COMMENT: Navigating the new UAE maritime laws
By Tarek Saad, Counsel at Baker & McKenzie Habib Al Mulla, UAE Maritime Practiice and Amir Alkhaja, Associate at Baker & McKenzie Habib Al Mulla, UAE Maritime Practice.
The UAE government is looking to diversify the nation's economy and become less dependent on oil revenues in the near future. Currently the UAE’s non-oil sector stands at 70% of the GDP and the government is aiming to raise it to 80% by 2021 and 100% by 2030, whereby the maritime sector was identified as the one with the greatest potential to contribute to this goal.
In line with government's vision, the UAE Federal Transport Authority ("the FTA"), being the federal entity responsible for the maritime sector, has adopted a long term strategic plan to transform the UAE into a global maritime cluster that caters to and provides unparalleled services for the shipping community.
The FTA recognized that the first step in reaching its goal would be to amend and update the UAE Federal Law No. 26 of 1981 relating to maritime activity ("the Maritime Law"). The FTA aims to provide modern and flexible legal legislation that consists of both common and civil law principles that facilitate and encourage both foreign and domestic investments in the UAE’s maritime sector.
Companies operating in the UAE’s maritime industry will notice the amendments aim to be efficient and creative in tackling areas which the previous laws did not address, such as shipping logistics and ports, ship finance, ship conversion and repair of various types of vessels, the role of shipping agents, as well as onshore services that are associated and related to the maritime industry operations.
For example, a shipping agent plays a crucial role not only in the maritime industry but also in the international transport chain. The agent's duties are diverse and can include the agent acting as port agent, cargo agent, or owner/charterer agent, responsible for handling the general interests of its customers at ports and harbors worldwide.
However, the current Maritime Law is silent in defining the role, responsibilities and obligations of the shipping agent. Consequently, the UAE courts, in an effort to determine such responsibilities and liabilities, has extended the scope of its judicial interpretation of Article 8 of the Maritime Law, which allows a court to apply international conventions, maritime customs and common rules of justice. The new Maritime Law will include a new section solely to regulate the rules and responsibilities of the shipping agent under the UAE law.
In addition, the project aims to update and amend the current legislation relating to matters such as ship registry, limitations of liability, precautionary and execution arrests procedures, and ratification of international marine conventions, as well as many other articles of the current law that are currently outdated.
Furthermore, the new law will provide attractive incentives such as concessions, services and exemptions and many other financial benefits, in order to encourage national and international capital investment in the maritime field.
Essentially, the government's main objective is to provide a comprehensive maritime law that matches international laws and stimulates the growth of the macro maritime sector by developing all aspects of the maritime industry.
The UAE always strives for innovation and leadership, and the proposed updates to the Maritime Law reinforce the nation’s vision and goals. It will also facilitate the ease of doing business in the UAE and cement its place as a global maritime hub. The government is committed to establishing an integrated legal environment for its maritime sector, bringing the Maritime Law and its associated regulations in line with global standards, and consolidating the UAE's position as a regional and international maritime hub.