United Arab Emirates: The Qatari Boycott Four Months On; Reflections From The UAE

Last Updated: 15 November 2017
Article by Patrick Murphy

Four months on from the abrupt cessation of diplomatic relations and imposition of restrictions on Qatar by the United Arab Emirates (UAE) and allied states, including Kingdom of Saudi Arabia (KSA), Egypt and Bahrain, the dispute shows no sign of immediate resolution. That is despite efforts at mediation by other Gulf Cooperation Council (GCC) states.

The nature of the actual measures and restrictions underlying what has been termed a "blockade" against Qatar by the so called "B4" countries has been the source of some uncertainty, however. In the UAE, the region's principal trading hub, and KSA, the largest economy, many of them are not even expressly set out in legislation, leading to some confusion as to what exactly is and is not prohibited.

The principal restrictions on trade imposed by the UAE and other B4 states so far have been focussed on modes of transport rather than underlying trade or transactions. Qatari flagged or owned vessels and aircraft have been prevented from entering the territory of B4 states, and vessels travelling to and from Qatar have been restricted from calling in ports in B4 states. This includes the port of Fujairah (and its anchorage) which are major regional bunkering hubs. Dubai's Jebel Ali container terminal, the largest container terminal in the region, has similarly restricted vessels loading or discharging cargo destined for or arriving from Qatar. The road border between KSA and Qatar has also been closed. The exception to this is Egypt, which has not restricted Qatari vessels from its territorial waters or the Suez Canal.

Qatari aircraft, including flag carrier Qatar Airways, have been prohibited from entering B4 states' airspace and the UAE has ceased handling international mail.

But, in contrast to more formal sanctions regimes maintained by, for example, the EU and the US, there has been no legislation passed by the UAE to give effect to these transport restrictions. In the same way that it has implemented multilateral sanctions regimes in the past, such as the UN/Iran sanctions, the UAE has implemented the restrictions through instructions given to executive agencies of the UAE government. In particular in this instance through the relevant harbour masters who have published notices informing the public of the restrictions in relation to the entry of Qatari flagged or owned vessels.

In the absence of any specific legislation prohibiting direct trade between the UAE and Qatar, there is nothing that makes the underlying trade itself unlawful per se; rather, it is the practical difficulty in transporting goods directly from the UAE to Qatar that has hindered trade between the two. By the same token, there is nothing prohibiting the transport of goods from the UAE to Qatar via third party non-B4 countries. Anecdotally it appears that goods are indeed being exported to Qatar from the UAE via third countries, and the majority of that trade appears for the moment to be going via Oman, which has so far remained neutral in the dispute. At least two major international container lines have put in place alternative container routes to Qatar that call at Salalah and Sohar ports in Oman rather than Jebel Ali, increasing the capacity for trade via Oman - as well as offering alternative routes for foreign exporters to ship containers to Qatar from Europe, Asia and the US without the need for transhipment in Jebel Ali. This has, however, resulted in congestion at both Salalah and Sohar ports, and whilst Fujairah is unavailable as a bunkering option for vessels in transit to or from Qatar, Mesaieed port has emerged as the alternative bunkering port of choice albeit at a cost. Consequently it has meant bunkers are trading at a premium of almost US$20 per ton over the Fujairah price.

The one area for the moment where the UAE has passed specific legislation to effect restrictions has been to add 59 individuals and 12 entities/organisations to an existing list of designated terrorist organisations and groups already maintained under Federal Law 7 of 2014 on Combatting Terrorist Offences. Of the 71 designations, 14 were already designated as SDNs by the US. The significance of the designations in the UAE context is that it obliges financial institutions in the UAE and other UAE establishments licensed and monitored by authorities other than the Central Bank (accountants, lawyers, real estate brokers and the suchlike) to freeze assets of the designated persons. It does not however require non-regulated persons in the UAE to freeze assets (as the asset freezing regimes in the US and EU for example would).

Further restrictions have been imposed on dealings with six Qatari financial institutions, requiring enhanced due diligence on transactions associated with them. However, there is no blanket ban on transactions with those financial institutions and it appears, for the moment, that UAE and Qatari financial institutions are in all other respects dealing with each other normally, including in remitting Qatari riyals.

Other restrictions imposed by B4 states include those on the movement of persons; Qatari nationals were required to leave the B4 states within 14 days of the break in diplomatic relations. In terms of the UAE, it appears that most Qatari residents who are not nationals of Qatar, but who are nationals of one of the 49 states whose citizens are able to obtain a visa on arrival in the UAE, are still able travel to the UAE. However, other nationals who are not able to obtain a visa on arrival and who were previously reliant on having a managerial title and Qatari nationality to obtain a UAE visa, appear not to be.

The UAE has also restricted access to some Qatari companies' websites. Qatar Airways' website, for example, is currently blocked in the UAE. Additionally, for some weeks immediately after the restrictions were introduced it was impossible for some subscribers in the UAE to access broadcasts of beIN Sports, a sports broadcaster based in Doha. beIN Sports has the rights to broadcast, amongst other things, English Premier League Football matches throughout the GCC. As at the time of writing (the beginning of the English Premier League season) it appears those restrictions have been lifted.

The UAE has taken the step of warning residents that expressions of support for Qatar could amount to an offence under the UAE's cybercrime law, Federal Decree No 5 of 2002. That follows similar warnings about social media postings in the past (such as after the crash landing of Emirates Flight 521 at Dubai International Airport in August 2016).

For some time Qatar itself resisted applying extensive countervailing restrictions of its own, with goods originating in B4 states appearing to be cleared for import into Qatar, with water and food stuffs, pharmaceuticals, feedstock and chemicals necessary for the operation of gas plants being prioritised over other goods. Project cargoes, for example, take a lesser priority than these other essential goods. However, there is evidence that it has become more expensive to transport goods into Qatar and, given congestion at intermediate transhipment hubs, it is taking longer. Also, in the last month, there is a suggestion that Qatar has begun to restrict the customs clearance of goods that are manufactured in B4 states.

Qatar has, however, filed three Requests for Consultation with the WTO's Disputes Settlement Body (DSB) under Article 4 of the WTO's Understanding on Rules and Procedures Governing the Settlement of Disputes, seeking consultations with the UAE, KSA and Bahrain (although not Egypt) on the measures they have introduced.

The requests allege that the measures contravene the GATT 1994, GATS and TRIPS. The particular measures focussed on include the transport restrictions, prohibitions on discharge of goods bound to or from Qatar, and the blocking of access to websites and audio visual content. The requests also allege a lack of transparency in the restrictions, through failure by the three states to publish a list of the restrictions.

The UAE has stated that it will not engage in consultations with Qatar, prompting Qatar to request on 12 October that the DSB establish a panel to determine the complaints. It is not clear whether it will similarly ask for panels to be established in the disputes with KSA and Bahrain, but the deadlines for each state to respond has already passed. Early indications are that if the disputes do proceed to a panel, the UAE, KSA and Bahrain might claim a defence under the Article XXI national security exception in the GATT (and similar exceptions under GATS and TRIPS); a relatively rarely used defence but one which affords a great deal of subjectivity for a state to determine and define what it considers to be its own "essential securiting interests".

For the time being, the various restrictions remain in force and whilst it is still in theory possible to lawfully move goods from B4 states to Qatar via third countries, it is taking longer to do so and is proving more expensive. That is not to say the position will not change, however, potentially without notice. The dispute manifested itself without much in the way of warning in the first instance. Nor, however, would it be sensible to assume that the restrictions will fall away in the short term, which was the analysis of many in the immediate aftermath of their introduction.

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.

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Patrick Murphy
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