Shipping and International Trade Law

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Shipping &

International Trade LawThis second edition of Shipping & International Lawaimsto provide a first port of call for clients and lawyers to startto appreciate the issues in numerous maritime jurisdictions.Each chapter is set out in such a way that readers canmake quick comparisons between the litigation terrain ineach country, determining the differences between, forexample, the rights of cargo interests to claim for cargoloss or damage in Italy and England.

A remarkable breadth of jurisdictions is covered, whilethe contributors are all leading lawyers in their countriesand are ideally placed to provide practical, straightforwardcommentary on the inner workings of their respective legalsystems.

Preface Norman Hay Cargill International SAForeword David Lucas Hill Dickinson LLPAngola Joo Afonso Fialho & Jos Miguel Oliveira Miranda Correia Amendoeira &

Associados in association with Ftima Freitas AdvogadosArgentina Fernando Ramn Ray & Alejandro Jos Ray Edye, Roche, De La Vega & RayAustralia Geoff Farnsworth & Natalie Puchalka Holding RedlichCanada Douglas G Schmitt Alexander Holburn Beaudin + Lang LLPChina Chen Xiangyong & Wang Hongyu Wang Jing & CoCyprus Vassilis Psyrras, Andreas Christofides & Costas Stamatiou Andreas Neocleous & Co LLCDenmark Johannes Grove Nielsen Bech-BruunEngland & Wales David Lucas, Jeff Isaacs & David Pitlarge Hill Dickinson LLPFinland Ulla von Weissenberg & Linda Ojanen Attorneys at Law Borenius Ltd LLPFrance Laurent Garrabos BCW & AssocisGermany Jobst von Werder & Ingo Gercke REM RechtsanwlteGreece Maria Moisidou Hill Dickinson InternationalHong KongDamien Laracy & Michael Ng Laracy & Co and

Mike Mallin Hill Dickinson Hong Kong LLPIndia Prashant S PratapIndonesia Juni Dani Budidjaja & AssociatesIsrael Amir Cohen-Dor S Friedman & CoItaly Paolo Manica & Michele Mordiglia Studio Legale MordigliaJapan Tetsuro Nakamura, Tomoi Sawaki & Minako Ikeda Yoshida & PartnersMalta Dr Ann Fenech & Dr Adrian Attard Fenech and Fenech AdvocatesMexico Enrique Garza, Roger Rodriguez & Ramiro Besil Garza Tello & Asociados SCMozambique Joo Afonso Fialho & Sofia Params Miranda Correia Amendoeira &Associados in association with Pimenta Dionsio & 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 FirmPanama Jorge Loaiza III Arias, Fabrega & FabregaPeru Percy Urday Moncloa, Vigil, Del Rio & UrdayPoland Sawomir Nowicki, Alina uczak, Katarzyna Bielarczyk & Agnieszka Nowicka

Wybranowski Nowicki Law Office

Portugal Joo Afonso Fialho & Jos Miguel Oliveira Miranda Correia Amendoeira & AssociadosRussia Elena Popova Sokolov Maslov & PartnersSingapore Raghunath Peter Doraisamy Selvam LLCSouth Africa Shane Dwyer & Jennifer Finnigan Shepstone & WylieSouth Korea Byung-Suk Chung Kim & ChangSpain Vernica Meana Larrucea & Santiago Lpez-Caravaca Boluda Meana Green Maura & CoTurkey Emre Ersoy & Zihni Bilgehan Ersoy Bilgehan Lawyers and ConsultantsUkraine Alexander Kifak & Artyom Volkov ANK Law OfficeUnited Arab Emirates Adrian Chadwick & Raymond Kisswany Hadef & PartnersUnited States John Kimball & Emma Jones Blank Rome LLP

General Editor: David LucasHill Dickinson LLP

Shipping &International Trade LawJurisdictional comparisons Second edition 2015

SECONDEDITION

2015Shipping&Inte

rnationalTradeLaw

GeneralEditor:

DavidLucas,HillD

ickinsonLLP


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Shipping &

International Trade LawJurisdictional comparisons Second edition 2015

General Editor: David Lucas, Hill Dickinson LLP


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General Editor

David Lucas, Hill Dickinson LLP

Commercial DirectorKatie Burrington

Commissioning EditorEmily Kyriacou

Senior Editor

Callie Leamy

Publishing AssistantNicola Pender

Publications EditorDawn McGovern

Published in 2014 byThomson Reuters (Professional) UK Limited

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A CIP catalogue record for this book is available from the British Library.

ISBN: 9780414029026

Thomson Reuters and the Thomson Reuters logo are trademarks of Thomson Reuters.

Crown copyright material is reproduced with the permission of the Controller of HMSO and theQueens Printer for Scotland.

While all reasonable care has been taken to ensure the accuracy of the publication, the publishers cannotaccept responsibility for any errors or omissions.

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2014 Thomson Reuters (Professional) UK Limited


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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 Joo Afonso Fialho & Jos Miguel Oliveira Miranda Correia Amendoeira & 1Associados in association with Ftima Freitas Advogados

Argentina Fernando Ramn Ray & Alejandro Jos Ray 27Edye, 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 105Andreas Neocleous & Co LLC

Denmark Johannes Grove Nielsen Bech-Bruun 127England & 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 & Associs 195

Germany Jobst von Werder & Ingo Gercke REM Rechtsanwlte 219

Greece Maria Moisidou Hill Dickinson International 239

Hong Kong Damien Laracy & Michael Ng Laracy & Co and 271

Mike Mallin Hill Dickinson Hong Kong LLPIndia 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 407Garza Tello & Asociados SC

Mozambique Joo Afonso Fialho & Sofia Params Miranda Correia Amendoeira 435& Associados in association with Pimenta Dionsio & 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 Sawomir Nowicki, Alina uczak, Katarzyna Bielarczyk & 533Agnieszka Nowicka Wybranowski Nowicki Law Office

Portugal Joo Afonso Fialho & Jos 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 Vernica Meana Larrucea & Santiago Lpez-Caravaca Boluda 667Meana 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


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Preface to thefirst editionCargill International SA Norman Hay

I am greatly honoured to be asked to write the preface to this timelyworldwide 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 increasein 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 internationalcomparative 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 signicant 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 ofimporting 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 insufcient to reduce to zero default

risk and the inevitable legal disputes.

This volume provides invaluable introductions to the diverse ways in

Preface to rst edition


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vi EUROPEAN LAWYER REFERENCE SERIES

Preface to the rst 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 governedby 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

conicting 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 SA

Geneva, 2011


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EUROPEAN LAWYER REFERENCE SERIES vii

Foreword to thefirst editionHill Dickinson LLP David Lucas

Until recently, shipping and commodities law was considered by the widerworld 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 uctuations 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 gure within thespace 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 asit 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 gures 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;

Foreword to the rst edition


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according to the International Maritime Organisation, in 2008 (the last

year for which gures are currently available) there were almost 53,000

cargo carrying ships with a total deadweight of almost 1.2 billion tonnes(almost double the gure for 1990). Cargo trafc 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

reected in the interdependence of its diverse national legal systems. Legal

practitioners in the eld of international trade, whether in law rms 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 vesselfaces 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 howthe 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, andto 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


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EUROPEAN LAWYER REFERENCE SERIES ix

both in formulating and rening 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 Englishchapter. Kay OBrien worked selessly to coordinate the project and to keep

it on track. Not least, my warm thanks are owed to Michele OSullivan, 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 Dickinson

General Editor

London, 2011


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xii EUROPEAN LAWYER REFERENCE SERIES

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 andCallie Leamy.

David Lucas, Hill Dickinson

General Editor

London, 2014


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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 CARRIAGE1.1 Jurisdiction/proper law

1.1.1 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 contractingparties 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 bedisregarded 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 led 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 whois 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 anarbitration clause (with a seat in the UAE or

abroad) if it meets certain criteria (discussed below at 1.1.4.1). Any objectionto the jurisdiction of the UAE court, based on there being a valid arbitration

clause, must be raised at the rst 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

rst 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 isalso 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.


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1.1.4 Arbitration clauses

1.1.4.1 Will an arbitration and/or a jurisdiction clause set out in an

incorporated document (such as a charterparty referred to in a bill oflading) 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

identiable manner (and ideally expressly mentioned in the incorporating

words) in a clearly identiable 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 ne 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 grantedspecic 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 identied. 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 specic 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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UAE


1.2 Parties to the bill of lading contract

1.2.1 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 onbehalf 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 oridentity 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 carriers

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 thebill is in favour of the bearer, that bearer, is entitled to sue for loss or damage

arising from the carriers 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 regimes

1.3.1 Which cargo convention applies Hague Rules/Hague Visby Rules/

Hamburg Rules? If such convention does not apply, what, in summary, isthe legal regime?

The Hague Rules, Hague Visby Rules, and the Hamburg Rules have not been

ratied 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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UAE


1.4 Lien rights

1.4.1 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 beenforceable as against the receiver for, eg, freight, deadfreight, demurrage,

general average and any shippers 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 benecial expense incurred in relation to the goods. A party

wishing to avail itself of the right of lien or attachment or retention shouldobtain 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 masters 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 charterers insolvency?No registration is required.

2. COLLISIONS2.1 Is the 1910 Collision Convention in force?

The UAE has not ratied 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 determineliability?

The UAE has acceded to the 1972 Collision Regulations. The provisions

apply to collisions that occur between two vessels causing damage due to

a vessels 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 defendantsresidence; (b) courts of the defendant vessels 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 ratied 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 appliesfor 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 satised.


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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 contractualprovisions 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 specic 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 ofan 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 notied in writing of a

claim sustained to goods within 30 days of delivery of said goods. The cargo

owners must be notied 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 mattermust be referred to the court if the experts adjustment is disputed. The

courts judgment (after exhaustion of appeals) is binding.

5. LIMITATION5.1 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 ConventionRelating 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 ratied 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, asimplemented 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, inuenced 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 UAEcourts 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 carriers liability to not more than AED 10,000

(USD 2,717) for each package or unit taken as a basis in computing thefreight 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 carriers 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 ratied the 1992 Protocol to the International Conventionon 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 undera 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 tting out of the vessel; (k) sums expended by the

master, shipper, charterer or agent on account of the vessel or its owners; (l)

master, ofcers and crew wages; (m) ownership of vessel dispute; (n) dispute

concerning co-ownership or possession or use of the vessel or right to prots

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 themaster; (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 ofce in the

UAE; (b) if the maritime debt arose in the UAE; (c) if the maritime debt aroseduring 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), whichstates, [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 benecial

ownership. Associated ship arrest (where vessels are not under common

registered ownership) is not permitted. However, this does occasionally

happen when the court mistakes benecial ownership for registered

ownership. In such cases, it is possible to persuade the court to lift the arrestupon 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 undera 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

tting 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 orcommercial 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 partys hands, the

name of the third party; (b) demonstrate through documentary evidence

that there is aprima facieclaim; and (c) persuade the court that there is a real

risk of dissipation of the asset prior to nal judgment. As with a ship arrestunder 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 law

8.1.1 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 clauses

8.2.1 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 specic authority to do so. See also 1.1.4 above.

8.3 Passing of title/property/risk

8.3.1 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 theforeign law provision and apply UAE law.

8.4 Description and quality

8.4.1 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 thedefect was declared by the seller. Where the sale is by sample, Article 492

requires the goods conform to the sample.

8.5 Performance

8.5.1 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 incases 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, noconsequences ow 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 terms

8.6.1.1 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 dene warranties and

conditions and the consequences of breaching such terms if they so choose.

UAE courts will apply the agreed contractual provisions unless deemedcontrary 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

dene such terms in their contract.

8.6.2 Exemption clauses

8.6.2.1 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 continuingcontracts. 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 satisedthat the exemption clause was agreed between the parties and may choose

to disregard an exemption clause included in ne 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 Remedies

8.7.1 What are the sellers remedies where the buyer is in breach of

contract?

See 8.7.3 below.

8.7.2 What are the buyers 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 specic performance. However, as there is no summary

judgment procedure in the UAE courts, the usefulness of seeking specic

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

xed 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 occurrencethereof.

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 prots, 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, nancial

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 specic remedy for a selleras 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 sellers 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 notperformed 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 rst.

8.8 Time limit

8.8.1 What is the statutory limitation period?

There is no specic 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 specic 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 burdento 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 Finance

8.9.1 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 refusepayment to a beneciary of a bank guarantee on grounds based either on

the banks relationship with the person who arranged the guarantee or that

persons relationship with the beneciary. 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 parteand 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 Security

8.10.1 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 satised that it has jurisdiction and that the

applicant has aprima facieclaim 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 debtors movable property;(3) attachment of debtors debts in possession of third parties, even if debts

were deferred or conditional;

(4) attachment of debtors 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 judgmentsare 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 satised (see

7.9 above) and there are assets within the UAE to attach. It is likely to

be difcult 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 ratication of the award

by the UAE court. An attachment application made prior to an award beingmade is unlikely to succeed. Enforcement can only occur after the foreign

arbitration award has been ratied.

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 led. 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 partys hands, the

name of the third party; (b) demonstrate through documentary evidence

that there is aprima facieclaim; and (c) persuade the court that there is a

real risk of dissipation of the asset prior to nal judgment. The application

is made ex parteand 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 guaranteefrom 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 vesselarrest) is difcult to prove as the affected party has to establish malicious

intent. A bona demistake, even if made recklessly, is unlikely to result in

compensation being ordered.

8.11 Enforcement

8.11.1 Is your country a signatory to the New York Convention?

The UAE ratied 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 ratied by the UAE there have been

numerous foreign arbitration awards which have been recognised andenforced 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 Convention

8.12.1 Is your country a signatory?

The UAE has not ratied 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 Emiratilawyers 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 Arabictranslation provided by a UAE Ministry of Justice approved translator, but

the documents do not require notarisation.


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Contact details

GENERAL EDITOR

David Lucas

Hill Dickinson LLP

The Broadgate Tower

20 Primrose Street

London EC2A 2EW

T: +44 20 7280 9208

F: +44 20 7283 1144E: [email protected]

W: www.hilldickinson.com

ANGOLA

Joo Afonso Fialho & Jos MiguelOliveira

Miranda Correia Amendoeira &Associados in association with Ftima

Freitas AdvogadosAv. Engenheiro Duarte Pacheco, 7

1070-100 Lisboa

Portugal

Ed. Monumental - Rua MajorKanhangulo, 290, 1st Floor

Luanda, Angola

T: +351 21 781 48 00

F: +351 21 781 48 02E: [email protected]: [email protected]: www.mirandaalliance.com

ARGENTINA

Fernando Ramn Ray &

Alejandro Jos Ray

Edye, Roche, De La Vega & Ray

25 de mayo 489 5toCPA C1002ABI

C.A.B.A. Buenos Aires

T: +54-11 4311-3011F: +54-11 4313-7765E: [email protected]

E: [email protected]

W: www.edye.com.ar

AUSTRALIA

Geoff Farnsworth & Natalie Puchalka

Holding Redlich

Level 65, MLC Centre19 Martin PlaceSydney NSW

2000 Australia

T: +61 2 8083 0416F: +61 2 8083 0399

E: geoff.farnsworth@holdingredlich.

com

E: natalie.puchalka@holdingredlich.

com

W: www.holdingredlich.com

CANADA

Douglas G SchmittAlexander Holburn Beaudin + Lang

LLP

2700-700 West Georgia Street

Vancouver, BCCanada V7Y 1B8T: +604 484 1754F: +604 484 9754E: [email protected]

W: www.ahbl.ca

CHINA

Chen Xiangyong & Wang Hongyu

Wang Jing & Co

Rm. 2807-12, 28/F., Bank of ChinaTower, 200 Yincheng Road Central,

Pudong, Shanghai, P. R. China

200120

T: +86 21 5887 8000F: +86 21 5882 2460E: [email protected]


W: www.wjnco.com

Contact details


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CYPRUS

Vassilis Psyrras, Andreas Christodes

& Costas StamatiouAndreas Neocleous & Co LLC

Neocleous House

195 Makarios AvenueLimassol CY 3608

T: +357 25 110000M: +357 25 110001E: [email protected]

E: andreas.christodes@neocleous.

comE: [email protected]

W: www.neocleous.com

DENMARK

Johannes Grove Nielsen

Bech-Bruun

Langelinie All 352100 Copenhagen

T: +45 72273377M: +45 25263377E: [email protected]

W: www.bechbruun.com

ENGLAND & WALES

David Lucas

Hill Dickinson LLP

The Broadgate Tower

20 Primrose StreetLondon EC2A 2EW

T: +44 20 7280 9208

F: +44 20 7283 1144



FINLAND

Ulla von Weissenberg & Linda

OjanenAttorneys at Law Borenius Ltd

Yrjnkatu 13 A

FI-00120 Helsinki

T: +358 9 6153 3460 (Ulla)T: +358 9 6153 3240 (Linda)F: +358 9 6153 3499E: [email protected]


W: www.borenius.com

FRANCELaurent Garrabos

BCW & Associs

25, rue du gnral Foy75008 ParisT: +33 1 42 84 84 70

F: +33 1 42 84 84 71


W: www.bcw-associes.com

GERMANY

Jobst von Werder & Ingo Gercke

REM RechtsanwlteBallindamm 26

D-20095 HamburgT: +49 0 40 32 52 99 0F: +49 0 40 32 75 69E: [email protected]

E: [email protected]: www.reme.de

GREECE

Maria MoisidouHill Dickinson International

2 Defteras Merarchias StPiraeus 185, 35T: +30 210 428 4770

F: +30 210 428 4777E: maria.moisidou@hilldickinson.

com


HONG KONG

Damien Laracy

Hill Dickinson Hong Kong LLP in

Association with Laracy & Co.

Room 3205, 32nd FloorTower Two, Lippo Centre

89 QueenswayAdmiralty

Hong Kong

T: +852 2525 7525F: +852 2525 7526E: [email protected]

W: www.laracyco.com


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INDIA

Prashant S Pratap

Senior AdvocateMaker Chambers III# 151, 15th FloorNariman Point

Mumbai 400021T: +91 22 6669 5669F: +91 22 6669 5699E: [email protected]

W: psplawofce.com

INDONESIA

Juni Dani

Budidjaja & Associates

The Landmark Center II, Floor 8

Jl. Jend. Sudirman No. 1

Jakarta 12910

T: +62-21 520 1600F: +62-21 520 1700E: [email protected]

W: www.budidjaja.com/

ISRAEL

Amir Cohen-Dor

S Friedman & Co

One Matam Towers9 Andrei Sakharov St, P.O.Box 15065

Haifa 31905T: +972 4 8546666F: +972 4 8546688E: [email protected]

W: www.friedman.co.il

ITALY

Paolo Manica & Michele MordigliaStudio Legale Mordiglia

Via XX Settembre 14/1716121 Genova

T: +39 010 586841F: +39 010 532729/562998E: [email protected]


W: www.mordiglia.it

JAPAN

Tetsuro Nakamura, Tomoi Sawaki &

Minako IkedaYoshida & Partners4th . Suitengu Hokushin Bldg.1-39-5 Nihombashi-KakigarachoChuo-ku, Tokyo 103-0014

T: +813 5695-4188F: +813 5695-4187W: www.japanlaw.co.jp

MALTA

Dr Ann Fenech & Dr Adrian Attard

Fenech and Fenech Advocates

198, Old Bakery Street

Valletta, VLT1455T: +356 2124 1232F: +356 2599 0645E: [email protected]

E: [email protected]: www.fenechlaw.com

MEXICO

Enrique Garza

Garza Tello & Asociados SC

Camino Sta. Teresa 187C 5 pisoMxico DF 14010T: +5255 54 24 84 61


W: www.garzatello.com.mx

MOZAMBIQUE

Joo Afonso Fialho & Soa ParamsMiranda Correia Amendoeira &Associados in association with

Pimenta Dionsio & AssociadosAv. Engenheiro Duarte Pacheco, 71070-100 Lisboa

Portugal

Rua Changamire Dombe (D. Diniz),

14, Sommerschild

MaputoMozambiqueT: +351 21 781 48 00


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


W: www.mirandaalliance.com

NETHERLANDS

Rene Van LeeuwenHampe Meyjes AdvocatenSluisjesdijk 151, 3087 AG RotterdamP.O. Box 55288, 3008 EG Rotterdam

T: +31 10-494 55 00F: +31 10-494 55 07E: rene.van.leeuwen@hampemeyjes.

nl

W: www.hmlaw.nl

NIGERIA

Emmanuel Achukwu

The Campbell Law Firm

Eleganza House, 2nd Floor15B Joseph StreetLagos

T: +234-1 2711505E: [email protected]

W: www.tclegal.com

PANAMA

Jorge Loaiza III

Arias, Fabrega & FabregaPlaza 2000, 16th Floor

50th StreetT: +507 205 7068F: +507 205 7001/02E: [email protected]

W: www.arifa.com

PERU

Percy UrdayMoncloa, Vigil, Del Rio & UrdayCalle Chacarilla N 485, San IsidroLima, 27

T: +51 1 4224101/ 4401246F: +51 1 4401246/ 4227593E: [email protected]


POLAND

Sawomir Nowicki, Alina uczak,

Katarzyna Bielarczyk & AgnieszkaNowicka

Wybranowski Nowicki Law OfceEnergetykow Street

70-952 SzczecinT: +48 91 4624 839



E: [email protected]: [email protected]

W: www.wybranowskinowicki.pl

PORTUGAL

Joo Afonso Fialho &

Jos Miguel OliveiraMiranda Correia Amendoeira &Associados

Av. Engenheiro Duarte Pacheco, 7,1070-100 Lisboa

T: +351 21 781 48 00F: +351 21 781 48 02E: [email protected]: [email protected]: www.mirandalawrm.com

RUSSIA

Elena PopovaSokolov, Maslov and PartnersBarklaya Street 17

121309 MoscowT: +7 499 145 21 30F: +7 495 956 22 45E: [email protected]

W: www.smplawyers.ru

SINGAPORERaghunath Peter Doraisamy

Selvam LLC

16 Collyer Quay #17-00Singapore 049318

T: +65 6311 0030F: +65 6311 0058E: [email protected]

W: www.selvam.com.sg


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SOUTH AFRICA

Shane Dwyer & Jennifer Finnigan

Shepstone & WyliePO Box 305,La Lucia, 4153Durban

T: +27 31 575 7308F: +27 31 575 7300E: [email protected]

E: [email protected]: www.wylie.co.za

SOUTH KOREA

Byung-Suk Chung

Kim & Chang

1st Floor, 223 Naeja-dong,

Jongno-gu,

Seoul 110-720

T: +82 2 3703 1103

F: +82 2 737 9091

E: [email protected]: kimchang.com

SPAIN

Vernica Meana Larrucea & SantiagoLpez-Caravaca Boluda

Meana Green Maura & CoC/ Velzquez 92 - 2 Dcha28006 Madrid

T: +34 91 432 3875F: +34 91 432 3876



W: www.meanagreenmaura.com

TURKEY

Zihni Bilgehan & Emre ErsoyErsoy Bilgehan

Maya Akar Center,Buyukdere Cad. No:100-102 K:26

34394 Esentepe, Istanbul

T: +90 212 213 23 00

F: +90 212 213 36 00


W: ersoybilgehan.com

UKRAINE

Alexander Kifak & Artyom Volkov

ANK Law Firm9 Lanzheronovskaya Street,

Odessa, 65026 UkraineT: +38 0482 348 716

F: +38 0482 348 716

E: [email protected]: [email protected]

W: www.ank.odessa.ua

UAEAdrian Chadwick &

Raymond Kisswany

Hadef & Partners

Emaar Square

Building 3, Level 5Downtown Dubai

PO Box 37172

Dubai, UAE

T: +971 4 429 2960 (Adrian)T: +971 4 429 2949 (Raymond)

T: +971 4 429 2999

F: +971 4 429 2888



W: www.hadefpartners.com

UNITED STATES

John Kimball & Emma JonesBlank Rome LLP

The Chrysler Building

405 Lexington AvenueNew York, NY 10174-0208

T: +1 212 885 5259 (John)T: +1 212 885 5128 (Emma)F: +1 917 332 3730


E: [email protected]: www.blankrome.com

Shipping and International Trade Law

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