THE LEGAL EAGLES
As the industry continues to grow, so does the complex nature of ownership and the yachts’ continued and successful operation. Luckily, expert advice is at hand from global teams of dedicated maritime and superyacht lawyers, tax advisers and accountants
There is no doubt that the financial and legal elements of owning and running a yacht whether private or charter are becoming more complex, and the need for expert advice is now more important than ever.
But, where to get the advice that is particularly relevant to the yacht/maritime sector is also key. And at a time when owning a yacht is on the rise by nearly 50%, now is the time to unearth the experts on the follies and faux pas to avoid when building, buying and owning a yacht.
These are the guys who flush out the faults in the small print, hunt down the uncrossed ‘T’s, and trail the transactions until the ink has dried. Onboard sniffed out the experts in this domain to quizz them on some of the more common questions, solutions and mistakes that are made by the people that buy boats.
The list of concerns and questions thrown at the experts is lengthy and diverse. For Jessica Galea, Senior Associate at Dingli & Dingli these include; What is the difference between owning
a pleasure and commercial yacht? What are the obligations on the part of owners in each case? Where should the owner be registered for VAT? Is this necessary if the yacht is a pleasure yacht? Is VAT due on the yacht? What are annual fixed costs to own and operate a commercial or pleasure yacht?
Jay Tooker is co-head of HFW’s yacht team. He says unfortunately VAT is at the forefront of everyone’s mind. “Sometimes you get a call from someone asking a lot of questions about VAT and some time into the conversation you realise that actually what they are interested in is buying a yacht!” Tooker’s advice to clients is to focus on what, where, how and why they might want to own a yacht rather than just focusing on the VAT which is really only an incidental feature of owing or buying a boat.
Andrew Charlier who leads the HFW team in Monaco adds that another typical question from a yacht manager might be: “I manage a yacht which has just been arrested in Villefranche sur Mer by a crew member, what do I do?” This says Charlier is not uncommon and is linked to issues of French employment law. He explains, “If your yacht is registered in the Cayman Islands via a Cayman company and you are sitting in the USA, you probably don’t think you need to worry too much about employment law but you’d be wrong.” In fact, any yacht that spends considerable time on the French coast or has French based crew is subject to mandatory rules of employment law. Says Charlier, “That means that if there is a dispute between a crew member and an employer, the crew member can go to an employment tribunal, start an action of unfair dismissal and it’s fairly easy in France to go and arrest the yacht as security for your employment.” It’s Charlier’s job to defend the yacht owner from arrest and employment actions brought on behalf of the disgruntled crew member.
Tom Kelly, Partner at Preston Turnbull LLP works mostly with yachts during the build stage or soon after. The most common concerns he deals with are; disputes over responsibility for particular aspects of a project or work done by subcontractors, delays in the schedule/delivery of a yacht, problems that arise after delivery in terms of quality or performance – especially where the yacht has agreed various items or arrangements, but does not get the quality it wanted or the owner has a change of mind, which can get expensive.
Charlotte van Steenderen at Mainport Lawyers deals with both transactional and dispute resolution work. She says, “Common questions and issues are in respect of the wording of letters of intent, build slot agreements and yachting construction agreements.” She gets asked things like: Is there any binding effect of the letter of intent? If so, to what extent are parties bound and which part is still open for negotiation? How do you deal with VAT on owner’s supplies? She’s also quizzed on shipyard bankruptcy and what to do if the yacht fails on achieving certain performance criteria (speed, noise and vibrations, range etc.).