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Understanding the new Saudi Maritime Law

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Part of the vision 20/30 plan is to make Saudi the hub for shipping and transportation for the region Middle East. 90% of the goods are imported by sea into Saudi. 10 billion dollars alone has been earmarked to put in the infrastructure in the 9 state owned ports, which are being privatised over the next 2-3 years. If you just look at how much money is going in and the investment and what is coming around, Saudi needed to catch up on its laws. The Commercial Court Law came into effect on 3 July and Saudi had been working on it for about 15 years. So it was a thought out plan. It took time and they wanted to get it right, and I think they have got it right in a lot of areas. It is a very detailed law now. It has over 300 sections which deal with virtually everything you would expect a Maritime Law to deal with, for example liens, rights of arrest, cargo liabilities, limitation of liability. It is one of the most modern laws of the GCC states. It's got certain provisions which are much more advanced and more in line with more international practices. Sharia law, you cannot limit your liability. And traditionally that was the case. International operators and ship-owners had that in the back of their minds so as a trading risk, commercial risk was quite high. For instance, if they had an incident there, they could not limit their liability in line with international conventions. Saudi has gone quite a step forward for it. It has introduced limitation of liability, which is now based on the 1976 convention of limitation of liability of maritime claims and the 1996 protocol and that is the most up to date version within the region that you will find. Huge certainty and commercial risks are being reduced for offshore operators that if they do have an unfortunate incident or collision and it's a huge incident, they will be able to rely on the provisions of the law to limit their liability. The section on cargo liabilities has been changed dramatically. It's still very cargo friendly but, because it's more in line with the Hamburg Rules rather than the Hague-Visby Rules. The Hamburg Rules are far much more cargo friendly than owner friendly but at least now the ship-owners have got a framework that they know what their liability is going to be. From a commercial shipping perspective where cargo is coming in, you will have at least the operators can take comfort and they ensure us that there is a regime in place which is in line with international practices. Having more certainty in the legal background and reducing the commercial risk, or at least being more aware of what their risk is, I wouldn't be surprised if you had new entrants and new ship-owners who would then come into Saudi. I think with more certainty you may have more people who would want to set up and operate in the Kingdom. At the moment, you have about 4 or 5 traditionally offshore operators who operate those vessels so hopefully, you will see more competition in the market.

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Duration: 3 minutes and 43 seconds
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Language: English
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Posted by: clydecomarketing on Oct 22, 2019

The ambition and projects set out in Vision 2030 to make Saudi Arabia a logistics and maritime hub necessitated the expansion and regulation of the maritime industry. The issuance of the first bespoke Maritime Law indicates the importance of the maritime sector to Saudi Arabia's economy and development plans, and is a significant development in regulating the sector.
In this video, Legal Director Khurram Ali looks at some of the key issues covered by the new Maritime Law and what it means for Saudi and non-Saudi vessels.

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