UAE Law and Practice Contributed by: Abdelhak Attalah and Ghassan Hidar, Attalah Legal Consultancy
tion can still appoint arbitrators with expertise in ML or related fields. The parties can choose to refer their dispute to arbitration under the general framework pro - vided by the UAE’s arbitration laws. The UAE has established institutions, such as the Dubai International Arbitration Centre (DIAC) and the Abu Dhabi Commercial Conciliation and Arbitra - tion Centre (ADCCAC), which can handle arbitra - tion matters, including maritime disputes. While these institutions are not specifically dedicated to maritime claims, they can provide the neces - sary services for arbitration in such cases. 6.6 Remedies Where Proceedings Are Commenced in Breach of Foreign Jurisdiction or Arbitration Clauses If proceedings are commenced in breach of a foreign jurisdiction or arbitration clause in the UAE, the defendant has several remedies. • Arbitration clause violation: If the dispute is subject to an arbitration clause, the defend - ant must raise the issue of the arbitration agreement at the first hearing. This is crucial to prevent accidental waiver of the right to arbitration. If the defendant challenges juris - diction based on the arbitration agreement at the initial hearing, the court is likely to dismiss the case without addressing the merits, and the matter will be referred to arbitration as per the agreement. • Foreign jurisdiction clause violation: If the proceedings are commenced in violation of a foreign jurisdiction clause, the defendant should raise the issue of lack of jurisdiction as early as possible, ideally at the first avail - able opportunity. The court will assess the challenge and, if it finds the foreign jurisdic - tion clause binding, may dismiss the case in favour of the agreed foreign jurisdiction.
In both cases, the key is to act promptly in rais - ing the issue of jurisdiction or arbitration to avoid waiving the right to challenge the venue or dis - pute resolution mechanism. 7. Ship-Owners’ Income Tax Relief 7.1 Exemptions or Tax Reliefs on the Income of Ship-Owners’ Companies In the UAE, the tax treatment of income earned by vessels owned by companies depends on where the company is incorporated and the nature of its operations. In addition, the introduc - tion of Article 12(3) in the ML could have impli - cations for the future landscape of UAE-based maritime operations. This Article might encour - age more international shipping deals, mergers and joint ventures, potentially leading to new tax reliefs or more attractive conditions for shipping companies in the future. However, as of now, its exact impact on vessel tax exemptions remains to be seen. Free Zone Exemption Companies incorporated in UAE free zones typi - cally enjoy corporate tax exemptions, provided they meet certain conditions. This often includes a 0% corporate tax rate on qualifying activities such as the ownership, management and opera - tion of ships involved in international transporta - tion. Shipping companies based in these zones are not subject to corporate income tax, mak - ing free zones a popular choice for ship-owners looking for tax relief. Mainland UAE Companies Companies incorporated in mainland UAE do not currently benefit from the same exemptions, as there is no tonnage tax or specific relief for shipping activities under UAE’s mainland tax regime. As a result, shipping companies based
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