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Maritime law, or admiralty law, refers to the body of laws that regulate ships, the commercial nature of shipping, navigation, and other nautical matters. Maritime law is especially crucial for nations located near a body of water where much commercial activity depends on shipping activity to and from the nation.
Decree Law No. 23/1982 promulgating the Maritime Law (the “Old Law”) was the first coherent legislation in the Kingdom of Bahrain regulating maritime law. Four decades later, the Kingdom enacted a new Maritime Law under Decree Law No. 10/2022 promulgating the Maritime Law (the “Maritime Law” or the “Law”) which builds on new elements relating to the registration of ships, seizure and seizure of ships. maritime commercial activities, among others.
This article will cover the key concepts of maritime law and discuss any changes to these features from the old law. Further regulation is expected in the coming weeks and months through ministerial resolutions issuing implementing regulations to the law, which entered into force on October 6, 2022. For areas that are covered in more detail under implementing regulations and other ministerial resolutions, we defer discussion of these to subsequent articles once these legal instruments are enacted.
Key concepts under maritime law
Ship registration is governed by Article 5 of the Maritime Law. Essentially, vessels owned by Bahraini or GCC nationals/companies will be able to be registered, although foreign-owned vessels may be registered if they are resident or domiciled in the Kingdom of Bahrain. Vessels of one hundred and fifty (150) gross tonnage or more are required to register, except for vessels built more than twenty years ago at the time of filing the application for registration. Vessels that have not been registered are prohibited from sailing under the flag of Bahrain.
Carriage of goods by sea and bill of lading
Carriage of goods by sea is an important pillar of maritime law in jurisdictions around the world as it forms the basis of commercial relationships between businesses. The maritime law regulates the carriage of goods by sea and the bill of lading in articles 217-282.
The bill of lading is a document that proves the contract of carriage of goods and serves as a carrier or shipping receipt under which the shipper undertakes to deliver the goods against return of the document. This document is issued by the carrier at the request of the sender after receipt of the goods or their loading on board the vessel. It is important to distinguish the role of the different parties; shipper refers to the party that actually transports the goods to their destination while carrier refers to the party that contracts with the shipper to transport the goods.
The Maritime Bill (the “Bill”) treats the bill of lading differently than the final version of the Maritime Law implemented. Section 218(b) of the bill provided that “The contract for the carriage of goods by sea can only be established in writing by means of the bill of lading. » This was likely to cause practical problems since the bill of lading is issued by the shipper at the request of the carrier. after the goods have been delivered or loaded onto the vessel. It is therefore implausible that the bill of lading serves as only document establishing the contract. Accordingly, section 218(b) now provides that “The contract for the carriage of goods by sea is only established in writing”.
Mortgaged vessels and protective seizure
Vessels are like other assets that may be mortgaged and subject to legal seizure. When mortgaging a ship, the shipowner agrees to provide the bank or lender with an interest in the ship as security for a loan. In accordance with article 47 of the law, a mortgage on a ship can only be realized by a notarial deed, failing which it is deemed null and void. Although the old law did not limit such contracts to take the form of a notarial deed, the civil code paved the way for this requirement by stipulating that “Unless otherwise stipulated, a mortgage can only be contracted on a building“, and “[a]the mortgage is deemed concluded only if it is made by virtue of an official act”. In addition, mortgages on ships now extend to their machinery, equipment and fittings under Article 42(d).
In order to maximize the potential financial utility of a vessel, the law provides that a mortgage may be registered on a vessel still under construction. Contrary to what one might initially think, the mortgages taken on a ship nevertheless remain on its wreck.
For a Mortgage to be registered, a registration must be made by the Ship Registrar after receiving an official copy of the Mortgage Agreement together with a list signed by the applicant containing the following key details:
- Surname, first name and nationality of each mortgage debtor and creditor, as well as their place of residence and profession. If the mortgagee is a legal person (ie a company), the names of the partners and their nationalities must be mentioned;
- Date of the contract;
- The amount of the debt indicated in the contract;
- Terms of payment ;
- Name and description of the mortgaged vessel, as well as the date and number of the certificate of registration or the declaration of construction of the vessel; and
- The elected domicile of the mortgagee at the registry office where the registration was made.
Seizure of vessel
Section 57 of the Maritime Law only authorizes the imposition of a precautionary arrest on any ship in relation to a maritime debt. A maritime debt may arise from any of the following: (i) port and river dues; (ii) expenses related to the removal of wreckage and salvage of the ship and cargo; (iii) damage caused by the vessel due to collision, pollution or other similar maritime accidents; (iv) loss of life or personal injury caused by the vessel or resulting from its use; (v) contracts for the use or charter of a vessel; (vi) vessel insurance; (vii) transportation of goods; (viii) loss of or damage to goods and baggage carried by the vessel; (ix) salvage contracts; (x) supply of materials or tools necessary for the operation or maintenance of the vessel; (xi) the cost of constructing, repairing or equipping the ship and the wharf.
A new provision introduced by the Maritime Law provides for the possibility of attachment of other vessels belonging to the debtor (subject to certain exceptions). This is permitted even if the maritime debt does not relate to the same ship because seizure can be requested if the ship belonged to the debtor at the time the maritime debt arose. This with the exception of maritime debts arising from disputes over the ownership of the vessel, jointly owned vessels and their possession or mortgaged vessels.
A request for the precautionary seizure of a vessel can be made under article 59 of the law. The applicant must include the full contact details of the ship, the amount of the maritime debt as well as the supporting documents. This request must be lodged with the competent court, and when the court pronounces the precautionary seizure, the order must be presented to the captain of the vessel or to his representative, and another copy to the PMA in order to avoid the departure of the vessel from the Kingdom of Bahrain.
Before the promulgation of the new maritime law, applications for the arrest of ships had to go through the enforcement court. The law now provides for the seizure of vessels upon request to the competent court, Where through enforcement proceedings, the latter being governed by Articles 63 to 71. Enforcement proceedings are generally used with a view to selling the ship at public auction. It is essential to note that the seizure sanctioned by the enforcement court does not need to arise from a maritime debt as indicated above in relation to conservatory seizures. Instead, the debt must be established under an “deed” (i.e. a judgment, debt instrument, or other legal document establishing the debt. For more information on “Implementing acts”, please see Flight. I of Knowledge Series: Enforcement Law). The maritime law has also revised the period available to the judge of the enforcement court to sanction the seizure so that a period of three days must elapse from the formal notice of the debtor to pay from the previous twenty-four hour period.
Compulsory insurance coverage
One of the novelties introduced by the maritime law is the requirement of insurance cover on the vessels, failing which it cannot be registered with the PMA. Article 6 states that the following risks must be insured against: (i) the liability of the owner towards the members of the crew, (ii) claims relating to the loss, damage or loss of any property carried on board, (iii) claims relating to death or personal injury of any person or loss or damage to any property arising from the operation of the vessel, (iv) claims relating to environmental damage, and (v) claims arising from the removal of the vessel after its abandonment when it becomes a total loss or wreck.
The legislator added this requirement with the aim of aligning the maritime law with the international treaties and agreements signed by the Kingdom since the implementation of the old law. The law provides for vessel, cargo or liability insurance, with a set of provisions dealing with each.
Rules of prescription/prescription
While the Civil Code provides for various limitation periods depending on the cause of action, each of these rules is without prejudice to specific legislation which may set a limitation period different from that provided by the Civil Code. The Maritime Law sets a limitation period of two years for claims resulting from: (i) towage of ships, (ii) pilotage (navigational assistance to captains to assist in entering and leaving port waterways ), (iii) collision, (iv) liability of shipowners, (v) insurance and (vi) contracts for the carriage of goods by sea.
Four decades have passed since the implementation of the old law. Meanwhile, Bahrain has signed several international agreements and treaties on various elements of maritime law, thus the recent enactment of the maritime law aims to respond to global developments on this subject over the years and intends to bring the practice to Bahrain in accordance with said advances. However, certain aspects of the law, such as the alteration and modification of vessels, the register and the certificate of maritime service, require further clarification through ministerial resolutions to be published this year, and our next articles will deal with these developments.
The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.