LEGAL
Staying with new builds Andrew Charlier adds, “The main questions from clients for new build projects are linked to ensuring that the project is being followed correctly by a technical adviser, and dealing with bumps along the road (delays, change orders, etc.). We are increasingly encountering resistance from certain shipyards to dealing with sales brokers for new builds.”
Whether we’re talking new build or refit, warranties are always going to be a hot topic and this is where owners really need an expert with a sharp pencil to oversee the contract negotiations, however, there are acute differences in the contract for a new build or second hand yacht. Gordon S. Blair’s Mousny explains more, “In the context of newly built yachts, both scope, content and duration of financial and legal or tax warranties must be negotiated with the shipbuilder. If some warranties are either implied or imposed by law, such as, under European law, against hidden defects, contractual warranties are also of crucial importance and must be negotiated with the shipbuilding contractor. The main controversial warranty aspect of a newly built yacht lies in the warranties related to the technical performance of the yacht to be negotiated with the shipbuilder.”
With many new entrants coming into the market, the second hand market is experiencing a boom time, but concerning warranties, this is quite a specialist area. Edouard Mousny elaborates, “In respect of second-hand yachts, the main issues relating to the warranties pertain to the assignability of the subsisting shipbuilder’s and third-party’s contractors’ warranties since they are, by nature, limited in time. The other aspect which is the object of negotiations between the seller and the buyer relates to the contractual ‘seller’s warranty’ whose main purpose is to protect the buyer from any unexpected legal, tax or financial risk arising after the completion of the acquisition but originating from any event that took place before said acquisition.”
Julia Wiechell, founder and partner from Upwind Legal also adds, “In the second hand yacht market, the client’s main concerns are pre-existing defects, encumbrances on the boat and its VAT status. These need to be evaluated before the closing with due care. Julia’s colleague Martin Malinowski concludes, “Also disputes whether defects are actually warranty items or whether warranty works were sufficient, are to be properly governed in a contract.”
HFW
HFW is an international law firm with over 600 lawyers working across their global network. They advise clients on legal issues in relation to all aspects of international commerce and are regarded as one of the world’s leading shipping law firms. The expertise, experience and reputation earned in commercial shipping for nearly 140 years in business is carried into the yacht practice. HFW’s yacht team has been an integral part of the yachting industry for over 30 years. Its in-depth industry knowledge, combined with its global reach ensures it is pre-eminent in the provision of full service legal support to the yachting industry. The team advises on all legal issues a yacht is likely to encounter over its life, including financing, design and construction, refit, sale and purchase, ownership structures, VAT, operation, management, crewing, chartering, physical and cyber security, and insurance. The team’s expertise also encompasses personal injury, health and safety, regulatory, sanctions and compliance, casualties and crisis response and dispute resolution. For more details visit
www.hfwyachts.com
For Bargate a popular warranty issues surrounds that of paint quality. “Typical issues concern whether a defect is covered, whether that defect has been notified to the builder in accordance with the terms of the build/refit contract, whether a latent defect is covered, the list goes on. Paint quality is a rich source of potential disputes, so ensure you pay close attention to these clause in the Specification and ensure they are approved by a paint specialist.”
Overall as an industry we need to manage client expectations. Once our friendly brokers have made the deal, it is time to bring in the big guns and make sure the contractors are fit and proper.
Spend the time in the initial stages making sure every step of the buying process and ownership journey is nailed tight leaving no room for ambiguity. Protecting everyone from the owner to the shipyard and suppliers is paramount.
If the owners are happy and enjoying their yachts, this gives the whole industry a better reputation and let’s face it, in the end this means we all keep our jobs.
ONBOARD | SUMMER 2022 | 131
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