Which are the key ports in your jurisdiction and what sort of facilities do they comprise? What is the primary purpose of the ports?
The strategic location of the United Arab Emirates (UAE), its history as a trading hub and its wealth of hydrocarbon resources have all contributed to its development as a global centre for maritime trade. As a result, there a number of key ports spread across the Emirates, servicing various purposes.
The key commercial ports are:
- Khalifa Port, Abu Dhabi: recognised in 2016 as the second-fastest growing port in the world, and the first semi-automated container port in the region. Khalifa Port has an annual capacity of 2.5 million TEU (20ft equivalent units) and 12 million tons of general cargo. A new terminal is currently under development, which will increase the annual capacity up to 6 million TEU, making it one of the world’s top 25 ports for handling containers.
- Mina Zayed, Abu Dhabi: the oldest commercial port in Abu Dhabi, which served as the main city port for over 40 years. Following the transfer of all of its container traffic to Khalifa Port, Mina Zayed Port has expanded to encompass cruise tourism, as well as general and bulk cargo.
- Jebel Ali, Dubai: as the world’s largest man-made harbour, and the ninth-largest container port worldwide, Jebel Ali Port is Dubai’s major trading hub, with an annual capacity of 19.3 million containers. It has a General Cargo Terminal Facility and a Container Terminal.
- Mina Rashid, Dubai: a multi-purpose port catering for both cargo and passenger operations and for all types of vessels. Mina Rashid Port is equipped with both a cruise terminal and a ferry terminal. The cargo terminal is well known for its export of used cars.
- Fujairah Port, Fujairah: this has two oil terminals, and a 1.4-kilometre-long main quay. It is able to cater for general cargo, bulk cargo, wet bulk cargo and container activity.
- Ras Al Khaimah Port, Ras Al Khaimah: previously named Al Khor Port. The port has cargo handling operations, including a single-berth roll-on, roll-off (ro-ro) facility, and a passenger cruise terminal.
- Saqr Port, Ras Al Khaimah: established in 1977 by the Ruler of Ras Al Khaimah, the port has one general-purpose berth, three container handling berths and eight bulk-handling berths, and has become a major bulk-handling port in the Middle East.
- Khor Fakkan, Sharjah: this is one of the world’s leading container transhipment ports, with the capacity to store over 45,000 TEU, less-than-cartload lot cargo and reefer containers.
- Port Khalid, Sharjah: this is a multi-purpose port comprising a container terminal, ro-ro cargo terminal and a free trade terminal. It has 21 berths that support general, reefer, dry, liquid and bulk cargoes.
In addition to the predominantly commercial ports listed above, two key petroleum ports of Jebel Dhanna Ruwais (onshore) and Das Zirku Mubarraz (offshore) in Abu Dhabi serve as the principal export terminals for the petroleum products of Abu Dhabi National Oil Company, as well as providing facilities for cargo handling, storage and distribution. These petroleum ports fall under the regulatory supervision of the Petroleum Ports Authority in Abu Dhabi.Reform and port models
Describe any port reform that has been undertaken over the past few decades and the principal port model or models in your jurisdiction.
Ports in the UAE were originally managed by the government of each respective Emirate where the port is located. However, in more recent years, some Emirates and port authorities have become more open to authorising private entities to develop and manage some areas of the relevant ports, or to stimulating external investment into port operations. For instance:
- in Dubai, DP World, formally established in September 2005, has responsibility for the management and operation of ports in Dubai. Shares in DP World were listed on the NASDAQ Dubai stock exchange in 2007, and it is now one of the largest global port operators;
- the Abu Dhabi Ports company (AD Ports), a public joint stock company established by Federal Decree in 2006, signed a concession agreement with Cosco Shipping Ports Ltd, a subsidiary of China COSCO Shipping Corporation, in September 2016 for the development and operation of a new container terminal at Khalifa Port; and
- Fujairah Port Authority authorised Vopak Horizon Fujairah, a joint venture established in 1998 between the government of Fujairah, Horizon Terminals, Vopak and Kuwait’s Independent Petroleum Group to manage storage terminal for oil products.
Is there an overall state policy for the development of ports in your jurisdiction?
There is no overall policy at federal level for the development of ports in the UAE. The policy approach varies from one Emirate to another. Some Emirates have engaged private companies to develop and manage some parts of ports, or as joint venture partners with domestic port companies.Green ports
What ‘green port’ principles are proposed or required for ports and terminals in your jurisdiction?
Pursuant to Federal Decree No. 74 of 2006, the Gulf Area became a Special Area under the MARPOL Convention 73/78 on 1 August 2008. As a result, it is prohibited to pump out, discharge or jettison any dirty ballast, slops, sludges, bilges, sewage, garbage, refuse or any other sort of sea pollutant in any part of the Gulf Area. Those breaking the rules will be liable for the cost of clean-up operations as well as heavy fines.
Additional principles may be applied in each Emirate. In Dubai, various circulars have been issued that require adherence to MARPOL standards, and also require ships to adhere to certain pollution prevention and control measures. The costs of cleaning up any spills or pollution will be borne by the port user, but the port operator may undertake clean-up activities without letting the port user or their representatives know in advance.
Abu Dhabi has issued a number of regulations, including the Maritime Sector Transport Regulations (General & Port Operations), setting out additional required standards.
Legislative framework and regulationDevelopment framework
Is there a legislative framework for port development or operations in your jurisdiction?
There has been a general increase in PPPs in the UAE owing to new PPP legislation introduced in 2015 and 2017. Various PPPs are in operation in the transport and infrastructure sector generally, but not yet specifically for ports. Each Emirate may, however, have discretion to pass its own laws to authorise developments and for the operation of some areas of the ports.Regulatory authorities
Is there a regulatory authority for each port or for all ports in your jurisdiction?
The national transport authority is the UAE’s Federal Transport Authority (FTA). Among other functions, the FTA proposes marine transport policies, laws and legislation. Each Emirate also has its own regulatory authority governing its ports.
In Dubai, the Port, Customs and Free Zone Corporation (PCFC) is the overarching regulatory entity. It is responsible for a variety of other entities that regulate the Dubai ports, the most relevant of which are:
- the Department of Planning and Development - Trakhees (DPDT), which is the regulatory arm of the PCFC. The regulations issued by DPDT relate to vessel and crew, not general port operations.
- Dubai Customs is the customs agency that focuses on trade facilitation, regulatory and revenue aspects.
- Dubai Maritime City Authority (DMCA) ensures the safety of the marine environment in Dubai and seeks to maintain Dubai’s position as an international maritime hub.
- Dubai Ports Authority is the agency that services Dubai’s ports and provides related services.
Abu Dhabi’s Department of Transport (DoT) regulates the maritime sector, along with AD Ports. AD Ports manages and operates the (non-oil) seaport terminals, and provides training and services to the ports, whereas the DoT is responsible for overseeing the commercial side of Abu Dhabi’s commercial ports. This includes issuing regulations and instructions of AD Ports. The Petroleum Ports Authority has regulatory oversight of Abu Dhabi’s petroleum ports.
In Ajman, the relevant authority is the Government of Ajman’s Department of Ports and Customs; in Ras Al Khaimah it is the Government of Ras Al Khaimah Customs and Port Department; and in Sharjah, the Sharjah Department of Seaports and Customs and the Sharjah Port Authority.
What are the key competences and powers of the port regulatory authority in your jurisdiction?
The FTA has responsibility for issuing certification and registration documents for corporate maritime activities to maritime agents, seamen, commercial vessels service providers and leisure boat services providers.
Depending on the Emirate, the relevant port authorities have power to manage the relevant port and supervise the application of the relevant regulations with respect to safety and security. For instance, the Abu Dhabi DoT’s role is ‘to develop, coordinate and implement maritime regulations within a framework encompassing safety, security, environmental and economic aspects in Abu Dhabi for Sea Ports, Waterways Management and Public Water Transport’.
The powers of the regulatory entities in Dubai are listed in question 6.Harbourmasters
How is a harbourmaster for a port in your jurisdiction appointed?
Depending on the management of the port, the harbourmaster is appointed either by the relevant port authority or the company in charge of management of the port. For instance, in Abu Dhabi the harbour-master is appointed in writing subject to article TP07/10 of the DoT’s Transport Regulations (October 2010).Competition
Are ports in your jurisdiction subject to specific national competition rules?
The Competition Law in the UAE (Federal Law No. 4 of 2012) excludes marine transport and related services and therefore does not apply to ports. There are no specific rules applying to competition in ports and therefore no competition rules apply to ports in the UAE.Tariffs
Are there regulations in relation to the tariffs that are imposed on ports and terminals users in your jurisdictions and how are tariffs collected?
There are several regulations of tariffs issued by the authority of the port of each Emirate. Generally, the FTA imposes an annual tax of two dirham per net ton on every vessel registered in the UAE. Otherwise, tariffs are imposed by each Emirate or port operating authority. For example, in Dubai tariffs for Port Rashid and Jebel Ali Port are regulated by DP World. These are collected in advance by the port operator. If charges are not paid, use of the port facilities or permission to sail may be denied until payment has been made.
In Abu Dhabi’s commercial ports, tariffs are imposed by AD Ports pursuant to article 4(4) of Decree No. 6 of 2016. There is a basic level of tariff, but AD Ports has the power to agree a special tariff without permission from the DoT, although it must notify the DoT that a special tariff has been granted. The DoT regulates tariffs for the ports of Abu Dhabi. The DoT must approve any changes to the tariffs, and it may object to tariffs proposed by AD Ports or ask for clarification regarding proposed tariff changes.
Are there restrictions relating to the currency applied to the tariffs or to any fees that are payable by a port operator to the government or port authority? Are any specific currency conditions imposed on port operators more generally?
Tariffs are charged in UAE dirham.Public service obligations
Does the state have any public service obligations in relation to port access or services? Can it satisfy these obligations through a contract with a private party?
Concession agreements generally obligate the port authority to provide and maintain access to the port. Port authorities are usually also responsible for the provision of emergency services, but sometimes the port operator can be contractually responsible for providing such services. If the port operator does have responsibility for the emergency services, it is likely that the port authority will be required to reimburse the port operator for the costs of these. The port authority is also likely to have step-in rights in the event it deems that the port operator is not providing adequate emergency services.
Obtaining permission to access ports is subject to security approval by the police authority in the port, along with the approval of the relevant port authority in the relevant Emirate. However, these obligations may be satisfied by a private party in some cases where the port, or part of a port, is being managed by a private party who has the requisite authority to issue permission to access.Joint ventures
Can a state entity enter into a joint venture with a port operator for the development or operation of a port in your jurisdiction? Is the state’s stake in the venture subject to any percentage threshold?
China COSCO Shipping Corporation has partnered with AD Ports for the development and operation of a new container terminal at Khalifa Port. Horizon Terminals, Vopak and Kuwait’s Independent Petroleum Group have entered into a joint venture with the government of Fujairah for the operation of storage terminals for break-bulk, petroleum products and crude oil. There is no set minimum threshold for a government stake in any such joint venture, and this will be determined and negotiated on a case-by-case basis.Foreign participation
Are there restrictions on foreign participation in port projects?
While discretion can be applied by the port operators and regulators for a foreign company to enter into or participate in a port project, any participating company would need to have a local presence and possess the relevant licences. This would likely involve a requirement to set up onshore in the UAE (ie, not in a free zone) and have at least 51 per cent local ownership. Some port authorities have allowed foreign entities to participate in port projects. Very specific licences are, however, likely to be needed in such cases.
Free zones exist in the UAE, where 100 per cent foreign ownership of companies is allowed. Free zone companies are, however, usually restricted to carrying on their activities within free zones or outside the UAE. Therefore, if the port is not yet in the relevant free zone then using a free zone company to participate in a port project may not be viable.
Public procurement and PPPLegislation
Is the legislation governing procurement and PPP general or specific?
There is specific legislation in the UAE for PPPs. Cabinet Resolution (1/1) of 2017 provides a procedure manual for PPPs in the UAE (PPP Procedure Manual). The Emirate of Dubai has issued Law No. 22 of 2015, which regulates PPPs in Dubai (Dubai PPP Law), and Law No. 6 of 1997, which concerns contracts of governmental departments in the Emirate of Dubai (Dubai Governmental Contracts Law). The Dubai government Department of Finance has also issued a very comprehensive Guide to Public Private Partnership in Dubai. In February 2019, Abu Dhabi enacted a new law to regulate PPPs as part of an initiative to encourage private sector involvement in projects in the emirate. See further question 44.Proposal consideration
May the government or relevant port authority consider proposals for port privatisation/PPP other than as part of a formal tender?
The PPP Procedure Manual requires proposals for privatisation and PPPs to be established through a rigorous tendering process, which is set out in detail in the PPP Procedure Manual, and all bidders must meet certain eligibility requirements and be registered on the appropriate eProcurement system. Each Emirate also has its own tendering processes, which need to be complied with. It is likely, however, that authorities have discretion to waive requirements and processes in various circumstances.Joint venture and concession criteria
What criteria are considered when awarding port concessions and port joint venture agreements?
Although there are no specific criteria, it is likely that port authorities will be looking at financial history, previous experience and company reputation when considering whether to award port concessions or enter into joint venture agreements. Furthermore, the contractual tendering and negotiation process will play a significant part in the selection process when a port concession is being considered or awarded. Therefore, general commercial considerations will apply.
While not formally applicable to a joint venture or port concessions, when a PPP partner (ie, corporate private sector person(s)) is being considered by the Dubai authorities, the Dubai PPP law states that the PPP partner must satisfy any applicable financial and technical standards, and the potential partner must have relevant speciality capability and efficiency. The overriding criteria for the selection of PPP partners are:
- free competitiveness;
- equal opportunities;
- equality; announcement of competition; and
- achieving the requirements of public interest.
These are all factors that may be considered by the government when entering into joint ventures and port concessions.Model agreement
Is there a model PPP agreement that is used for port projects? To what extent can the public body deviate from its terms?
There is no model PPP agreement in the UAE. The Dubai PPP Law at article 26, however, sets out the most important provisions to be included in a partnership contract. These include the nature and scope of the works or services; the responsibility to obtain the requisite licences, permits and approvals; and financial and technical obligations. The Abu Dhabi Law sets out similar provisions at article 12.Approval
What government approvals are required for the implementation of a port PPP agreement in your jurisdiction? Must any specific law be passed in your jurisdiction for this?
In Dubai, the authority approving the project will vary depending on the financial liability to the authority arising from the proposed project. This will either be the Director General, the Financial Department or the Supreme Committee for Financial Policy. No specific laws need to be passed for the PPP agreement to be entered into.Projects
On what basis are port projects in your jurisdiction typically implemented?
Annex 1 to the PPP Procedure Manual sets out all the types of PPPs. There are currently no port projects owned on a PPP basis. However, established build-operate-transfer (BOT) and build-own-operate-transfer (BOOT) models have been employed in past projects.Term length
Is there a minimum or maximum term for port PPPs in your jurisdiction? What is the average term?
The PPP Procedure Manual states that the term of a PPP must be stated in the PPP contract and suggests 30 or 35 years as a maximum term. Furthermore, Annex 1 of the PPP Procedure Manual sets out many different types of PPP and the contractual period for each. The Dubai PPP Law states that the maximum term for PPPs in Dubai is 30 years.
Although they are not PPPs, we are aware of port concession agreements extending beyond the suggested 30-year time-frame for PPPs, with terms including options to extend. These options can sometimes be unilateral, only requiring written notification from the port operator.
On what basis can the term be extended?
The maximum term for PPPs in Dubai cannot be extended. However, port concession agreements can last longer as they are not specifically governed as PPPs. Elsewhere in the UAE, extensions are likely to be secured by agreement between the parties.Fee structure
What fee structures are used in your jurisdiction? Are they subject to indexation?
No specific fee structures are required to be used. As such, all fee structures are open to contractual negotiation and will be subject to commercial considerations and requirements. In concession agreements, both fixed fees and variable fees (which may be revenue or performance linked) are commonplace.Exclusivity
Does the government provide guarantees in relation to port PPPs or grant the port operator exclusivity?
The guarantees provided by the government or a federal entity to a private PPP partner are set out in the PPP Procedure Manual. The types of guarantees provided are as follows:
- service use or revenue guarantee - this guarantees a minimum level of use for the project. If there is a shortfall, the state will pay the difference;
- guarantee of minimum service fees - this is usually required by lenders to ensure that a minimum level of service fee is paid to the private partner regardless of the actual level of the project’s performance; and
- guarantee of law and regulation amendment - this provides the private partner with protection from any future regulatory policy.
It is at the discretion of the relevant authority as to whether these guarantees will apply in relation to ports.Other incentives
Does the government or the port authority provide any other incentives to investors in ports?
There are no formal incentives, but rebates or other incentives may be agreed on a case-by-case basis.
Port development and constructionApproval
What government approvals are required for a port operator to commence construction at the relevant port? How long does it typically take to obtain approvals?
Companies need to be established in the UAE and will need to obtain the relevant licences. The procedure and time-frame for obtaining these licences, and also what specific licence(s) will be required, will depend on the Emirate or free zone in which the company is established. Typically the licensing process can take between one and six months, depending on the free zone or Emirate of establishment.Port construction
Does the government or relevant port authority typically undertake any part of the port construction?
Port construction is generally subject to contractual negotiation and either subcontracted or carried out by the port operator.
Does the port operator have to adhere to any specific construction standards, and may it engage any contractor it wishes?
Generally, the government of the relevant Emirate sets out the construction standards depending on the future development plan of the Emirate. For instance, in Abu Dhabi the DoT has issued a Design Code for Maritime Infrastructure, which sets out the necessary standards for the development of marine structures in Abu Dhabi. In Dubai, the DPDT has issued construction standards that must be adhered to. These standards are available online. There is no restriction on which contractors the port operator must engage; however, any operators must have the necessary licences to carry out the relevant activities.
What remedies are available for delays and defects in the construction of the port?
Remedies for delays and defects in the construction of a port will depend on the remedies available in, and be subject to, the construction contract.
What government approvals are required in your jurisdiction for a port operator to commence operations following construction? How long does it typically take to obtain approvals?
While there are no specific approvals required, it is likely that the operator would require sign off or approval from Dubai Customs, the Road and Transport Authority or the equivalent in other Emirates to commence operations. Additionally, the operator must have the necessary licences for the relevant UAE entity in place and up to date.Typical services
What services does a port operator and what services does the port authority typically provide in your jurisdiction? Do the port authorities typically charge the port operator for any services?
The services provided by port operators and port authorities differ from port to port depending on the Emirate where the port is located. All services relating to security, safety of navigation and the issuing of access permissions are generally managed by the port authorities or public companies. However, depending on the port of each Emirate, services provided to vessels and cargo operation services can be provided by private companies. Any charges to the port operator for services provided by the port authorities depends on the Emirate and the agreements in place between the parties.Access to hinterland
Does the government or relevant port authority typically give any commitments in relation to access to the hinterland? To what extent does it require the operator to finance development of access routes or interconnections?
This would depend on the development plan of the relevant Emirate and the requirements of the relevant authorities. It is, however, common for governments of the various Emirates to undertake developments of hinterland through various private companies.
Generally, we see port authorities being responsible for the maintenance and servicing of the common areas in concession agreements, which would include roads into the port. A detailed description and plan will normally be included in a concession agreement highlighting the common areas that the port authority is responsible for servicing and maintaining, as well as the concession areas that the port operator is responsible for servicing and maintaining.Suspension
How do port authorities in your jurisdiction oversee terminal operations and in what circumstances may a port authority require the operator to suspend them?
Port authorities generally oversee compliance with terminal operations agreements and the implementation of concessions. Concession agreements will typically contain inspection and audit rights for the authority to monitor performance, and require the operator to provide regular reports in respect of its operations and performance obligations under the concession agreement. A port authority may require operators to cease terminal operations for reasons of force majeure, breach of contract, persistent failure in performance or breach of environmental or safety standards. A breach of contract terms or the prevailing law, rules and regulations would likely lead to suspension.Port access and control
In what circumstances may the port authorities in your jurisdiction access the port area or take over port operations?
Port authorities are not generally in charge of port operations in the UAE. However, and subject to the relevant provisions of the agreements with the port operator, port authorities may reserve some rights to access the port area or take over the operations in some circumstances. The port can also be accessed by court order or through permission obtained from the relevant law enforcement agencies.
In concession agreements, force majeure events and default events are usually comprehensively listed. Often in the event of these events occurring, the port authority may be able to access and take over the operation of the port. There are usually corresponding arrangements made in relation to the effects of such a takeover on fees payable by the port operator. The port area can also be accessed by court order or through permission obtained from the relevant law enforcement agencies.Failure to operate and maintain
What remedies are available to the port authority or government against a port operator that fails to operate and maintain the port as agreed?
The available remedies will be those provided for by the concession agreement, which will usually be governed by UAE law. The port authority may also file legal action against the port operator before the UAE courts or arbitration (depending on the dispute resolution provision in the agreement) for remedies available under applicable UAE law, such as damages or cancellation of the contract.Transferrable assets
What assets must port operators transfer to the relevant port authority on termination of a concession? Must port authorities pay any compensation for transferred assets?
Details of assets to be transferred to the port authorities by the port operator when a port concession terminates depend on the contractual agreement between the port operator and the port authorities. Whether compensation or other fees are payable for these assets, and the amount of such compensation or fees, will also depend on the terms of the contract.
Generally, the transfer process is laid out clearly in the concession agreement. This is likely to involve a transfer transition plan being drawn up and provided to the port authority by the port operator. The port authority must approve this plan before any transfer plan can be put into action.
MiscellaneousSpecial purpose vehicles
Is a port operator that is to construct or operate a port in your jurisdiction permitted (or required) to do so via a special purpose vehicle (SPV)? Must it be incorporated in your jurisdiction?
Port operators must be incorporated in the jurisdiction, and will require certain licences to operate. Special Purpose Vehicles (SPV) cannot hold such licences and so the operating company cannot be an SPV. It will therefore have to be a company with a licence to carry out construction or trading activities established within the UAE.Transferring ownership interests
Are ownership interests in the port operator freely transferable?
Generally, the port operator is required to obtain prior written consent from the port authority before transferring its ownership interests to a third party. The details of such approval, and whether or not it is required, will depend on the contractual terms, which may affect or restrict the transfer of the interests in the port operator. There are no specific restrictions in place under UAE company law that restrict the transfers of shares in local companies, provided that the 51 per cent minimum local ownership requirements are still met (where applicable), and any pre-emption right waived or respected.
Concession agreements usually state that no assignment of the port operator’s right is allowed unless both parties consent. It is also possible for the concession agreement to be drawn up between a port authority and a port operator for the benefit of another project company, which will become the port operator when established. This is utilised in instances where the ‘new’ port operator may not yet be set up or there may be some other reason why it cannot yet be the contracting party.Granting security
Can the port operator grant security over its rights under the PPP agreement to its project financing banks? Does a port authority in your jurisdiction typically agree to enter into direct agreements with the project financing banks and, if so, what are the key terms?
The agreed contractual terms will determine the extent of any security rights, but a port operator will typically seek the ability to be able grant security as part of its project financing. In addition, direct agreements are common where the banks receive confirmation from the port operator that the borrower’s rights under the PPP or concession agreement are assigned to the banks and an undertaking that the port operator will not take any action against the borrower for a certain period following an enforcement event. Finally, if the financing banks do not have a banking licence issued by the UAE Central Bank, then a UAE-licensed bank may need to be appointed to hold security pursuant to a security agency agreement.Agreement variation and termination
In what circumstances may agreements to construct or operate a port facility be varied or terminated?
Contract variation is likely to be governed by the contractual terms, and an addenda (or equivalent) to the contract will be required to amend it. In Dubai, article 30 of the Dubai Governmental Contracts Law governs the alteration of contracts between the government and private parties, and stipulates that changes in any such contract will need the consent of the Director General and will be subject to the contractual terms. In this instance, the changes to the contract will need to be contained in an appendix to the contract.
Concession agreements generally list the events in which termination can occur. They may also provide for variation of certain terms of the concession agreement by express consent of both the port operator and the port authority.Contractual breach
What remedies are available to a government or port authority for contractual breach by a port operator?
Government authorities will almost certainly insist on contracting under UAE law. Equitable remedies are not generally acknowledged or provided for by UAE law. As such, the available remedies will depend on the contractual terms agreed between the port operator and port authority or government entity in relation to step-in rights and other provisions relating to breach of the contract. Furthermore, the government or port authority may be able to bring an action against the port operator for breach of contract. Remedies for breach of contract are likely to be limited to damages.Governing law
Must all port PPP agreements be governed by the laws of your jurisdiction?
Although there is generally freedom of jurisdiction for contractual arrangements in the UAE, most government entities will not enter into contracts that are not subject to UAE law and jurisdiction. Even where contracts are subject to a foreign jurisdiction, the UAE courts may assume jurisdiction regardless of the elected jurisdiction where the contract concerns a matter of public policy or interest, or where the courts consider themselves to have jurisdiction.
The PPP Procedure Manual sets out model mechanisms of dispute resolution, including national litigation and arbitration inside the state. This strongly suggests that the UAE courts would consider themselves to have jurisdiction in relation to PPP agreements and would disregard any other jurisdiction elected by the contracting parties. Specifically, article 35 of the Dubai PPP law states that the law applicable to PPP agreements in Dubai is the law of the Emirate of Dubai. Furthermore, the jurisdiction of any arbitration clause must be in Dubai, and provision to the contrary would be deemed unenforceable.Disputes
How are disputes between the government or port authority and the port operator customarily settled?
The specific arrangements in respect of dispute resolution will depend on what has been agreed by the parties to the port operation contract. Arbitration is a commonly used method of dispute resolution in this field, especially in relation to construction disputes. Although no entities are immune from being sued in the UAE, specific procedures may be required to be followed for certain government entities or companies ultimately owned by a government entity. These may override the contractual dispute provisions.
Updates and trendsKey developments of the past year
Are there any other current developments or emerging trends that should be noted?Key developments of the past year44 Are there any other current developments or emerging trends that should be noted?
Along with several other of the Gulf States, the UAE continues to invest heavily to diversify its economy and move away from a reliance on hydrocarbons. The infrastructure, tourism and leisure sectors are at the forefront of current initiatives to boost further economic growth. The ports and terminals industry will continue to be instrumental in driving growth by enabling maritime and logistics infrastructure to promote both trade flow and foreign investment.
From a regulatory perspective, a new UAE foreign direct investment law, Federal Decree-Law No. 19 of 2018, came into force in late 2018, permitting increased levels of foreign ownership for economic sectors and activities. In addition, in February 2019, Abu Dhabi enacted two new laws to encourage private sector involvement in projects in the emirate, as part of a three-year, 50 billion dirham, programme to boost the economy. These two laws (Nos 1 and 2 of 2019) relate respectively to (i) the establishment of the Abu Dhabi Investment Office (ADIO) for the implementation and execution strategy for the increasing FDI in the emirate and (ii) the regulation of PPP. As part of this initiative, the ADIO will also be responsible for establishing a ‘PPP Centre of Excellence’ designed to deliver best practices and facilitate investment. These measures reflect the prevailing trend in the UAE to foster increased private investment, which looks set to deliver new opportunities for international investors across a range of sectors including transport and infrastructure.