LEGAL
SHOOSMITHS Shoosmiths LLP is highly skilled in the provision of the full range of legal services to the marine and superyacht sector. From their nationwide network of offices including Southampton and the City of London, the Yacht Team routinely act for owners, family offices and brokers in relation to issues arising from the sale and purchase of yachts and their upkeep and all aspects of dispute resolution. They offer expertise in dealing with complex issues in yacht finance, including those relating to offshore ownership structures and leasing schemes designed for tax mitigation. The firm are members of British Marine and SuperyachtUK. For more details visit
www.shoosmiths.co.uk
We do see a lot of problems and discussions arising out of warranty provisions in the contracts and the interpretation thereof
“We also stress the importance of looking into the question of whether the warranty given excludes defective design. Particular issues may become apparent in relation to the builder’s guarantee liability arising from defects in design. In many cases, the builder extends a guarantee in respect of ‘defects’, which are contractually defined as ‘any deficiencies or defects in materials and/or poor workmanship’. Basically, it’s important to get the wording right.”
Van Steenderen also has experience of yards expressly excluding consequential damages as a result of defective design such as loss of charter hire or obligation to pay crew during repairs.
ELLIOT BISHOP, HEAD OF LUXURY ASSET GROUP Tel: +44 (0)3700 867 024
elliot.bishop@
shoosmiths.co.uk Described in Spears 500 as a ‘distinguished individual’, Elliot is head of the luxury asset group within Shoosmiths Business Advisory Division and a member of the Private Wealth team. Analytical and pragmatic, he is well known in the marine sector and has acted in multi-jurisdictional litigation on behalf of owners, family offices and brokers.
“We have been involved in a case whereby an owner had taken delivery of a yacht a few months earlier but was still waiting for the yard to sort out the root cause of a technical problem, with the assistance of its main subcontractors. At the time of delivery, everything looked fine but after a short maiden voyage the captain had lost control of the yacht due to steering and propulsion problems leading to a short black-out. Not only was this owner’s first season spoiled, but he was also told by the yard that he would have to claim compensation for damages from his own hull and machinery underwriters since the warranty clause covered only repair and replacement of parts and labour and not no consequential damages.”
While Puopolo points out that when a shipyard goes bankrupt problems arise regarding the progressive transfer of ownership and the possibility to finish the yacht elsewhere, Tooker has another example to watch out for.
He says, “Let’s say you have an owner building a yacht at a yard which goes into administration, not full bankruptcy, but it’s under supervision of the court in order to resolve its affairs. The owner meets with the directors of the company and they sign an agreement about the yacht under construction. What the owner fails to realise is that once the company is under supervision of the court of administration the directors no longer have the power to sign agreements without authorisation from the court. And so in this case the owner signed an agreement with the directors, for all I know in good faith, but the company did go into bankruptcy and the agreement was unenforceable.”
SARAH FAIRWEATHER, LEGAL DIRECTOR Tel: +44 (0)3700 866 915
sarah.fairweather@shoosmiths.co.uk Sarah is an incredibly experienced commercial and asset finance lawyer within the Banking and Finance team of Shoosmiths and recognised as a ‘next generation partner’ by Legal 500 2021. She advises Yacht (and Aviation) clients on their leasing, financing and associated commercial arrangements.
Puopolo adds, “We also assisted a client whose new yacht was unavailable for two years due to major defects. Upon delivery of the yacht, the client assigned the sale contract to another company also owned by him. The warranty clause provided for the non-assignability of the warranty to new owners and for a limitation of liability in favour of the shipyard. Unfortunately for our client, having a contract not properly negotiated, led him to a long and complex dispute that could have been avoided by seeking legal advice at an early stage.”
Fairweather has had recent examples of VAT issues not only with the yacht but also pieces of art on board that ‘raise the interest of zealous tax inspectors along the Mediterranean in particular’.
ONBOARD | SUMMER 2021 | 97
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