The United Arab Emirates is the central shipping point of the Middle East, operating several ports in the country, which contribute significantly to the GDP of the United Arab Emirates.
The law governing the shipping industry and maritime commerce is Federal Law No. 26 of 1981 (Maritime Code).
The Maritime Code regulates the procedure for registration of ships, contracts of carriage, liens, limitation of liability, accidents or collisions of ships, seizure and sale of ships, among others.
Vessels with UAE nationality
The Maritime Code defines ships under Article 11/1 as follows.
A ship is any structure operating normally, or intended to operate, in the field of maritime navigation, regardless of its power, tonnage or the purpose of its navigation.
Every vessel must have a name, nationality, flag and port of registry under Article 13. The registration and flag of the vessel determine its nationality and the country that exercises regulatory control of the vessel.
According to article 15, any vessel that holds the nationality of the United Arab Emirates is required to fly the flag of the United Arab Emirates. For a vessel to acquire UAE nationality, it must be registered in one of the UAE ports and be owned by a natural or legal person with UAE nationality. In the case of an LLC, at least 51% of the capital must be held by persons with UAE nationality and directors of the same nationality under Article 14.
A vessel can only sail under the flag of the United Arab Emirates if it is registered under the Maritime Code.
Legal capacity of the vessel
A vessel does not have the legal capacity to be sued and therefore any claim arising out of or in connection with a vessel must be brought against the registered owners of the vessel and not against the vessel itself.
Can a ship be mortgaged?
Yes, a ship whose total tonnage exceeds ten tons can be mortgaged. This is provided for in article 97 of the maritime code. The mortgage of the ship is contracted by the conclusion of a mortgage agreement under article 99, which must state the name of the ship, its capacity, its nationality, its port of registry and the date of the certificate of ‘registration.
Once the mortgage has been created, it must be registered at the office of the port of registry of the ship in accordance with article 102.
The Maritime Code does not specify the mandatory conditions of the mortgage and it seems that the legislator has left it to the parties to determine the conditions of the mortgage. That said, Section 1440 of Federal Law No. 5 of 1985 specifies that the terms of the mortgage expire when the debt expires.
Arrest of the ship
A ship can only be seized in settlement of a “maritime debt”. A maritime debt has been defined in article 115 of the Maritime Code. Article 115/2 provides that:
The expression “maritime debt” means a claim relating to a right resulting from one of the following causes:
- Damage caused by the vessel due to collision or otherwise
- Loss of life or bodily injury caused by the vessel and resulting from its use.
- Assistance and rescue.
- Contracts relating to the use or operation of the vessel under a charter party or otherwise
- Contracts relating to the carriage of goods under a charter party, bill of lading or other documents,
- Loss of or damage to property or personal effects carried on board the ship
- Overall average.
- Towing or steering the vessel.
- Supplies of products or equipment necessary for the use or maintenance of the vessel, regardless of where the supply is made.
- Construction, repair or fitting out of the vessel and docking costs.
- Sums spent by the master, shippers, charterers or agents on behalf of the vessel or on behalf of its owner.
- Salaries of master, officers and crew, and other persons working on board the ship under a maritime labor contract.
- A dispute over the ownership of the ship
- A dispute relating to the co-ownership of the vessel, or its possession or use, or the right to profits derived from the use thereof.
- A maritime mortgage
How do I file a vessel arrest request?
In order to file a vessel arrest request, the party must provide a power of attorney signed by him in favor of a local attorney, and the power of attorney must be signed before a notary public in the UAE. The request for the arrest of the vessel must be filed with the competent civil court. The seizure of the ship will only be pronounced in settlement of a maritime debt. A stopped vessel is prohibited from sailing under section 118.
Cancel an arrest order
According to Article 118/2, an arrest warrant can be canceled by the civil court if a guarantee or other surety is presented before the court which is sufficient to satisfy the debt. However, when the maritime debts relate to the dispute of ownership, co-ownership, possession, use or right to benefits resulting from the use of the vessel, the seizure order cannot be canceled under the terms of article 118/2.
The laws governing the shipping industry in the United Arab Emirates are complex and extensive, although it is clear that the objective is to promote the country’s internal and external trade, economic security and to develop the United Arab Emirates in as the largest maritime location in the world.