Navigating the New UAE Maritime Law 43 of 2023: Guidance for Protection and Indemnity Clubs

The European Union’s Emissions Trading System (EU ETS) was extended to cover emissions from shipping as of 1^st January 2024.

The EU ETS is limited by a 'cap' on the number of emission allowances. Within the cap, companies receive or buy emission allowances, which they can trade as needed. The cap decreases every year, ensuring that total emissions fall.

Each allowance gives the holder the right to emit:

One tonne of carbon dioxide (CO2), or;
The equivalent amount of other powerful greenhouse gases, nitrous oxide (N2O) and perfluorocarbons (PFCs).
The price of one ton of CO2 allowance under the EU ETS has fluctuated between EUR 60 and almost EUR 100 in the past two years. The total cost of emissions will vary based on the cost of the allowance at the time of purchase, the vessel’s emissions profile and the total volume of voyages performed within the EU ETS area. The below is for illustration purposes:
~A 30.000 GT passenger ship has total emissions of 20.000 tonnes in a reporting year, of which 9.000 are within the EU, 7.000 at berth within the EU and 4.000 are between the EU and an outside port. The average price of the allowance is EUR 75 per tonne. The total cost would be as follows:
~~9.000 * EUR 75 = EUR 675.000
~~7.000 * EUR 75 = EUR 525.000
~~4.000 * EUR 75 * 50% = EUR 150.000
~~Total = EUR 1.350.000 (of which 40% is payable in 2024)
For 2024, a 60% rebate is admitted to the vessels involved. However, this is reduced to 30% in 2025, before payment is due for 100% with effect from 2026.
Emissions reporting is done for each individual ship, where the ship submits their data to a verifier (such as a class society) which in turns allows the shipowner to issue a verified company emissions report. This report is then submitted to the administering authority, and it is this data that informs what emission allowances need to be surrendered to the authority.
The sanctions for non- compliance are severe, and in the case of a ship that has failed to comply with the monitoring and reporting obligations for two or more consecutive reporting periods, and where other enforcement measures have failed to ensure compliance, the competent authority of an EEA port of entry may issue an expulsion order. Where such a ship flies the flag of an EEA country and enters or is found in one of its ports, the country concerned will, after giving the opportunity to the company concerned to submit its observations, detain the ship until the company fulfils its monitoring and reporting obligations.
Per the EU’s Implementing Regulation, it is the Shipowner who remains ultimately responsible for complying with the EU ETS system.

There are a number of great resources on the regulatory and practical aspects of the system – none better than the EU’s own:

‍https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A02003L0087-20230605

‍https://climate.ec.europa.eu/eu-action/transport/reducing-emissions-shipping-sector_en

‍https://climate.ec.europa.eu/eu-action/eu-emissions-trading-system-eu-ets/what-eu-ets_en

We receive and willingly submit the following advice from BLK partners a law firm based in UAE which through lawyer Tarek Saad actively contributed to the drafting and amendment of the New UAE Maritime Law 43 of 2023 in collaboration with the Federal Transportation Authority.

This is an important issue, regulating a mandatory Liability Insurance for all type of transport ships including Passengers ships and recognizing a crucial role to P&I Clubs and P&I Insurers in offering financial protection and indemnification to shipowners and their vessels calling or transiting UAE waters.

Navigating the New UAE Maritime Law 43 of 2023: Guidance for Protection and Indemnity Clubs

In the dynamic landscape of the maritime and shipping industry, the recently enacted UAE Maritime Law No. 43 of 2023 stands as a significant regulatory update. This law specifically addresses the functions and responsibilities of Protection and Indemnity (P&I) clubs, recognizing their crucial role in offering financial protection and indemnification to shipowners.

The new law aims to fortify the position and functions of P&I clubs in key aspects outlined below:

Article57: Provisional Seizure and Guarantee for Maritime Debts

1. Provisional seizure serves to restrict a ship from traveling.

2. The court holds the authority to lift the seizure upon presentation of sufficient bail or guarantee.

3. Guarantee letters issued by P&I clubs or approved financial institutions are acknowledged as satisfactory, and the executive regulations determine the provisions for the acceptance of the guarantee letters.

4. Requests for lifting seizure or providing bail/guarantee are not construed as an admission of liability.

Article333: Ensuring Compliance with Mandatory Liability Insurance

1. Ships within state ports or waters are mandated to carry insurance documents covering liability for maritime risks.

2. Insurance covering the wages of captains and sailors is considered part of liability insurance.

3. Ships flying the state's flag must obtain insurance covering liability for all their voyages.

4. The ministry defines covered risks and assumes supervisory authority.

Article334: Mandatory Liability Insurance for Passenger Transport Ships

Operators of passenger transport ships are obligated to maintain liability insurance, with specific guidelines established by the ministry.

Article335: Facilitating Cooperative Insurance Entities

1. Entities such as P&I clubs are permitted to establish branches in the country andenter into agreements with local insurance entities.

2. The minister specifies accredited entities authorized to issue letters guaranteeing the payment of maritime debts.

This circular has been developed by the Maritime, Shipping, and Logistics departmentat BLK Partners, headed by Tarek Saad (Partner). Tarek spearheaded the maritime law project and actively contributed to the drafting and amendment of the lawin collaboration with the Federal Transportation Authority in the UAE.

Should you have any queries or require further clarification, please do not hesitate to reach out to our team at:

Tarek.saad@blkpartners.com ; Elias.elmurr@blkpartners.com.

This circular can also be accessed at www.blkpartners.com

BLKPartners

Note: This circular provides a broad perspective on the marine market and should not beconstrued as an advisory. The information is derived from sources deemed reliable at the time of publication, and we cannot be held responsible for any omissions in the circular. The above circular is a summary of the New UAE Maritime Law 43 of 2023 and does not include the exact translation of the article's context.

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This Newsletter, and our information archive, can also be accessed at www.locktonplferrari.com

Lockton P.L. Ferrari & CO S.r.l.

Lockton P.L. Ferrari – A Member of the Lockton Group of Companies This newsletter is intended solely as an overview of the marine market and does not constitute any form of advice. It is based on sources believed to be accurate at the time of printing and we cannot be held liable for the omission of any information within the newsletter.

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Navigating the New UAE Maritime Law 43 of 2023: Guidance for Protection and Indemnity Clubs

The European Union’s Emissions Trading System (EU ETS) was extended to cover emissions from shipping as of 1st January 2024.

Navigating the New UAE Maritime Law 43 of 2023: Guidance for Protection and Indemnity Clubs

The European Union’s Emissions Trading System (EU ETS) was extended to cover emissions from shipping as of 1^st January 2024.