New UAE Maritime Law – Ship Arrests

On 29 March 2024, the long-awaited Federal Decree-Law No. 43 of 2023 Concerning the Maritime Law (the “New Maritime Law”) will take effect. Amongst a raft of other revisions to the current version (Federal Law No. 26 of 1981 (the “Existing Maritime Law”)), shipowners, charterers, P&I Clubs and of course, shipping lawyers both in the UAE and from abroad, will be interested in the development of the ship arrest provisions in the New Maritime Law.

Whilst there haven’t been any changes as dramatic as introducing associated-ship arrests, the New Maritime Law has broadened the definition of “maritime debts” with the effect that the grounds for a precautionary attachment (commonly, an “arrest”) over a vessel have been expanded.

Broadly speaking, the Existing Maritime Law permits the arrest of vessels for claims for:

• damage caused by a vessel;
• loss of life or personal injury occasioned by a ship and arising out of its use;
• assistance and salvage;
• contracts relating to the use of a vessel under, inter alia, a charterparty;
• contracts relating to the carriage of goods under, inter alia, a bill of lading;
• general average;
• towage or pilotage;
• supplies of products or equipment necessary for the utilisation or maintenance of the vessel;
• construction, repair or fitting out of a vessel and costs of docking;
• sums expended by the master, shippers, charterers or agents on account of the vessel or owner;
• crew wages;
• disputes as to ownership, co-ownership, possession or use, or rights to profits arising out of the use of a vessel;
• vessel mortgages.

Whilst the New Maritime Law expands or amends some of the abovementioned causes of action in certain respects, notably, allowing arrests for crew repatriation costs and social insurance contributions and not just their wages, it also adds the following causes of action to the definition of a “maritime debt” (as translated):

• “damage that a 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 raising a sunken, wrecked, stranded or abandoned ship and those related to moving them, restoring them, stopping their harmful effects, or destroying them”;
• “fees for ports, canals, drydock, harbours and other waterways”;
• “insurance premiums for the ship and its Takaful insurance contributions that are obligated to be paid by the ship owner or the bareboat charterer, or their representative”;
• “any commissions, brokerage, or agency expenses payable by the ship owner, bareboat charterer, or their representative”;
• “any dispute arising from the ship sale contract”.

The New Maritime Law will also entail a notable change insofar as sister-ship arrests are concerned. Under the Existing Maritime Law, a sister-ship is susceptible to arrest if it was owned by the debtor at the time the (maritime) debt in respect of the concerned (“guilty”) ship arose. Under the New Maritime Law, the “target” (i.e. sister) ship must be owned by the debtor at the time of applying for its arrest.

In addition, under the New Maritime Law, vessels chartered under a bareboat charter will be subject to arrest during the period of the charter for debts incurred by the bareboat charterer. The position under the Existing Maritime Law differs in that the claimant is not restricted to arresting the vessel during the period of the charter.

The New Maritime Law will also introduce some uniformity in the provision of counter-security across the various emirates. The Existing Maritime Law makes no provision for a claimant to provide counter-security and so it fell to the courts of the individual emirates to decide whether, and in what form, counter-security was to be required. At present, the courts of certain emirates require a claimant to provide a letter(s) of undertaking whilst others require cash deposits at court. Under the New Maritime Law, it will not be permissible for the court to order an arrest unless it accepts a financial guarantee provided by the claimant for the security and safety of the ship and its crew during the period of arrest. In the event of the judicial sale of the vessel, any amounts drawn down on the guarantee will be considered as “judicial expenses” when the proceeds of execution are distributed. It remains to be seen what method the courts will use to determine an appropriate level of counter-security and whether there will be uniformity across the courts of the various emirates in this respect.

Another significant development in the New Maritime Law is the fact that LOUs issued by P&I Clubs or financial institutions acceptable to the competent court will be accepted as security for the release of vessels from arrest.

Under the New Maritime Law, claimants will have five working days from the date of the arrest to file a case for the validity of the arrest before the competent court in whose jurisdiction the attachment was executed, failing which, the attachment will be considered null and void. Although not prescribed in the New Maritime Law, claimants will also have to commence the substantive claim, if they haven’t already done so, within eight days of the arrest order as provided in the Civil Procedure Code (Federal Decree-Law 42 of 2023).

How can we help?

Our team at Al Tamimi & Company is well-prepared to guide and assist clients in navigating the significant changes introduced by the New Maritime Law in the UAE. Should you have any questions, please contact the team below.