Overview on New Maritime Approach in the Kingdom of Saudi Arabia

New Maritime Approach in the Kingdom of Saudi Arabia

The Kingdom of Saudi Arabia has introduced a transformative shift in its maritime sector with the new Saudi Commercial Maritime Regulation, enacted via Royal Decree No. M33/1440 and published in the Official Gazette on January 5, 2019. This significant legislative change, which came into effect in early July 2019, is a strategic part of Saudi Arabia’s Vision 2030, aiming to bolster the commercial maritime industry and attract foreign investment.

The new regulations replace the outdated Articles 150 to 431 of the Commercial Court Regulation, alongside the Ports, Harbours and Lighthouses Regulation and its Executive Rule. These older laws had governed the maritime sector for decades but were seen as insufficient in meeting the modern demands of international maritime trade. The comprehensive overhaul introduced by the new regulation marks a significant shift towards aligning Saudi maritime law with global standards.

Key Provisions and Innovations

Nationality, Registration, and Ownership of Ships

The regulation provides detailed guidelines on the nationality, registration, and ownership of ships, including bareboat chartered ship registrations. This ensures clarity and legal security for shipowners and operators.

Offshore Platforms Licensing

A notable innovation is the distinct provisions for licensing offshore platforms, a pioneering move within the region. This includes classification accreditation and detailed requirements for safety and environmental protection.

Maritime Mortgages and Ship Arrests

The new regulation introduces a structured framework for maritime mortgages, covering registration procedures, priority debts, and maritime liens. It also outlines the process for ship arrests, judicial execution, and release against guarantees, providing a robust legal recourse for creditors.

Liabilities and Obligations

Ship owners, managers, and masters now have clearly defined liabilities and obligations. This includes the authority and duties of shipmasters, the rights and responsibilities of shipping agents and freight forwarders, and specific provisions for maritime employment contracts.

Maritime Contracts and Marine Insurance

The regulation covers various maritime contracts, such as charterparties, passenger transportation, and carriage of goods by sea. It also includes provisions on marine insurance contracts for vessels and cargo, enhancing protection against maritime risks.

Environmental and Safety Standards

Provisions addressing marine pollution, collisions, towage, pilotage, and salvage operations are part of the regulation, emphasizing environmental protection and safety standards.

New Ship Agents Regulations

In conjunction with the new maritime regulations, the Saudi Ports Authority issued new Ship Agents Regulations. These regulations facilitate the licensing of ship agents, now permitting foreign investors to operate as ship agents within the Kingdom, provided they meet specific criteria. This move aims to make Saudi ports more attractive to international investors and enhance the overall efficiency of port operations.

Encouraging Foreign Investment

The new regulations allow foreign entities to establish wholly-owned legal entities in Saudi Arabia and obtain ship agent licenses. This is expected to boost foreign direct investment, create job opportunities for Saudi nationals, and position Saudi ports as a global hub for maritime trade. By modernizing the regulatory language and incorporating contemporary maritime practices, Saudi Arabia is aligning itself with international maritime law, thereby facilitating smoother and more reliable international trade.

Compliance and Penalties

Entities operating within Saudi Arabia's maritime sector must comply with these new regulations to avoid penalties. Ship owners and managers face fines ranging from 100,000 to 1,000,000 Riyals for non-compliance, such as failing to register vessels flying the Saudi flag. Offshore platform operators without necessary safety measures could be fined between 100,000 and 500,000 Riyals. Additionally, ship agents must adhere to licensing and business practice rules, with penalties imposed for violations, including daily fines for expired licenses and improper handling of dangerous cargo.

Conclusion

The new Saudi Commercial Maritime Regulation and Ship Agents Regulations represent a comprehensive modernization of the Kingdom’s maritime legal framework. By adopting these regulations, Saudi Arabia is enhancing legal protections, encouraging foreign investment, and striving to become a pivotal hub for international maritime trade. This regulatory overhaul not only brings the Kingdom's maritime laws up to international standards but also reflects its ambition to diversify its economy and expand its global trade footprint in line with Vision 2030.