This article provides an overview of vessel arrests in the UAE, and highlights some recent developments which have had a material impact on both the procedure for applying for vessel arrests and the regularity with which arrests are granted.
Arrests in the UAE
The UAE has not ratified the 1952 Arrest Convention1 but the provisions in respect of arresting a vessel are contained in the UAE Federal Law 26 of 1981 on Maritime Commercial Law (the Maritime Code).
Grounds for an arrest
Article 115 of the Maritime Code almost mirrors the position under the 1952 Arrest Convention in respect of claims for which a vessel can be arrested: charterparty disputes, cargo damage, general average, etc.
Vessels susceptible to arrest
Under Article 116 of the Maritime Code, any person seeking to recover maritime debts, as defined by Article 115 of the Maritime Code, can arrest the vessel to which the debt relates or any other vessel owned by the debtor at the time the maritime debt arose, except for debts in respect of:
- Disputes over the ownership of a vessel
- Disputes over co-ownership of a vessel, her possession, and use by the co-owners of their rights to the profits therefrom
- Maritime mortgages
Proof that a vessel is in the port
Generally, an arrest is granted, subject to establishing a prima facie case, if the vessel is within UAE waters, i.e. within 12 nautical miles from the coast of the UAE.
However, a recent trend in Abu Dhabi and Dubai has been for the court to require a letter from the Harbour Master confirming that the vessel is within port limits (sometimes even at berth) rather than accept confirmation from a reputable on-line source, such as Lloyd’s MIU2, that the vessel is within UAE territorial waters or, even, when the vessel’s estimated time of arrival in UAE waters is.
This additional requirement adds another layer of administrative procedure and one that carries with it potential complications, such as:
- The time taken to obtain the necessary letter(s) is likely to result in additional delay, and increases the risk that the vessel may sail before the arrest order can be obtained; this is particularly true where vessels are only calling at anchorage for bunkers or the like
- The Harbour Master may not issue the required letter(s) if the arrest is likely to cause congestion in the port
- It will not be possible to obtain an arrest order if the vessel is only calling over a weekend (Friday and Saturday) as the UAE does not have judges that sit over those two days, and it will not be possible to get the required letters to them. Previously, UAE judges would have considered issuing an arrest order before the weekend on the basis that the vessel was scheduled to arrive within UAE waters over the weekend
It remains to be seen if this trend will be adopted by courts in the other Emirate states.
Can a vessel be arrested for a breach of a settlement agreement?
In most jurisdictions, a claimant is unable to arrest a vessel for breach of a full and final settlement agreement where the original debt was a maritime debt.
If one looks at what amounts to a maritime debt under Article 115 of the Maritime Code, a settlement agreement is not expressly listed as a maritime debt. However, we have recently seen a case where a UAE court granted an arrest for breach of a settlement agreement where the original debt was a maritime debt.
This is potentially an attractive tool for the innocent party for creating leverage on the defaulting party to pay the sums due under a settlement agreement.
Arrests for unpaid bunkers
Consider the following: bunkers are supplied to a vessel in Singapore and the bunker supplier is not paid. The bunker supply contract is subject to Singapore law and the jurisdiction of the Singapore Courts.
If required, a UAE Court will exercise its jurisdiction and grant the arrest of this vessel in UAE waters but, until recently, the position was that the court would not have jurisdiction over the substantive claim; instead the arrest could stand as security for foreign proceedings.
However, a recent judgment by the Dubai Court of Cassation (the Supreme Court) suggests that a UAE court may also have jurisdiction to hear the underlying dispute, hence avoiding the need for dual proceedings.
It remains to be seen if this approach will be adopted on a regular basis by the UAE courts as the UAE is a civil law jurisdiction and, therefore, previous judgments are not binding.
There are, of course, benefits if the court has jurisdiction over the underlying claim because it will avoid the need for enforcing a foreign judgment (and the costs implications and complications associated with the same) against local security.
The UAE was never the most arrest friendly jurisdiction, but recent developments regarding procedural requirements seem to have made it even more favourable to shipowners, and have in turn also helped alleviate UAE ports congestion.