By Jasamin Fichte, Managing Partner, Fichte & Co
Geographically, as being in the centre of the World, the UAE is arguably an “ideal” Maritime location. As a gateway to Europe and America from the Fareast, one of the largest Ports in the World, state of the art warehousing facilities and a tax free nation – UAE has much to offer to be a Maritime hub. However, limitations within the Law have hindered development in the Maritime field where not only has the industry remained under-developed but has seen many a Shipowner, despite the immense possibilities the nation has to offer, shy away from it. A Maritime Law, enacted in 1981 and amended in 1988 in today’s age, remains ineffective and short of answering many issues a developed Maritime nation is required to offer. A hindrance which is required to be immediately addressed should UAE desire to remain in the league of Maritime nations with a thriving Maritime industry.
Key issues to be addressed
Most shipowners deploy international crew and officers to man their vessels. This requirement could vary depending on the flag state requirements, trading patterns, technical requirements and various other factors. In general deployment of seafarers require them to have a “continuous discharge certificate” (CDC) and in some cases a “seafarers visa” when joining a ship. Seafarers joining a UAE flagged vessel are required to have a UAE visa, an employment visa with a validity of 2 years together with a local medical insurance as a requirement as per local immigration laws. This alone is a hindrance to ship operations as seafarer contracts rarely exceed a period of 12 months today. The shipowner of a UAE flagged vessel is therefore not only faced with dealing with immigration formalities but also added manning expenses. In addition, a Shipowner also has to spend twice on medical insurances for his crew and officers which are covered under the P&I (Protection and Indemnity) Insurance policy, unrecognized by the local immigration authorities.
Every contractual agreement, due to various reasons can always lead to a dispute. A complexity of a Maritime contract which not only has involvement of various parties is also dependent on multiple technical issues. This “techno-commercial” contract together with the complexities of trading requirements is always in English. A translation of documents into Arabic, a pre-requisite for UAE Courts, can result in a “loss in translation” thereby defeating the purpose of resolving a dispute. It is therefore, fundamental that all Maritime matters be addressed in English and probably a separate Maritime Court be set up in either DIFC or ADGM where cases are addressed in English. This will not only add a comfort factor to a shipowner but also ensure that translation is not the Achilles Heel for a Maritime dispute.
Arrest of vessels is not uncommon in the Maritime field. For a Shipowner, disruption of business due to an arrest is most uncomforting. An interesting aspect with regards to arrest which Shipowners are either unaware or are not properly advised, is that, irrespective of the applicable law within the contract, if the action arose within the UAE, an arrest based on that action can be granted by the UAE Courts. It can be argues that this makes UAE an “arrest friendly” jurisdiction, however ignoring a contractual jurisdiction adds to a sore point from a shipowners prospective. Therefore, it is necessary that the jurisdiction of an underlying contract is applied when an arrest application is to be considered. Relief from an arrest presently is only acceptable in the form of a bank or cash guarantee to court. This again in most mature Maritime jurisdictions is available via P&I Club LoUs (Letter of Undertaking) which the present law does not allow.
In consideration of the vision of the UAE being recognized as an unparalleled Maritime Hub, developments in the infrastructure alone will not attract the key shareholders of the industry – the Shipowner and therefore unless relevant issues in the new Maritime Law are addressed, what would remain is another struggle to encourage domestic and international investment in the maritime sector.