claim to the purchase price.

In conclusion, the ML provides a structured framework for dealing with privileged debts, including those arising from maritime activities such as injuries to crew members, and offers specific mechanisms for registering and enforcing these debts.

It is not required that the owners or demise charterers be personally liable for a vessel to be arrested. A vessel can indeed be arrested regardless of the personal liability of its owners or demise charterers, as long as the claim qualifies as a maritime debt under Article 53 of the ML. Privileged maritime debts attach to the vessel herself, and they remain valid even if the ownership of the vessel changes, meaning that the vessel can be arrested irrespective of who is currently operating her.

Under Article 54, an arresting party may arrest the vessel related to the maritime debt, as well as any other ship owned by the debtor, when submitting its arrest application. However, this does not apply if the claim is based on certain maritime debts, such as those related to the ownership of the vessel, a mortgage over the vessel or the sale of the vessel. In those cases, only the vessel directly related to the debt can be arrested.

If the vessel is under a demise charter, the vessel related to the debt or any other vessel owned by the demise charterer can be arrested. However, vessels owned by the owner of the chartered vessel, but not by the demise charterer, cannot be arrested for the maritime debt.

Under Article 55, in the case of a time charter where the charterer has the right to manage the vessel navigationally, and where the charterer is solely responsible for the maritime debt, the arresting party can arrest the relevant vessel or any other vessel owned by the charterer. The arresting party cannot arrest other vessels owned by the vessel’s owner (the “chartering owner”).

Bunkering claims are classified in Article 53(2)(l) of the ML as follows: “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”. Thus, ship arrest in the UAE is a preservatory remedy to obtain security in favour of an unpaid bunker claim in the merits, whether commenced or to be commenced through court litigation or arbitration. Furthermore, supplying fuel is classified in Article 29(5) of the ML as privileged maritime debt, entitling the supplier to seek an arrest of the vessel. A bunker supplier, whether actual or contractual, has the right to arrest a vessel for unpaid bunkers supplied to her.

The contractual supplier can arrest the vessel if they can prove the existence of a bunker supply contract with the owner, charterer, Master or agent, along with evidence of a stamped bunker delivery note. In contrast, an actual supplier’s claim for non-payment may be challenged if the owner or charterer can demonstrate that payment was made to the contractual supplier. There have been cases where the actual supplier attempted to arrest the vessel based on a bunker delivery confirmation from the Master, but such claims were dismissed when proof of payment to the contractual supplier was presented by the owner.

UAE courts generally upheld the bunker supplier’s right to arrest the vessel, even if the charterer, rather than the owner, entered into the bunker supply contract.

To arrest a vessel, a written application must be submitted to the competent court, accompanied by relevant documents that substantiate the maritime debt. An advocate licensed to practise in UAE courts must be retained to initiate the proceedings. The arresting party must provide a notarised power of attorney (PoA), which must be issued by the arresting party. If the PoA is executed outside the UAE, it must be attested by the UAE embassy or consulate in the country of execution, and subsequently counter-attested by the UAE Ministry of Foreign Affairs or the Ministry of Justice.

As Arabic is the official language of the UAE, all court proceedings, including those related to admiralty matters, are conducted in Arabic. All documents submitted to the court must be translated into Arabic by a translator licensed by the Ministry of Justice. While recent amendments to civil procedure laws allow certain matters to be conducted in English, it is not clear whether this applies to admiralty cases, so it is advisable to have all documents translated into Arabic.

UAE courts have historically followed varying practices regarding security for the arrest of vessels. Some courts required an indemnity undertaking from a local entity, while others insisted on a bank guarantee. However, with the introduction of Article 56 of the ML, the arresting party is now required to provide a financial guarantee to ensure the safety of the vessel and its crew. Any funds drawn from this guarantee will be considered judicial expenses and prioritised as debt in the event of the vessel’s sale. Although Article 56 does not specify the exact form of the financial guarantee, based on Article 57, it is likely that a letter of guarantee from a P&I club or a recognised financial institution will be acceptable.

In the UAE, it is possible to arrest bunkers and freight under the Civil Procedure Code of 2022 (CPC) rather than under the ML. Article 252(1) of the CPC allows a creditor to seek a court order from the judge for expedited matters for the confiscation of the debtor’s property, including bunkers and freight or debts owing to their debtor in the hands of third parties – even if they are deferred, subject to a condition or disputed – by providing valid grounds, such as the debtor being based outside the UAE or there being a risk of losing the security.

The process of arresting bunkers requires strict adherence to procedural formalities and the presentation of sufficient evidence that clearly establishes the debt and proves that the bunkers belong to the debtor.

A sister-ship arrest is possible in the UAE, as permitted under Article 54 of the ML. A claimant may arrest a sister ship owned by the debtor provided that the ship was owned by the debtor at the time the maritime debt was incurred. However, there are some restrictions. Sister-ship arrests are not allowed in cases where the debt relates to a dispute over the ownership or joint ownership of a vessel or involves issues concerning the use or rights to profits arising from a vessel. Additionally, in cases involving maritime mortgage claims, the arrest is limited to the mortgaged vessel only.

Thus, while a sister-ship arrest is generally allowed, certain specific claims, such as those involving ownership disputes or mortgages, would prevent such an arrest.

Apart from ship arrests, there are several other possibilities for obtaining attachment orders to secure a debt.

Attachment of Goods on Chartered Ships

Under Article 133 of the ML, a ship charteree/lessor can seek an attachment order for goods transported on a chartered vessel. These goods serve as security for the payment of the vessel’s hire and associated charges.

If the charterer’s hire remains unpaid, the charteree/lessor can petition a magistrate of summary justice to place the goods in the custody of a third party and seek their sale, either in whole or in part. This can occur unless the charterer provides a guarantee for the outstanding debt and covers the costs associated with the seizure, custody, and sale.

The charteree/lessor retains a lien over the goods transported on the chartered vessel to secure payment of the hire and associated charges. This lien remains effective for 15 days after the delivery or deposit of the goods, unless a third party in good faith acquires a real right over them. Importantly, the lien remains valid even if the goods are commingled with other goods.

Attachment of Various Assets

Under Articles 247 and 252 of the CPC, attachment orders can be sought for a variety of assets belonging to the debtor. These assets can include bank accounts, real estate, machinery, cargo, vehicles, shares and office equipment.

Attachment orders can also extend to assets held by third parties under Article 252 of the CPC, where the court may impose conditions for enforcement, such as requiring proof of ownership of the assets to be attached.

The specific attachment order granted will depend on the nature of the debtor’s assets and the details of the case, allowing the creditor flexibility in securing the debt through various types of property.

Together, these provisions provide multiple avenues for creditors to secure their claims through attachment orders on a wide range of assets – ie, not limited to vessels alone.

To release an arrested vessel, the owner or any interested party must provide security in the form of a cash deposit, a manager’s cheque, a bank guarantee issued by a licensed UAE bank or a letter of undertaking (LOU) from P&I clubs or financial institutions pursuant to Article 57(3) of the ML. The competent court will have the discretion to accept these LOUs as sufficient security for the vessel’s release.

Judicial Sale

The judicial sale of an arrested vessel proceeds after the court issues a final judgment. Once the judgment is made, the court will:

• issue a notification regarding the sale;
• notify the vessel registry and any other locations designated by the court; and
• appoint an expert to assess the vessel’s value and set the initial price for the sale.

The court will also specify the basic price for the vessel, the terms and conditions governing the sale and the time of the auction.

The sale is conducted through an online auction managed by a company called Emirates Auction, which serves as the auctioneer. The auction is held in multiple rounds. The highest bid in each round becomes the initial price for the next round, with the vessel sold to the highest bidder in the final round subject to court confirmation. If no bids are received or the initial bid is below the reserve price, the auctioneer can seek a reduction in the initial price from the court.

Private Sale

Private sales of arrested vessels are not allowed in this jurisdiction. The judicial sale must proceed through a public auction.

Maintenance of the Vessel

The arresting party is responsible for maintaining the vessel from the time of arrest until she is sold by the court. If the port authorities or the vessel agent incur costs for the maintenance, these costs can be claimed as priority debts from the sale proceeds.

Priority Ranking of Claims

According to Article 29 of the ML, the priority ranking of claims from the sale proceeds is as follows:

• legal expenses related to the preservation or sale of the vessel;
• rights arising from maritime employment contracts;
• compensation for assistance, salvage and contribution to general average;
• compensation for marine accidents, excluding loss or damage to cargo and personal effects;
• debts arising from contracts executed by the ship’s agent or Master outside the ship’s port of registration;
• debts from loading, unloading, pilotage and towing operations;
• mortgages;
• liabilities for damages necessitating compensation on behalf of the ship’s charterers; and
• total insurance premiums for up to one year.

Mortgage Priority and Its Relation to Maritime Claims

General priority of mortgages

Mortgages are listed as a lower priority compared to other maritime claims, such as legal expenses, crew wages and compensation for salvage. These higher-priority claims are satisfied first from the sale proceeds of an arrested vessel.

Priority of mortgages under the ML

According to Article 44 of the ML, a mortgage ranks directly after privileged debts attached to the vessel, which are specified in clauses (1), (2), (3), (4), (5), and (6) of Article 29 of the ML. However, mortgages may rank below certain other privileged debts referred to in clauses (7) and (8) of Article 29, if certain conditions are met.

Ranking of multiple mortgages

Debts secured by mortgages rank in order of the dates of registration. If several mortgages are registered on the same day on the vessel (or a share of the vessel), their priority is determined by the order of registration, with the oldest registered mortgage having higher priority.

Return of debt

The registration of a mortgage also ensures that the returns of the debt for the last two years, in addition to the current year’s returns in which the bid is awarded, are secured. These returns are given the same priority as the principal debt of the mortgage.

Effect of judicial sale

After the judicial sale of the vessel, mortgages are extinguished. The sale proceeds are distributed based on the court’s priority ranking of claims, which may include the assistance of an appointed expert to allocate the funds accordingly. Mortgages are not carried forward with the vessel once she is sold, and their claims are satisfied based on the order of registration.

Insolvency and Bankruptcy Framework in the UAE

The UAE operates two distinct court systems, each having its own regime for handling insolvency and bankruptcy cases.

Mainland “Onshore” Courts

These courts follow a civil law system and apply federal laws. Insolvency applies to individuals without merchant status and is governed by Federal Decree Law No 19 of 2019 on Insolvency. Bankruptcy applies to certain entities, including companies under Federal Decree-Law No 51 of 2023 (the “Financial Restructuring and Bankruptcy Law”), which governs bankruptcy for:

• companies subject to Federal Decree-Law No 32 of 2021 on Commercial Companies and those incorporated in free zones, except Abu Dhabi Global Market (ADGM) and Dubai International Financial Centre (DIFC);
• individuals with commercial activities (merchants); and
• licensed civil companies of a professional nature.

Offshore Courts (ADGM and DIFC)

These courts operate under a common law system and their own respective legal frameworks. In the DIFC, insolvency is governed by DIFC Law No 1 of 2019 (the “Insolvency Law”). In the ADGM, insolvency is regulated by the Insolvency Regulations 2022.

While the UAE’s insolvency and bankruptcy laws aim to provide a legal framework for restructuring and reorganisation, they do not have a direct equivalent to Chapter 11 of the United States Bankruptcy Code, which allows for debtor-in-possession reorganisation.

Arrest and Judicial Sale of a Vessel During Bankruptcy

Regarding the arrest and judicial sale of a vessel owned by entities undergoing bankruptcy proceedings, once bankruptcy proceedings are initiated in the UAE under Federal Decree Law No 51 of 2023, the competent bankruptcy court takes over the process. As part of this process, individual creditor claims and lawsuits (including those seeking ship arrests) are typically stayed. This means that creditors cannot usually initiate actions such as vessel arrests or judicial sales once bankruptcy proceedings have been initiated. However, the bankruptcy court may provide specific relief in certain cases, but in general, such actions are prohibited while the bankruptcy process is underway.

The UAE does not have specialised admiralty courts. Instead, maritime claims are treated as commercial disputes and are handled by the general judiciary. Thus, in case of bankruptcy, they are handled by the competent bankruptcy court and once bankruptcy proceedings are underway, the bankruptcy court takes over, and maritime arrests or judicial sales of vessels are generally prohibited unless specific relief is granted.

In the UAE, there is no specific provision under the ML for claiming damages due to wrongful arrest, and there is limited history of such claims. Generally, the courts do not award damages for wrongful arrest unless the party alleging such arrest can prove that the arresting party obtained the arrest based on fraudulent or forged documents. The burden of proof lies with the party claiming wrongful arrest to demonstrate that the arrest was unjustified. Without such proof, the courts are unlikely to grant compensation for damages or costs arising from the arrest.

Passenger Claims

In the UAE, maritime passenger claims are governed by the ML, as the UAE has not ratified the Athens Convention Relating to the Carriage of Passengers and Their Luggage by Sea (1974, as amended). The provisions related to passenger claims are mainly outlined in Articles 206–220 of the ML, which cover the contract of carriage of persons by sea.

Time Limit for Filing a Claim

Claims for death or injury during maritime transportation must be filed within two years from the passenger’s departure from the ship (or from the day of death, if it occurs after leaving the ship due to an incident during the voyage). Claims for the loss or damage of personal effects are subject to a one-year time limit. Claims for delayed arrival of the vessel must be filed within six months from the day following the passenger’s departure from the ship.

Limitations on Liabilities

The ML sets liability caps as follows:

• for death or injury of a passenger, the carrier’s liability is limited to 250,000 SDR unless the incident is caused by exceptional circumstances like war, piracy or natural disasters, in which case the liability limit increases to 400,000 SDR;
• for loss or damage of registered personal effects, the carrier’s liability is limited to 3,375 SDR. However, for vehicles transported by sea, the liability can be up to 12,700 SDR; and
• for unregistered personal effects, the carrier’s liability is limited to 2,250 SDR.

Additionally, the ML allows carriers to agree to liability limits exceeding these amounts. However, if the claimant proves that the damage resulted from intentional acts or gross negligence on the part of the carrier or its agents, the carrier may not invoke the limitation of liability.

Maritime Lien or Maritime Claim for Personal Injury

Claims for personal injury of a passenger are recognised as maritime claims under UAE law, and they are considered privileged debts according to Article 29(4) of the ML.

In the UAE, the recognition and enforcement of law and jurisdiction clauses in B/L are subject to specific conditions under UAE arbitration law and Commercial Maritime Law.

Transfer of Rights and Arbitration Clauses

When a B/L is transferred to the consignee, it typically transfers all the rights and actions of the shipper. However, arbitration clauses are treated differently. For an arbitration clause to be enforceable against the consignee, the consignee must explicitly consent to it in writing.

If the arbitration clause is negotiated separately and individually with the carrier, it may be deemed null and void. This means that a consignee cannot be automatically bound by an arbitration clause unless they have agreed to it.

Enforceability of Arbitration Clauses

UAE courts have ruled that for an arbitration clause contained in a B/L to be enforceable, it must be prominently displayed on the front side of the B/L. This clause should be presented in the same font size and style as other essential information, such as the names of the shipper and carrier, ensuring that the clause is clearly visible and acknowledged by all parties involved. Thus, for an arbitration clause in a B/L to be recognised and enforced in the UAE, it must be clearly stated and prominently positioned in the document, and the consignee must give their explicit written consent. If these conditions are not met, the clause may not be enforceable.

In the UAE, the recognition and enforcement of law and jurisdiction clauses in B/L depend on the specific conditions set by the country’s legal framework, including both its onshore civil law system and the offshore jurisdiction of the DIFC and ADGM.

Onshore Jurisdiction (UAE Civil Law System)

In the UAE’s onshore civil law system, arbitration clauses in B/L can be enforced, but certain conditions must be met.

• Explicit consent: The consignee must explicitly consent to the arbitration clause. If the clause is negotiated separately from the B/L, it might not be enforceable.
• Clear incorporation: The arbitration clause must be clearly indicated in the B/L, typically with the same prominence as other critical details such as the names of the shipper and carrier. If the arbitration clause is incorporated by reference from the charterparty, the reference must be specific and clearly identify the dispute resolution mechanism.

For instance, in Al Buhaira National Insurance Co v The Shipping Corporation of India Limited (Cassation No 363 of 2011), the Dubai court of cassation ruled that a general incorporation clause referring to terms in a charterparty, including the arbitration clause, was sufficient for enforcement. The court stated that even if the charterparty’s details were not fully specified, the incorporation clause was enforceable as long as it explicitly referred to arbitration in the B/L.

Offshore Jurisdiction (DIFC and ADGM)

In the DIFC, which follows English common law, the approach to arbitration clauses in B/L is more flexible.

• General terms of incorporation: the DIFC courts may recognise arbitration clauses even if they are incorporated by general terms. As seen in cases such as The Merak (1964), the English court recognised that a general reference to “all terms of the charter party” was sufficient to incorporate an arbitration clause if the clause was broad enough to apply to disputes under both the charterparty and the B/L.
• Binding arbitration clauses: as long as the arbitration clause applies to disputes arising from both the B/L and the charterparty, it may be considered enforceable, even if the specific details of the charterparty are not included in the B/L.

Challenges With Incorporation by Reference

The incorporation of an arbitration clause by reference is more complicated when a B/L is transferred to a third party (such as a consignee). Since the third party might not have knowledge of the charterparty’s terms, the validity of such incorporation can be disputed. The third party may challenge the arbitration clause, arguing that it was not properly incorporated or that they did not consent to it.

Legal Risks for B/L Transferees

Transferees of a B/L should be cautious when accepting an endorsement, as they may inadvertently agree to an arbitration clause they did not negotiate. This could lead to legal disputes about the enforceability of the clause in the onshore UAE jurisdiction, where “express terms” are generally required for incorporation.

The New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958 is applicable in the UAE. The UAE ratified the Convention on 31 August 2006 without any reservation. As a result, foreign arbitral awards are generally recognised and enforced in the UAE, subject to the conditions outlined in the Convention.

In terms of domestic law, the recognition and enforcement of foreign arbitral awards in the UAE are governed by Article 222, 223 and 225 of the CPC, specifically under Articles 222 and 223 read together, which provide the conditions under which foreign arbitral awards may be refused recognition or enforcement. The general rule is that foreign arbitral awards, even from non-signatory states, are recognised and enforced in the UAE, with certain statutory exceptions.

Courts in the UAE can order the arrest of a vessel or the attachment of assets, even if the relevant claim is subject to a foreign arbitration or jurisdiction clause. This is because the UAE courts have the authority to arrest vessels in their territorial waters, regardless of whether they have jurisdiction to adjudicate the substantive claim or whether the claim is subject to a foreign arbitration or jurisdiction clause in a contract such as a B/L or charterparty.

While the UAE is not a member of the International Convention on Arrest of Ships of 1999, it follows its own legal framework, which allows for the arrest of vessels based on maritime debts recognised under Article 53 of the ML, including claims that may be subject to foreign arbitration or jurisdiction clauses. Therefore, even if a contract stipulates foreign arbitration or jurisdiction, this does not preclude the possibility of a vessel being arrested in UAE waters to secure the claim.

There is no specialised domestic arbitration institute exclusively for maritime claims in the UAE. However, parties to a maritime contract who wish to resolve disputes through arbitration can still appoint arbitrators with expertise in ML or related fields.

The parties can choose to refer their dispute to arbitration under the general framework provided by the UAE’s arbitration laws. The UAE has established institutions, such as the Dubai International Arbitration Centre (DIAC) and the Abu Dhabi Commercial Conciliation and Arbitration Centre (ADCCAC), which can handle arbitration matters, including maritime disputes. While these institutions are not specifically dedicated to maritime claims, they can provide the necessary services for arbitration in such cases.

If proceedings are commenced in breach of a foreign jurisdiction or arbitration clause in the UAE, the defendant has several remedies.

• Arbitration clause violation: If the dispute is subject to an arbitration clause, the defendant must raise the issue of the arbitration agreement at the first hearing. This is crucial to prevent accidental waiver of the right to arbitration. If the defendant challenges jurisdiction based on the arbitration agreement at the initial hearing, the court is likely to dismiss the case without addressing the merits, and the matter will be referred to arbitration as per the agreement.
• Foreign jurisdiction clause violation: If the proceedings are commenced in violation of a foreign jurisdiction clause, the defendant should raise the issue of lack of jurisdiction as early as possible, ideally at the first available opportunity. The court will assess the challenge and, if it finds the foreign jurisdiction clause binding, may dismiss the case in favour of the agreed foreign jurisdiction.

In both cases, the key is to act promptly in raising the issue of jurisdiction or arbitration to avoid waiving the right to challenge the venue or dispute resolution mechanism.

In the UAE, the tax treatment of income earned by vessels owned by companies depends on where the company is incorporated and the nature of its operations. In addition, the introduction of Article 12(3) in the ML could have implications for the future landscape of UAE-based maritime operations. This Article might encourage more international shipping deals, mergers and joint ventures, potentially leading to new tax reliefs or more attractive conditions for shipping companies in the future. However, as of now, its exact impact on vessel tax exemptions remains to be seen.

Free Zone Exemption

Companies incorporated in UAE free zones typically enjoy corporate tax exemptions, provided they meet certain conditions. This often includes a 0% corporate tax rate on qualifying activities such as the ownership, management and operation of ships involved in international transportation. Shipping companies based in these zones are not subject to corporate income tax, making free zones a popular choice for ship-owners looking for tax relief.

Mainland UAE Companies

Companies incorporated in mainland UAE do not currently benefit from the same exemptions, as there is no tonnage tax or specific relief for shipping activities under UAE’s mainland tax regime. As a result, shipping companies based on the mainland may face higher tax obligations and will likely continue to flag their vessels under other jurisdictions that offer more favourable maritime tax regimes, such as tonnage tax or accelerated depreciation.

Tonnage Tax and Accelerated Depreciation

The UAE does not currently have a tonnage tax system (which is a tax based on the vessel’s tonnage rather than its income). Additionally, there is no specific accelerated depreciation system targeted at ships under the UAE tax law. As a result, companies seeking such benefits need to incorporate in jurisdictions that offer these specific maritime tax incentives.

Under UAE law, the concept of force majeure is recognised, and there is relevant case law addressing situations such as pandemics. Force majeure refers to events that, if they occur, make it impossible for a party to fulfil its contractual obligations, as outlined in Article 273 of the Civil Transactions Code. In the case of the COVID-19 pandemic between 1 April 2020 and 31 July 2021 and other specific cases, UAE courts recognised an emergency financial crisis under the previous Federal Decree Law No 9 of 2015 on bankruptcy, along with its amendments. Therefore, circumstances like late delivery, non-arrival of a chartered vessel or delays in loading or discharging could be considered force majeure if they meet the criteria of making performance impossible under the contract.

Since 1 January 2020, the UAE has implemented the IMO 2020 regulations, which limit the sulphur content of fuel oil used on board ships to 0.50% mass by mass (m/m). This regulation applies to vessels operating within UAE territorial waters and calling at UAE ports.

The Ministry of Energy and port authorities are responsible for enforcing the sulphur content limitations in the UAE.

Vessels are required to comply with these regulations by either using compliant fuel (with sulphur content not exceeding 0.50%) or by having an approved alternative means of compliance, such as an exhaust gas cleaning system (scrubber).

Fuel Compliance

Vessels refuelling at UAE ports with high-sulphur fuel oil (HSFO) must provide an International Air Pollution Prevention (IAPP) certificate, which confirms that the vessel has a working scrubber system. This allows the vessel to continue using HSFO while complying with the sulphur limit.

Vessels entering UAE territorial waters or ports with non-compliant fuel must submit a fuel oil non-availability report (FONAR). However, submitting a FONAR does not exempt the vessel from the requirement to carry compliant fuel.

Enforcement Actions

While there have been no reported enforcement actions or sanctions for violations as of now, the UAE authorities are monitoring compliance actively. Any violations would typically lead to penalties or sanctions, but the exact measures are not publicly detailed.

The UAE legal system enforces international trade sanctions, but it does not enforce unilateral sanctions imposed by countries such as the USA or the UK unless they are consistent with United Nations (UN) resolutions. The UAE implements UN Security Council sanctions resolutions, ensuring compliance with international trade sanctions as mandated by the UN. However, the UAE has not adopted specific sanctions against Russia under its domestic law. As a result, these sanctions do not directly impact Russian citizens or entities conducting business in the UAE. However, although the UAE has not enacted specific sanctions against Russia, the global economic shifts and changes in trade routes may indirectly affect the UAE. The country has maintained a neutral stance on the conflict, and there have been no direct reports of sanctions-related impacts on the UAE’s trade activities.

While the UAE central bank monitors compliance to avoid violations of international law, the UAE does not have special committees that grant permits for trade activities otherwise prohibited by sanctions. However, entities in the UAE are expected to comply with international sanctions when applicable and may seek guidance from regulatory bodies like the central bank to ensure compliance with international laws.

Since the onset of the Russia-Ukraine conflict, the UAE has experienced some disruption in the supply of raw materials, particularly affecting sectors reliant on imports from these countries. While there is no specific public data detailing the full extent of this impact, there have been legal cases before UAE courts involving breaches of contract between Russian or Ukrainian suppliers and UAE buyers, particularly concerning raw materials like seeds and agricultural by-products. These disruptions could have various legal and commercial implications, such as frustration of shipping and carriage contracts, where delays or non-delivery of goods due to the conflict may be claimed. War risk insurance coverage may come into play if goods are damaged or lost during transit due to the conflict, and issues related to the deterioration of goods because of late delivery could also arise. Additionally, if goods are significantly delayed or lost, this could lead to claims for total loss under the terms of the carriage contract.

While the UAE legal system is equipped to handle such disputes, the implications of international conflicts for trade and contracts could include increased litigation, more insurance claims and the renegotiation of commercial terms between affected parties.

The ML introduced significant changes, particularly regarding foreign ownership. Foreign investors are allowed to own up to 100% of shipping companies, a notable departure from the restrictions of the previous Commercial Maritime Law of 1981. The ML also provides comprehensive provisions addressing maritime debts, ship mortgages and the foreclosure thereof, offering greater clarity and a more robust legal framework for resolving disputes related to maritime financial obligations. This is expected to have a substantial impact on how shipping companies operate and how creditors enforce their rights in relation to ship mortgages.

Additionally, the ML allows UAE residents of any nationality to own and register vessels in the UAE. It also extends registration to companies incorporated in the UAE and vessels managed by UAE-based entities. This represents a significant shift from the previous Commercial Maritime Law of 1981, aligning the legal framework with the evolving needs and interests of the shipping community. Stakeholders in the shipping industry should be mindful of these developments and their potential implications for ownership, finance and dispute resolution in the maritime sector.

Another point of clarification pertains to the bareboat charterer of a ship registered abroad that meets the registration criteria for a UAE-flagged vessel, as set out in Article 13 of the ML. It would be useful to determine whether a bareboat chartered-in vessel flying the UAE flag under Article 18(1) of the ML will still be considered a “foreign ship” for the purposes of Article 15(1), which requires approval from the Ministry for a foreign ship to engage in marine transportation within UAE ports or to participate in other maritime activities such as towing, piloting, fuelling, etc.