The UAE has introduced a new maritime law, Federal Decree-Law No 43 of 2023, which will enter into force by the end of March 2024.

The previous maritime law has raised many points of discussion and disagreement, and we can even say confusion, in the past years. The new maritime law has addressed many of those issues.

Registration of Vessels

The new law has introduced many amendments to the vessels registration rules.

We have a new registration authority, the law expanded the scope of eligibility for registration and more vessels can now fly the UAE flag; in addition, it’s now possible to register under-construction vessels and chartered vessels.

Under the new maritime law, the Ministry of Energy and Infrastructure shall create a “Ship Register” to record ships, while under the repealed maritime law, the Maritime Inspection Department at the Ministry of Transportation had the jurisdiction to register vessels.

Article 13(1)(b) of the new maritime law provides that a vessel may be registered in the Ministry of Energy and Infrastructure’s (the “Ministry”) Ship Register (the “Ministry’s Ship Register”) if the majority of the shares in the ship is owned by natural persons or juristic persons holding the nationality of the state or the nationality of one of the Gulf Cooperation Council countries. Alternatively, ownership may belong to natural persons or juristic persons with a domicile, head office, or ship management office in the State.

On the contrary, under Article 14 of the previous maritime law, registration of vessels in the UAE was limited to vessels owned by (i) individuals holding UAE nationality or (ii) companies where all or the majority of its shares are held by UAE nationals.

Registration of Under-Construction Ships

Article 24 of the repealed maritime law briefly touched upon the requirements for registering a newbuilding vessel in the UAE whereas Articles 9, 10 and 11 of the new maritime law deal with the registration of vessels under construction by registering the relevant shipbuilding contract in a special register (the “Under-Construction Ships Register”) in which shipbuilding contracts are to be registered. Interestingly, it is the shipbuilder, rather than the “shipbuilding seeker” (buyer), who records the shipbuilding contract in said register.

Article 18 of the new maritime law allows charterers of vessels registered abroad to apply for registration of the vessels in the UAE and fly the UAE flag when the chartered vessel is not equipped and the duration of the charterparty is not be less than six months, provided that the charterers meet the registration requirements of Article 13.

On the other hand, Article 19 allows the owners of vessels registered under the UAE flag to apply for permission to fly the flag of another country in the event the vessel is to be rented without equipment.

Precautionary Arrest

The new maritime law has come up with many significant amendments in relation to the provisions and procedures of precautionary arrest over marine vessels.

The new maritime law has increased the marine debts in relation to which a precautionary arrest may be pursued.

Article 53 of the Federal Decree-Law No. 43 of 2023 enumerates the marine debts in relation to which a precautionary arrest may be pursued to secure the payment thereof. Those marine debts are as follows:

1. Damage caused by the Ship due to the operation of the Ship;
2. Loss of life or personal injury occurring in direct connection with the operation of the Ship;
3. Salvage operations or salvage agreements, even if the ship or its cargo causes imminent damage to the environment.
4. The 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.
5. 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.
6. Any agreement relating to the use of a ship, whether contained in a charter party or other document.
7. 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.
8. Loss or damage to cargo or personal effects transported on board a ship.
9. General Average Losses.
10. Towing the Ship.
11. Piloting the Ship.
12. 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.
13. Building, rebuilding, repairing, or equipping the Ship and the costs of its mooring in docks.
14. Fees for ports, canals, basins, harbours and other waterways.
15. 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.
16. Amounts paid on behalf of the shipowner or operator.
17. The insurance premiums for the ship and its Takaful insurance contributions that are obligated to be paid by the ship owner or the charterer, or their representative.
18. Any commissions, brokerage, or agency expenses payable by the unequipped ship owner, charterer, or their representative.
19. Any dispute over ownership or possession of the ship.
20. Any dispute over the joint ownership of the Ship, or the right to the profits arising out of the use thereof.
21. Mortgage of the ship or any other security rights in rem that burdens it.
22. Any dispute arising from the ship sale contract.

The new maritime law also extended the scope in relation to the vessels of the debtor that can be subject to precautionary arrest. Article 54 of the Federal Decree-Law No. 43 of 2023 allows the arrest of the vessel to which the debt relates, or any other ship owned by the debtor at the time the precautionary arrest petition is submitted. The maritime law no. 26 of 1981 would not allow the arrest of any ship owned by the debtor at the time the petition is submitted, if it was not owned by the debtor at the time the debt arose.

On the other hand, the new maritime law has limited the right of the creditors of a charterer to arrest the chartered ship by making the arrest permissible only during the validity of the charter party agreement.

The new law mandates that applicants seeking the arrest of a vessel must provide financial security to cover the expenses of the crew and vessel maintenance.

The new maritime law brings vessel arrest within the UAE in line with some international standards, particularly in respect of the ability to lift an arrest by posting a letter of guarantee from a P&I club or approved financial institution.

Under the new maritime law, entities engaged in Takaful insurance activities, including P&I clubs, are permitted to establish branches in the State, and may enter into partnership or representation agreements with entities operating in the field of insurance within the country.

The Legal Proceedings Following the Arrest Order

Under the federal law no. 26 of 1981 there was a problematic situation where the claim on merits and the claim for the validity of the arrest order were required to be filed by one case within 8 days of the arrest order issuance otherwise the arrest would be lifted, and the ship would be released.

The previous law required that the claim on merits and the claim for the validity of the arrest order shall be submitted to the competent state court while many of the claims arise from charter agreements or carriage contracts where an arbitration clause is stated.

In those cases, the lawyers used to file the claim on merits before the state court to maintain the validity of the arrest order as required by the law, and then request the stay of the proceedings till an arbitral award is issued in the substantive claim.

The new maritime law differentiated between the claim for the validity of the arrest, and the claim on merits whereby the claim for the validity of the arrest shall be filed within 5 days from the arrest order issuance before the state court, and the claim on merits may be filed before the competent state court or the arbitral tribunal, as the case may be. Although it’s not stated in the new maritime law, the claim on merits shall be filed within 8 days of the issuance of the arrest order according to the general provisions of the Federal Decree-Law No. 42 of 2022 on Civil Procedures Law.

This is supposed to solve the confusion caused by the previous law where the claims on merits were required to be initially filed before state courts in spite of any arbitration agreement.

This was a brief analysis of some of the major amendments introduced by the new maritime law.

If you have any question, or you seek any legal advice in relation to maritime and shipping, do not hesitate to reach out to us.

Author: Shamseddien Essam