Dubai Grapples with Import, Export Losses Amid Floods: Insight into Legal Liabilities

Dubai, renowned for its bustling trade and commerce, has recently grappled with severe flooding, raising concerns about the impact on import and export activities and the potential legal liabilities stemming from these losses.

The unprecedented floods have disrupted transportation networks, damaged infrastructure and impeded the movement of goods in and out of the emirate. As a result, businesses involved in import and export operations are facing significant challenges, including delays, damages to goods and financial losses.

The type of insurance we need to know about when it comes to import and export:

Marine Cargo Insurance:Import products are often covered by marine cargo insurance while in transit. This insurance typically protects against loss or damage to goods during sea, air, or land transportation. In the event of floods damaging imported goods, marine cargo insurance policies may cover the losses, subject to the terms and conditions of the policy.

Amidst this crisis, questions arise regarding the legal liabilities associated with import and export losses incurred due to the floods. Several key considerations come into play:

Force Majeure Clauses: Contracts governing import and export transactions often include force majeure clauses, which excuse parties from fulfilling their contractual obligations in the event of unforeseen circumstances beyond their control.

Whether the floods constitute a force majeure event depends on the specific language of the contract and the applicable legal principles. The Abu Dhabi Court of Cassation reviewed a request to terminate a contract on the grounds of force majeure in Case Number 512 of 2021.

The court ruled that the occurrence of force majeure must be the only cause of damage in order to be excused from responsibility. The court reiterated that it is within the trial court's discretion to rule on such questions.

Negligence and Liability: If the flooding was a result of negligence on the part of government authorities or private entities responsible for maintaining infrastructure, such as drainage systems and waterways, affected businesses may have grounds to pursue legal action for damages.

Proving liability, however, can be complex and requires demonstrating a breach of duty of care and causation.

Insurance Coverage: Businesses engaged in import and export activities typically carry insurance coverage to mitigate risks associated with loss or damage to goods during transit.

Depending on the terms of their policies, businesses affected by the floods may be eligible for compensation for their losses, subject to policy exclusions and limitations.

Government Assistance and Relief: In response to the flooding crisis, government authorities in Dubai may offer financial assistance, relief measures, or compensation schemes to affected businesses.

Understanding the eligibility criteria and application procedures for such assistance is crucial for businesses seeking support in mitigating their losses. The United Arab Emirates’ cabinet approved Dh2 billion ($544.6 million) to deal with damage to homes from the rain and storm last week that left buildings and warehouses inundated and roads and highways inaccessible.

International Trade Regulations:Import and export activities are governed by various international trade regulations, including customs laws, tariffs and trade agreements.

Disruptions caused by the floods may have implications for compliance with these regulations, potentially leading to penalties or sanctions if deadlines are missed or obligations are not met.

Conclusion

As businesses in Dubai assess the impact of the floods on their import and export operations, addressing the legal aspects demands careful consideration of contractual rights, potential liabilities, insurance coverage and available avenues for recourse.

Seeking legal advice and exploring options for dispute resolution may be essential in addressing the challenges and minimising the economic repercussions of the crisis.

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