Recently, the United Arab Emirates (UAE) updated and improved its maritime laws in order to strengthen the role that the maritime industry sector plays in international trade. Federal Decree-Law No. (43) of 2023 on Maritime Law (UAE New Maritime Law) has replaced earlier law. The New Maritime Law addresses the various aspects of maritime activities such as chartering of a ship. The following are the important clauses from the chartering of a ship under the New Maritime Law.
Important legal provisions for Chartering a Ship under the New Maritime Law
Ship chartering is the method of leasing a ship for the transportation of goods or passengers. Article 1 of the New Maritime Law, a charterparty refers, it is a contractual agreement between a lessor (who provides the vessel) and a charterer (who hires the vessel for a specific purpose). Which outlines the terms and conditions, such as the duration, payment, responsibilities, and operational control. Under this contract the lessor agrees to provide a ship or a portion of the ship offered to the charterer for a specified period or for the purpose of carrying out one or more voyages in exchange for a hire that the charterer will pay.
According to the Article 130 states that, the provisions governing ship chartering apply unless the contracting parties agree otherwise, provided that such agreements do not contradict the fundamental nature of the charter party. The ship’s charter party is subject to the laws of the ship’s flag state unless both parties mutually agree to a different governing law.
As per the Article 131, a ship's charter party is a binding contract and such contract must be in writing and should include important details such as the names of the lessor and charterer, as well as the ship’s specifications, the quantity and type of cargo, the amount of cargo covered by the hire, loading and unloading locations, and the contractual terms. This agreement is legally binding on both parties and any individuals managing the ship. However, third parties can only be held responsible under the charter party if they were aware of its terms at the time of execution.
Subletting the Ship
Unless specifically stated otherwise in the contract, the charterer is permitted to sublet the ship as specified by Article 132. It is important to note that subletting does not release the original charterer from their obligations to the lessor, nor does it establish a direct contractual relationship between the original charterer and the sub-charterer. Additionally, the lessor retains the right to demand that the sub-charterer repay any unpaid hire fees up to the amount that the sub-charterer owes the original charterer.
Article 133 describes cargo security and liabilities. The ship's cargo acts as security for paying the expenses of the hire and related fees. While the lessor cannot detain the cargo upon arrival due to non-payment. However, they may seek a court order to place them under custody and request their sale. The lessor also retains a lien on the shipped cargo for 15 days of after delivery unless a third party in good faith acquires rights over them. In accordance with Article 134, the third parties have the right to take legal action against the lessor as a result of the ship's usage. Further the New Maritime Law state that, the sale of the ship does not terminate the charter party. However, if the buyer proves they were unaware of the charter agreement at the time of purchase, they may request its termination.
Bareboat Charter Party
A bareboat charter is an agreement where the lessor provides a seaworthy ship to the charterer without supplies, fuel, or crew, in exchange for hire (Article 137). If the contract includes an ownership transfer clause or a promise to sell, it may still be classified as a bareboat charter. The lessor is responsible for repairing defects inherent in the ship, and if such defects cause the ship to be out of service for more than 24 hours, the hire payment is suspended for that period (Article 138). The charterer assumes both the commercial and navigational management of the ship unless agreed otherwise (Article 139).
Voyage Charter Party
According to Voyage Charter Party agreement where the lessor provides a fully equipped and crewed ship for one or more voyages in return for hire (Article 140). The lessor must ensure the ship is in seaworthy condition and maintain it throughout the voyage. They may not load any cargo beyond what is agreed upon unless the charterer provides explicit consent. If the lessor violates this rule, the extra freight collected belongs to the charterer, who may also claim compensation for damages (Article 141).
Time Charter Party
A time charter is a contract where the lessor provides a fully crewed and supplied ship to the charterer for a specific period in exchange for hire (Article 150). The lessor must ensure the ship is in seaworthy condition at the agreed time and place and must maintain it throughout the contract period.
The lessor retains navigational management and is responsible for maintaining the ship and paying the crew, though they may delegate management to another party. Liability for ship loss depends on whether navigational management was transferred to the charterer (Article 151). The charterer assumes commercial management, covering all related costs, such as fuel, port fees etc. They must return the ship upon contract expiration and are liable for damages from its commercial use beyond normal wear and tear (Article 152).
Conclusion
The New Maritime Law ensures clarity and balance in ship chartering agreements, protecting the interests of both lessors and charterers while addressing potential disputes and liabilities.