UAE Law and Practice Contributed by: Abdelhak Attalah and Ghassan Hidar, Attalah Legal Consultancy
Request for establishment The ship-owner or their representative must file a request for the creation of a compensation fund with the court. This is detailed in Article 85 (1) of the ML. The court’s role The court with jurisdiction over the incident is respon - sible for establishing the compensation fund. This is specified in Article 85 (2) of the ML. Compensation calculation Compensation from the fund is calculated based on the conditions set out in Article 83 (1) of the ML, though the exact methodology is detailed further in the executive regulations. For instance, to calculate the limitation fund for a ship with a tonnage of 20,000 GT based on Article 83 (1) of the ML, the formula pro - vided can be used, with an exchange rate of 1 SDR = AED4.84 (as of 10 December 2024), following the rules step by step. • Step 1: identify the compensation limit based on tonnage – concerning the initial compensation for loss of life and physical damage, the basic amount is 1,000,000 Special Drawing Rights (SDR) for vessels with a tonnage not exceeding 2,000 tons. Concerning vessels with a tonnage exceeding 2,000 tons, the ship in question has a tonnage of 20,000 tons, so it falls into the second category. For this category, the compensation increases by 400 SDR for each additional ton above 2,000 tons (up to 30,000 tons). • Step 2: calculate the additional SDR for the vessel – since the vessel has a tonnage of 20,000 tons, the additional compensation based on the addi - tional tonnage above 2,000 tons must be calcu - lated: (i) tonnage above 2,000 tons, 20,000 − 2,000 = 18,000 tons; and (ii) compensation for additional tonnage (18,000 tons), 18,000 × 400 = 7,200,000 SDR. • Step 3: calculate the total compensation in SDR – the total compensation is the sum of the base compensation (1 million SDR) and the additional compensation for the 18,000 tons above 2,000 tons: 1,000,000 SDR + 7,200,000 SDR = 8,200,000 SDR. • Step 4: convert SDR to United Arab Emirates dirham – given that the exchange rate is 1 SDR
and clearer liability limits for ship-owners, charterers, operators, managers and salvors, while aligning the country’s maritime laws with international conven - tions. 3.4 Vienna Convention on the Law of Treaties The UAE has not ratified the Vienna Convention on the Law of Treaties 1969 (VCLT). However, Articles 31–33 of the VCLT – which set out the principles for treaty interpretation – are widely recognised as reflecting customary international law and are therefore binding on all states, including the UAE, regardless of formal ratification. In MSC Mediterranean Shipping Company SA v Conti 11 Container Schiffahrts-GmbH & Co KG MS “MSC Flaminia” [2025] UKSC 14, the UK Supreme Court adopted a textualist approach to interpreting Article 2.1 of the LLMC 1976, giving words their ordinary meaning without imposing glosses or implying unstat - ed distinctions. This methodology reflects the VCLT’s core interpretive framework: good faith interpretation according to the ordinary meaning of terms in their context and in light of the treaty’s object and purpose. The UAE ratified the LLMC 1976 and the 1996 Proto - col, which entered into force on 23 May 2021. When UAE courts are called upon to interpret the LLMC or other international maritime conventions ratified by the UAE, they should apply an equivalent interpre - tive methodology through customary international law. Article 2 of the ML reinforces this by providing that the law’s provisions do not prejudice international agree - ments, conventions and protocols approved by the UAE – thereby affirming the primacy of treaty obli - gations and, by extension, the interpretive principles governing them. 3.5 Procedure and Requirements for Establishing a Limitation Fund Procedure and Requirements The procedure for establishing a limitation fund in the UAE is outlined in the ML. The process is initiated by a request from the ship-owner or their representative, who submits it to the court with jurisdiction over the area where the incident occurred, unless otherwise agreed upon.
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