Port operations in United Arab Emirates

Port operations

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.

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.

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.

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.

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.

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.

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.