The United Arab Emirates (UAE) has a long and proud maritime tradition, and is an important strategic hub for shipping in the Arabian Gulf. From time to time, it may become necessary to arrest vessels trading to and from, and located in the UAE. This article will briefly examine the relevant statutory and procedural framework for conducting vessel arrests in the UAE.
In brief
A vessel may only be arrested to secure payment of a "maritime debt" as defined in Article 115 of the Maritime Code.
It is important to ensure that there is sufficient nexus with the UAE in order to establish jurisdiction for the arrest and the substantive proceedings.
A claimant should seek specialist legal advice from lawyers familiar with UAE shipping law prior to commencing arrest proceedings, as there are a number of legal and procedural issues to consider which are specific to the UAE (and the Gulf States generally).
The Maritime Code
The UAE Maritime Code No. 26 of 1981, as amended (the Maritime Code) is the primary statute governing maritime law in the UAE. The Maritime Code also regulates the arrest of vessels amongst other issues. An arrest application in the UAE is carried out ex-parte.
Arrest only possible for a "maritime debt"
A vessel may only be arrested to secure payment of a "maritime debt" as defined in Article 115 of the Maritime Code. A "maritime debt" would, typically, include maritime claims arising in respect of charterparties, mortgages, ownership, supplies and necessaries, collisions, and more.
Requirements prior to arrest order being issued
POA
To arrest any vessel in the UAE, the claimant must first provide a Power of Attorney (POA) to lawyers with right of audience in the UAE to represent them before the UAE courts. If the POA is executed abroad, it must be notarized, legalised by the relevant Ministry of Foreign Affairs of the country of execution and authenticated by the UAE Embassy in that country. Upon its arrival in the UAE, the POA must be further authenticated by the UAE Ministry of Foreign Affairs and translated into Arabic. This can take time, which can be an issue especially if an arrest is urgent (as it often is).
Supporting documents
The official language of the UAE courts is Arabic, and all relevant documents supporting an arrest must be translated to Arabic by translator who is licensed by the UAE Ministry of Justice.
Court fees
Court fees are payable for an arrest and vary depending in which Emirate a vessel is arrested. Typically, court fees for an arrest application will be AED15,000.
Counter security
The UAE courts have wide discretion to ask for counter security (normally in the form of a bank guarantee drawn on a UAE bank). In Dubai, a port undertaking letter is generally required (i.e. no bank guarantee) but some other jurisdictions (like Fujairah) regularly demand counter security, normally up to 10% of the claim amount. A claimant is not obliged to accept a P&I Letter of Undertaking as security for the release of a vessel, but may choose to do so.
Procedure after an arrest order has been granted
Notification of port authorities
If an arrest order is granted, a letter from the UAE court will be sent to the relevant Ports Authority requesting the arrest of the vessel.
Filing of substantive proceedings
The claimant needs to file substantive proceedings (i.e. proceedings on the merits) within eight days of an arrest order being granted. Further court fees are payable for the substantive proceedings, current calculated on a sliding scale up to AED30,000. If the claimant fails to file substantive proceedings within eight days of an arrest order being granted, the arrest will lapse.
The UAE court will then typically schedule a number of hearings and determine the case on its merits. In the meantime, the arrest order will remain in place unless the arrested party provides a UAE bank guarantee for the release of the vessel or pays cash into court (or provides other security acceptable to the claimant).
Jurisdiction
It is important to ensure that there is sufficient nexus with the UAE in order to establish jurisdiction for the arrest and the substantive proceedings. Under Article 122 of the Maritime Code the UAE courts will inter alia, following an arrest, have jurisdiction to hear the substantive proceedings if the maritime debt arose in the UAE or if the claim relates to a maritime mortgage.
Judicial Sale
The Maritime Code allows for the sale of a vessel by judicial auction following a final enforceable judgment on the merits.
Conclusion
The UAE has enacted specific laws regulating the arrest of vessels. A claimant would be well advised however to seek specialist legal advise from lawyers familiar with UAE shipping law prior to commencing arrest proceedings, as there are a number of legal and procedural issues to consider which are specific to the UAE (and the Gulf States generally).
© Hadef & Partners 2012
