The growing importance of legal services in UAE maritime

From complicated financial transactions and agreements, leasing deals and charter transactions to acquisitions and mergers, ship sale and purchase, insurance matters, and claims and recoveries, the shipping industry relies heavily on the legal framework and assistance to manage cost and risks.

While any number of issues can result in the need for legal help, some are cropping up more often than others.

“The UAE government and the various emirates were the first in the region to construct and operate first-class ports creating a regional hub for cargo coming into the Middle East region,” says Yaman Al Hawamdeh, Partner and Head of Shipping for the Middle East at HFW, an international law firm with operations in the UAE.

“It is typical in any country that the legal framework takes more time to develop. What is currently lacking is a joint approach to a unified dedicated federal legislation governing port operations, including marine services,” explains Al Hawamdeh.

“Such legislation would ideally regulate and govern incidents during berthing and cargo-handling operations, abandoned and rejected cargo and a unified liability regime.”

Legal developments

While issues concerning port operations will undoubtedly come up, there are ways in which legal teams can assist in settling disputes.

The inception of the Emirates Maritime Arbitration Centre (EMAC) that was founded in 2016, is a major positive step for the maritime industry in the region.

“Disputes will inevitably arise from time to time in a commercial context,” says Richard Strub, Partner at HFW.

“The aim is to assist the maritime industry in the resolution and settlement of disputes efficiently and cost effectively, whether this is using traditional or alternative methods for dispute resolution. The development of the EMAC is a good example of this, as this provides flexible arbitration and mediation procedures locally and regionally.”

As shipping alliances consolidating their businesses have become somewhat of a trend in the competitive market conditions, this is another area in which efficient legal assistance is crucial.

Mergers and acquisitions

“The container sector and the offshore marine sector have both witnessed a wave of market consolidation leading to mergers and acquisitions between container lines and an expansion by shipping companies into port operations,” says Tien Tai, Partner at HFW. “The most recent one was UASC merging with Hapag-Lloyd in the middle of 2017.”

He adds that the industry is remarkably fragmented to start with and is ripe for consolidation to cope with the difficult market conditions, sharing the benefits of cost reduction and increased overall efficiencies.

“Legal service providers offer real value to such consolidation by conducting the necessary due diligence exercises. They can also provide a roadmap so that all the necessary approvals from the relevant governmental and competition agencies are obtained in advance.”

Although many companies have merged in this turbulent global economy, for some, the last crucial port of call can be assistance with refinancing.

“Law firms who work closely with the commercial and legal teams and understand their business, as well as the commercial pressures clients are facing, provide real value, as they can help the company communicate the refinancing requests to the lenders in such a way the lenders expect and maximise the chances of a successful refinancing,” explains Tai.