A special analysis on the UAE Maritime Commercial Law: The current status and what is needed to be done to improve it
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. Limitations within the UAE Federal Law No. 26 of 1981 relating to maritime activity (the “Maritime Law”) have however so far 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.
For several years now, the sector is facing a number of challenges that are increasing due to several reasons mainly, the national concerns in the UAE. “The real driver for change is that UAE has gone through a number of transformation processes and unfortunately one of the laws that is stand still and not even practiced in UAE is the maritime law” said Khamis Buamim, Chairman of the DCMMI Emirates and CEO of Gulf Navigation Holding. 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.
The FTA thankfully recognized all this to amend and is aiming to update the Maritime Law, to provide modern and flexible legal legislation that consists of both common and civil law principles which can facilitate and encourage both foreign and domestic investments in the UAE’s maritime sector. 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 repairs, the role of shipping agents, as well as onshore services that are associated and related to the maritime industry operations.
Current legislation bars international ships owners and does not encourage local shipowners to fly the UAE flag due to issues with registration, mortgage formalities, supervision and administrative provisions. It is thus necessary to create a broader maritime environment to incentive investment in the maritime industry in its wider sense. There is accordingly a need to facilitate formalities for ship registration, mortgage and enforcement in case of default as well as the need to encourage the banks and financial institutions to provide ship finance. Most importantly, the law must be consistently applied and easily understandable by everyone.
Importantly the law will need to cater not only for commercial ships, and therefore not be another “commercial maritime law”, but also for other extremely important players such as agents, port authorities and yacht owners, being thus a truly complete “maritime law”.
Such changes would hopefully not only attract shipowners, but also make other necessary industry players such as banks more comfortable with the jurisdiction, knowing that their rights are protected by a modern and comprehensive law.
In consideration of the vision of the UAE to be recognized as an unparalleled Maritime Hub, developments in the infrastructure alone will not attract the key shareholders of the industry 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.
This article was first published in Marasi Magazine.