08 Feb 2016

EMAC – The Next Step in Making Dubai a World-Class Maritime Hub

Authored by: Raymond Kisswany

EMAC – The Next Step in Making Dubai a World-Class Maritime Hub

The United Arab Emirates (“UAE”), in particular Dubai, has a long-standing maritime tradition dating more than 7,000 years which includes pearl diving, ship building, importing and exporting of goods and much more. Some of the well known maritime accomplishments include building Jebel Ali Port, the world's largest man-made harbour as well as being the leading and busiest port in the region. Dubai Drydocks, the only large dry docks in the Arabian Gulf, is another example of Dubai’s recent maritime achievements. However, the fact is that while Dubai is an ever-expanding maritime hub, Dubai is rarely used as an arbitration seat for shipping disputes, even where the parties are UAE domiciled. The Emirates Maritime Arbitration Centre (“EMAC”) is hoping to change this fact.

In September 2014, the Government of Dubai announced the launching of EMAC, describing EMAC as “a first-of-its-kind initiative in the Middle East […] aimed at addressing and resolving maritime disputes via [arbitration] based on legal frameworks and [to] set maritime regulatory guidelines and standards [in order to] position the emirate as a world-class maritime hub”. While the rules of EMAC are still being drafted, it is believed that the rules will encompass international standards and guidelines in order to attract parties towards resolving their disputes in Dubai.

There are several factors which should permit EMAC to become a world-class maritime arbitration centre.

At present, almost all maritime based disputes subject to arbitration are resolved in New York (SMA Rules), London (LMAA Rules), Singapore (SCMA Rules) or Hong Kong (HKIAC Rules). As one can easily recognise, there exists a vast geographical vacuum between arbitrations in Europe and Asia. As such, Dubai, as a regional commercial and shipping hub, is poised to fill in that vacuum.

An important factor of EMAC is that it will be located in the Dubai International Financial Centre (“DIFC”) under the review of the DIFC Courts. This is significant for a variety of reasons. First, the DIFC is an English speaking common-law based legal system which is similar to that practiced in all other major maritime arbitration centres. Second, the DIFC Arbitration Law is an arbitration-friendly statute based on the UNCITRAL Model Law, which provides arbitration awards with the necessary balance of strict enforcement where errors arise and, similarly, the competence, experience and knowledge to recognise and enforce legitimate awards. Third, DIFC Courts are signatory parties to the Memorandum of Guidance with the Dubai Courts, permitting automatic enforcement of DIFC judgments in the Dubai Courts without delving into their merits or the underlying dispute (this includes an EMAC arbitration award that has been recognised and enforced by the DIFC Courts).

As a result of the preceding paragraph, legal and commercial certainty should boost business confidence in Dubai and could lead to EMAC rivalling more established maritime arbitration centres.

There is little doubt that EMAC is a positive step towards enhancing Dubai’s vision of becoming a globally recognised maritime hub; however, there are some additional actions that Dubai and the DIFC, as well as the UAE on a whole, can take to improve Dubai’s shipping industry.

For example, it would be useful for the UAE to update Federal Law No. 26 of 1981 (“Commercial Maritime Law”) and to formulate a DIFC maritime law (the latter being more important with the launch of EMAC) as well as to create UAE and DIFC Admiralty Courts presided over by judges who are experienced in maritime law and have the jurisdiction to hear disputes encompassed in line with updated maritime laws. These Admiralty Courts should consider sessions at night and over the weekends for urgent applications, such as the arrest or release of arrest of ships. These are some ideas which should be further developed and discussed in the future.

In conclusion, currently, most shipping contracts have standard clauses for parties to choose New York, London, Singapore or Hong Kong arbitration to resolve disputes that may arise (e.g. see BIMCO forms). It will inevitably take a few years before EMAC hears its first dispute in Dubai. It is important that EMAC is a successful dispute resolution centre in order to promote Dubai as an international maritime hub and provide an alternative arbitration route that is geographically convenient as well as cost and time effective and efficient. The success of EMAC will hinge on its rules as well as the recognition and enforcement of its awards.

 
 

This article, including any advice, commentary or recommendation herein, is provided on a complimentary basis without consideration of any specific objectives, circumstances or facts. It reflects the views of the writer which may, in some cases, differ from those of the firm, especially in the developing jurisdiction of the UAE.