United Arab Emirates: Three Learnings From Dubai Maritime Agenda 2017

Following the initial Dubai Maritime Agenda in 2015, the second event was successfully held on 10 October at the Address Dubai Marina under the patronage of His Highness Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, Crown Prince of Dubai and Chairman of the Executive Council. Moderated by the excellent Todd Benjamin, who is best known for his 26 years as a CNN anchor, the event brought together a wide range of industry actors. This article explores the variety of topics that were discussed at the event and highlights the issues that remain in an industry that struggles with its identity.

The UAE maritime industry in 2017: a rapid expansion

Dubai's rapid rise to become the main maritime hub in the Arabian Gulf and a key one worldwide is impressive. Nawfa Al Jourani's reminded us how the city became a global maritime centre, from having 400 ships in 1984 to now having a capacity of 18 million TEU at Jebel Ali Port.

Today, Dubai ranks as the 6th most prominent maritime centre on the planet, according to the Xinhua-Baltic International Shipping Centre Development Index 2017, behind Singapore, London, Hong Kong, Hamburg and Shanghai. Around 76,000 people work in approximately 5,500 shipping companies that operate in the United Arab Emirates and, although estimates differ greatly, the sector accounts for USD7.3 billion of Dubai's GDP.

Dubai and the Dubai Maritime Cluster Office (DMCO) are now pushing to further enable the country's successful maritime industry through the creation of a cluster, in a similar fashion to Hamburg, Hong Kong and Vancouver. But how will this cluster serve an industry that has traditionally struggled to keep pace with a changing world and will it be effective as other clusters that currently exist in Dubai?

Stepping into the digital age in a time of consolidation – opportunities and challenges on the horizon

Consolidation, consolidation, consolidation: if Mark Gijsbrechts, CEO of Maersk Line in West and Central Asia says it, it must be happening. Maersk's fresh acquisition of Hamburg Süd, CMA CGM's interest in Mercosul Line and MSC's takeover of terminals at Long Beach and Seattle, formerly held by defunct Hanjin, demonstrate just that. Consolidation is not only inevitable but essential. Hanjin's recent insolvency came as a surprise to some and sent shockwaves that resonated amongst some of the largest and most dynamic players in the industry. It has become a race for survival and in every race the opportunities are there for the winner(s).

The tech factor

One of those opportunities can, and is likely to be, a bold technological advantage over competitors. Mr Gijsbrechts and other participants highlighted the immense amount of paperwork that still plagues the shipping industry in an age in which 2.5 billion individuals possess smartphones and internet access has penetrated 52% of the world's population (above 80% in Europe and North America). In a similar manner to our very own legal profession, it is difficult to argue that the maritime sector has been at the forefront of global innovation since, well, the advent of containerisation. However this was in 1950s, fast forward 60 years and we now live in a fully established information age with the likes of Google, Apple and Microsoft rivalling the influence of state governments.

Digitalisation is coming to the maritime sector, whether it is prepared for it or not. Artificial intelligence, robotics, automatisation, blockchain, 3D printers and, yes, renewable energy; these are all on the table. On the basis of humankind's experience in other industries, we could naturally deduce that all this new technology will bring efficiency and increased productivity, but in the case of shipping this can also mean a potential reduction in the need for and volumes of maritime transport services. New-entry players can stand to gain but the traditional companies must adapt to the changing environment or suffer the consequences. At a time when the latter are licking their wounds, engaging M&A lawyers and battling with longstanding debt (which banking institutions are less likely to support going forward), the former, which are not equally affected by these challenges, may bring unanticipated disruption to the shipping arena.

Shipping giants leading the pack – what about the others?

Notwithstanding Maersk's announcement that a digital revolution is its first priority, Mr Gijsbrecht was not comfortable with detailing exactly how many resources are going into this project. One thing is almost certain; we all believe that Maersk, MSC and CMA CGM can do it if they want to, regardless of the challenges currently affecting the industry, but what about the smaller companies which comprise a vast proportion of the market? Ultimately, fragmentation has always been a defining characteristic of the industry and a partition between those who will embrace digitalisation and those who will not, will result in competitive advantages that cannot yet be effectively evaluated.

Dubai's maritime cluster

A maritime cluster is a good idea in theory: put all owners, charterers, bunker suppliers, shipbuilders, freight forwarders, bankers and lawyers in geographical proximity to each other and let them collaborate to advance the interests of the industry. It seems that we might be creating the perfect platform for them to fight one another but let's give them the benefit of the doubt and say that they will cooperate after all.

The emergence of the Emirates Maritime Arbitration Centre (EMAC)

One fundamental component of the cluster is the emergence of the Emirates Maritime Arbitration Centre (EMAC). Whilst many correctly question whether EMAC is the correct forum for all types of international maritime arbitrations, local disputes can and should be arbitrated locally. The reason was repeated over and over again by Mark Beer, Co-Chief Executive of DIFC Courts: enforcement, enforcement, enforcement. If the dispute involves two local companies, the winning party can seek to enforce the EMAC award via the DIFC Court, which should prove to be quick and effective due to the collaboration between EMAC and the DIFC Court. Furthermore, there is an element of truth in stating that the New York Convention is not as effective in the Arabian Gulf in light of the specific regional dynamics.

The law and jurisdiction clause tends to be one of the most overlooked provisions of a contract but it is definitely one of the most important if things go sour. For that reason, employing a commercial lawyer is paramount to ensuring such clauses are drafted clearly and effectively and in accordance with the parties' needs.

The unique selling point

The speakers all offered their different views on what was considered to be most important for a maritime cluster. For example, the representative from Hamburg's maritime cluster, Stephan Piworus, is a believer that clusters enhance productivity, innovation and market entries. Jos Standerwick, speaking for London's cluster, said that community was most important. Nawfal Al Jourani, Chief Officer of the DMCO was right in saying that each cluster has a distinct core that makes it what it is, a unique selling point. For Ferrari, it is being the best sports car manufacturer. For Rolex, it is being an impeccable watch maker. These are easy to identify after all. But what is it for the DMCO? You may scratch your head in awe and, even after attending the Agenda, you may still be unsure. You should, however, not be hesitant because the answer lies in the city itself. Dubai is indeed the unique selling point.

The city has already experimented and achieved success with other types of commercial clusters, such as the DIFC, Healthcare City and the Creative Clusters. Why would it not work for the maritime sector? Nawfal Al Jourani pointed out that regulation and tax are the potential downsides of clusters, but this would not be the issue in Dubai given that, from a commercial standpoint, Dubai has been consistently synonymous with (1) low tax, (2) lax regulation and (3) a forward-driven leadership. The main issue is the inherent flaw of the modern shipping industry: fragmentation. The maritime sector is intrinsically fragmented and a cluster will not enable and further the interests of such an industry if the latter does not correct this identity flaw. Digitalisation and clustering, especially when the two concepts complement each other, can actually be the springboards from which the industry relaunches itself. If the DMCO goes further in its push for a Global Council of Maritime Clusters, as Mr Al Jourani announced yesterday, the effects of such change may be even deeper. And maybe there will come the time when even the legal industry will see a revolution after all. 

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions