Saudi Arabia Shipping 2023

1. How does the title of a ship pass from ship builder to ship owner?
In general, the ownership of the vessel will remain with the shipbuilder until the ship owner conducts necessary trials and accepts the delivery.
In Saudi Arabia the authority that is responsible for ships and marine units is the Transport General Authority (TGA). Owners of the ship may transfer the ship ownership by applying via the TGA’s Maritime Gate portal.

2. What happens in the event of a dispute between the ship yard and ship owner?
Lawsuits related to the ship rights will be filed before the commercial court in the jurisdiction where the ship’s registration office is located.

3. Does this differ if the ship is built outside the jurisdiction – do the local courts have any
powers to demand delivery?
The acceptance of a case by the Saudi court depends on the agreements established between the ship owner and the ship builder. In the event that the defendant does not raise a jurisdictional objection during the initial hearing, the court will proceed with the case, and the judgment rendered by the local court will be binding for both parties.

4. Where a defective ship has caused damage to a third party – under what circumstances is the
owner, the builder or a third party liable?
The liability for damage caused to a third party by a defective ship depends on the circumstances and parties involved. The following outlines the general principles of liability in line with the Commercial Maritime Law:
1. Owner’s Liability: The ship’s owner may be held liable if the damage resulted from a defect inherent to the ship, such as a structural issue or mechanical failure.
2. Builder’s Liability: If the damage is caused by a defect in the ship’s construction or design, the shipbuilder may be held liable for the resulting consequences.
3. Third Party Liability: If a third party, such as a manufacturer or supplier, provided a defective component or equipment that led to the damage, they may be held liable.

5. How is the nationality of a vessel determined in the country?

In Saudi Arabia, the nationality of a vessel is determined based on two criteria. First, the vessel must be registered in one of the Saudi ports. Second, it must be fully owned by a Saudi national. If there is co-ownership, it is required that the Saudi national holds the majority of shares in the vessel for it to acquire Saudi nationality.

6. How do laws governing shipping in your country vary with those of major jurisdictions?
Saudi Arabia does not have admiralty law. The legal system in Saudi Arabia is based on Islamic law (Sharia), and the Commercial Courts operate within this framework to adjudicate maritime disputes.

7. What types of situation can impact rights in shipping contracts?
Situation that may impact the rights in a shipping contracts includes:
1-Damage repair of the vessel.
2-Changes in the laws and regulations.
3-Issues of reaching the designated port.
4-Force majeure.
5-Based on the circumstances the losses and damages cost during a sea voyage could be general average or particular average.
6-If there is breach of contract from one of the parties.

8. Are there any time limits governing shipping contracts?
Under Saudi Arabia’s Commercial Maritime Law, there are time limits governing shipping contracts. Article 119 states that a claim by a principal or employer against a shipping agent or transport operator must be filed within two years from the debt’s maturity date. Additionally, Article 225, paragraph 1 states that no claim arising from an insurance contract can be heard after two years, with the starting point depending on the nature of the claim.

9. Are local arbitration centers commonly used in shipping disputes – and in what general
circumstances?
Yes. In fact one of the goals for the Saudi Centre for Commercial Arbitration or SCCA to create a safe environment that attracts both foreign and domestic parties to settle maritime disputes by arbitration.

10. In what circumstances do domestic courts take precedence over foreign court decisions or
arbitration decisions in shipping contracts?
There are four situations:
1-Laws and regulations applied on Saudi vessels and foreign vessels that anchor at the Kingdom’s ports or maritime areas.
2-The transfer of ownership that are considered invalid.
3-The dismissal of crew.
4-Lawsuits arising from maritime rescue will be considered null and void if the rescue operation occurs in the Kingdom’s maritime areas and the rescuing or rescued vessel is Saudi.

11. Are there any special maritime courts or arbitrators locally – what sort of cases do they
generally cover?
In Saudi Arabia, there are no special maritime courts or arbitrators specifically dedicated to maritime cases. Maritime disputes are instead generally handled by the Commercial Courts. These courts have jurisdiction over all types of maritime disputes in the absence of an agreement for arbitration. The Saudi Centre for Commercial Arbitration exists as an option for parties to voluntarily choose arbitration as a means of resolving their maritime disputes. As for maritime labor disputes, they are typically handled by the labour court.

12. What local remedies are available to those in shipping disputes?
In Saudi Arabia, there are several local remedies available to parties involved in shipping disputes. These include:
Commercial Courts: Parties can file a lawsuit in the Commercial Courts, which have jurisdiction over maritime disputes. These courts can hear cases related to shipping contracts, cargo claims, collisions at sea, salvage, and other maritime legal matters.
Mediation: Parties can opt for mediation, where a neutral third party assists them in reaching a mutually acceptable resolution. Mediation can be conducted through the Saudi Centre for Commercial Arbitration or other mediation centres authorised by the Saudi Ministry of Justice.
Arbitration: Parties can also choose to resolve their shipping disputes through arbitration. The Saudi Centre for Commercial Arbitration is the primary institution for commercial arbitration in Saudi Arabia. Parties can agree to arbitration either before or after a dispute arises, and the arbitration process can be conducted based on the rules and procedures agreed upon by the parties.
Saudi Arabian Monetary Agency (SAMA): In cases involving financial disputes, parties may seek remedies through the Saudi Arabian Monetary Agency, the central bank of Saudi Arabia. SAMA oversees banking and financial-related matters and can provide assistance in resolving financial disputes arising from shipping transactions.

13. What are the key responsibilities of a shipper under the laws of this jurisdiction?
The shipper is responsible for preparing the goods for shipping, including packaging, labelling, and providing necessary documentation such as a bill of lading or shipping instructions.

14. Does this differ where the ship owner is not the contracted carrier?
Yes. The roles and responsibilities of the shipper and carrier can differ when the shipowner is not the contracted carrier. In these cases, the shipowner and the contracted carrier may have separate roles and liabilities.
Shipowner’s Responsibilities:
Seaworthiness: The shipowner is responsible for ensuring that the vessel is seaworthy, meaning it is fit for the intended voyage and capable of safely carrying the cargo.
Equipment: The shipowner is responsible for providing and maintaining the necessary equipment on board the vessel for the safe transportation of goods. 

Safe Navigation: The shipowner is responsible for ensuring the safe navigation of the vessel and taking necessary measures to prevent accidents or damage to the cargo.

Carrier’s Responsibilities:
Custody of Goods: The carrier, who may be a separate entity contracted by the shipper or shipowner, is responsible for the custody and transportation of the goods while they are in their possession.
It is important to note that specific liabilities and responsibilities may vary depending on the terms of the contract between the shipper, shipowner, and carrier.

15. Are there any laws a shipper can limit liability for damaged/late cargo?
According to the Commercial Maritime Law, the carrier is exempt from liability if the loss or damage to the goods is caused by an external factor beyond their control. This exemption protects the carrier from liability when the loss or damage results from circumstances they could not have reasonably foreseen or prevented.

16. How does route deviation impact contractual defenses?
Route deviation can have implications on contractual defenses in shipping contracts. The impact will depend on the specific terms and provisions outlined in the contract. Here are a few scenarios to consider:
Authorised Route Deviation: If the contract allows for authorised route deviation, meaning the carrier has explicit permission to deviate from the agreed-upon route, then the contractual defences may remain intact. The carrier can argue that the deviation was within their rights and does not breach the contract.
Unauthorised Route Deviation: If the carrier deviates from the agreed-upon route without proper authorisation, it could potentially weaken their contractual defenses. The shipper or cargo owner may argue that the unauthorised deviation constitutes a breach of contract and seek remedies or damages.
Force Majeure: In some cases, route deviation may be justified due to unforeseen circumstances or events beyond the carrier’s control, such as adverse weather conditions or port closures. If the contract includes a force majeure clause that covers these events, the carrier may invoke this clause as a defence against any contractual breach resulting from route deviation.
Notice and Mitigation: Regardless of whether route deviation is authorised or unauthorised, carriers are generally expected to provide timely notice to the shipper or cargo owner regarding any significant changes affecting the planned route. Failure to provide adequate notice or take reasonable steps to mitigate the impact of route deviation could weaken the carrier’s contractual defences.

17. Who has the right to sue in cargo disputes?
A cargo owner, the carrier, consignee or insurer.

18. Which international laws/treaties are in recognised in this jurisdiction and with what impact?
The United Nations Convention on the Law of the Sea of 1982. The convention is used to define concepts such as sovereignty and jurisdiction, protection and preservation, and dispute resolution.
The International Convention on the Measurement of Tonnage of Ships (1969) and its amendments. The dimensions and measurement of the vessels. International agreements issued by the International Maritime Organisation. The requirements for security and safety, as well as environmental assessment procedures for the protection of the marine environment.
International Rules for Preventing Collisions at Sea of 1972 and their amendments.
It emphasises the importance of following sailing and steering rules, using specific lights and signals, and avoiding collisions to ensure safety and avoid potential hazards. The Unified Customs Law of the Gulf Cooperation Council countries and its regulations.
The GCC Unified Customs Law aims to eliminate internal customs barriers, establish a single customs territory, ensure uniformity among member states, increase intra-GCC trade, simplify customs clearance processes, and improve global trade competitiveness.
Treaties signed by the Kingdom of Saudi Arabia with neighbouring and corresponding countries. Concerning maritime borders or natural resource exploitation in the Red Sea, Gulf of Aqaba, and Arabian Gulf.

19. Are overseas judicial sales recognised and what is there legal consequence?
On 5 September 2023, Saudi Arabia became one of the countries that recognised the UN Convention on the International Effects of Judicial Sales of Ships (2002). Article 36 of the Commercial Maritime Law mandates official documents authenticated by the Kingdom’s diplomatic mission in transactions that involve the establishment, transfer, or termination of an ownership right or any other right in rem against the vessel; otherwise, it is null and void. The transaction must also be recorded in the vessel register in order for it to be binding on third parties.

20. Are there any procedures for a judicial sale in this jurisdiction – and how do they work?
The court has the power to order the sale of the vessel in cases that the owner is in debts related to the vessel. The process for an executory arrest of a vessel is as follows:
1. Initiation of arrest:
Debtor Notice: Before arresting a vessel, the creditor must officially notify the debtor to pay the debt.
Arrest Notice: A notice is delivered to the owner or, if the debt concerns the vessel, to the captain.
Summons: The notice includes a summons to appear in court for a sale order hearing.
2. After the arrest notice:
Arrest Confirmation: The competent authority at the port must confirm the arrest to prevent sailing.
Registration Update: The arrest is registered with the vessel registration office and the flag state consul.
Sale Order: The judge determines the starting price, sale terms, and auction dates. Claims and Appeals: Claims and requests to annul the arrest must be filed 48 hours before the auction, but won’t automatically stop the sale. Appeals against related judgments have a 15-day filing period.
3. The judicial sale of the vessel by public auction procedure: Two-Session Auction: The highest bid from the first session becomes the starting price for the second. The highest bidder across both sessions wins.
No Bid Scenario: If no bids are received, the starting price is lowered, and a new auction date is set.

Winner’s Payment: The winning bidder pays 20% upfront and deposits the remaining amount within seven days. Failure to do so leads to a new auction on their responsibility.
Appeals: Decisions on awarding bids can be appealed within 15 days based on procedural flaws.

21. What is the law governing salvage how does it work?
In Saudi Arabia, the law governing salvage operations is outlined in the Commercial Maritime Law, specifically in Part Six, Chapter 2, titled Maritime Rescue. The relevant articles that detail salvage procedures are Articles 260 to 270. Key points regarding salvage operations under Saudi Arabian law include:
Duty to Rescue: Shipmasters have an obligation to rescue individuals in distress at sea. They must take reasonable measures to save lives without putting their own vessel or crew in danger. Failing to fulfill this duty can result in liability for the shipmaster.
Reward for Successful Rescue: Successful salvages are eligible for rewards. The specific amount of the reward is determined based on various factors, such as the value of the saved property, the level of risk involved in the salvage operation, and the efforts made by the salvor.
Unsuccessful Rescue and Reimbursement: If a salvage attempt is unsuccessful, the salvor may be entitled to reimbursement for the reasonable expenses incurred during the rescue operation. However, this reimbursement is contingent upon the salvor having acted diligently and in good faith.
Special Compensation for Preventing Environmental Damage: In situations where a salvage operation is aimed at preventing or minimising environmental damage, the salvor may be eligible for additional compensation from the vessel owner. This provision encourages prompt and effective action to mitigate potential harm to the environment.
Even if the rescuing vessel and the vessel in distress are owned by the same person or entity, rewards are still applicable. This provision ensures that the salvor is duly recognised and compensated for their efforts, regardless of the ownership relationship between the vessels involved.

22. What vessels are eligible for registration under the country’s flag?
Only vessels that are wholly owned by Saudi nationals and registered in Saudi Arabian ports are eligible for registration under the Saudi flag.

23. What inspections do port authorities carry out?
The Saudi Ports Authority or Mawani carries out inspections to ensure compliance with safety, security, and environmental regulations. The specific inspections conducted may vary depending on the type of activity and vessel involved. Here are some common inspections carried out by Saudi port authorities:
Safety Inspections: Safety inspections focus on verifying that the vessel meets the required safety standards. This includes inspections of life-saving equipment, fire safety systems, navigation equipment, hull integrity, and overall structural condition of the vessel.
Security Inspections: Security inspections are conducted to assess and ensure compliance with international security standards, particularly those outlined by the International Ship and Port Facility Security (ISPS) Code. These inspections aim to prevent security threats, including unauthorised access, smuggling, and acts of terrorism.
Environmental Inspections: Environmental inspections are performed to verify compliance with environmental regulations and prevent pollution. These inspections focus on assessing the vessel’s waste management practices, fuel handling procedures, and adherence to international conventions such as MARPOL (International Convention for the Prevention of Pollution from Ships).
Customs Inspections: Customs inspections are carried out to enforce customs regulations and ensure that the vessel follows import/export requirements. These inspections may involve the verification of cargo manifests, customs declarations, and the examination of cargo for prohibited or restricted items.
Port State Control (PSC) Inspections: Port State Control inspections are conducted by port authorities to assess the seaworthiness and compliance of foreign-flagged vessels visiting their ports. These inspections cover a range of areas, including safety, security, crew welfare, and environmental compliance. Vessels found to be non-compliant may be detained or subject to penalties. It’s important to note that the specific inspections and their frequency may vary depending on the nature of the vessel’s activities, its classification, and the applicable regulations. Vessel owners and operators are responsible for ensuring their vessels meet the required standards and are prepared for inspections when entering Saudi Arabian ports.

24. What powers do port authorities have?
a. Inspecting ships, monitoring and reporting violations
b. Seizing the ship and preventing it from sailing
c. Imposing fines according to the schedule of violations

25. Are there any appeals against port authority powers?
Yes. There is a provision for appeals against port authority powers in Saudi Arabia. According to the regulations governing the committee examining objections to maritime transportation violations, any interested party has the right to raise objections to the committee within 14 days from the date the violation was detected. The decision made by the committee is considered effective from the date of its approval.

26. Under what circumstances can authorities remove wrecks?
In Saudi Arabia, the authorities can remove wrecks under the following circumstances:
Sunken or Stranded Vessels: Any vessel, or part thereof, that is sunken or stranded within the Kingdom’s maritime areas can be considered a maritime wreck. In these cases, where the vessel is in a wrecked state, the authority has the power to remove it.
Items Missing or Washed Away: If any items are missing from a vessel in the sea and have been washed away by the current to the Kingdom’s maritime areas, they can also be considered part of a maritime wreck. 

Vessel on the Verge of Sinking or Grounding: If a vessel is on the verge of sinking or there is a reasonable expectation that it will sink or run aground within the Kingdom’s maritime areas, and there are no effective measures for assistance, it can be classified as a maritime wreck.
In addition, the Authorities also have the power to strike off the vessel’s registration, confiscate the wreck as security, and hold administrative auctions to recover costs or settle outstanding debts.

27. What environmental rules govern shipping in your ports/waters?
Protocol for the Prevention of Pollution of the Seas by Discharge of Waste and Other Substances into the Sea, 1996 The London Treaty of 1972. Protocol (1992 AD) to the Civil Liability Treaty for Compensation for Oil Pollution Damage The International Convention for the Prevention of Pollution from Ships of 1973 AD and its Protocol of 1978 AD As amended by the 1997 Protocol International Convention on Civil Liability for Ship Fuel Pollution Damage 2001 1988 Protocol relating to the International Convention on Load Lines 1966 (1988 LL PROT) The International Convention for the Prevention of Pollution from Ships, 1973, as amended by a general protocol 1978 and 1997, as amended (MARPOL): International Convention on Civil Liability for Damage Resulting from Oil Pollution, 1969 (CLC 1969) The 1992 Protocol to Amend the International Convention on Civil Liability for Damage Resulting from oil Pollution 1969, (CLC PROT 1969) The International Convention on Civil Liability for Pollution Damage by Bunker Oil, 2001 (BUNKERS 2001) Commercial maritime system. Implementing regulations for international maritime agreements to which the Kingdom is a party. Rules and instructions for sea ports of the Gulf Cooperation Council countries.

28. Under what circumstances can your authorities arrest a vessel?
Saudi authorities can arrest a vessel under various circumstances, including:
– Maritime Violations: If a vessel is involved in maritime violations, such as illegal fishing, smuggling, pollution, or other breaches of maritime laws, Saudi authorities have the power to arrest the vessel as part of the enforcement process.This allows them to detain the vessel and initiate legal proceedings related to the violation.
– Unpaid Debts: Saudi authorities can arrest a vessel if there are unpaid debts associated with the vessel, such as outstanding port fees, fines, or claims from suppliers, contractors, or service providers. The arrest serves as a means to secure the vessel as collateral until the debts are settled.
– Legal Disputes: If there is a judicial order from the competent court for Provisional arrest of a vessel.
– Safety or Navigation Concerns: If a vessel is deemed to be wrecked.

29. What are ship owners/operators responsibilities to those serving on the vessel?
Responsibility for Personnel: Owners/operators are accountable for the actions of the vessel’s master, crew members, pilots, and other personnel while they are performing their duties on the vessel. Liability for Contracts: Owners/operators are legally liable for the obligations of the vessel’s master arising from contracts entered into within the master’s authorised powers. The liability of a vessel owner/operator for maritime claims is subject to relevant international conventions. These conventions allow owners to limit their liability in certain situations. The specific causes for which liability can be limited include death or injury of passengers, loss or damage to property on board, death or injury of other persons, damage caused by the vessel to port installations, losses resulting from carriage delays of goods or passengers, breach of non-contractual rights related to vessel operations or rescue operations, and damage caused by raising or removing wreckage. However, there are exceptions where a vessel owner/operator cannot limit their liability. These include claims arising from intentional acts or omissions, negligence with knowledge of potential damage, obligations related to assistance, rescue, or contribution to general average losses, and damage resulting from pollution caused by oil or other substances.

30. How is a master appointed and dismissed?
The vessel operator has the power to appoint and dismiss the master. If dismissed, the master will have the right to compensation according to the Commercial Maritime Law.

31. What powers and responsibilities does the master have?
The master of a vessel holds several powers and responsibilities, which can be summarised as follows:
i. Command and Navigation: The master is responsible for commanding the vessel and overseeing its voyage. They must adhere to technical standards of maritime navigation, international conventions, maritime customs, and port provisions. The master personally takes charge during arrival, departure, navigating through waterways, and in challenging situations.
ii. Seaworthiness and Supplies: The master is responsible for ensuring the vessel’s seaworthiness, which includes maintaining its structural integrity, equipment, and safety systems. They must also ensure that the vessel has sufficient supplies for the intended voyage.
iii. Reporting and Documentation: The master must keep records of births and deaths that occur during the voyage and inventory any property of deceased individuals. They are required to report actions, collect evidence, and submit seized items to the authorities. The master represents the vessel’s operator in court proceedings related to necessary acts for the vessel and its voyage. They also maintain important documents, certificates, and records related to the vessel, crew, passengers, and cargo. The vessel’s official logbook must be submitted to the vessel registration office within 24 hours of arrival.
iv. Emergency Situations: In emergency situations, the master has certain powers. They can pledge the vessel and its freight as collateral to secure a loan or cargo, with the permission of a competent court. If a loan cannot be obtained, the master has the authority to sell part of the cargo. However, consignors can object to the pledging or selling of goods if full freight has been paid.
v. Personal Benefits and Safety: With the owner’s permission, the master and crew members may ship goods on the vessel for their own benefit. The master also has the authority to order the jettisoning (discarding) of goods if they pose a risk to the safety of the vessel, its occupants, or the cargo on board.
vi. Vessel Actions and Exigent Circumstances: The master has the power to initiate vessel repairs during a voyage, hire additional vessels for transportation purposes, or pay freight for part of the voyage. In exigent circumstances, the master must take necessary measures to protect the interests of the vessel owner, operator, crew members, passengers, and cargo rights.

32. What employment laws govern the crew?
The employment contracts of those employed on vessels traveling abroad are governed by the Commercial Maritime Law and Labour Law.

33. What constitutes a contract for the charter of a vessel – what specific rights and duties does
such a contract create?
A contract for the charter of a vessel establishes the terms and conditions under which the vessel is leased to the charterer. In Saudi Arabia, the Saudi Commercial Maritime Law governs ship charter contracts, which can be categorized into three types:
Time Charter, Voyage Charter, and Time and Voyage Charter. The specific rights and duties created by a ship charter contract are outlined by the Saudi Commercial Maritime Law and include the following: Rights of the Lessee (Charterer)
a. The lessee has the right to receive possession of the vessel and use it for the designated period as agreed upon in the contract.
b. The lessee has the right to enjoy the ship and carry out any lawful activities within the scope of the charter.
c. At the end of the contract period or if the lessee violates the terms of the contract, the lessee has the right to reclaim the vessel. 

Obligations of the Lessee
a. The lessee is obliged to pay the agreed-upon rent or charter hire to the lessor as stipulated in the contract.
b. The lessee must use the vessel with care, adhering to the terms and conditions specified in the contract.
c. If the lessee causes any damage to the vessel due to error or negligence, they are responsible for repairing the vessel or compensating the lessor accordingly.

Transfer of Ship Usage Rights and Lessor’s Rights
a. The ship charter contract involves the transfer of ship usage rights from the lessor (owner) to the lessee (charterer) for the agreed period.
b. The lessee is responsible for the ship during the charter period and must comply with all applicable laws, regulations, and maritime customs.
c. If the lessee breaches the terms of the contract, the lessor retains the right to terminate the contract and seek legal remedies or damages.

34. What constitutes a contract of maritime transport – what specific rights and duties does
such a contract create?
A contract of maritime transport establishes the terms and conditions governing the transportation of goods by shipping agents and transport operators. The specific rights and duties created by such a contract are outlined in the Shipping Agent and Transport Operator chapter of Maritime Commercial Law Liability of Shipping Agents
a. Shipping agents remain liable to the transport operator as paid agents.
b. Shipping agents are not liable to consignors or consignees for loss or damage to goods, unless such loss or damage is due to their fault or the fault of their servants.
c. Shipping agents are required to take measures to protect the rights of parties with regard to goods against carriers or transport operators. Failure to do so implies acceptance of the goods’ condition as stated in the bill of lading. 

Liability of Transport Operators
a. Transport operators are responsible for the shipping or discharge of goods on behalf of the assigning party.
b. The liability of transport operators is limited to faults attributed to them or their servants.

35. What are the key principles governing damage and liability in the case of collisions?
The liability and principles governing damage in the case of collisions in Commercial Maritime Law are as follows:
1. No Liability for Force Majeure or Unknown Causes: If a collision occurs due to force majeure (unforeseeable circumstances beyond the control of the vessel) or unknown causes, each vessel involved is not held liable for the resulting damage sustained by other vessels, even if they are at anchor.
2. Liability for Collisions Due to Common Fault: In cases where a collision is caused by a common fault involving multiple vessels, each vessel’s liability is assessed proportionally based on their responsibility for the damage caused. The degree of fault is taken into account to determine the liability of each vessel.
3. Joint Liability in Cases of Indeterminable Responsibility: If it is not possible to determine the exact responsibility for a collision, all vessels involved are considered equally liable for the resulting damage.
4. Sole Liability for Damage to Other Vessels, Cargo, and Crew: In collisions where a vessel is solely at fault, it is held fully liable for the damage sustained by other vessels, as well as any damage to cargo and possessions of the crew members on board those vessels.
5. Joint Liability for Death or Bodily Injury: If the collision results in death or bodily injury, the vessels involved are held jointly liable for the resulting harm.
6. Liability for Pilot-Related Faults: The liability provisions also apply in cases where a collision occurs due to a fault attributed to the pilot, even in situations of compulsory pilotage where a pilot is mandated to navigate the vessel.