SECOND EDITION 2015 Shipping & International Trade Law and...Shipping & International Trade Law This...

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Shipping & International Trade Law This second edition of Shipping & International Law aims to provide a first port of call for clients and lawyers to start to appreciate the issues in numerous maritime jurisdictions. Each chapter is set out in such a way that readers can make quick comparisons between the litigation terrain in each country, determining the differences between, for example, the rights of cargo interests to claim for cargo loss or damage in Italy and England. A remarkable breadth of jurisdictions is covered, while the contributors are all leading lawyers in their countries and are ideally placed to provide practical, straightforward commentary on the inner workings of their respective legal systems. Preface Norman Hay Cargill International SA Foreword David Lucas Hill Dickinson LLP Angola João Afonso Fialho & José Miguel Oliveira Miranda Correia Amendoeira & Associados in association with Fátima Freitas Advogados Argentina Fernando Ramón Ray & Alejandro José Ray Edye, Roche, De La Vega & Ray Australia Geoff Farnsworth & Natalie Puchalka Holding Redlich Canada Douglas G Schmitt Alexander Holburn Beaudin + Lang LLP China Chen Xiangyong & Wang Hongyu Wang Jing & Co Cyprus Vassilis Psyrras, Andreas Christofides & Costas Stamatiou Andreas Neocleous & Co LLC Denmark Johannes Grove Nielsen Bech-Bruun England & Wales David Lucas, Jeff Isaacs & David Pitlarge Hill Dickinson LLP Finland Ulla von Weissenberg & Linda Ojanen Attorneys at Law Borenius Ltd LLP France Laurent Garrabos BCW & Associés Germany Jobst von Werder & Ingo Gercke REMÉ Rechtsanwälte Greece Maria Moisidou Hill Dickinson International Hong Kong Damien Laracy & Michael Ng Laracy & Co and Mike Mallin Hill Dickinson Hong Kong LLP India Prashant S Pratap Indonesia Juni Dani Budidjaja & Associates Israel Amir Cohen-Dor S Friedman & Co Italy Paolo Manica & Michele Mordiglia Studio Legale Mordiglia Japan Tetsuro Nakamura, Tomoi Sawaki & Minako Ikeda Yoshida & Partners Malta Dr Ann Fenech & Dr Adrian Attard Fenech and Fenech Advocates Mexico Enrique Garza, Roger Rodriguez & Ramiro Besil Garza Tello & Asociados SC Mozambique João Afonso Fialho & Sofia Paramés Miranda Correia Amendoeira & Associados in association with Pimenta Dionísio & Associados The Netherlands Wilbert ten Braak, Rene van Leeuwen, Hans Posthumus Meyjes & Elisabeth T A Naaykens Hampe Meyjes advocaten Nigeria Emmanuel Achukwu The Campbell Law Firm Panama Jorge Loaiza III Arias, Fabrega & Fabrega Peru Percy Urday Moncloa, Vigil, Del Rio & Urday Poland Sławomir Nowicki, Alina Łuczak, Katarzyna Bielarczyk & Agnieszka Nowicka Wybranowski Nowicki Law Office Portugal João Afonso Fialho & José Miguel Oliveira Miranda Correia Amendoeira & Associados Russia Elena Popova Sokolov Maslov & Partners Singapore Raghunath Peter Doraisamy Selvam LLC South Africa Shane Dwyer & Jennifer Finnigan Shepstone & Wylie South Korea Byung-Suk Chung Kim & Chang Spain Verónica Meana Larrucea & Santiago López-Caravaca Boluda Meana Green Maura & Co Turkey Emre Ersoy & Zihni Bilgehan Ersoy Bilgehan Lawyers and Consultants Ukraine Alexander Kifak & Artyom Volkov ANK Law Office United Arab Emirates Adrian Chadwick & Raymond Kisswany Hadef & Partners United States John Kimball & Emma Jones Blank Rome LLP General Editor: David Lucas Hill Dickinson LLP Shipping & International Trade Law Jurisdictional comparisons Second edition 2015 SECOND EDITION 2015 Shipping & International Trade Law General Editor: David Lucas, Hill Dickinson LLP

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  • Shipping & International Trade LawThis second edition of Shipping & International Law aims to provide a first port of call for clients and lawyers to start to appreciate the issues in numerous maritime jurisdictions. Each chapter is set out in such a way that readers can make quick comparisons between the litigation terrain in each country, determining the differences between, for example, the rights of cargo interests to claim for cargo loss or damage in Italy and England.

    A remarkable breadth of jurisdictions is covered, while the contributors are all leading lawyers in their countries and are ideally placed to provide practical, straightforward commentary on the inner workings of their respective legal systems.

    Preface Norman Hay Cargill International SAForeword David Lucas Hill Dickinson LLPAngola João Afonso Fialho & José Miguel Oliveira Miranda Correia Amendoeira & Associados in association with Fátima Freitas AdvogadosArgentina Fernando Ramón Ray & Alejandro José Ray Edye, Roche, De La Vega & Ray Australia Geoff Farnsworth & Natalie Puchalka Holding RedlichCanada Douglas G Schmitt Alexander Holburn Beaudin + Lang LLP China Chen Xiangyong & Wang Hongyu Wang Jing & Co Cyprus Vassilis Psyrras, Andreas Christofides & Costas Stamatiou Andreas Neocleous & Co LLCDenmark Johannes Grove Nielsen Bech-Bruun England & Wales David Lucas, Jeff Isaacs & David Pitlarge Hill Dickinson LLPFinland Ulla von Weissenberg & Linda Ojanen Attorneys at Law Borenius Ltd LLPFrance Laurent Garrabos BCW & Associés Germany Jobst von Werder & Ingo Gercke REMÉ Rechtsanwälte Greece Maria Moisidou Hill Dickinson International Hong Kong Damien Laracy & Michael Ng Laracy & Co and Mike Mallin Hill Dickinson Hong Kong LLP India Prashant S PratapIndonesia Juni Dani Budidjaja & Associates Israel Amir Cohen-Dor S Friedman & Co Italy Paolo Manica & Michele Mordiglia Studio Legale MordigliaJapan Tetsuro Nakamura, Tomoi Sawaki & Minako Ikeda Yoshida & Partners Malta Dr Ann Fenech & Dr Adrian Attard Fenech and Fenech AdvocatesMexico Enrique Garza, Roger Rodriguez & Ramiro Besil Garza Tello & Asociados SCMozambique João Afonso Fialho & Sofia Paramés Miranda Correia Amendoeira & Associados in association with Pimenta Dionísio & AssociadosThe Netherlands Wilbert ten Braak, Rene van Leeuwen, Hans Posthumus Meyjes & Elisabeth T A Naaykens Hampe Meyjes advocatenNigeria Emmanuel Achukwu The Campbell Law Firm Panama Jorge Loaiza III Arias, Fabrega & FabregaPeru Percy Urday Moncloa, Vigil, Del Rio & UrdayPoland Sławomir Nowicki, Alina Łuczak, Katarzyna Bielarczyk & Agnieszka Nowicka Wybranowski Nowicki Law Office Portugal João Afonso Fialho & José Miguel Oliveira Miranda Correia Amendoeira & AssociadosRussia Elena Popova Sokolov Maslov & Partners Singapore Raghunath Peter Doraisamy Selvam LLCSouth Africa Shane Dwyer & Jennifer Finnigan Shepstone & Wylie South Korea Byung-Suk Chung Kim & ChangSpain Verónica Meana Larrucea & Santiago López-Caravaca Boluda Meana Green Maura & CoTurkey Emre Ersoy & Zihni Bilgehan Ersoy Bilgehan Lawyers and Consultants Ukraine Alexander Kifak & Artyom Volkov ANK Law Office United Arab Emirates Adrian Chadwick & Raymond Kisswany Hadef & Partners United States John Kimball & Emma Jones Blank Rome LLP

    General Editor: David Lucas Hill Dickinson LLP

    Shipping & International Trade LawJurisdictional comparisons Second edition 2015

    SECOND EDITION

    2015Shipping &

    International Trade LawG

    eneral Ed

    itor:

    David Lucas, H

    ill Dickinson LLP

  • Shipping & International Trade Law

    Jurisdictional comparisons Second edition 2015

    General Editor: David Lucas, Hill Dickinson LLP

  • General Editor David Lucas, Hill Dickinson LLP

    Commercial Director Katie Burrington

    Commissioning Editor Emily Kyriacou

    Senior Editor Callie Leamy

    Publishing AssistantNicola Pender

    Publications Editor Dawn McGovern

    Published in 2014 by Thomson Reuters (Professional) UK Limited

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    © 2014 Thomson Reuters (Professional) UK Limited

  • Contents

    EUROPEAN LAWYER REFERENCE SERIES iii

    ContentsPreface to the first edition Norman Hay Cargill International SA v

    Foreword to the first edition David Lucas Hill Dickinson LLP vii

    Foreword to the second edition David Lucas Hill Dickinson LLP xi

    Angola João Afonso Fialho & José Miguel Oliveira Miranda Correia Amendoeira & 1 Associados in association with Fátima Freitas Advogados

    Argentina Fernando Ramón Ray & Alejandro José Ray 27 Edye, Roche, De La Vega & Ray

    Australia Geoff Farnsworth & Natalie Puchalka Holding Redlich 47

    Canada Douglas G. Schmitt Alexander Holburn Beaudin + Lang LLP 65

    China Chen Xiangyong and Wang Hongyu Wang Jing & Co 85

    Cyprus Vassilis Psyrras, Andreas Christofides & Costas Stamatiou 105 Andreas Neocleous & Co LLC

    Denmark Johannes Grove Nielsen Bech-Bruun 127

    England & Wales David Lucas, Jeff Isaacs & David Pitlarge Hill Dickinson LLP 145

    Finland Ulla von Weissenberg & Linda Ojanen Attorneys at Law Borenius Ltd LLP 177

    France Laurent Garrabos BCW & Associés 195

    Germany Jobst von Werder & Ingo Gercke REMÉ Rechtsanwälte 219

    Greece Maria Moisidou Hill Dickinson International 239

    Hong Kong Damien Laracy & Michael Ng Laracy & Co and 271 Mike Mallin Hill Dickinson Hong Kong LLP

    India Prashant S. Pratap, Senior Advocate 307

    Indonesia Juni Dani Budidjaja & Associates 321

    Israel Amir Cohen-Dor S Friedman & Co 337

    Italy Paolo Manica & Michele Mordiglia Studio Legale Mordiglia 357

    Japan Tetsuro Nakamura, Tomoi Sawaki & Minako Ikeda Yoshida & Partners 371

    Malta Dr Ann Fenech & Dr Adrian Attard Fenech and Fenech Advocates 385

    Mexico Enrique Garza, Roger Rodriguez & Ramiro Besil 407 Garza Tello & Asociados SC

    Mozambique João Afonso Fialho & Sofia Paramés Miranda Correia Amendoeira 435 & Associados in association with Pimenta Dionísio & Associados

    The Netherlands Wilbert ten Braak, Rene van Leeuwen, Hans Posthumus Meyjes 463 & Elisabeth TA Naaykens Hampe Meyjes advocaten

    Nigeria Emmanuel Achukwu The Campbell Law Firm 477

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    Panama Jorge Loaiza III Arias, Fabrega & Fabrega 497

    Peru Percy Urday Moncloa, Vigil, Del Rio & Urday 515

    Poland Sławomir Nowicki, Alina Łuczak, Katarzyna Bielarczyk & 533 Agnieszka Nowicka Wybranowski Nowicki Law Office

    Portugal João Afonso Fialho & José Miguel Oliveira Miranda Correia Amendoeira 557 & Associados

    Russia Elena Popova Sokolov, Maslov & Partners 581

    Singapore Raghunath Peter Doraisamy Selvam LLC 599

    South Africa Shane Dwyer & Jennifer Finnigan Shepstone & Wylie 623

    South Korea Byung-Suk Chung Kim & Chang 647

    Spain Verónica Meana Larrucea & Santiago López-Caravaca Boluda 667 Meana Green Maura & Co

    Turkey Emre Ersoy & Zihni Bilgehan Ersoy Bilgehan Lawyers and Consultants 685

    Ukraine Alexander Kifak & Artyom Volkov ANK Law Office 703

    United Arab Emirates Adrian Chadwick & Raymond Kisswany Hadef & Partners 721

    United States John Kimball & Emma Jones Blank Rome LLP 739

    Contact details 755

  • EUROPEAN LAWYER REFERENCE SERIES v

    Preface to the first editionCargill International SA Norman Hay

    I am greatly honoured to be asked to write the preface to this timely worldwide review of shipping and trading law.

    Over the last 30 years, the volume and variety of international trade in and shipping of commodities has grown dramatically. Liberalisation of global markets, and the need for commodity inputs as those markets have developed, have promoted this growth.

    International shipping trade is central to the economy of the planet. Without it, there can be no increase in economic value which allows billions of people to raise themselves out of poverty.

    However, as with all such rapid growth, there comes a parallel increase in risk associated with the commodities being transported and the vessels undertaking such transport.

    The notion of risk in international trade goes back thousands of years and in each period of growth there has been the need for legal frameworks to handle disputes. The necessity for such legal systems is of utmost importance to the trade itself. Without such structures, an understanding of where risk occurs and how to mitigate it becomes clouded and there will be a drag on the growth of trade itself.

    This book represents a milestone in providing an international comparative survey of legal risks, issues and indeed opportunities pertaining to shipping and trading activities. The volume takes a pragmatic approach by setting out a series of answers to questions that confront market participants to illustrate the variety and types of legal dispute that can arise, and to help managers and practitioners navigate through the risk areas.

    The sheer size and complexity of the shipping and trading business would, on its own, lead to significant legal disputes. In addition, however, there has been a substantial increase in price volatility in the markets for the goods that these vessels carry. This volatility is increasing as the list of importing and exporting countries and the variety of the goods they trade also increases dramatically.

    While the companies and businesses involved in international trade have adopted a wide variety of methods to limit their risk (eg, stringent counterparty credit control, surveillance technologies and sophisticated trading instruments), such methods are insufficient to reduce to zero default risk and the inevitable legal disputes.

    This volume provides invaluable introductions to the diverse ways in

    Preface to first edition

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    Preface to the first edition

    which the various legal systems address common forms of default and the legal remedies which are available to the parties to resolve their differences.

    The majority of international trade and shipping contracts are governed by English Law. However, given the vast number of countries now engaged in trade, it is inevitable that other legal systems will impinge on the underlying contracts. This volume details and examines how such legal overlap can occur and presents new ideas on the implications and the methodologies that parties faced with legal disputes can adopt in such conflicting situations.

    Without a doubt, this volume provides a unique set of insights into this complicated but incredibly important area of global trade and its authors and editors are to be commended on the quality of the analysis.

    Norman Hay, President, Cargill International SAGeneva, 2011

  • EUROPEAN LAWYER REFERENCE SERIES vii

    Foreword to the first editionHill Dickinson LLP David Lucas

    Until recently, shipping and commodities law was considered by the wider world to be a fairly esoteric specialism of restricted general relevance. Laymen hardly focused on vagaries of market movements (except during times of historic crisis such as the aftermath of the Yom Kippur War) let alone the transnational impact of those movements.

    Now, all that has changed. Everyone in the world who has to buy food, fuel, garments or who has access to the media is only too well aware of the impact of fluctuations in commodity prices. They have seen the prices of, say, wheat and sugar soar (roughly doubling in the six months from June 2010), cotton rocket (almost quadrupling in the two years from early 2009), crude oil rise inexorably (almost tripling in the same period), back nearly to the dizzy heights reached before the collapse in mid-2008. Similar rises have been experienced with non-ferrous metals, iron ore, coal, fertilisers and numerous other commodities. The list is almost endless. All these price movements are, virtually without exception, overshadowed by the quite spectacular boom and bust of 2008.

    Equally, freight rates have undergone even more spectacular convulsions with, for example, the Baltic Dry Index rising to well over 11,000 in mid-2008, before collapsing to less than a mere tenth of that figure within the space of a very few months.

    The causes of this turmoil in the markets are too well known to merit repetition in this brief introductory Foreword. But what does merit consideration here is the stark way in which such turmoil illustrates the interconnectedness of the modern world. When China imports record quantities of crude oil, prices at the petrol pumps in Europe rise. When Russia suffers drought and bans wheat exports, the price of bread in Egypt soars.

    This would not happen if the modern world economy were not so inextricably wedded to international trade on a vast scale. The world as it has fashioned itself could not exist without it. Although trade between nations and regions goes back to the ancient Phoenicians and perhaps beyond, the present level of global interdependence is unprecedented.

    The rest of this volume will be devoid of statistics, so I hope I will be forgiven for offering just three sets of impressive figures which, I suggest, place in context the importance of the topics covered in this book:• about 90 per cent of world trade is carried by the international shipping

    industry;

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    • according to the International Maritime Organisation, in 2008 (the last year for which figures are currently available) there were almost 53,000 cargo carrying ships with a total deadweight of almost 1.2 billion tonnes (almost double the figure for 1990). Cargo traffic exceeded 8 billion tonnes and almost 34 billion tonne miles were sailed; and

    • seaborne trade in the main bulk cargoes (iron ore, grain, coal, bauxite/ alumina and phosphate) grew from 448 million tonnes in 1970 to 1,997 million tonnes in 2007 and other dry cargoes grew from 676 million tonnes to 3,344 million tonnes in the same period.

    The economic interdependence of the modern world economy is reflected in the interdependence of its diverse national legal systems. Legal practitioners in the field of international trade, whether in law firms or in- house, will be only too familiar with the need, often the very urgent need, to seek advice, assistance or local intervention, whether in the courts or with local authorities, in jurisdictions worldwide. Although English law remains the most common choice of governing law in trade-related contracts and the English court or arbitral jurisdiction remains the most popular contractual forum, other legal systems and fora are frequently chosen (particularly with the burgeoning growth of international arbitration) and, irrespective of contractual choice, often become relevant to the challenges facing a party in crisis. Examples are boundless but include: a ship owner whose vessel faces arrest; a cargo owner whose goods face the exercise of a lien by the ship owner; a buyer who is seeking to prevent a bank from paying under a letter of credit against fraudulent documents; unexpectedly, a transaction suddenly involves dealings with a state or entity subject to UN, EU or US sanctions; an underwriter of cargo on board a vessel which has suffered a collision. Advice may be needed as a matter of extreme urgency in one or more relevant jurisdictions where the crisis is occurring.

    The purpose of this volume is to give those involved, or potentially involved, in such a crisis a brief and readily accessible guide as to how the relevant issues might be approached in the affected jurisdiction or jurisdictions. Needless to say, it cannot be a substitute for formal advice from a lawyer well versed in the relevant legal system after he has been fully briefed, but it is hoped that the short summaries of key legal issues will assist those seeking to manage a crisis by focusing expectations and enabling them to brief local lawyers with an awareness of the opportunities and pitfalls afforded by the relevant legal system. Within the constraints of the format of this volume it has only been possible to provide summaries of the law in a limited number of legal systems. To those states not represented, and to those who had hoped for guidance as to the law in any of those states, I extend my apologies.

    I could not have carried out my functions in the preparation of this book without the tireless efforts of many to whom my profuse thanks are gladly offered. Also thanks to the eminent lawyers in the various jurisdictions who had so unstintingly given their time and expertise in providing their respective chapters. My colleagues at Hill Dickinson LLP, Jeff Isaacs, Andrew Meads, Andrew Buchmann and David Pitlarge, provided enormous help

  • Foreword to the first edition

    EUROPEAN LAWYER REFERENCE SERIES ix

    both in formulating and refining the questionnaire for each chapter (which had to be thoughtfully composed to elicit the most helpful responses from our contributors) and in contributing the substantive content of the English chapter. Kay O’Brien worked selflessly to coordinate the project and to keep it on track. Not least, my warm thanks are owed to Michele O’Sullivan, the International Director, Emily Kyriacou, the Commissioning Editor, and the editorial team, for both inspiring me and my colleagues to undertake this project and tirelessly bringing it to fruition.

    David Lucas, Hill DickinsonGeneral EditorLondon, 2011

  • EUROPEAN LAWYER REFERENCE SERIES xi

    Foreword to the second editionHill Dickinson LLP David Lucas

    When the publishers asked Hill Dickinson to work with them on a second edition of this volume, my immediate reaction was that it might be premature, given that the basic principles in the various legal systems covered in the first edition were perhaps unlikely to have changed that much, if at all; and this book never claimed to cover more than basic principles, given that in the first edition 25 jurisdictions were covered within the span of just 400 pages.

    However, it was pointed out to me that this would be an opportunity to expand the scope of the book to cover a number of jurisdictions which, for very good practical reasons, we had been unable to cover first time round. This opportunity has been seized with enthusiasm and I am delighted that this second edition has been expanded to cover some 36 jurisdictions, including many of considerable significance to the international trade and shipping community.

    In the Foreword to the first edition, I described the commercial and geopolitical trends and convulsions, natural catastrophes and conflicts which so often underlay and drove the issues which had confronted international trade and shipping lawyers every day in their work: Such events did not of course cease with the first edition: a mere list of names, acronyms and words suffices to make the point: Syria, Ukraine, sanctions, OFAC, Costa Concordia, Ebola… This list could be expanded indefinitely.

    Market prices of commodities and freight rates have of course continued to fluctuate – not as wildly, perhaps, as in some previous times, but sufficiently to drive defaults and thus to generate disputes between market participants. Meanwhile, statistics have continued to balloon. In the Forward to the first edition, I noted that in 2008 the world fleet of cargo carrying vessels accounted for a total deadweight of almost 1.2 billion tonnes; by January 2013 that figure had risen to 1.63 billion tonnes. Although the rate of growth of world GDP has slowed, nonetheless between 2008 and 2012 total cargo traffic increased from 8 to 9.2 billion tonnes. Just as trade continues to expand, so does the need for legal advice in multiple jurisdictions.

    As before, it is my pleasure to thank the numerous contributors to this book for their support and time-consuming work aimed at making it as useful as possible to its readers. My colleagues at Hill Dickinson LLP, Jeff Isaacs and David Pitlarge have greatly contributed to the review and

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    Foreword to the second edition

    updating of the English chapter. Not least, grateful thanks are due to the team at Thomson Reuters who have brought this second edition about: Emily Kyriacou, Katie Burrington, Dawn McGovern, Nicola Pender and Callie Leamy.

    David Lucas, Hill DickinsonGeneral EditorLondon, 2014

  • EUROPEAN LAWYER REFERENCE SERIES 721

    United Arab EmiratesHadef & Partners Adrian Chadwick & Raymond Kisswany

    The United Arab Emirates (‘UAE’) is a Federation comprising seven Emirates: Abu Dhabi, Dubai, Sharjah, Ajman, Umm Al Quwain, Fujairah and Ras Al Khaimah. Each Emirate is a separate legal jurisdiction. Abu Dhabi, Dubai and Ras Al Khaimah each have their own separate court systems. The other Emirates follow the federal courts. Each court applies UAE federal law as well as laws enacted by the Emirate in which the court is based. References in this chapter to UAE courts means all the courts in the UAE except the Dubai International Financial Centre (‘DIFC’) courts. References to UAE laws means the UAE federal laws. The UAE has a civil law based legal system except for DIFC law.

    The DIFC is a separate enclave within the Emirate of Dubai with its own common law based legal jurisdiction. None of the civil and commercial laws of the UAE apply in the DIFC. Instead, the DIFC has its own laws, which are primarily based on English law, and its own system of courts. In practice, it is uncommon for DIFC law to be expressly adopted as the governing law of a contract of carriage, or an international sale of goods contract. The information provided in this chapter concerns UAE laws and the procedures of the UAE courts. The position under DIFC law and the procedures of the DIFC courts are not covered in this chapter.

    1. CONTRACTS OF CARRIAGE 1.1 Jurisdiction/proper law1.1.1 In the absence of express provisions in a bill of lading (or charterparty), by what means will the proper law of the contract be determined?Article 19 of the UAE Civil Code (Federal Law No 5 of 1985, as amended) (‘Civil Code’) provides that the form and substance of contractual obligations are governed by the law of the state in which both contracting parties reside, but if they reside in different states then the law of the state in which the contract was concluded applies, unless the parties have agreed on another law or it is apparent from the circumstances that the parties intended for another law to apply. However, in practice, a UAE court, if it considers that it has jurisdiction, invariably applies UAE law and disregards any provision in the bill of lading or charterparty which provides for a foreign law to apply.

    UAE

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    UAE

    1.1.2 Will a foreign jurisdiction or arbitration clause necessarily be recognised? Generally, foreign jurisdiction clauses are not recognised and will be disregarded if the UAE court considers it has jurisdiction. The UAE courts exercise jurisdiction pursuant to the provisions of the UAE Civil Procedures Code (Federal Law No 11 of 1992, as amended) (‘CPC’). Article 20 provides that, except in respect of actions concerning real estate abroad, the UAE courts have jurisdiction to hear actions filed against UAE citizens and foreigners who are domiciled in or reside in the UAE. However, it is unclear if the UAE court will exercise jurisdiction if the cause of action had no connection with the UAE. Article 21 sets out a list of instances where the UAE courts will have jurisdiction should the claims be raised against a foreigner who is not a resident of or domiciled in the UAE. Of particular relevance are Articles 21(3) and 21(7). Article 21(3) confers jurisdiction upon the UAE courts where the action concerns ‘obligations concluded, executed, or its execution was conditioned in the state or related with a contract required to be authenticated therein or with an incident occurred therein ...’. Article 21(7) grants jurisdiction to the UAE courts if any one of the defendants, against whom the claim has been brought, is a resident of or domiciled in the UAE.

    CPC Article 203 recognises an arbitration clause (with a seat in the UAE or abroad) if it meets certain criteria (discussed below at 1.1.4.1). Any objection to the jurisdiction of the UAE court, based on there being a valid arbitration clause, must be raised at the first hearing of the case, otherwise the party will be deemed to have waived its objection. However, the UAE court does not usually determine the objection as a separate preliminary issue and may only decide if there is a valid arbitration clause when it renders its judgment on all the issues. A party seeking to rely on an arbitration clause may therefore have to defend the merits of the claim in case the court determines that there is no valid arbitration clause or that it was not properly raised at the first hearing of the case.

    1.1.3 In the event that an injunction or order preventing proceedings is obtained in the agreed jurisdiction (whether Court or arbitration), will this be recognised in your Court?An injunction or order preventing a UAE court proceedings made by a foreign court will not be recognised by a UAE court unless there is a treaty for judicial cooperation and enforcement of judgments between the UAE and the country in which the foreign court is located. There are bilateral treaties with various countries including France, India and China. There is also the GCC Convention 1996 with the other GCC states, and the Riyadh Convention 1983 with various Arab states. There is no treaty with the United States or any EU state except France.

    If the injunction or order was made by way of an arbitration award, rather than an interim award, it is unclear whether it will be possible to persuade the UAE court to recognise it and, even if it was possible to do so, the length of time that the recognition proceedings would probably take means that the injunction or order would have little or no practical effect.

  • EUROPEAN LAWYER REFERENCE SERIES 723

    UAE

    1.1.4 Arbitration clauses1.1.4.1 Will an arbitration and/or a jurisdiction clause set out in an incorporated document (such as a charterparty referred to in a bill of lading) be recognised if its text is not set out in the contract in question?The UAE courts usually only recognise arbitration agreements in a referenced document if the arbitration agreement is set out in a prominent and identifiable manner (and ideally expressly mentioned in the incorporating words) in a clearly identifiable document and if the arbitration agreement has been signed by both parties. UAE courts have in the past regularly disregarded arbitration agreements set out in fine print on the reverse side of bills of lading.

    The CPC requires arbitration agreements to be in writing and for the representatives who signed the arbitration agreement to have been granted specific authority to do so.

    It is also necessary to bear in mind that referring matters to arbitration is considered an exception to the UAE courts’ general jurisdiction and as such UAE courts construe arbitration clauses restrictively. The courts will not enforce an arbitration agreement rendered void by fraud or incapacity or where the subject matter is not arbitrable due to matters of public policy.

    A foreign jurisdiction clause set out in a referenced document will probably not be recognised as discussed above at 1.1.2.

    1.1.4.2 Will the incorporation of an unsigned arbitration agreement into a contract be recognised?Usually no – see above at 1.1.4.1.

    1.1.5 In any event, will all of the provisions of a charterparty incorporated into a bill of lading contract be recognised? Specifically, if a charterparty with an arbitration clause is incorporated into a bill of lading, is it necessary for the incorporating words to make express mention of the arbitration clause of the charter? The provisions of a charterparty (except the arbitration clause) which has been incorporated into a bill of lading will probably be recognised provided the charterparty can be clearly and expressly identified. However, the likelihood of provisions being recognised is reduced where proceedings are brought by or against a consignee who is not a party to the charterparty.

    The recognition of an arbitration clause is discussed in 1.1.4.1 above. It is prudent for the incorporating words to expressly mention the arbitration clause and the arbitration clause needs to be signed by representatives of both parties who have specific authority to do so.

    1.1.6 If a bill of lading refers to the terms of a charterparty, but without identifying it (eg, by date):1.1.6.1 Will incorporation be recognised without such detail?Probably no.

    1.1.6.2 If so, which charterparty will be incorporated?Probably none.

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    1.2 Parties to the bill of lading contract1.2.1 How is the carrier identified? In particular, what is the relationship between statements on the face of the bill and/or the signature by or on behalf of the Master and demise clauses/identity of carrier clauses?Article 257 of the UAE Commercial Maritime Code (Federal Law No 26 of 1981) (‘CMC’) provides that the contract of maritime transport shall be evidenced by a bill of lading which must, amongst other matters, state the name and address of the carrier, shipper and consignee. The CMC does not provide guidance as to how to identify the carrier where the position is unclear having regard as to who signed the bill of lading; whether it is stated to be signed by or on behalf of the master, who is stated on the face of the bill as being the carrier; and whether the bill includes a demise clause or identity of carrier clause. When the position is unclear, the UAE courts tend to consider the vessel owner to be the carrier. There have been occasions where a vessel owner has been held liable even though the bill of lading was signed or issued by another party.

    1.2.2 Who is entitled to sue for loss or damage arising out of the carrier’s alleged default? In particular, by what means, if at all, are rights under the contract of carriage transferred? The consignee named in the bill of lading or the ultimate endorsee or, if the bill is in favour of the bearer, that bearer, is entitled to sue for loss or damage arising from the carrier’s alleged default.

    The consignee can transfer its rights under the contract of carriage by way of endorsing the bill of lading to a third party.

    Transfer of rights should not affect the liability of the original shipper.

    1.3 Liability regimes1.3.1 Which cargo convention applies – Hague Rules/Hague Visby Rules/Hamburg Rules? If such convention does not apply, what, in summary, is the legal regime? The Hague Rules, Hague Visby Rules, and the Hamburg Rules have not been ratified by the UAE. The applicable legal regime is contained in the CMC which has provisions based partly on the Hague Rules and the Hague Visby Rules.

    1.3.2 Have the Rotterdam Rules been ratified? No.

    1.3.3 Do the Hague/Hague Visby Rules apply to straight bills of lading? The provisions of the CMC apply to straight bills of lading.

    1.3.4 Are any such rules compulsorily applicable to shipments either from your jurisdiction or to it (or both)?The UAE courts will apply the provisions of the CMC in respect of all disputes where the UAE courts have jurisdiction irrespective of whether the shipment concerned was to or from the UAE.

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    1.4 Lien rights1.4.1 To what extent will a lien on cargo be recognised? Specifically:1.4.1.1 Will liens arising out of obligations under the bill of lading contract be enforceable as against the receiver for, eg, freight, deadfreight, demurrage, general average and any shipper’s liabilities in respect of the cargo?There are a number of possibilities for a party to exercise a lien over cargo. CMC Article 223 provides a right of lien for freight against charterers, provided that title to the goods has not passed to an innocent third party; a general right of attachment of moveable assets under CPC against the party owning the goods; and a right of retention under the Civil Code for necessary or beneficial expense incurred in relation to the goods. A party wishing to avail itself of the right of lien or attachment or retention should obtain a court order. Exercising a lien without a court order is risky and selling the goods without court sanction may be considered a criminal act.

    CMC Article 360 recognises a master’s right to refuse delivery of goods which must contribute to general average.

    The concept of dead freight is recognised in the UAE, but under CMC Article 230 it is the charterer who is liable.

    1.4.1.2 Can the owner lien cargo for time charter hire? If so, is this limited to hire payable by the cargo owners?CMC Article 222 prohibits a disponent owner from distraining goods on board the vessel for non-payment of freight at a UAE discharge port. However, he may apply to the court to hold the cargo until freight is paid or for the sale of the cargo (or parts thereof) for payment. In our view, CMC Articles 222 and 223 probably also apply in respect of time charter hire.

    1.4.1.3 Is it necessary for the owners to register its right to lien sub-freights as a charge against a charterer incorporated in your jurisdiction for that lien to be recognised in the event of the charterer’s insolvency?No registration is required.

    2. COLLISIONS 2.1 Is the 1910 Collision Convention in force?The UAE has not ratified the 1910 Collision Convention. However, CMC Articles 318 to 326 apply to maritime collisions and are partly based on the Convention.

    2.2 To what extent are the Collision Regulations used to determine liability?The UAE has acceded to the 1972 Collision Regulations. The provisions apply to collisions that occur between two vessels causing damage due to a vessel’s act or omission to observe UAE law or approved international maritime conventions. By CMC Articles 318 and 320 compensation for damage to a vessel involved in a collision must be for the actual damage caused, including pure economic loss. Proportionate liability applies where more than one vessel is at fault.

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    2.3 On what grounds will jurisdiction be founded – what essentially is the geographical reach?CMC Article 325 grants jurisdiction to: (a) courts of the defendant’s residence; (b) courts of the defendant vessel’s registration; (c) courts where a vessel or its sister vessel is arrested or where security has been offered; or (d) courts where the collision takes place. Article 12 of the Determination of the Marine Territories of the UAE (Federal Law No 19 of 1993) extends the sovereign jurisdiction of the Exclusive Economic Zone of the UAE to a maximum of 200 nautical miles in certain instances.

    2.4 Can a party claim for pure economic loss in the event of a collision?Yes.

    3. SALVAGE3.1 Has your country enacted any salvage conventions? If so, which one?The UAE has ratified the 1989 International Convention on Salvage.

    3.2 In any event, what are the principal rules for obtaining non-contractual salvage? In the event that a salvage contract is signed, will this clearly displace any general law on salvage liabilities?The rules for non-contractual salvage are found in CMC Articles 327 to 339. Each act of salvage gives a right to remuneration if it achieves a useful result. However, remuneration cannot exceed the value of the salvaged objects. There is no entitlement to remuneration if the assisted vessel expressly prohibited any assistance for reasonable cause. There is also no entitlement to remuneration for towage or pilotage unless exceptional towage or pilotage services beyond the scope of custom were provided. The remuneration is determined by the court if the parties cannot agree. No remuneration applies for saving persons. Pursuant to CMC Article 339, any salvage agreement conferring jurisdiction on a foreign court or arbitration tribunal is void if the salvage occurred in UAE territorial waters and the assisting and salvaged vessels are both UAE registered.

    3.3 What is the limitation period for enforcing salvage claims in your jurisdiction?CMC Article 337 provides a two-year limitation for enforcing salvage claims from the date such actions were performed.

    3.4 To what extent can the salvor enforce its lien prior to the redelivery of ship/cargo?Ideally a court order should be obtained but in practice the salvor withholds the ship/cargo until its claim is satisfied.

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    4. GENERAL AVERAGE (‘GA’)4.1 Will any general average claim (whether under the contract, generally or GA securities) necessarily follow the contractual provisions in relation to general average, in particular, the chosen version of the York Antwerp Rules (‘YAR’)?General Average (‘GA’) is regulated by CMC Articles 340 to 365 which are similar to the York Antwerp Rules. CMC Article 340(2) provides that the provisions of the CMC will apply unless there is a specific agreement to the contrary between the parties. It is important to note that GA is rarely exercised in the UAE; usually parties will contract GA to experts in London.

    4.2 Time bars4.2.1 Will general average claims under the contract of carriage be governed by any contractual time bar – in particular, any which might be set out in the YAR (eg, YAR 2004)?CMC Article 365(1) provides for a general time bar of two years from the arrival date of the vessel at the discharge port or the port in which the voyage ended. However, CMC Article 365(2) states that: ‘[i]n addition to any other causes for which the period of

    limitation for the hearing of a suit may be interrupted at law the said period shall expire upon the appointment of an average adjuster and in that event the new period shall run for the same period from the date of signing of the general average adjustment or from the date on which the average adjuster retires’.

    CMC Article 363 provides that the master must be notified in writing of a claim sustained to goods within 30 days of delivery of said goods. The cargo owners must be notified in writing within 30 days from the date the voyage terminated for losses sustained by the vessel.

    4.2.2 In the event that claims should be pursued under general average securities in your jurisdiction, what is the applicable time bar for such claims? Will this be affected by the provision of YAR 2004 Rule XXIII if 2004 YAR is specified in the relevant contract?See 4.2.1 above.

    4.2.3 To what extent is any general average adjustment binding?CMC Article 357 requires the GA adjustment to be made by a UAE court appointed expert(s), unless the parties have agreed on an expert. The matter must be referred to the court if the expert’s adjustment is disputed. The court’s judgment (after exhaustion of appeals) is binding.

    5. LIMITATION 5.1 What is the tonnage limitation regime in respect of claims against the vessel? CMC Articles 138 to 142 permit a shipowner to limit liability as follows: (a) AED 250 (USD 63.93) per tonne where only physical damage is caused; (b)

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    AED 500 (USD 135.87) per tonne where only bodily injury is caused; (c) AED 750 (USD 203.80) per tonne where both physical damage and bodily injury are caused. These articles are based on the 1957 International Convention Relating to the Limitation of Liability of Owners of Seagoing Ships, but appear to be couched in permissive wording rather than as a mandatory provision of UAE law.

    In 1997, the UAE ratified the Convention on Limitation of Liability for Maritime Claims 1976 (‘LLMC’) and the Dubai Court of Cassation has held that the LLMC has full force of law; however, the position remains uncertain as a result of the following: (a) CMC Articles 138 to 142 have not been repealed (although the provisions of LLMC, as an international convention, should prevail over domestic legislation); (b) the Arabic text of LLMC, as implemented in the UAE, appears to differ in meaning to the English text and suggests that limitation of liability is a permissive or discretionary provision rather than a mandatory provision; (c) the necessary legislation/mechanism to enable a limitation fund to be set has not been implemented; (d) the courts, influenced by Sharia law, have shown a reluctance to apply limitation provisions, especially for personal injury matters, and tend to impose a heavy burden of proof on the party seeking to be entitled to limit liability; and (e) the lack of any doctrine of binding precedent in UAE law.

    5.2 Which parties can seek to limit?CMC Article 138 permits vessel owners to limit their liability. LLMC permits ship owners and salvors to limit their liability.

    5.3 What is the test for breaking the limitation?CMC Article 140 prohibits an owner from limiting liability caused by his personal error. In addition, liabilities arising out of assistance and salvage or GA contributions; rights of master, crew and their heirs; and claims arising from nuclear damage cannot be limited. As discussed above in 5.1, the UAE courts are generally reluctant to allow a party to limit its liability.

    5.4 To what degree do any limitation provisions found jurisdiction for the substantive claim?Limitation provisions do not found jurisdiction in the UAE.

    5.5 Which package limitation figure applies?CMC Article 276(1) limits a carrier’s liability to not more than AED 10,000 (USD 2,717) for each package or unit taken as a basis in computing the freight or a sum not exceeding AED 30 (USD 8.15) per kilogram per gross weight of the cargo, whichever is higher. CML Article 276(2) states, ‘[i]f packages or units are grouped in cases, boxes or other containers and the bill of lading states the number of packages or units contained in each container, then each one shall be deemed to be a package or unit ... [for the purposes of liability]’. A carrier’s liability may not be limited if the shipper has declared a value of the goods (Article 276(3)).

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    6. POLLUTION AND THE ENVIRONMENT6.1 Which Civil Liability Convention (‘CLC’) regime applies?In 1997, the UAE ratified the 1992 Protocol to the International Convention on Civil Liability for Oil Pollution Damage 1969 (‘Civil Liability Protocol’) and the 1992 Protocol to the International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage 1971 (‘Fund Protocol’).

    7. SECURITY AND ARREST7.1 Is your jurisdiction a party to any particular arrest convention? If so, which one?The UAE is not a party to any international arrest conventions. However, CMC Articles 115 to 134 are broadly based on the 1952 Arrest Convention.

    7.2 Which claims afford a maritime lien in your jurisdiction?The concept of a maritime lien giving rise to a right to arrest is not recognised under UAE law. A vessel can only be arrested to obtain security in respect of a maritime debt as set out in CMC Article 115(2) and are in summary: (a) damage caused by the vessel by reason of collision; (b) loss of life or personal injuries; (c) assistance and salvage; (d) contracts relating to the use of the vessel under a charterparty; (e) contracts relating to carriage of goods under a charterparty or bill of lading; (f) loss or damage to goods carried on board a vessel; (g) GA; (h) towage or pilotage of the vessel; (i) supplies of products or equipment necessary for utilisation or maintenance of the vessel; (j) construction, repair or fitting out of the vessel; (k) sums expended by the master, shipper, charterer or agent on account of the vessel or its owners; (l) master, officers and crew wages; (m) ownership of vessel dispute; (n) dispute concerning co-ownership or possession or use of the vessel or right to profits arising out of use of the vessel; and (o) maritime mortgage.

    7.3 In any event, to what extent does a mortgagee have priority over claims for loss and damage which are not maritime liens?CMC Article 84 ranks priority debts. In summary these are: (a) judicial costs incurred in protecting and selling the vessel, and distributing the proceeds thereof, as well as port charges and other related costs; (b) crew wages; (c) monies due for assistance and salvage, and GA; (d) compensation due for collisions and other navigational accidents, compensation due for bodily injuries to passengers and crew, and compensation for loss or damage to goods and possessions; (e) debts arising out of contracts made by the master; (f) breakdowns and damage giving rise to a right of compensation to charterers; and (g) insurance premiums. CMC Article 105(1) states that mortgages shall rank directly after Article 84(e).

    7.4 Is there any suggestion that an arrest claim might lead to the founding of substantive jurisdiction?The court which issues an arrest order has jurisdiction to determine the substantive claim if the court has jurisdiction under the CPC (see 1.1.2

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    above). In addition, under CMC Article 122 the court also has jurisdiction where: (a) if the claimant has a usual place of residence or head office in the UAE; (b) if the maritime debt arose in the UAE; (c) if the maritime debt arose during a voyage during which the arrest was effected on the vessel; (d) if the maritime debt arose out of a collision or assistance over which the court has jurisdiction; and (e) if the debt is secured by a maritime mortgage over the arrested vessel. It is important to note that within eight days of the vessel being arrested, substantive proceedings must be commenced before a UAE court of competent jurisdiction, otherwise the arrest will lapse.

    7.5 To what extent can sister/associated ships be arrested?Arrest of sister vessels is permitted pursuant to CMC Article 116(1), which states, ‘[a]ny person seeking to recover the debts referred to in ... Article [115] may arrest the vessel to which the debt relates, or any other vessel owned by the debtor if such other vessel was owned by him at the time the debt arose even if the vessel is ready to sail’. The vessels must be under common ‘registered ownership’ and not just common ‘beneficial ownership’. Associated ship arrest (where vessels are not under common registered ownership) is not permitted. However, this does occasionally happen when the court mistakes beneficial ownership for registered ownership. In such cases, it is possible to persuade the court to lift the arrest upon production of evidence of registered ownership. It is important to note that this is a lengthy process taking several months.

    7.6 Is it possible to arrest ships for claims arising out of (a) MOAs; (b) ship repair; and (c) ship construction contracts?CMC Article 115(2) lists the maritime debts for which a vessel can be arrested. Article 115(2)(d) and (e) permits the arrest of a vessel for claims arising from contracts relating to the use of a vessel under a charterparty or otherwise and under contracts relating to the carriage of goods under a charterparty, bill of lading or other carriage document. Article 115(2)(j) allows for the arrest of a vessel for claims arising from construction, repair or fitting out of the vessel, as well as docking costs.

    7.7 To what degree can an arrest be anticipated/prevented by the lodging of security?There are no provisions under the CMC that allow for security to be lodged in advance to prevent the arrest of a vessel.

    7.8 If a vessel can be arrested, by what means can the claim be secured? Specifically:7.8.1 Can an arresting party insist on a cash deposit or a bail bond?UAE courts only accept a bank guarantee from a UAE domiciled bank to secure the release of an arrested vessel, unless the arresting party agrees to accept other security. A payment into court is risky as it may be taken as an admission of liability.

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    7.8.2 Will the court accept a letter of guarantee from a protection and indemnity club?Not unless the arresting party agrees.

    7.8.3 Does any guarantee have to be provided by a domestic bank or other acceptable guarantor?See 7.8.1 above.

    7.9 Briefly summarise the further security options: eg, freezing orders, attachment of debts due to the defendant, etc.It is possible, pursuant to CPC Articles 252 to 257, to request a precautionary attachment of moveable assets in order to obtain security for any civil or commercial claim. The most common asset attached is a bank account. However, a vessel can be attached under the CPC, but usually a party seeking security will prefer to arrest the vessel under the CMC, unless its claim is not a maritime debt under CMC Article 115(2). In order to obtain a precautionary attachment under the CPC, it is necessary to: (a) identify exactly the asset to be attached, and if it is in a third party’s hands, the name of the third party; (b) demonstrate through documentary evidence that there is a prima facie claim; and (c) persuade the court that there is a real risk of dissipation of the asset prior to final judgment. As with a ship arrest under the CMC, the party that has obtained an attachment must commence substantive proceedings before a UAE court having jurisdiction within eight days of the attachment being obtained, otherwise the attachment will lapse.

    8. CONTRACTS OF SALE OF GOODS8.1 Jurisdiction/proper law8.1.1 In the absence of express provision in a contract of sale, by what means will the proper law of the contract be determined?See 1.1.1 above.

    8.1.2 Will a foreign jurisdiction or arbitration clause necessarily be recognised? In the event that proceedings can be commenced before your court notwithstanding such provisions, can such proceedings be challenged?See 1.1.2 above.

    8.1.3 In the event that an injunction or order preventing proceedings is obtained in the agreed jurisdiction (whether court or arbitration), will this be recognised by your court?See 1.1.3 above.

    8.2 Arbitration clauses8.2.1 What are the essential elements for the recognition of an arbitration agreement?The CPC requires arbitration agreements to be in writing. Although the courts may consider a contract to be valid, even if unsigned, the courts require an

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    arbitration agreement to be signed and for the representatives who signed it to have been granted specific authority to do so. See also 1.1.4 above.

    8.3 Passing of title/property/risk8.3.1 What terms if any are implied by your rules as to the passing of:8.3.1.1 title (property) to the goods?Civil Code Article 511(1) provides that, absent an agreement between buyer and seller to the contrary, ownership of goods transfers to the buyer at the time the sale of the goods concludes.

    8.3.1.2 risk?Risk transfers at the time the seller validly delivers the goods, Civil Code Article 522 states, ‘[i]f the seller validly delivers the goods sold to the purchaser, he shall not thereafter be liable for what happens to the goods’.

    8.3.2 In relation to the passing of title and risk, do your rules apply even if the underlying contract applies another law?In the event that a foreign law applies to the contract, in theory, the substance of the foreign law will be treated as a question of fact by the UAE court. However, as stated in 1.1.1 above, UAE courts invariably disregard the foreign law provision and apply UAE law.

    8.4 Description and quality8.4.1 Do your rules imply terms on (a) the description of the goods and/or (b) their quality?Civil Code Article 543(1) provides that a ‘sale shall be deemed to have been concluded on the basis that the goods sold are free of any defects, save such as tolerated by custom’. However, Articles 544 to 555 set out certain exemptions to this general rule, such as when there is latent defect or the defect was declared by the seller. Where the sale is by sample, Article 492 requires the goods conform to the sample.

    8.5 Performance8.5.1 Delivery: What provisions does your law make as to delivery of the goods (eg, on timing and method of delivery)?Civil Code Article 530(1) requires the seller to deliver the goods at the place where the goods are located at the time the contract is made. However, under Article 530(2), delivery will only occur if the goods reach the buyer in cases where the contract provides for, or commercial custom dictates, that the goods are to be delivered to the buyer after the contract is made; unless otherwise agreed by the parties in their contract. Civil Code Articles 525 to 529 set out provisions concerning when actual delivery or constructive delivery of the goods occurs. Ordinarily, delivery depends on the nature of the goods, the contract terms or custom or, if required, upon registration.

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    8.5.2 Acceptance: When is the buyer deemed to have accepted the goods?Acceptance usually occurs when the goods are delivered. Under UAE law, no consequences flow from acceptance.

    8.5.3 Payment: In the absence of express provision, by when must a buyer pay for the goods?The buyer is required to pay for the goods at the time the contract is formed, but before delivery or any legal claim is made with respect to the goods; unless there is a contractual agreement contrary to Civil Code Article 556.

    8.6 Other terms8.6.1 Classification of terms8.6.1.1 Do your rules differentiate between warranties (breach of which only entitles the innocent party to damages) and conditions (breach of which also entitles him to terminate the contract), and if so what is the effect?UAE law does not expressly distinguish between warranties and conditions in contracts. However, the parties may contractually define warranties and conditions and the consequences of breaching such terms if they so choose. UAE courts will apply the agreed contractual provisions unless deemed contrary to public policy.

    8.6.1.2 In English law, we also have the concept of intermediate (or innominate) terms. Breach of such terms may have differing effects depending on the gravity of the consequences of the breach. Do you have a similar concept under your system?UAE law does not have the concept of intermediate (or innominate) contractual terms. However, as stated in 8.6.1.1 above, the parties may define such terms in their contract.

    8.6.2 Exemption clauses8.6.2.1 Do your courts recognise exemption (ie, exclusion) clauses, such as force majeure? Civil Code Article 273 provides that, if force majeure makes performance of the contract impossible, the corresponding obligations shall cease and the contract is automatically cancelled. In the event of partial impossibility, the part of the contract which is impossible to be performed, will be extinguished. This also applies to temporary impossibility in continuing contracts. In both cases the obligee can cancel the contract provided the obligor is made aware.

    Civil Code Article 249 is relevant by providing the court with discretion, after weighing the interests of both parties, to reasonably reduce onerous obligations if an unforeseeable event of public nature occurs, thereby resulting in an onerous performance of a contractual obligation threatening the obligor with grave loss. Any agreement excluding Article 249 is void.

    Contracting parties often include a contractual force majeure clause and

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    the UAE courts will apply the same unless the clause breaches public policy. With regards to other exemption clauses, the UAE courts are fairly reluctant

    and may decline to uphold such clauses. The court may want to be satisfied that the exemption clause was agreed between the parties and may choose to disregard an exemption clause included in fine print or in a reference document unless the parties have signed the clause to signify their agreement to the exemption. Any attempt to exclude or restrict liability for unilateral acts, such as fraud or wilful misconduct, will probably not be upheld.

    8.6.2.2 What are the key requirements for relying on an exemption clause?See 8.6.2.1 above.

    8.7 Remedies8.7.1 What are the seller’s remedies where the buyer is in breach of contract? See 8.7.3 below.

    8.7.2 What are the buyer’s remedies where the seller is in breach of contract? See 8.7.3 below.

    8.7.3 Are there any general limitations on the remedies available?There are two main types of contractual remedies available under UAE law: damages and specific performance. However, as there is no summary judgment procedure in the UAE courts, the usefulness of seeking specific performance is limited.

    In assessing the level of damages the following are relevant: Civil Code Article 389 states that ‘if the amount of compensation is not

    fixed by a provision of law or of the contract, the judge shall assess it in an amount equivalent to the harm in fact suffered at the time of the occurrence thereof’.

    Civil Code Article 390(2) permits either party to request the court to vary the contractual terms so as to make compensation equal to the harm if the contract included a liquidated damages clause or a penalty clause. Any agreement excluding Article 390(2) is void.

    Although UAE law recognises the concept of consequential damages, it arguably only applies to tortious liability and not contractual liability.

    Usually the courts only award damages for direct losses and not indirect losses unless there was intent to cause harm.

    The courts award damages for loss of profits, but the occurrence of loss must be certain as the court does not award damages for hypothetical or probable losses or for speculative damages.

    Moral damages for infringement of reputation, liberty, dignity, financial standing, etc can also be awarded subject to proof of loss.

    Contractually agreed punitive damages and exemplary damages clauses may not be accepted by a UAE court as these concepts are not part of UAE law.

    Limitation of liability clauses may be accepted by the court provided

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    liability for unilateral acts such as fraud or wilful misconduct is sought to be restricted.

    Civil Code Article 557(1) provides a specific remedy for a seller as it permits the seller to retain the goods until the buyer has paid, notwithstanding the seller may have been provided a pledge or guarantee. However, Article 557(2) stipulates that a seller’s right to retain property lapses, and he is obliged to deliver the goods to the buyer, if the seller agrees to defer the amount owed by the buyer.

    Two other important provisions are:Civil Code Article 272 whereby, if a party breaches the contract terms,

    the other party may give notice requiring the contract to be performed or cancelled. However, the contract is not cancelled automatically if it is not performed and a court order cancelling the contract needs to be obtained. If the contract is cancelled, the parties are to be restored to the position they were in before the contract was made. If that is impossible, compensation will be ordered by the court.

    Pursuant to Civil Code Article 247, a party may refrain from performing its contractual obligations if the other party breaches the contract terms. However, the contract is not cancelled. Article 247 is often used to justify why a party has failed to comply with its contractual obligations as the party argues that the other breached first.

    8.8 Time limit8.8.1 What is the statutory limitation period?There is no specific statute of limitations. Instead, various time limits for different causes of action are contained in various statutes. Generally, a claim is time barred after 15 years pursuant to Civil Code Article 473, unless there is a specific provision to the contrary. Commercial obligations between traders have a time limit of 10 years. Claims arising out of charterparties or bills of lading have a time limit of one year. The defendant has the burden to raise and prove any time bar defence.

    8.8.2 Do your courts uphold shorter contractual limitation periods?The UAE court may uphold a shorter contractual time limit depending on the wording of the contract and the provisions of the relevant statute which imposes a time limit for the particular cause of action. Additionally, there is no system of binding precedent in the UAE, although decisions of the various Courts of Cassation are highly persuasive and are now more widely reported.

    8.9 Finance8.9.1 In what circumstances is it possible for your Courts to prevent payment out under:8.9.1.1 a letter of credit? See 8.9.2 below.

    8.9.1.2 performance bonds?See 8.9.2 below.

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    8.9.2 What does one have to show to prevent payment out?Article 417 of the UAE Commercial Code (Federal Law No 18 of 1993, as amended) (‘Commercial Code’) provides that a bank may not refuse payment to a beneficiary of a bank guarantee on grounds based either on the bank’s relationship with the person who arranged the guarantee or that person’s relationship with the beneficiary. However, Article 417 further provides that in exceptional cases, the court may, at the request of the person who arranged the guarantee, levy seizure on the guarantee amount provided his claim is based on ‘serious and solid grounds’. The application is made ex parte and whether it is granted is at the discretion of the judge. Furthermore, it is fair to state that UAE courts have shown reluctance in preventing payment under letters of credit or performance bonds.

    8.10 Security8.10.1 What remedies are available to obtain security for the claim:8.10.1.1 where the substantive claim is being litigated?The UAE court must be satisfied that it has jurisdiction and that the applicant has a prima facie claim before it will grant security for a claim or order other pre-emptive relief. The orders that the court can make include: (1) preventing the debtor from leaving the country;(2) attachment of the debtor’s movable property;(3) attachment of debtor’s debts in possession of third parties, even if debts

    were deferred or conditional;(4) attachment of debtor’s stocks, securities, income and shares; and(5) requiring the debtor to provide a guarantee for payment or a guarantor

    for his appearance at court or to deposit the amount claimed in court.

    8.10.1.2 where the substantive claim is not being litigated in your jurisdiction?Where the foreign court proceedings are in a jurisdiction whose judgments are recognised by UAE courts, it should, in theory, be possible to obtain a precautionary attachment from the UAE courts in advance of the judgment being issued provided that the test for obtaining the same is satisfied (see 7.9 above) and there are assets within the UAE to attach. It is likely to be difficult to obtain and maintain such an attachment where the court proceedings are not in such a jurisdiction.

    Where a foreign arbitration award has been made it is possible to obtain a precautionary attachment in advance of obtaining ratification of the award by the UAE court. An attachment application made prior to an award being made is unlikely to succeed. Enforcement can only occur after the foreign arbitration award has been ratified.

    8.10.2 Must the applicant have already commenced substantive proceedings (whether by litigation or arbitration) to be able to obtain security?A party can apply to the UAE court for a precautionary attachment prior to a substantive claim being filed. However, pursuant to CPC Article

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    252, a substantive claim must be commenced within eight days from the attachment being obtained. The proceedings can be stayed if the substantive claim is being litigated or arbitrated abroad.

    8.10.3 Is there a distinction between the remedies available for a claim which is subject to litigation and one which is referred to arbitration?No, but in both cases the security must be obtained by a court order.

    8.10.4 What tests are applied to establish a right to each remedy?As discussed above, it is possible under CPC Articles 252 to 257 to request a UAE court, having jurisdiction, to grant a precautionary attachment of moveable assets in order to obtain security for any civil or commercial claim. The most common asset attached is a bank account. In order to obtain a precautionary attachment under the CPC it is necessary to: (a) identify exactly the asset to be attached and, if it is in a third party’s hands, the name of the third party; (b) demonstrate through documentary evidence that there is a prima facie claim; and (c) persuade the court that there is a real risk of dissipation of the asset prior to final judgment. The application is made ex parte and proceedings in respect of the substantive claim must be commenced before a UAE court having jurisdiction within eight days of the attachment being obtained otherwise the attachment will lapse.

    In respect of the other potential pre-emptive remedies, such as a travel ban, it is necessary to persuade the UAE court of the reasons for the remedy sought as the courts are reluctant to make such orders prior to a court decision of the substantive dispute.

    8.10.5 Is the applicant required to provide counter security, and if so by what means?Granting an attachment is at the discretion of the court and counter security is sometimes, but not often, required usually by way of a bank guarantee from a UAE domiciled bank.

    8.10.6 What exposure does an applicant have for damages if the attachment is deemed wrongful?The counter security ordered, if any, secures a claim for damages for wrongful attachment of property. A claim for wrongful attachment falls under Civil Code Article 282, ‘[a]ny harm done to another shall render the actor, even though not a person of discretion, liable to make good the harm’. However, a claim for wrongful attachment (or for wrongful vessel arrest) is difficult to prove as the affected party has to establish malicious intent. A bona fide mistake, even if made recklessly, is unlikely to result in compensation being ordered.

    8.11 Enforcement8.11.1 Is your country a signatory to the New York Convention?The UAE ratified the New York Convention in 2006.

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    8.11.2 To what extent is the New York Convention applied in practice?Since the New York Convention was ratified by the UAE there have been numerous foreign arbitration awards which have been recognised and enforced by the UAE courts. The courts made it clear that, in considering whether or not to recognise a foreign arbitration award, only the terms of the New York Convention are relevant and do not apply the CPC provisions for recognition of arbitration awards. On one occasion, the Dubai Court of Cassation refused to recognise a foreign arbitration award on the grounds that it had no jurisdiction as neither of the parties were based in the UAE, the subject matter of the award was not connected to the UAE and there were no assets in the UAE against which enforcement was sought.

    8.12 Vienna Convention8.12.1 Is your country a signatory? The UAE has not ratified the Vienna Convention.

    9. GENERAL FORMALITIES9.1 Does a lawyer require a formal power of attorney to be able to act?A notarised power of attorney is required for lawyers to appear in UAE courts and for representing clients before any government authority. Only Emirati lawyers have rights of audience before UAE courts. A notarised power of attorney is also usually required by arbitration tribunals. If the power of attorney is notarised abroad, it also has to be legalised by the relevant foreign ministry and authenticated by the UAE embassy in the country concerned.

    9.2 Do claim documents (and their translation) require notarisation?All documents submitted to UAE courts must be in Arabic or with an Arabic translation provided by a UAE Ministry of Justice approved translator, but the documents do not require notarisation.

  • EUROPEAN LAWYER REFERENCE SERIES 755

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    GENERAL EDITORDavid LucasHill Dickinson LLPThe Broadgate Tower20 Primrose StreetLondon EC2A 2EWT: +44 20 7280 9208F: +44 20 7283 1144E: [email protected]: www.hilldickinson.com

    ANGOLAJoão Afonso Fialho & José Miguel OliveiraMiranda Correia Amendoeira & Associados in association with Fátima Freitas Advogados Av. Engenheiro Duarte Pacheco, 7 1070-100 LisboaPortugal

    Ed. Monumental - Rua Major Kanhangulo, 290, 1st Floor Luanda, AngolaT: +351 21 781 48 00F: +351 21 781 48 02E: joao.fia[email protected]: [email protected]: www.mirandaalliance.com

    ARGENTINAFernando Ramón Ray & Alejandro José RayEdye, Roche, De La Vega & Ray25 de mayo 489 5toCPA C1002ABIC.A.B.A. Buenos AiresT: +54-11 4311-3011F: +54-11 4313-7765E: [email protected]: [email protected]: www.edye.com.ar

    AUSTRALIAGeoff Farnsworth & Natalie PuchalkaHolding RedlichLevel 65, MLC Centre19 Martin Place Sydney NSW 2000 AustraliaT: +61 2 8083 0416F: +61 2 8083 0399E: [email protected]

    com E: [email protected]

    comW: www.holdingredlich.com

    CANADADouglas G SchmittAlexander Holburn Beaudin + Lang LLP2700-700 West Georgia StreetVancouver, BCCanada V7Y 1B8T: +604 484 1754F: +604 484 9754E: [email protected]: www.ahbl.ca

    CHINAChen Xiangyong & Wang HongyuWang Jing & CoRm. 2807-12, 28/F., Bank of ChinaTower, 200 Yincheng Road Central,Pudong, Shanghai, P. R. China200120T: +86 21 5887 8000F: +86 21 5882 2460E: [email protected]: [email protected]: www.wjnco.com

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  • 756 EUROPEAN LAWYER REFERENCE SERIES

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    CYPRUSVassilis Psyrras, Andreas Christofides & Costas StamatiouAndreas Neocleous & Co LLCNeocleous House195 Makarios AvenueLimassol CY 3608T: +357 25 110000M: +357 25 110001E: [email protected]: [email protected]

    comE: [email protected]: www.neocleous.com

    DENMARKJohannes Grove NielsenBech-BruunLangelinie Allé 352100 CopenhagenT: +45 72273377M: +45 25263377E: [email protected]: www.bechbruun.com

    ENGLAND & WALESDavid LucasHill Dickinson LLPThe Broadgate Tower20 Primrose StreetLondon EC2A 2EWT: +44 20 7280 9208F: +44 20 7283 1144E: [email protected]: www.hilldickinson.com

    FINLANDUlla von Weissenberg & Linda OjanenAttorneys at Law Borenius LtdYrjönkatu 13 AFI-00120 HelsinkiT: +358 9 6153 3460 (Ulla)T: +358 9 6153 3240 (Linda)F: +358 9 6153 3499E: [email protected]: [email protected]

    W: www.borenius.com

    FRANCELaurent GarrabosBCW & Associés25, rue du général Foy75008 ParisT: +33 1 42 84 84 70F: +33 1 42 84 84 71E: [email protected]: www.bcw-associes.com

    GERMANYJobst von Werder & Ingo GerckeREMÉ RechtsanwälteBallindamm 26D-20095 HamburgT: +49 0 40 32 52 99 0F: +49 0 40 32 75 69E: [email protected]: [email protected]: www.reme.de

    GREECEMaria MoisidouHill Dickinson International2 Defteras Merarchias StPiraeus 185, 35T: +30 210 428 4770F: +30 210 428 4777E: [email protected]

    comW: www.hilldickinson.com

    HONG KONGDamien LaracyHill Dickinson Hong Kong LLP in Association with Laracy & Co.Room 3205, 32nd Floor Tower Two, Lippo Centre89 QueenswayAdmiraltyHong KongT: +852 2525 7525F: +852 2525 7526E: [email protected]: www.laracyco.com

  • EUROPEAN LAWYER REFERENCE SERIES 757

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    INDIAPrashant S PratapSenior AdvocateMaker Chambers III# 151, 15th FloorNariman PointMumbai 400021T: +91 22 6669 5669F: +91 22 6669 5699E: [email protected]: psplawoffice.com

    INDONESIAJuni DaniBudidjaja & AssociatesThe Landmark Center II, Floor 8Jl. Jend. Sudirman No. 1Jakarta 12910T: +62-21 520 1600F: +62-21 520 1700E: [email protected]: www.budidjaja.com/

    ISRAELAmir Cohen-DorS Friedman & Co One Matam Towers9 Andrei Sakharov St, P.O.Box 15065Haifa 31905T: +972 4 8546666F: +972 4 8546688E: [email protected]: www.friedman.co.il

    ITALYPaolo Manica & Michele MordigliaStudio Legale MordigliaVia XX Settembre 14/1716121 GenovaT: +39 010 586841F: +39 010 532729/562998E: [email protected]: [email protected]: www.mordiglia.it

    JAPANTetsuro Nakamura, Tomoi Sawaki & Minako IkedaYoshida & Partners4th fl. Suitengu Hokushin Bldg.1-39-5 Nihombashi-KakigarachoChuo-ku, Tokyo 103-0014T: +813 5695-4188F: +813 5695-4187W: www.japanlaw.co.jp

    MALTADr Ann Fenech & Dr Adrian AttardFenech and Fenech Advocates198, Old Bakery StreetValletta, VLT1455T: +356 2124 1232F: +356 2599 0645E: [email protected]: [email protected]: www.fenechlaw.com

    MEXICOEnrique GarzaGarza Tello & Asociados SCCamino Sta. Teresa 187C 5 pisoMéxico DF 14010T: +5255 54 24 84 61F: +5255 51 71 0763E: [email protected]: www.garzatello.com.mx

    MOZAMBIQUEJoão Afonso Fialho & Sofia ParamésMiranda Correia Amendoeira & Associados in association with Pimenta Dionísio & Associados Av. Engenheiro Duarte Pacheco, 7 1070-100 LisboaPortugal

    Rua Changamire Dombe (D. Diniz), 14, Sommerschild MaputoMozambiqueT: +351 21 781 48 00

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    758 EUROPEAN LAWYER REFERENCE SERIES

    F: +351 21 781 48 02E: [email protected]: [email protected]

    comW: www.mirandaalliance.com

    NETHERLANDSRene Van LeeuwenHampe Meyjes AdvocatenSluisjesdijk 151, 3087 AG RotterdamP.O. Box 55288, 3008 EG RotterdamT: +31 10-494 55 00F: +31 10-494 55 07E: [email protected]

    nlW: www.hmlaw.nl

    NIGERIAEmmanuel AchukwuThe Campbell Law FirmEleganza House, 2nd Floor15B Joseph StreetLagosT: +234-1 2711505E: [email protected]: www.tclflegal.com

    PANAMAJorge Loaiza III Arias, Fabrega & FabregaPlaza 2000, 16th Floor 50th Street T: +507 205 7068 F: +507 205 7001/02E: [email protected]: www.arifa.com

    PERUPercy UrdayMoncloa, Vigil, Del Rio & UrdayCalle Chacarilla Nº 485, San IsidroLima, 27T: +51 1 4224101/ 4401246F: +51 1 4401246/ 4227593E: [email protected]: [email protected]

    POLANDSławomir Nowicki, Alina Łuczak, Katarzyna Bielarczyk & Agnieszka NowickaWybranowski Nowicki Law OfficeEnergetykow ¾ Street70-952 SzczecinT: +48 91 4624 839F: +48 91 4624 056E: [email protected]: [email protected]: [email protected]: [email protected]: www.wybranowskinowicki.pl

    PORTUGALJoão Afonso Fialho & José Miguel OliveiraMiranda Correia Amendoeira & Associados Av. Engenheiro Duarte Pacheco, 7, 1070-100 LisboaT: +351 21 781 48 00F: +351 21 781 48 02E: [email protected]: [email protected]: www.mirandalawfirm.com

    RUSSIAElena PopovaSokolov, Maslov and PartnersBarklaya Street 17121309 MoscowT: +7 499 145 21 30F: +7 495 956 22 45E: [email protected]: www.smplawyers.ru

    SINGAPORERaghunath Peter DoraisamySelvam LLC16 Collyer Quay #17-00Singapore 049318T: +65 6311 0030F: +65 6311 0058E: [email protected]: www.selvam.com.sg

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    EUROPEAN LAWYER REFERENCE SERIES 759

    SOUTH AFRICAShane Dwyer & Jennifer FinniganShepstone & WyliePO Box 305,La Lucia, 4153DurbanT: +27 31 575 7308F: +27 31 575 7300E: [email protected]: [email protected]: www.wylie.co.za

    SOUTH KOREAByung-Suk ChungKim & Chang1st Floor, 223 Naeja-dong,Jongno-gu,Seoul 110-720T: +82 2 3703 1103F: +82 2 737 9091E: [email protected]: kimchang.com

    SPAINVerónica Meana Larrucea & Santiago López-Caravaca BoludaMeana Green Maura & CoC/ Velázquez 92 - 2º Dcha28006 MadridT: +34 91 432 3875F: +34 91 432 3876E: [email protected]: [email protected]: www.meanagreenmaura.com

    TURKEYZihni Bilgehan & Emre ErsoyErsoy BilgehanMaya Akar Center,Buyukdere Cad. No:100-102 K:2634394 Esentepe, IstanbulT: +90 212 213 23 00F: +90 212 213 36 00E: [email protected]: ersoybilgehan.com

    UKRAINEAlexander Kifak & Artyom VolkovANK Law Firm9 Lanzheronovskaya Street,Odessa, 65026 UkraineT: +38 0482 348 716F: +38 0482 348 716E: [email protected]: [email protected]: www.ank.odessa.ua

    UAEAdrian Chadwick & Raymond KisswanyHadef & PartnersEmaar SquareBuilding 3, Level 5 Downtown DubaiPO Box 37172 Dubai, UAET: +971 4 429 2960 (Adrian)T: +971 4 429 2949 (Raymond)T: +971 4 429 2999F: +971 4 429 2888E: [email protected]: [email protected]: www.hadefpartners.com

    UNITED STATESJohn Kimball & Emma JonesBlank Rome LLPThe Chrysler Building405 Lexington Avenue New York, NY 10174-0208T: +1 212 885 5259 (John)T: +1 212 885 5128 (Emma)F: +1 917 332 3730E: [email protected]: [email protected]: www.blankrome.com