For owners in the early stages of owning a yacht, the choice of flag serves as the most crucial decision to make, as it will have a direct effect on every aspect of ownership from tax, privacy, functionality, and exposure to liability.
On March 24th, the UAE will promulgate its 2023 Maritime Law Code. The new code will repeal the previous Maritime Law code, which has been in operation since 1981. The most significant change for the maritime leisure sector would be the widened scope afforded for flag registration under the UAE jurisdiction. In the past, any foreign-owned yacht wanting to fly the UAE flag could not do so, and any charter business requires the yacht to be at least 51% owned by an individual or entity carrying a UAE nationality.
The new law, however, jettisons this law in favor of an extended range of scope that now permits any foreign individual or entity to fly the UAE flag, according to Article No. 13 (b) of the 2023 Maritime Law. Individuals or entities with an office or domicile managing the vessel in the UAE may fly the flag for the first time ever.
While a welcome and long overdue change, there still may be ambivalence from any foreign entity considering flying this flag on their sterns. Taking a step back, when a prospective owner is in the process of selecting their flag of choice, it has become conventional wisdom to opt for a flag that is accepted within the shipping industry, as well as by governments around the world. A widely used reference point comes in the form of the Paris MoU list. Hopefully, the UAE will make it’s way towards attaining a spot on the White list, with it’s current placement on the -Non-listed flags having undergone IMO (V)IMSAS Audit- list proving to be a step in the right direction.
Further amendments include the acknowledgment of Acceptance of Letters of Undertaking (LOU). For releasing arrested vessels, any LOU issued by P&I clubs is now a form of valid security. By having this form of security, litigation may be largely avoided with the streamlining dispute resolution process. The new law also focuses on stronger environment protection measures, and greater transparency and accountability among other commercial and fiscal amendments.