Breaking News in the UAE: The Nairobi Wreck Removal Convention is Almost Here!

In addition to the 31 Conventions of the International Maritime Organization (“IMO”) ratified by the United Arab Emirates (“UAE”), the country is on the cusp of achieving another milestone in its endeavor to make significant strides as an international maritime hub.

The UAE is one step away from being the 71^st state to ratify the Nairobi International Convention on the Removal of Wrecks (Wreck Removal Convention) 2007, which came into force on 14 April 2015 (“WRC 2007”).

The UAE has obtained all internal regulatory approvals (the last being the approval of the President) and has issued a Federal Decree to ratify the WRC 2007.  As such, the only remaining step for the UAE to formally become party to the WRC 2007 is for the appropriate instrument to be deposited with the Secretary General of the IMO.

This yet again highlights the commitment of the nation to promote the maritime sector and comes on the heels of the UAE ushering in a new maritime law, being the Federal Decree Law No. 43 of 2023 (“the New Maritime Code”), which repealed the 40-year-old statute previously in force in the country (our client alert on the changes brought about by the New Maritime Code is available here).

What this means

According to Article 18 paragraph (2) of the WRC 2007, the Convention shall enter into force in the UAE three months following the date of deposit by the UAE of the appropriate instrument with the IMO.

Since international conventions which UAE is a party to have automatic force of law in the country, we expect that the following major points of the WRC 2007, will soon begin to apply in the UAE:

1. Application of the WRC 2007 to UAE territorial waters

Under the WRC 2007, state parties may choose to extend the scope of the Convention to their territorial waters.

As per the Federal Decree issued, the UAE has confirmed its decision to opt in and apply the WRC 2007 within its territorial waters (although a comparable regime is already in place under UAE domestic law- see below at point 2).

2. Compulsory Insurance under Article 12

Article 12 of the WRC 2007 establishes a compulsory insurance regime, modeled after the framework of other IMO Liability Conventions. Key requirements include:

• Vessels of 300 GT or more must obtain Certificates of Insurance issued by a State that is party to the Convention.

• These Certificates confirm compliance with the compulsory insurance provisions of the Convention and must be carried on board at all times.

These requirements under the WRC 2007 align with the UAE’s longstanding commitment to protecting the marine environment and ensuring the safety and security of its maritime sector. In 2021, the UAE issued Cabinet Resolution No. 71 of 2021 on Marine Wrecks and Violating Ships (effective 15 September 2021).

This Resolution applies to vessels in UAE waters whether national or foreign. It also mandates that ships of 300 gross tonnage or more maintain insurance or a financial guarantee to cover wreck removal responsibilities.

With this domestic legislation already in place, the UAE is well-prepared to comply with the requirements of the WRC 2007 following its ratification.

3. Role of P&I Clubs and Issuance of Certificate

The WRC 2007 requires vessels registered in a State party or entering or leaving a port in the territory of a State party, to have appropriate insurance cover arrangements commensurate with the requirements of the Convention and a certificate from a State party attesting that such insurance is in force. 

All P&I Clubs thus issue “blue cards” to their members and once UAE becomes party to the WRC 2007, it will be able to certify such insurance requirements also instead of UAE flagged vessels having to identify other state parties willing to issue Certificates for vessels which do not fly their flag. 

This is significant since the New Maritime Code has opened up the flag and now permits vessels owned by foreign entities and persons to be registered under the UAE flag. The ratification of the WRC 2007 will bring insurance requirements for UAE flagged vessels in line with international requirements and will make the UAE flag a significantly attractive option for shipowners.

       4. Limitation of Liability & Reservations

Under Article 10(2) of the WRC 2007, the provisions of the Convention do not affect the shipowners’ right (if any) to limit liability under applicable national or international regimes.

The most commonly applicable limitation regime is the Convention on Limitation of Liability for Maritime Claims, 1976 (LLMC), as amended by the 1996 Protocol. The UAE has ratified both, and the 1996 Protocol entered into force in the country on 23 May 2021. Therefore, shipowners and insurers can apply to limit their liability before UAE Courts.

States ratifying the LLMC can reserve the right to exclude its application to liabilities arising from wreck removal. As a result:

• In some jurisdictions, shipowners cannot limit their liability for claims under the WRC 2007.
• This creates varying liability limits depending on the state in question.

We have reason to believe that the UAE is shortly going to apply to reserve its right under Article 18 (1) of the LLMC to exclude the applicability of the LLMC to wreck removal claims. Once the reservation is formally submitted to the IMO, neither shipowners nor their insurers (who will compulsorily be required to provide insurance under the WRC 2007) will be able to limit their liability for wreck removal claims arising within UAE waters.

Contact us for further information

While this development is extremely positive and is poised to elevate the maritime industry, there will be a period of transition while stakeholders adapt to the new regime.

For further details and in-depth clarification on the effect of the WRC 2007 in the UAE, please do not hesitate to reach out to us.