Legal Solutions to the Challenges Facing Egypt’s Maritime Transport Sector

Introduction

Maritime transport is one of the principal pillars of global trade and the world economy. According to data from the United Nations Conference on Trade and Development (UNCTAD), more than 80% of the volume of international trade in goods is carried by sea. This sector is particularly important to Egypt because of its location between the Mediterranean and Red Seas, the presence of the Suez Canal and an extensive network of seaports, as well as the expansion of dry ports and logistics centers and their connection to areas of production and consumption.

However, developing berths and ports and purchasing vessels alone is not sufficient to build a competitive maritime transport system. A substantial part of the sector’s efficiency depends on the legal framework governing contracts of carriage, carrier liability, marine insurance, customs clearance, ship registration, maritime safety, environmental protection, employment relationships, and dispute resolution.

Dr. Mostafa El Rouby previously addressed certain legal aspects related to international trade and transportation, including documentary credits as one of the most important guarantees for the performance of international commercial contracts. In this article, we examine more broadly the principal legal challenges facing the maritime transport and dry ports sector and propose a number of practical solutions in light of Egyptian legislation and recent developments.

Maritime Transport and Dry Ports… One Integrated System

The seaport is no longer the endpoint of the transportation process. Modern trade operates through an integrated system that begins at the factory or warehouse, passes through road or rail transport and the dry port, then the seaport and the vessel, and may continue thereafter through another mode of transport until the goods reach the importer.

This highlights the importance of dry ports, which operate as inland centers for container handling and the completion of certain customs and logistics procedures away from the seaport, thereby helping reduce congestion and improve cargo clearance times.

The General Authority for Land and Dry Ports is responsible for planning and managing a number of these ports and logistics zones and coordinating among the authorities operating within them. The principal legislative framework is based on Law No. 1 of 1996 concerning Dry and Specialized Ports, as amended by Law No. 10 of 2017.

Accordingly, addressing maritime transport challenges should not be limited to the vessel and seaport, but should encompass the entire transport chain.

First: Contractual Problems in Maritime Transport

Numerous parties are involved in maritime transport operations, including the carrier, shipper, consignee, ship agent, freight forwarder, logistics companies, ports, insurance companies, and others. The greater the number of parties, the greater the likelihood of disputes over the allocation of responsibility.

Among the most common causes of disputes are:

Failure to identify the party responsible for loading or unloading the cargo.
Ambiguity concerning delivery deadlines and the period of the carrier’s responsibility.
Failure to specify the consequences of delay in arrival.
Disputes concerning the condition of the goods when delivered to the carrier.
Lack of clarity regarding limits of liability and compensation.
Failure to specify the applicable law or the forum for resolving disputes.

The solution does not lie in making the contract longer, but rather in drafting it clearly in a manner consistent with the nature of the commercial transaction, the transport documents used, and the applicable legal rules.

The parties should also be aware that Egypt is a party to the 1978 United Nations Convention on the Carriage of Goods by Sea, the “Hamburg Rules”, which entered into force for Egypt on 1 November 1992.

As for the 2008 “Rotterdam Rules,” despite their importance in developing the rules governing international multimodal transport involving a maritime stage, they have not yet entered into force internationally, and Egypt is not a party to them. Accordingly, they should not be treated as a convention in force governing maritime transport contracts in Egypt.

The Solution: Building the Contract of Carriage Around a Clear “Responsibility Map”

Before signing the contract, each stage of transportation should be identified, together with the party responsible for performing it and bearing its risks. This includes:

The place and time of receipt of the goods.
Responsibility for packaging and packing.
Loading, unloading, and storage.
Customs procedures and documentation.
Delay and the effect of force majeure.
Procedures for notifying the carrier of damage or shortage.
Limits of liability and insurance.
The applicable law.
The competent court or arbitration agreement.

Every issue resolved before the voyage begins reduces the scope of disputes after damage occurs.

Second: Marine Insurance… Having a Policy Does Not Necessarily Mean Having Protection

Marine insurance is one of the areas requiring specialized legal and technical review. There is a distinction between hull and machinery insurance, cargo insurance, liability insurance, and other forms of coverage.

Disputes often arise after an incident occurs and the insured discovers that the risk is not covered, that the policy contains an exclusion that was overlooked, or that notification to the insurance company was not made within the required time or in the agreed manner.

Accordingly, reviewing an insurance policy should not be limited to the amount of coverage. It should also include examination of:

Covered and excluded risks.
The commencement and expiry of the insurance period.
The geographical scope of the voyage.
Deductibles and excesses.
Notification obligations in the event of an incident.
Survey procedures and proof of damage.
Salvage and general average provisions.
The chosen law and dispute resolution mechanism.

Documenting the condition of the goods at the time of receipt and delivery is also a decisive factor in determining whether the damage occurred while the goods were in the carrier’s custody or before or after that period.

Third: Customs and Delays in Cargo Clearance

Customs disputes remain one of the principal sources of unexpected costs in international trade, particularly where disagreements arise concerning customs classification, origin of goods, customs value, or the documents submitted.

The Egyptian customs system has undergone an important digital transformation through the “Nafeza” platform and the ACI Advance Cargo Information system, which is based on submitting shipment data before goods are shipped to Egypt, together with the expansion of paperless customs clearance.

Accordingly, the solution today is not to create an entirely new electronic system from scratch, but rather to complete digital integration among customs, seaports, dry ports, regulatory authorities, and transport companies, thereby reducing duplicate data entry and repeated submission of the same documents.

How Can a Company Avoid Customs Problems Before the Shipment Arrives?

Prevention begins before the goods are loaded onto the vessel. It is advisable to review:

The correct customs tariff classification of the goods.
The applicable rules of origin.
The invoice and packing lists.
The required sector-specific licenses or approvals.
The ACID number and advance registration procedures where the system applies.
Consistency between the data in commercial documents and transport documents.

An error in the description or data of the goods may result in delays in clearance, storage and demurrage charges, penalties, and additional transportation costs that may in some cases exceed the value of the customs dispute itself.

Fourth: Environmental Liability Has Become Part of Operating Costs

The maritime transport sector is undergoing a rapidly accelerating global transition toward reducing pollution and emissions, and environmental obligations are no longer limited to oil spill incidents.

Marine environmental risks today include waste and oil management, ballast water, pollution caused by hazardous substances, air emissions from ships, and response to pollution incidents.

Activities in Egypt are subject to Environment Law No. 4 of 1994, as amended, in addition to international obligations binding on Egypt and technical rules relating to ports and vessels.

The practical solution is to incorporate environmental compliance into the company’s risk management system through:

Written plans for responding to pollution incidents.
Clear procedures for handling hazardous waste.
Ensuring the validity of vessel certificates and environmental equipment.
Training crews and employees on emergency procedures.
Reviewing contracts with entities responsible for receiving and disposing of waste.
Maintaining records that can be produced during inspections or following an incident.

Environmental fines are not the only risk. Non-compliance may also result in suspension of operations, vessel delays, and significant liabilities and compensation claims.

Fifth: Rights of Seafarers and Sector Employees

A vessel is not merely a financial asset; it is also a workplace of an exceptional nature. Accordingly, many matters relating to seafarers differ from ordinary land-based employment relationships.

Disputes may arise concerning wages, leave, hours of work and rest, repatriation, injuries, medical care, and termination of employment.

Employees working within ports, logistics centers, and land-based facilities are subject to national rules governing labor and social insurance according to the nature of each employment relationship.

The solution is to avoid relying on generic employment contracts that fail to reflect the nature of maritime or logistics functions, while maintaining properly documented records concerning wages, training, safety, insurance, and occupational injuries.

Sixth: Land and Usufruct Rights Within Ports and Logistics Zones

Dry port and logistics center projects require large areas of land, and investment relationships may extend for decades. Accordingly, the land agreement or usufruct agreement becomes one of the most important contracts of the project.

Legal review should not be limited to the price and duration of the agreement, but should also examine:

The basis of land allocation and the authority having jurisdiction over the land.
The boundaries and coordinates of the land.
The permitted purpose of use.
The duration of the usufruct right and renewal conditions.
The implementation timetable.
Cases in which the land may be withdrawn or the agreement terminated.
Ownership of structures erected upon expiry of the usufruct period.
Rights relating to financing, mortgage, and assignment to third parties.

Making a substantial investment on land in respect of which the investor lacks a clear legal position represents a risk no less serious than the commercial risks of the project itself.

Seventh: Multiple Fees and Costs

The cost of maritime transport is not limited to freight charges. It also includes port fees, storage, handling, pilotage, towage, services, customs duties, agency fees, and sometimes demurrage, storage, or container charges.

The problem arises when the cargo owner does not know in advance which party is responsible for each cost, or where the contract uses commercial terms without clearly linking them to the parties’ obligations.

The solution is to prepare a contractual financial schedule specifying every potential fee and charge and the party responsible for it, while reviewing the applicable tariffs and regulations before calculating the cost of the transaction.

Eighth: Maritime Accidents, Collisions, and Salvage

Maritime Trade Law No. 8 of 1990 regulates a number of matters relating to maritime incidents, including collisions, salvage, general average, and insurance.

As a general rule, maritime salvage provisions provide for entitlement to a fair reward where the salvage operation achieves a useful result, subject to specific provisions depending on the circumstances and the relationship between the parties.

However, the practical dispute often does not concern the existence of the legal provision, but rather proving what actually occurred: Was the operation a salvage operation or merely performance of an ordinary contractual obligation? What was the value of the property salvaged? What was the degree of danger and effort involved?

Accordingly, when a maritime incident occurs, immediate action should be taken to preserve evidence, including vessel records, communications, photographs, survey reports, location data, and crew statements, rather than waiting until litigation begins.

Ninth: Ship Arrest Requires Speed and Precision

One important tool available to protect a maritime creditor is the ability to impose a precautionary arrest on a vessel in accordance with the conditions prescribed by the Maritime Trade Law, where the claim falls within the maritime claims specified by law.

However, ship arrest is not a means of pressure available for every debt. It is a procedure subject to precise conditions, and the arresting creditor is also bound by procedural obligations and time limits that must be observed.

Accordingly, any decision to seek or challenge an arrest requires immediate review of the nature of the claim, ownership of the vessel, its location, and the security that may be provided to obtain its release.

Tenth: Multimodal Transport Requires More Precise Contracting

Dry ports now connect maritime transport with road and rail networks, raising an important legal question: Who bears responsibility if the goods are damaged and it is not known at which stage the damage occurred?

A contract covering only a maritime voyage differs from a “door-to-door” contract involving multiple modes of transport.

Accordingly, the contract should specify whether the principal contracting party is responsible for the entire journey or merely acts as an intermediary arranging separate transport operations, and should identify the legal regime applicable to each stage and the limits of recourse against subcontractors.

This is one of the areas requiring further legislative and practical development as Egypt expands its dry ports and logistics corridors.

Important Legislative Developments in 2025

February 2025 witnessed the issuance of three interconnected laws representing an important development in the regulation of Egyptian vessels, flag registration, ship registration, and maritime safety.

Law No. 2 of 2025 Concerning Ship Safety

Law No. 2 of 2025 amended certain provisions of Law No. 232 of 1989 concerning Ship Safety.

Among its most important provisions, it requires that, before a newly constructed vessel or marine unit may fly the Egyptian flag, its plans and specifications must be approved by the competent authority, and construction must take place under its supervision or the supervision of an entity entrusted by it with that responsibility.

With respect to a vessel or marine unit registered in a foreign State, the Law generally established a maximum age of 25 years, reduced to 20 years for passenger vessels.

It also requires the inspection and survey of foreign bareboat-chartered or financially leased vessels before their purchase or lease for the purpose of registration in Egypt, in order to verify their seaworthiness.

Law No. 3 of 2025 and the Expansion of Cases in Which a Vessel May Acquire Egyptian Nationality

Law No. 3 of 2025 amended Article 5 of the Maritime Trade Law and introduced an important change to the rules governing the acquisition of Egyptian nationality by vessels.

In addition to the case in which a vessel is owned by an Egyptian natural or legal person, a foreign bareboat-chartered vessel may now acquire Egyptian nationality where it is chartered to an Egyptian person for a period of not less than two years, throughout the duration of the charter. The regulation also covers the financial leasing of foreign bareboat-chartered vessels.

This amendment opens the way for expansion of the fleet flying the Egyptian flag without requiring full ownership of the vessel from the outset, while imposing upon the Egyptian charterer, in the cases specified by law, the responsibilities of the shipowner.

The Law also retained the requirement that transactions creating, transferring, or terminating ownership rights or rights in rem over a vessel must be executed in an official instrument; otherwise, they are void.

Law No. 4 of 2025 and the Development of the Registration System

Law No. 4 of 2025 completed the framework by amending Commercial Ship Registration Law No. 84 of 1949 and replacing the former authorities referred to in the Law with the Egyptian Authority for Maritime Safety in matters relating to registration and supervision.

The Law also regulated the registration of foreign bareboat-chartered vessels leased to Egyptians under the Egyptian flag during the charter period and established the procedures required to suspend the Egyptian registration of an Egyptian vessel chartered for the purpose of temporary registration under a foreign flag.

The Law also increased the penalty for operating an unregistered vessel under the Egyptian flag, reflecting the legislature’s approach of combining facilitation of registration with stricter compliance requirements.

What Is the Significance of the 2025 Amendments?

The real significance of these laws lies not merely in amending registration procedures, but in changing the philosophy governing expansion of the Egyptian fleet.

Instead of requiring complete reliance on purchasing and owning vessels, the system now permits the use of instruments such as bareboat chartering and financial leasing, while imposing requirements relating to safety, vessel age, and registration.

This flexibility can help companies increase their operating capacity while reducing the amount of capital required for direct ownership, provided that financing and charter agreements are carefully drafted and supported by clear security arrangements.

The Role of the Office of Dr. Mostafa El Rouby – Attorneys and Legal Consultants

The Office of Dr. Mostafa El Rouby – Attorneys and Legal Consultants believes that legal work in the maritime transport sector should begin before a dispute arises, not after it reaches the courts.

Legal support for companies operating in the sector includes:

Legal due diligence: reviewing licenses, contracts, internal policies, and regulatory obligations to identify risks before they develop into disputes.
Transport, shipping, and logistics contracts: defining the parties’ responsibilities, limits of compensation, and applicable law.
Vessel chartering and financing agreements: particularly in light of the 2025 amendments concerning bareboat-chartered vessels and financial leasing.
Marine insurance: reviewing insurance policies and handling claims relating to losses and incidents.
Maritime disputes: representation in disputes involving cargo, collisions, arrest, salvage, and maritime contracts.
Customs and international trade: reviewing documents, contracts, and the impact of customs procedures on business operations.
Establishment of maritime and logistics projects: including selection of the appropriate legal form and obtaining the necessary licenses.
Environmental and labor compliance: reviewing obligations relating to safety, employment, pollution, and waste.

The earlier legal counsel becomes involved, the greater the ability to prevent problems rather than merely manage their consequences.

Legal and Practical Solutions for Developing the Sector

1. Unifying the Digital System

Egypt has already taken important steps through the “Nafeza” platform, the ACI system, and paperless clearance. The next step is to complete electronic integration among maritime authorities, customs, dry ports, and regulatory bodies so that shipment data can move electronically without repeated resubmission.

2. Standardizing Documents and Data

Discrepancies among bills of lading, invoices, packing lists, and customs documents should be reduced, together with the development of electronic verification mechanisms, because a significant proportion of delays originate from minor inconsistencies between documents.

3. Developing Multimodal Transport Contracts

With the growth of dry ports and logistics corridors, clear contractual models should be developed to regulate relationships where a single journey includes maritime, rail, and road transport under one contract, and to determine liability where the stage at which the damage occurred cannot be identified.

4. Establishing Specialized Channels for Resolving Maritime Disputes

Maritime disputes require specialized legal and technical expertise. The use of arbitration and mediation can be supported in contracts suited to these mechanisms, while enhancing specialized technical expertise before the Economic Courts having jurisdiction over disputes arising from the application of the Maritime Trade Law.

5. Developing Insurance and Risk Management

Every company operating in shipping or logistics should maintain a risk register identifying potential incidents, available insurance coverage, the person responsible for managing each risk, and the documents that must be preserved if an incident occurs.

6. Preparing for the Environmental Transition

The global trend toward reducing emissions will increasingly affect vessel operating costs, fuel and equipment choices, and trade routes. Future environmental obligations should therefore be assessed when vessels are purchased or financed, rather than after they enter service.

7. Enhancing Human Resources Capacity

A modern maritime system incorporating new legal and technological rules cannot be implemented without training personnel. Training programs should therefore cover legal aspects alongside safety, technology, customs, and risk management.

8. Periodic Contract Review

One common mistake is for companies to continue using the same contract template for years despite changes in law, insurance systems, technology, and the nature of the services they provide. Contract templates and internal policies should be reviewed periodically whenever a significant legislative change occurs.

Conclusion

Egypt’s maritime transport sector possesses exceptional strengths. Its geographical location, the Suez Canal, seaports, and the expansion of dry ports and logistics corridors all provide Egypt with a genuine opportunity to strengthen its role as a center for trade, transport, and logistics services.

However, infrastructure alone is not sufficient. A vessel needs clear law, cargo requires a properly structured contract, a port requires efficient procedures, and an investor needs to understand costs and liability before committing capital.

Laws Nos. 2, 3, and 4 of 2025 represented an important step in modernizing the rules governing ship safety, nationality, and registration, particularly by permitting the registration of foreign bareboat-chartered vessels leased to Egyptians and regulating financial leasing, while strengthening safety and supervisory requirements.

The challenge during the next phase remains to connect these reforms with the development of contracts, digitalization of procedures, improvement of dispute resolution, enhancement of workforce capabilities, and completion of integration between seaports, dry ports, and transport networks.

When legal rules are transformed from procedural burdens into tools for managing risk, accelerating trade, and protecting rights, the law itself becomes part of the competitive advantage of Egypt’s maritime transport sector.