Attention Seafarers: Your Claim May Be Time Barred!
Transport & Insurance Focus
The UAE Federal Law No. 26 of 1981, often referred to as the "UAE Maritime Law," solidifies the position that crew wages are a priority debt.
Law Update: Issue 366 - Transport & Insurance Focus
Wael Elgouhari Senior Associate,Transport & Insurance
Fares AbdullahAssociate,Transport & Insurance
The UAE Federal Law No. 26 of 1981, often referred to as the "UAE Maritime Law," solidifies the position that crew wages are a priority debt. This prioritisation of seafarers' remuneration is a common thread running through maritime legislation globally, reflecting the critical importance of safeguarding the rights and welfare of those who work at sea. Article 84 of the UAE Maritime Law establishes crew wages as a priority debt, underscoring the UAE's alignment with international norms in this regard. This provision ensures that, in the event of a vessel’s sale or other financial proceedings, crew wages are paid out before other claims against the vessel.
Article 84:"The following and only the following debts shall be priority debts... (b) Debts arising out of a contract for the employment of the master and crew, and other persons bound by a contract of maritime employment on board the vessel."
Historically, UAE courts have demonstrated a tendency to prioritise crew claims without stringent scrutiny of the timeliness of these claims, reflecting a pro-crew bias in wage disputes. However, a recent decision by one of the UAE's federal courts marks a significant departure from this approach. The court accepted challenges raised by a company that had auctioned and sold a vessel, spotlighting Article 93 of the UAE Maritime Law, which imposes a time bar on priority debts. The court's interpretation that the crew's claim was time-barred due to the failure to initiate a substantive claim within the prescribed timeframe represents a pivotal shift in judicial attitude. This ruling prompted the court to categorise the crew's claim as a normal debt rather than a priority one, fundamentally altering the traditional precedence of crew wages over other claims in maritime proceedings.
Quote from Article 93:"Upon there being an objection, and in the absence of a lawful excuse, no claims shall be heard in respect of priority rights against the vessel after the expiry of one year... The periods herein-before set out shall be extended up to three years if it is not possible to arrest the ship to which the priority right attaches in the territorial waters of the State..."
In light of the Federal Decree by Law No. 43 of 2023 (the "New UAE Maritime Law"), it is not anticipated that the stance of the courts will significantly deviate from past practices concerning the prioritisation of crew wage claims and the procedural aspects related to them. The New UAE Maritime Law, through its provisions, reinforces the importance of timely filing for claims while maintaining the prioritisation of seafarers' rights and welfare.
Article 29 of the New UAE Maritime Law reiterates the prioritisation of maritime debts, including those arising from the employment agreements of the captain, seafarers, and other maritime employment contracts, affirming the enduring commitment to the welfare of those at sea. Similarly, Article 106 explicitly outlines the time bar for claims arising from a seafarer employment contract, emphasising a one-year limitation period post-contract expiration, thereby underscoring the continuity in the legal framework governing the timeliness of such claims.
Quote from Article 29:"The lien holder of a ship may keep a watchful eye on the ship wherever it exists, in order to satisfy its right as per the following order of priority: ... The rights arising from the employment agreement of the captain, seafarers and other persons who are bound by a seafarer employment agreement on the ship."
Quote from Article 106:"In the event of denial and absence of a legally-admissible excuse, claims arising from a seafarer employment contract shall not be heard after one year from the date of expiration of the contract.”
This landmark decision has sent ripples through the maritime industry, drawing attention to the crucial importance of timeliness in lodging priority debt claims. Crew members and their representatives must now be acutely aware of the one-year time frame for bringing claims, as stipulated in Article 93 of the UAE Maritime Law, to ensure their claims maintain their priority status. This development underscores the necessity for all parties involved in maritime employment to diligently adhere to legal deadlines to safeguard their rights and interests.
Article 84 and Article 93 of the UAE Maritime Law serve as the legal bedrock for determining the priority and timeliness of crew wage claims. Article 84 lists the debts considered priority, including judicial costs related to the vessel's sale and distribution of proceeds, and significantly, debts arising from employment contracts for the crew. Conversely, Article 93 delineates the time restrictions within which claims for priority rights must be made, establishing a clear legal framework for the adjudication of such claims. This framework balances the need to protect crew wages as a priority debt while also introducing a mechanism to ensure claims are made in a timely fashion, reflecting a nuanced approach to maritime law that acknowledges the complexities of modern seafaring life.
The recent update to UAE Maritime Law and stricter court rulings highlight a clear message: the importance of timely filing for seafarers' claims is increasing. This shift aims to maintain the balance between protecting crew members and upholding legal standards. As maritime law evolves, timely action on claims will be crucial for everyone in the industry.
For further information,please contact Wael Elgouhari and Fares Abdullah.
Published in March 2024
