PAKISTAN Law and Practice Contributed by: Faisal Daudpota, Daudpota International
alternative financing (including leasing) due to stricter traditional bank lending. • Shift in finance: There is a noticeable shift away from traditional, purely bank-financed lending towards alternative credit providers and Chinese leasing houses. These entities offer more flexible structures compared to conventional debt, includ - ing operating-and-finance leases. • Sale and leaseback: These transactions are com - mon in the industry, serving as a popular method for ship-owners to unlock equity in their vessels while retaining operational control. • Lessor/lessee v lender/borrower: In a leasing arrangement, the lessor holds title to the vessel, making enforcement, such as repossession, poten - tially faster than enforcing a mortgage on a default - ing borrower, which may require lengthy judicial intervention. • Enforcement: Courts and tribunals generally handle leasing defaults by focusing on the contractual right of the lessor to regain possession of the asset. However, legal issues in ship leasing can be complex, often requiring the application of both maritime law and specialised financial lease legisla - tion. 3. Marine Casualties and Owners’ Liability 3.1 International Conventions: Pollution and Wreck Removal Applicable International Conventions Pakistan is party to several key International Maritime Organization (IMO) conventions, with the Ministry of Maritime Affairs (formerly Ports & Shipping) acting as the focal point: • Civil Liability for Oil Pollution Damage (CLC), 1992; • International Convention for the Prevention of Pol - lution from Ships (MARPOL 73/78); • Intervention on the High Seas in Cases of Oil Pollu - tion Casualties, 1969 & 1973 Protocol; • Convention on the Prevention of Marine Pollution by Dumping of Wastes and Other Matter (London Convention), 1972; • United Nations Convention on the Law of the Sea (UNCLOS), 1982; and
• Nairobi International Convention on the Removal of Wrecks, 2007. Relevant Laws of Pakistan • Port Acts (Karachi Port Trust Act 1886, Port Qasim Authority Act 1973, Gwadar Port Authority Ordi - nance 2002); and • AJHCO 1980. 3.2 International Conventions: Collision and Salvage Key Domestic Laws (Pakistan) • MSO 2001; • AJHCO 1980; • Merchant Shipping (Navigation, Collision and Acci - dent) Rules, 2003; • Marine Insurance Act, 2016; and • PEPA, 1997. Applicable International Conventions Pakistan has acceded to several International Mari - time Organization (IMO) conventions, impacting liabil - ity: • International Convention on Salvage, 1989 (Sal - vage 1989); • International Convention on Civil Liability for Oil • MSO 2001; • PEPA, 1997; Pollution Damage (CLC), 1992 (“CLC-92”); • International Convention on Civil Liability for Bunker Oil Pollution Damage, 2001 (the “Bunker Convention”); and • COLREGs 1972. Impact on Liability and Interested Parties • Collision liability: under the MSO 2001, liability is usually determined based on fault, but in instances involving oil-carrying ships, the strict liability rules of CLC-92 apply, holding the owner liable regard - less of fault, subject to limited exceptions. • Salvage rewards: the International Convention on Salvage, 1989 allows for significant awards to be calculated based on the skill of the salvor, the value of the property salvaged, and the protection of the environment. • Limitation of liability: ship-owners can limit their liability for property damage or personal injury in
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