Waves of Transformation: UAE's Maritime Legal Overhaul

Attention to all maritime stakeholders! The horizon is brimming with anticipation as the UAE Federal Decree Law Number 43 of 2023 on the Maritime Law (the New Maritime Code) prepares to embark on a transformative journey on March 29, 2024!

As the maritime landscape undergoes a sea change, it is crucial for all involved to brace themselves for the ground-breaking developments ahead. Let us delve into the intricacies of these forthcoming changes and explore the pivotal role they will play in shaping the future of the maritime industry in the UAE. Here is a detailed breakdown of the key highlights:

1. Enhanced Precautionary Arrest Procedures

In a bid to safeguard the interests of all parties involved, the New Maritime Code mandates that applicants seeking vessel arrest must provide financial security. This measure ensures coverage for crew expenses and vessel maintenance, prioritizing safety and welfare in maritime operations.

2. Expanded Maritime Debt Definition

The definition of "maritime debt" has undergone a significant expansion. It now includes claims arising from environmental damage caused by the vessel, wreckage removal, and port fees. This broader scope ensures fair and comprehensive resolution of maritime disputes, addressing a wider range of potential issues.

3. Sister Vessel Arrest

One of the most notable changes is the allowance for sister vessel arrest. Under the New Maritime Code, arresting a sister vessel is permissible, provided it was owned by the debtor at the time of the arrest application. This departure from the previous requirement, which necessitated the debtor to own the sister vessel at the time the debt arose, provides greater flexibility for effective debt recovery strategies.

4. Claims against Bareboat Charterers

Pursuant to Article 55 of the New Maritime Code, where the bareboat charterer alone is responsible for a maritime debt related to the vessel, the creditor may arrest the relevant vessel during the period of the charter, or any other vessel owned by the bareboat charterer. However, the creditor will not be entitled to arrest any other vessel belonging to the owner of the (bareboat) chartered ship in respect of which the maritime debt relates.

5. Major Development in Dispute Resolution

The New Maritime Code introduces a significant advancement in the dispute resolution process. It allows litigants in maritime disputes to avoid long court procedures, streamlining the resolution process for greater efficiency and timeliness.

6. Recognition of Letter of Undertaking

In alignment with international standards, the New Maritime Code recognizes a letter of undertaking (LOU) as a valid security measure to lift a ship's arrest. This update reflects the UAE legislators' commitment to modernizing maritime regulations and facilitating smoother transactions in the global maritime industry.

7. Foreign Owned Vessels

Embracing a more global outlook, the 2023 New Maritime Code now allows vessels owned by foreign entities and individuals to register under the UAE flag. This departure from the previous exclusivity granted to UAE nationals and companies opens up new avenues for international collaboration and investment in the UAE maritime sector. In conclusion, the implementation of the New Maritime Code in the UAE marks a significant and long-awaited milestone for all stakeholders involved in the maritime industry.

This comprehensive legal reform not only brings the UAE in alignment with international best practices and standards but also demonstrates a proactive response to the evolving needs and desires of the maritime sector.

By addressing longstanding concerns and gaps in the previous legal framework, the New Maritime Code provides clarity, efficiency, and enhanced protection for all parties involved in maritime activities. Through measures such as recognizing an LOU as a valid security measure, the New Maritime Code fosters a business-friendly environment and facilitates smoother transactions within the global maritime community.

Furthermore, this legal overhaul positions the UAE as a competitive and sustainable maritime hub on the international stage. By modernizing regulations and streamlining dispute resolution processes, the New Maritime Code enhances the attractiveness of the UAE as a maritime destination and reinforces its role as a key player in the global maritime arena.

In essence, the New Maritime Code represents a positive and transformative development that unlocks new opportunities, fosters collaboration, and drives growth and innovation within the UAE maritime sector. As stakeholders embrace these changes and adapt to the evolving legal landscape, the stage is set for a more vibrant, resilient, and prosperous maritime future in the UAE.

Written by

Sakina Dickenwala | MBC Legal Consultants