by Rita Jansen, Partner, Ince & Co, Dubai office
Andrew Charlier, Head of Yachts, Superyachts and Business Jets, Partner at Ince & Co, Paris office
The UAE already boasts one of the richest populations in the world and it is estimated that private wealth in the country will continue to grow at a rate of 7.4% per year to Dh 2.94 trillion over the next five years. The same source also indicates that the UAE is home to more than 72,000 super rich individuals and 810 ultra-high net worth individuals with the latter controlling USD 120 billion wealth. Dubai in particular is reported to be a destination of choice for 27% of GCC’s high net-worth investors closely followed by Abu Dhabi. But one of the great things about Dubai is that the ownership of yachts and pleasure boats is accessible not only to the super rich but is enjoyed by many local and expatriate population in the country. Dubai continues to support growth of this recreational activity by encouraging investments in expansion of the city’s waterfronts and the marinas. The Dubai Harbour project will add 1400 berths and Marasi Business Bay will feature 800 berths in the next few years.
The procedure for registration of yachts
Navigating the legal requirements for owning a yacht can be confusing especially in the ever-changing legal environment. The procedure for registration of yachts above 10 tonnes is set out in the UAE Maritime Law No 26 of 1981. As the law currently stands only a UAE national or UAE national-owned company is permitted to fly the UAE flag on this yacht and/or to lease this yacht for commercial charter. This means that any foreign-owned vessel wishing to carry out charter business in the UAE has to be at least 51% owned by a national of the UAE and leads to curious situations where a yacht registered in the UAE by a foreign resident is not allowed to fly the UAE flag and instead must fly the flag of that resident’s country.
The good news is that the drafting of a new Maritime Law is well underway and it is expected to address issues of registration of various pleasure crafts and yachts in the UAE. In the meantime, this should not put anyone off from buying their dream boat and we aim to clarify some of the issues surrounding the process.
The relevant authority registering and licensing the boats in Dubai is the Dubai Maritime City Authority (“DMCA”). The DMCA is taking over this function from the Federal Transport Authority - Land & Maritime (“FTA”) in Dubai further to the memorandum of understanding signed between the two authorities in early 2017. The FTA will remain the responsible authority for registration of pleasure boats in Abu Dhabi and in other emirates. As for Dubai the registration system has been developed so as to facilitate the process and to reflect Dubai’s status as a global marine hub.
Under Dubai law (Executive Council Resolution No. 11 of 2013), pleasure vessels are broadly placed into two categories: motorized and non-motorized. Non-motorized vessels include rowing, sailing and other similar vessels. Motorized vessels are further classified as and include personal watercraft and similar vessels; vessels less than 12 meters in length; vessels between 12 and 24 meters in length and vessels more than 24 meters in length. The main differences are in the technical requirements presented to different types of vessels and the registration fees.
No vessel can be used in Dubai unless it is licensed
No vessel can be used in Dubai unless it is licensed and registered with the DMCA. The license is issued for a period of one year and can be renewed. Any vessel must undergo a technical inspection by the DMCA or DMCA-accredited entity. If the vessel does not meet the relevant safety and security requirements, the DMCA may refuse to issue the license. Such a refusal can be appealed before the executive director, whose decision is final.
It is also worth bearing in mind that in 2014 the UAE authorities have issued the Yacht Regulations which apply to all new and existing private yachts of 24 meters and above of all types and their support vessels. The Yacht Regulations (or the Yacht Code) sets out requirements for designing, producing and operating the yacht by their owners and operators.
Any foreign pleasure vessel sailing through the Dubai waters must obtain a sailing permit from DMCA, which is issued for a period of 3 months. A separate permit is required for a foreign vessel wishing to sail through territorial waters of other emirates and it can be obtained from the FTA.
The registration system developed in Dubai seems to be moving in the direction of efficiency and transparency. It is hoped that the national regulations will also catch up and the new maritime law, when issued, will address the issues in relation to ownership, registration and flagging of all types of pleasure vessels.