Jasmin Fichte
Fichte & Co Legal, Dubai
jasmin.fichte@fichtelegal.com

Shehab Mamdouh
Fichte & Co Legal, Dubai
​​​​​​​shehab.mamdouh@fichtelegal.com

Recently, we have witnessed significant development in the United Arab Emirates (UAE) maritime industry. The UAE has acceded to two major international conventions, namely the 1996 Protocol on Limitation of Liability (the 'LLMC') and the 2001 International Convention on Civil Liability for Bunker Oil Pollution Damage (the 'Bunker Convention'). Further, negotiations are continuing for the ratification of the 2007 Nairobi Convention on the Removal of Wrecks (the 'Nairobi Convention').

In this realm, the UAE maritime industry is still facing unsolved situations related to wrecks and abandoned vessels, whereby some of these vessels still have their crew on board. These vessels have been abandoned by the owners, or have been judicially arrested for ongoing litigation before the court.

To address these issues, the UAE Council of Ministers issued Resolution No 71 of 1 July 2021, regarding Marine Wreck and Non-Compliant Ships (the 'Resolution'). The Resolution came into force within two months from the date of enactment. Subsequently, it created the premises for speeding up the process of solving the issues of wrecks and abandoned ships.

What are the major implications of the Resolution?

The Resolution applies to all seagoing vessels of any type or size, regardless of power, tonnage capacity or purpose of navigation. The definition of a vessel also includes fixed or floating platforms. Conversely, the Resolution does not apply to warships and state-owned or operated vessels.

The salient points of the Resolution imply that all national and foreign vessels present in UAE waters or ports, or within the UAE exclusive economic zone, shall be subject to the regime imposed by the Resolution. The cases of non-compliance are strictly regulated, including situations in which the vessel is abandoned; anchored in unsigned areas; or where the owner failed to guarantee the ship's seaworthiness, is in arrears of the payment of wages, or is in default with the payment of towing, insurance or mooring.

Specifically, one central element of the Resolution is that all national and foreign vessels of over 300 GT hold a valid insurance policy or present financial security, such as a bank or financial institution guarantee. Article 4 specifically authorises ship agents and port authorities to verify and ensure that vessels hold a valid insurance policy or a financial guarantee. In the case of non-compliance, the respective vessel will be obliged to cover the cost of wreck removal. Furthermore, if the agent fails to verify the insurance requirements of the vessel, the agent will bear the liability of wreck removal.

Are any governance rules imposed by the Resolution?

On the governance side, the Resolution provides that a committee of five members will be established under the name of the 'Committee of Wrecks and Non-Compliant Ships'. The committee will act as an adviser to the Ministry of Energy and Infrastructure (the 'Ministry') in relation to necessary actions to be taken against the non-compliant or abandoned vessel. In severe cases, the Ministry will be authorised to either request or apply for a judicial sale of the non-compliant or abandoned vessel.

What are the benefits of the Resolution?

The main achievement of the Resolution is the protection and sustainable development of most of the codified environmental law principles, compliant with international standards, in the UAE and within the maritime zones in which the UAE exercises sovereign rights, such as the exclusive economic zone.

The Resolution safeguards seafarers' rights if an owner violates them by not paying their wages for a period of more than two months.

The Resolution permits the fast judicial sale of the non-compliant vessel. Prior to the Resolution, a similar remedy would have been obtained only after three to four years of litigation as only on completion of the litigation process would it have been possible to sell the vessel via a public auction.

However, granting the Ministry the power to request the competent court or authority to apply for the judicial sale, either before or during the process of litigation, will minimise the risk of wreck hazard and the abandoned vessel being disposed of only after a long period of time, with all advantages thereto.

Are there any differences and similarities between the Resolution and the Nairobi Convention?

Both instruments are mainly aimed at the common goal of environmental protection and generally apply to all types of vessels. Furthermore, both acknowledge the overall problematic and negative impact that wrecks create on the navigation and marine ecosystems. As such, both instruments impose the positive obligation that vessels possess sufficient financial security in the form of insurance policies or guarantees for vessels with a tonnage of 300 GT or more. In terms of scope of application, both apply in the territorial waters and exclusive economic zones.

In addition to what has been mentioned, compared with the Nairobi Convention, the Resolution expands the scope of the protection regime granted to seafarers and covers abandoned vessels.

In particular, it institutes a specific competency for the Port Authorities and for ship agents to verify the insurance policies of the vessels for:

• the Port Authorities prior to permitting the vessels to enter the port's waters; and
• the ship agents before engaging the vessels.

On the procedural side, what are the major powers granted to the UAE authorities?

According to Article 8, paragraph 4, in the situation of a non-compliant arrested vessel, the Ministry may request the arresting authority to serve a warning to the shipowner or operator of the vessel to correct the situation of the vessel and cover the expenses of the crew members to maintain the vessel's seaworthiness status. Furthermore, if the situation is not rectified following such a warning, the court may also order the arresting party to cover the required expenses, with the right to add such expenses to the claim raised against the vessel.

If notwithstanding the above, the ship remains a non-compliant vessel, the Ministry may request the court, or the arresting authority, to apply for a judicial sale at a public auction and deposit the sale price in the court treasury, after deducting all expenses and fees.

What would be the effect of the ratification of the Nairobi Convention on the Resolution?

Future ratification of the Nairobi Convention implies that specific UAE legislation will need to be adapted or enacted in line with the text of the convention. Thus, whereas the Resolution appears to have strong common areas that link it with the text of the Nairobi Convention, it is possible that post ratification, the current regime will need to be amended or even re-enacted.

This article aims to provide a summary and overview. Nevertheless, this topic has many open questions. If you wish to make some additions, discuss some points in detail or have any questions, feel free to contact the authors directly.