The maritime flag is a flag intended for use on ships, boats and other craft. Naval flags are considered important at sea and flag flying rules and regulations are strictly enforced. The flag of the ship represents the nationality of the ship, i.e. the ship is under the control of the registered country. Based on the ship’s flag, the ship must comply with the international and maritime law of the country registered on the high seas and it can be used in a variety of ocean conflicts.
After signing a flag, the laws of that country are conferred on the ship, and each country is responsible for ships flying its flag. This includes ensuring ships comply with relevant international standards – through ship inspection and certification, the IMO explains. Flag countries sign international maritime treaties and are responsible for enforcing them, with rules set by the IMO regarding the construction, design, equipment and crew of ships. Under the United Nations Convention on the Law of the Sea, flag states are required to take measures to ensure safety at sea.
A “flag of convenience” refers to the registration of a vessel in a different state from that of the owners of the vessel. Ships registered under Convenience flags can often reduce operating costs or avoid restrictions of the owner’s country. To achieve this, a shipowner will find a country with an open registry or a country that allows the registration of ships owned by foreign companies. A ship operates under the laws of its flag state, so shipowners often register under other flags, aiming for less scrutiny, lower administrative costs, and more heart-friendly ports. However, many countries with open registries are criticized for having substandard regulations. Many ship owners are allowed to remain legally anonymous in open registry systems, making it difficult to identify and pursue legal action. Additionally, some active flag vessels are involved in criminal activities, detecting substandard working conditions, pollution incidents or illegal fishing. Therefore, vessels carrying these flags may be subject to special application when other countries invite them to one of the ports of the host country.
Rules applicable to exploitation for commercial purposes
The United Arab Emirates Maritime Commerce Act (Federal Law No. 26 of 1981, as amended) regulates all shipping practices in the United Arab Emirates. The regulatory body that primarily governs maritime activities in the UAE at the federal level is the Federal Transport Authority (FTA). In Dubai, the Dubai Maritime City Authority (DMCA) is the government authority responsible for regulating, coordinating and overseeing all aspects of Dubai’s maritime industry.
There are different procedures under UAE law for the registration of commercial vessels. Types of registration include temporary registration, permanent registration and registration of a vessel under construction. No procedure is available for Bearboat-Charter registration. A vessel must be owned by a UAE national to be registered in the UAE. The Maritime Law of the United Arab Emirates (Federal Law No. 26 of 1981) prohibits non-national vessels from engaging in coastal shipping between ports in the United Arab Emirates.
However, Article 16(2) of the Maritime Law of the United Arab Emirates provides an exception to this rule and provides that it is permitted to authorize foreign vessels to undertake this activity for specified periods and under certain terms and conditions. that the Ministry of Transport decides after consulting the various competent authorities. Whether a vessel leaves or rejoins the UAE flag, the UAE Ship Registry requires or is required to give or receive documents to or from other registries.
UAE maritime law provides for the government’s right to requisition ships in very limited circumstances, such as where a ship is operating under the flag of the UAE while not properly registered with of the Ship Registry, also when a UAE flagged vessel is sold to a foreign person/entity without following certain formalities to obtain UAE flag approval.
There is no specialized maritime court in the UAE. Unless otherwise agreed by the parties under a contract, the civil courts of first instance of the United Arab Emirates in the emirate concerned currently have exclusive jurisdiction over maritime matters which do not have a criminal aspect concerning them.
As mentioned earlier, there are no specialized maritime courts in the UAE. The following criteria governing the recognition and enforcement of foreign judgments apply under UAE law:
- the courts of the United Arab Emirates would not have had exclusive jurisdiction in the dispute;
- the foreign court had jurisdiction to hear the dispute under the applicable international rules;
- the judgment or order was rendered by a court in accordance with the law of the state in which the judgment or order was rendered and duly certified;
- the defendant in question had been subpoenaed and had regularly appeared before the foreign court;
- the judgment is final under the law of the court rendering the judgment; and
- the judgment does not conflict with a judgment or order previously rendered by the court of the United Arab Emirates and is not contrary to public morals or the order of the United Arab Emirates.
The UAE is also signatory to a limited number of international treaties facilitating the process of enforcing judgments issued by signatory states.
The UAE is a signatory to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.
The UAE ratified the 1976 Limitation of Liability Convention in 1977 (LLMC 76). However, the maritime law of the United Arab Emirates predates the ratification of the Convention and has not been amended, so uncertainty remains as to how the Convention will apply in each particular case. Recent cases indicate that judges would apply the Convention in principle, but some procedural aspects remain unresolved. For example, the creation of a limitation fund remains problematic.
Liability cannot be limited with respect to:
- a loss having engaged the responsibility because of the personal fault of the owner, the burden of proof resting on the plaintiff;
- liabilities arising from assistance, salvage and general average;
- rights of captain, crew, other personnel and their heirs; and
- claims arising from nuclear damage against the owner of a nuclear vessel.
Further, under Section 138(3), if the defendant’s liability as a result of the limitation is less than the compensation payable under Sharia, the plaintiff is entitled to claim the full compensation payable under Sharia.
Limits of liability shall be calculated in accordance with LLMC 76, but the following limits of UAE law may also apply:
- AED 250 for each ton of tonnage of the vessel if the material damage results solely from the incident;
- AED 500 for each ton of tonnage of the vessel if the personal injury results solely from the incident;
- in the amount of AED 750 for each ton of tonnage of the vessel if material damage and personal injury result from the incident. Of this sum, AED 500 per ton will be applied to compensation for personal injury and AED 250 per ton will be applied to compensation for material damage, and if the sum allocated for personal injury is insufficient to fully satisfy the liability, the balance of this responsibility will participate in the debts for material damage to the sums allocated to the repair of this last damage.
Typical processes for terminating a maritime claim include judgment, settlement, execution, withdrawal of claim, enforcement of foreclosure, and bankruptcy.
No income tax is imposed on vessels registered in the United Arab Emirates or abroad.
The accounting requirements are set out in the UAE Commercial Companies Law No. 2 of 2015.