Strait Of Hormuz Disruption: Legal And Practical Considerations Of Ship Arrests In The UAE

As parties across the supply chain continue to navigate the consequences of recent geopolitical developments affecting the Strait of Hormuz, it is useful to revisit the legal framework and practical considerations relating to ship arrests in the UAE.

Under UAE law, a vessel may be arrested only in respect of claims that qualify as "maritime debts" within the meaning of Article 53(2) of the Maritime Law. While a ship cannot be arrested for claims falling outside this definition, alternative remedies may still be available under the general civil and commercial laws.

Maritime debts cover a broad range of claims. Those of particular relevance in the current circumstances include claims arising out of:

• agreements for the use of a vessel (including charterparties);
• the carriage of cargo or passengers;
• loss of or damage to cargo or baggage;
• general average;
• personal injury or loss of life;
• crew wages and repatriation costs;
• salvage;
• towage;
• damage caused by a vessel, including environmental damage;
• insurance premiums;
• the supply of bunkers and other necessaries; and
• wreck removal costs.

This is not an exhaustive list. Disputes may also arise in less obvious scenarios, including between co-owners of vessels where there are disagreements as to trading decisions in the current environment.

The present disruption may also have broader financial consequences. Defaults under financing arrangements may lead mortgagees to exercise arrest rights against vessels located in UAE waters. In addition, disputes may arise in the context of ship sale and purchase transactions, for example, where buyers seek to withdraw due to market changes or increased operating costs, or where sellers are unable to deliver vessels at agreed locations. Claims arising under ship sale contracts also qualify as maritime debts for the purposes of arrest.

UAE law generally permits the arrest of sister ships in respect of maritime debts. However, sister ship arrests are not permissible for certain categories of claims, including those relating to ship sale contracts, mortgages, or disputes concerning ownership, possession, or entitlement to earnings.

From a practical perspective, claimants should be mindful of several procedural requirements:

• Authority to act: Legal representatives must be properly authorised under a notarised (and, where required, attested) power of attorney before filing an arrest application. Depending on the claimant's jurisdiction of incorporation, this process can take several weeks.
• Counter-security: Court practice varies between emirates. Some courts require a cash deposit, while others require letters of undertaking to:
  • indemnify the shipowner for losses arising from a wrongful arrest; and
  • cover crew wages and vessel maintenance costs during the period of arrest.
• Validation proceedings: The claimant must file a substantive action to validate the arrest within five working days of the arrest order, failing which, the arrest order will be considered null and void.
• Substantive claim: The underlying claim must also be commenced before the competent court within eight days of the arrest order. Failure to commence the substantive claim within this period or the arrest order may be considered null and void.

Given the rapidly evolving situation, parties should carefully consider all their legal obligations and rights, including the legal basis for a potential arrest and the practical steps required to secure and maintain it.

We remain available to assist with any queries arising from these developments.

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.