Evolution of maritime arbitration and education boosts Dubai's international reputation

Spurred on by the ambition of the Dubai Maritime Sector Strategy (MSS) to make the emirate a fully developed, multi-layered focal point for the global industry, a thoroughgoing re-examination of Dubai’s whole maritime infrastructure is under way. This includes not just developments in terms of “hardware” – the ports, yards and cranes visible around Port Rashid and Jebel Ali – but also the “software”: the legal and regulatory framework within which a successful maritime industry can find a home. Indeed, the MSS lists education, law and maritime societies among its main components, alongside yards, ports and marinas.

Centre For Arbitration

The plan recognises that “developing maritime legislation so that it sits on a par with the highest international standards” is an element that is “crucial for Dubai to lead the maritime sectors and attract even greater amounts of local and foreign direct marine investment.” A step towards this has recently been taken with the creation of the Emirates Maritime Arbitration Centre (EMAC), a body that is being established within the Dubai International Financial Centre (DIFC). Decree No. 14, to formally establish the EMAC, was issued by Sheikh Mohammed bin Rashid Al Maktoum, the vice-president and prime minister of the UAE, on April 20, 2016. According to a statement from Sheikh Mohammed, the new centre “aims to address and resolve maritime disputes through deliberations based on legal frameworks and set maritime regulatory guidelines ...”.

Its location within the DIFC gives the EMAC additional international credibility, with the DIFC financial services free zone operating within the laws and regulations pertaining to best international legal and administrative practices, with a strong English common law and pro-mediation tradition. The DIFC courts will thus police the EMAC’s decisions, which will be based on a legal framework that also takes on board the advice of a number of regional maritime law firms, as well as other interested parties. With the EMAC at the DIFC, disputes will be resolved under UK law, with no need to go to local UAE courts in order to enforce compliance. Up until this point, decisions made in foreign courts have in the past sometimes been difficult to enforce in normal UAE courts.

The EMAC also fills a gap in the international maritime arbitration market, with no centre yet established for this essential business between London and Singapore. Dubai will address this need, filling in an absence in both geographical distance and time-zone suitability.

Well Connected

The emirate is also able to leverage its good transport connections in establishing itself as a maritime arbitration centre, being within four hours’ flying time of one-third of the world’s population, while also possessing Dubai International Airport, which in 2015 was the world’s busiest for international flights. This should prove crucial: a 2010 survey of international arbitration released by global law firm White & Case identified accessibility as one of the four most important factors driving the success of a marine arbitration centre.

At the time of writing, the final shape of the EMAC’s regulations was still unknown. The final regulations are expected to take a “light touch” approach, looking for the speedy resolution of disputes, with costs for plaintiffs kept to a minimum. Once in place, the regulations will likely have an impact on the whole sector in the long term, as many will be waiting to see how they work out in practice. Testing in court is the ultimate criteria for any such legal framework, as is effective enforcement afterwards. Once this is seen to be done by the EMAC, however, future maritime contracts will likely be increasingly framed with reference to Dubai as the centre for dispute settlement. This will in turn have a positive knock-on effect in areas such as marine financing, as the presence of an effective EMAC would reassure financiers.

A Wider Framework

The next stage in constructing the legal infrastructure to enable Dubai to fulfil its MSS goals will likely be in the training and education field. Developing expertise in a specialist area such as maritime law requires considerable investment of time and money, with Dubai Maritime City Authority (DMCA) taking a leading role in this. Existing UAE law applying to the industry will also have to be examined for any areas in which it is under-equipped to cope with the full range of possible legal and regulatory scenarios faced by a truly global maritime hub.

Currently, the UAE is a signatory to the 1958 New York Treaty on the Recognition and Enforcement of Foreign Arbitral Awards, meaning that arbitration awards rendered in Dubai will be enforceable in the other 149 countries that are also signatories. However, it is possible there will be a further need to more fully assess the impact of the maze of international treaties and regulations concerning the sector that the UAE is – or is not – signed up to. This would also help in addressing any issues over consistency in rulings.

Maritime Code

The next major legal step, meanwhile, is the creation of a new maritime code for the sector, a major piece of legislation that has been under discussion for some years now. The UAE Maritime Code currently in operation was enacted in 1981, amended in 1988, and has remained unchanged since. Originally based largely on the maritime laws of Kuwait, Qatar and Oman, it accounts for around 80% of all statute law relevant to maritime transport within UAE waters.

Some now argue that it is time for a redraft, with certain areas now behind in custom and practice, while others, such as the rules around sale and disposal of vessels under arrest, are proving slow and cumbersome. In other areas, the UAE has been a leader, however, taking a strong stand on issues such as maritime environmental protection. In 1998, the UAE authorities instituted a ban on oil products being carried by non-dedicated barges, and enacted a marine and non-marine anti-pollution law, while the DMCA is leading programmes to combat sulphur oxide, nitrogen oxide and particulate matter emissions. The UAE is also a signatory to the International Maritime Organisation convention on prevention of pollution from vessels.

Future Prospects

With the final shape of the EMAC’s regulations in discussion at the time of writing, and talks continuing over a new Maritime Code, Dubai is inching forwards as a global maritime arbitration and legal centre, providing transnational companies and investors with a secure framework for future investment.

With good access to a regional market consisting of the Gulf and other Arab states, along with east Africa and the western Indian Ocean, Dubai has fine prospects for establishing itself as the go-to arbitration centre for a vast geographical area. Many in the region too would likely prefer to use a more accessible and culturally familiar location for dispute settlement than having to travel to Singapore or London, if the opportunity were there. Many law practices are already established in Dubai, creating an existing base of expertise to draw on, while the emirate’s role as the pre-eminent regional maritime hub remains strong, adding to its credibility as an arbitration and legal centre.

The global maritime arbitration market will not stand still, however, with Singapore in particular also looking to secure a role as the Indian Ocean’s centre for arbitration. Therefore, the emirate will need to move rather quickly to secure a place on this particular boat, before it sails away east.