REPORT: What EMAC means for UAE logistics and shipping
The Dubai-based Emirates Maritime Arbitration Centre (EMAC), the first of its type in the Middle East and North Africa (MENA) region, launched in September last year in response to the steady rise of the UAE’s maritime industry, which is expected to be one of the ten biggest in the world by 2020.
Based in the Dubai International Financial Centre (DIFC), the not-for-profit centre has compiled a list of selected arbitrators, mediators and experts to facilitate timely arbitration and mediation. Emergency arbitrators are also readily available to ensure fast interim action may be taken if necessary. It also offers a variety of additional services such as arbitration/mediation meeting rooms, appointment of translators, session stenographers and case secretaries.
“EMAC is an advanced maritime arbitration centre with its rules based on internationally recognised and accepted standards such as those of the UNCITRAL and uses the DIFC as its default jurisdiction enabling enforcement of arbitral awards in a timely fashion,” says Majid Bin Bashir, VC and secretary general of EMAC.
According to Patrick Murphy, partner, Clyde & Co, a specialist in commercial disputes and maritime arbitration, the DIFC jurisdiction and UNICTRAL Model Law gives the arbitration centre a major advantage moving forward. “What you have in the DIFC, which has its own legal system and courts, is a UNCITRAL Model Law based arbitration law, which does foster and engender good modern arbitration practise with a powerful court behind it that gives support to arbitration and arbitrators to render quick and enforceable awards,” he says. “It can step in and freeze assets in support of arbitration.”
In an interview with Logistics Middle East, VC and secretary general of EMAC, Majid Bin Bashir, said that the establishment of the Emirates Maritime Arbitration Centre is important because it brings arbitration ‘closer to the market’. “I mean this in terms of proximity and in turn efficiency,” he explains. “Now the industry has a specialised arbitration centre that is accessible to them in terms of services, a panel of experts, mediators, arbitrators, and will also minimise their expenses when a dispute needs to be resolved. These disputes will also be resolved faster, so it’s more efficient for maritime companies and logistics companies using the services of the maritime industry.”
Patrick Murphy, partner, Clyde & Co, who will be one of the legal specialists using the arbitration centre, agrees that ‘local is good’. “Experience shows that a local arbitration centre is important to people who have disputes that need resolving,” he says. “When clusters have been set up in London or Paris or Singapore and you have arbitration centres focused there, you get a critical mass of people using those centres, some of it is to do with time zones, some of it is to do with local culture or language, but it is important for the ultimate users that they have a local base.”
Murphy adds that the new centre ‘plugs a gap’ geographically. “You have the big maritime arbitration centres in Singapore, Hong Kong, Hamburg and London with nothing in between continental Europe and the Far East and this is one of the fastest growing maritime centres,” he points out. Bin Bashir said something similar in our interview with him, but also stressed that because of this, EMAC would add value to the wider Middle East maritime and logistics industry. “Now is the time that the industry is in need of such a center because it adds value to the industry by removing the need of going to the courts or to foreign arbitration centres that can make the process more costly and time consuming.”
This is important, he says, because one of the major advantages of arbitration in general is its efficiency. “The advantage is that you have confidentiality, lower legal costs and a fast turnaround in resolving disputes. In addition to that, for the maritime sector, the parties are able to have an expert panel decide on the dispute.” According to Murphy, this is what has always drawn the maritime industry to arbitration as a go-to means for addressing disputes. “We’ve seen in other parts of the world where there is a maritime focused arbitration centre that the maritime industry tends to use those specialist centre for their dispute resolution,” he says. “In London it has long been accepted that arbitration is a go-to means of resolving disputes by the maritime industry, it isn’t something that is seen as a last resort, it’s a normal incident of commercial life. So the maritime industry has always looked to arbitration as a sensible way of resolving disputes, and they also value the input of industry specialists to arbitrate on these matters. So EMAC brings these two aspects together.”
Both Murphy and Bin Bashir acknowledge, however, that EMAC will take time to build a body of cases it has overseen, because shipping lines and freight forwarders will need to refer to EMAC as the means of arbitration in their contracts, and disputes will then need to begin coming in for arbitration. “Realistically it will be years before there is a proper body of cases going through, but you have to start somewhere,” says Murphy. “What you also need is a large base of expert witnesses and arbitrators and there isn’t that depth here yet, but that will grow with EMAC. This is a very important step in the process of building a modern maritime arbitration centre to service the needs of the Middle East.”
Bin Bashir adds that in its formative years EMAC will be utilizing the services of international experts to sit on tribunals. “EMAC has a panel of arbitrators around the world,” he says. “Our arbitrators are not limited to the local industry, and they are specialized in maritime issues and disputes, so we’re able to be very selective.” He adds that retired judges will also be appointed to tribunals to ensure a “mix of industry expertise and specialist legal knowledge”. Murphy says that this is important because often a dispute might revolve around a particular legal interpretation of a contract, in which case legal expertise would be essential. “In another instance it may be focused on damage to cargo due to equipment failure, in which case specialist knowledge of that particular issue would be important.”
In terms of the functioning of EMAC, each party, such as the shipping line and freight forwarder, would need to refer to EMAC as the resolving body in their contract. If a dispute arose, each would then be able to appoint one arbitrator of their choosing, with those two individuals then appointing a third as chairman of the tribunal. “This is important because it gives each party some kind of autonomy in ensuring that the particulars of the case are heard by experts and the industry likes that their dispute will be heard by someone who has been at the sharp end of it and who understands the particular complexities of the issue,” says Murphy.