In the second in a series of interviews ahead of Seatrade Maritime Logistics Middle East, Tien Tai, a shipping finance lawyer and partner at law firm Holman Fenwick Willan in Dubai, spoke to Seatrade Maritime News about developments in the industry.
“The shipping cycle, on the whole, has seen a fantastic uptick. The only exception are the container carriers which are expected to have a hard landing. The important barometer is sentiment, and it is evident that our clients generally have a positive outlook, both in terms of overall asset prices and charter rates,” he said.
“More importantly, this includes offshore marine which has had a particularly difficult time since 2015. There is a real exploration and production bonanza which translates to increased capex spends by the national oil companies, which are filtering down to the offshore marine operators, particularly in the Middle East and West Africa.”
Tai said the region’s ship financing cycle was on an uptick. “There is still finance out there for the right project. Local and international banks have understandably gravitated towards top-tier borrowers—those with strong shareholders, transparent and robust corporate governance, and a good contract backlog or own cargo to carry,” he said.
“In this region, we have seen a real shift to non-bank financiers looking to partner with owners who are perhaps less well covered now by the mainstream banks. These alternative financiers can—again, for the right project—move fast and are execution-focussed.”
The evolution of domestic legislation continues to hamper the UAE shipping sector. “We have seen the draft Maritime Law, which seeks to amend and develop the legislative provisions on the 1981 UAE Maritime Code. It has been a draft for many years—it was being discussed when I arrived in Dubai in 2007—and we hope the new law, once issued, will take on board various comments from practitioners and market participants,” he said.
Separately, he expects to see a greater push on legislation and regulations towards decarbonisation of the maritime industry. “The UAE will host COP28 this year and we expect that climate finance will have an increased presence to support mitigation and adaption of action to address climate change,” he said.
He said the depth and breadth of HFW’s marine team was unrivalled in the Middle East. “We have five partners in the Dubai office in the shipping team, three of whom focus on shipping disputes, and two dealing with transactional and non-contentious shipping. We collaboratively work together so our shipping, offshore and logistics clients get commercial and legal advice which is industry-focussed.”
On the transactional marine side, the workload is varied. “It ranges from the financing of ports and terminals in the UAE to commercial vessels and superyachts,” he said.
Decarbonisation was on every agenda at the moment but the options for owners were still far from clear. He sees LNG carriers and methanol-powered vessels as leading the charge for newbuilds but a number of owners are understandably reluctant to commit significant capex on a 25-year asset without clarity on alternative fuel availability.
“There is a real risk of significant loss and value destruction—what the industry has termed a stranded asset. That a zero- or low-carbon transition is the ultimate goal is clear. The path to get there is not. We currently have policy uncertainty—the implementation of certain regulations is uncertain—and subject to further lobbying forces. The industry needs a clear path so we know how to get to the ultimate goal.”
Tien Tai, a shipping finance lawyer and partner at Holman Fenwick Willan in Dubai, is speaking at Seatrade Maritime Logistics Middle East, on May 16-18, 2023, in Dubai, UAE.
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