UAE Maritime Law 2023: Vessel Arrest, Sister Ships, and LoUs

The new arrest framework: 22 maritime debts, sister ship arrest, P&I Club letters of undertaking, and mandatory countersecurity

Federal Decree-Law No. 43 of 2023 on Maritime Law came into force on 29 March 2024, replacing Federal Law No. 26 of 1981. The new law overhauled the vessel arrest regime, expanded the list of qualifying maritime debts from the 1952 Arrest Convention framework to align with the 1999 International Convention on Arrest of Ships, introduced mandatory countersecurity for arresting parties, permitted P&I Club Letters of Undertaking (LoUs) to lift arrests, and separated the arrest validity claim from the merits claim. The UAE has not ratified the 1999 Convention, but the new law incorporates its core principles into domestic legislation.

For creditors (suppliers, bunker providers, port operators, cargo claimants, shipbuilders, crew members), the new law broadens access to arrest as a security tool. For shipowners and charterers, it introduces new protections: the arresting party must now fund crew and vessel maintenance during the arrest, and P&I Club LoUs can replace the costly cash deposits and bank guarantees that the old law required.

• Article 53(2) lists 22 categories of maritime debt that qualify for precautionary arrest. The old law used a narrower list based on the 1952 Convention. The expanded categories now include environmental damage caused by the vessel, wreck removal costs, port fees, insurance premiums, commissions, brokerage and agency fees, and disputes arising from a contract of sale of the vessel. Crew repatriation costs and social insurance contributions are also included.
• Sister ship arrest is permitted under Article 54. A creditor can arrest any vessel owned by the debtor at the time the arrest application is submitted, not only the vessel to which the debt relates. Under the old law, the debtor had to own the vessel at the time the debt arose. This change gives creditors access to a wider pool of assets when the debtor operates a fleet.
• The arresting party must provide countersecurity under Article 56. Before the court will grant an arrest, the claimant must post a financial guarantee covering the vessel's safety, crew expenses, and maintenance during the arrest period. This cost is treated as a judicial expense and ranks ahead of creditor claims in any distribution of sale proceeds.
• P&I Club LoUs are now accepted to lift arrests under Article 57(2). The old law required cash deposits, bank manager's cheques, or local bank guarantees. The new law expressly permits LoUs from P&I Clubs or approved financial institutions as security for vessel release, subject to court acceptance. This aligns the UAE with standard international practice and should reduce the time and cost of releasing arrested vessels.
• The arrest validity claim must be filed within 5 working days (Article 59), not 8 days. The merits claim can be filed before the state court or an arbitral tribunal, resolving a long-standing problem under the old law where arbitration agreements were effectively sidelined because the merits claim had to be filed in court. The hearing must be listed within 15 days of the arrest enforcement (down from 30 days under the old law).

Who this applies to

This article is for shipowners, charterers, P&I Clubs, bunker suppliers, port operators, cargo claimants, shipbuilders, ship repairers, and maritime and logistics lawyers in Dubai advising on arrest strategy. It also applies to banks and financiers holding ship mortgages who need to understand the priority ranking of their security against maritime liens and other privileged debts.

For companies that structure their commercial contracts for logistics operations in the UAE, the arrest provisions affect risk allocation in charterparty, supply, and service agreements.

The 22 qualifying maritime debts

Article 53(2) lists the maritime debts for which a vessel may be arrested. The list is closed: a claim that does not fall within one of these categories cannot support an arrest application. The 22 categories are:

How to arrest a vessel in the UAE

Step 1: Confirm the claim qualifies as a maritime debt

The claim must fall within one of the 22 categories in Article 53(2). A bunker supplier with an unpaid invoice qualifies under category 12 (supplies provided to the vessel). A cargo claimant with damaged goods qualifies under category 8. A port authority with unpaid fees qualifies under category 15. A general commercial creditor with a debt unrelated to the vessel does not qualify.

Step 2: File the arrest application

The creditor files a precautionary arrest application with the court in whose jurisdiction the vessel is located. The application must be supported by evidence of the maritime debt, identification of the vessel, and the legal basis for arrest. The target vessel must be physically present in a UAE port at the time of the arrest.

Step 3: Post countersecurity

Under Article 56, the arresting party must provide a financial guarantee covering the vessel's safety, crew expenses, and maintenance during the arrest period. The court will not issue the arrest order without this guarantee. For a mid-sized vessel, crew costs during arrest can run AED 50,000 to AED 150,000 per month depending on crew size and nationality. The arresting party should budget for this before filing.

Step 4: Arrest order issued

The court issues the precautionary arrest order. The vessel is detained at port. The port agent and vessel's master are notified.

Step 5: File the arrest validity claim within 5 working days

Under Article 59, the claimant must file a claim to validate the arrest within 5 working days of the arrest order (reduced from 8 days under the old law). If this deadline is missed, the arrest lapses.

Step 6: File the substantive claim within 8 days

Under the general provisions of the Civil Procedure Law (FDL No. 42 of 2022), the substantive claim must be filed within 8 days of the arrest order. The substantive claim can be filed before the competent state court or before an arbitral tribunal if the contract contains an arbitration clause. This is a significant improvement: under the old law, the substantive claim had to be filed before the state court regardless of any arbitration agreement, which forced parties to litigate in court even when their contract mandated arbitration.

Step 7: Hearing and judgment

The hearing must be listed within 15 days from the date of the arrest enforcement minutes (down from 30 days under the old law). The court issues judgment confirming the arrest and, if appropriate, ordering the sale of the vessel.

Sister ship arrest

Article 54(1) allows the creditor to arrest the vessel to which the debt relates, or any other vessel owned by the debtor at the time the arrest application is submitted. This is "sister ship arrest" and it gives creditors a wider pool of targets when the debtor operates multiple vessels.

The timing change is important. Under the old law, the debtor had to own the sister vessel at the time the debt arose. Under the new law, the debtor must own the sister vessel at the time the arrest application is submitted. A shipowner who sold one vessel but still owns another at the time the creditor files can have the remaining vessel arrested.

Exceptions: Article 54(2) does not permit sister ship arrest where the debt relates to a dispute concerning the vessel's ownership, a dispute between co-owners, a ship mortgage, or a ship sale. These categories require arrest of the specific vessel to which the dispute relates.

Bareboat charter vessels: Article 55 permits arrest of a bareboat-chartered vessel during the charter period for debts incurred by the charterer, provided the charterer is solely liable for the maritime debt and has the right to manage navigation. This is a change from the old law. A bunker supplier owed money by a bareboat charterer can now arrest the chartered vessel, not only other vessels owned by the charterer.

Privileged debts (maritime liens)

The UAE does not use the term "maritime lien" as understood in common law jurisdictions. Instead, Chapter 6 of the Maritime Law uses the term "Privileged Debts over a Ship." These are debts that attach to the vessel itself and rank in priority above unsecured claims and, in some cases, above registered mortgages.

Article 29 lists eight categories of privileged debts, in order of priority:

1. Legal expenses incurred for the preservation, sale, and distribution of the vessel's sale proceeds, including port fees, lighthouse fees, and similar charges, plus expenses for navigational pilotage
2. Claims arising from the employment contract of the master, officers, and crew
3. Salvage rewards and the vessel's share in general average
4. Compensation for collision and other maritime accidents, compensation for damage to port structures, docks, and waterways, and compensation for personal injury to passengers and crew
5. Claims arising from contracts concluded by the master in their capacity as the vessel's representative outside the home port, where such contracts are necessary for the preservation of the vessel or the continuation of the voyage
6. Claims of shippers for loss of or damage to cargo and baggage
7. Claims arising from contracts of pilotage
8. Claims arising from a contract of construction or repair of the vessel

Contractual liens are not enforceable. The UAE does not recognise maritime liens created by agreement between the parties. A contractual provision granting a supplier a "maritime lien" over the vessel does not create a privileged debt under UAE law. Only the eight categories listed in Article 29 carry priority. Creditors who rely on contractual lien language in their supply agreements should understand that this language has no priority effect in UAE enforcement proceedings.

Ship mortgages rank below privileged debts. A registered ship mortgage (Article 44) is enforceable and ranks as a priority debt, but it sits below the eight categories of privileged debt listed in Article 29. A mortgagee bank will be paid after crew wages, salvage rewards, collision claims, and the other privileged categories have been satisfied from the sale proceeds.

Lifting an arrest: P&I Club LoUs and other security

Under Article 57(2), an arrest can be lifted if the non-arresting party provides security through a Letter of Undertaking from a P&I Club or an approved financial institution. The court must accept this security. Under the old law, only cash deposits, bank manager's cheques, and local bank guarantees were accepted, which caused significant delays and costs for shipowners.

The acceptance of P&I Club LoUs is one of the most significant practical changes in the new law. A standard P&I Club LoU can be issued within 24-48 hours, compared to the days or weeks required to arrange a local bank guarantee in the UAE. This change should reduce the period of detention for arrested vessels and the associated losses (port fees, crew costs, demurrage, cargo delays, charter cancellation).

The executive regulations (still pending at the time of writing) will specify the detailed requirements for LoU acceptance. Courts may impose conditions on the form, amount, and issuing institution.

Limitation of liability and limitation funds

The new law introduces the ability for shipowners to establish a limitation fund in UAE courts. Under the old law, owners could limit their liability but had no statutory mechanism to establish a fund. The new provisions allow the fund to be constituted by a financial guarantee (potentially including a P&I Club LoU, though the executive regulations will confirm this). Once a limitation fund is established, creditors must pursue their claims against the fund rather than against other assets of the shipowner.

The limitation regime follows the principles of the 1976 Convention on Limitation of Liability for Maritime Claims (LLMC), as amended by the 1996 Protocol. The UAE has not ratified the LLMC, but the new law incorporates its structure. Limitation amounts will be specified in the executive regulations.

What creditors and shipowners should do

For creditors seeking to arrest:

• Confirm the claim falls within one of the 22 maritime debt categories in Article 53(2) before committing to the application. A rejected application wastes time and costs, and the countersecurity deposit is not refunded until the proceedings are resolved.
• Budget for countersecurity. Article 56 requires a financial guarantee covering crew and vessel maintenance. For a vessel with a 20-person crew, expect AED 100,000 to AED 300,000 for a 2-3 month arrest period. This is a judicial expense that ranks ahead of creditor claims, but it is cash out of pocket at the filing stage.
• File the arrest validity claim within 5 working days and the substantive claim within 8 days. Both deadlines are hard. Missing either one causes the arrest to lapse, and the creditor loses the security position.
• Consider whether sister ship arrest is available. If the debtor owns multiple vessels, arresting a vessel that is more commercially valuable to the debtor (or more likely to call at a UAE port) may produce faster settlement.

For shipowners and charterers defending an arrest:

• Request an LoU from the P&I Club immediately upon receiving notice of the arrest. The faster the LoU is issued and presented to the court, the faster the vessel is released. Delay costs demurrage, port charges, and potential cargo claims.
• Challenge the arrest if the claim does not qualify as a maritime debt under the closed list in Article 53(2). If the claim is a general commercial debt unrelated to the vessel, the arrest should not have been granted.
• Check whether the arresting party posted valid countersecurity under Article 56. An arrest granted without proper countersecurity may be vulnerable to challenge.
• Consider establishing a limitation fund if the total claims against the vessel exceed the limitation amount. This caps the owner's exposure and channels all claims through a single fund.

How should maritime creditors and shipowners approach vessel arrest in the UAE in 2026?

The 2023 Maritime Law positions the UAE as a more creditor-friendly jurisdiction for vessel arrest than it was under the 1981 law. The expanded list of 22 maritime debts, the sister ship arrest provisions, and the compressed court timelines all favour creditors seeking to secure their claims. The acceptance of P&I Club LoUs and the mandatory countersecurity requirement balance this by protecting shipowners against spurious or under-funded arrest applications.

The law has been in force since March 2024, but no Court of Cassation or Federal Supreme Court judgments interpreting the new provisions have been reported yet. How UAE courts apply the new rules in practice, particularly on countersecurity amounts, LoU acceptance conditions, and the interaction between arrest proceedings and arbitration agreements, will shape the regime over the next two to three years. Creditors and shipowners should seek legal advice before acting, not after the arrest order is issued.

For maritime creditors, shipowners, and P&I Clubs managing arrest applications or defences in UAE ports, our maritime and logistics team advises on arrest strategy, countersecurity, LoU acceptance, limitation, and enforcement of maritime claims.

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