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Superyacht lawyers under the spotlight

Posted: 01/07/2019


Partner Bernardo Ruiz Lima discusses the reasons behind needing a legal expert for the purchase and ownership of yachts and superyachts.

Many people don’t understand what a ‘superyacht lawyer’ does; can you explain what your role involves?

We provide legal advice and practical guidance in relation to all aspects of yachts and superyachts. Our day to day work deals with ownership, sale, purchase, finance, dispute resolution, insurance, management and advising a large variety of participants in the yacht industry; these clients may be the owners, managers, insurers, yacht brokers, yards or marinas.

We have considerable expertise in many superyacht related matters, such as building and refit contracts, urgent casualty response (personal injuries, groundings, salvage, towing, etc), chartering, crewing and employment, dispute resolution, insurance related matters, management, marina and yard´s liabilities, sale and purchase, registration and finance. We are particularly involved in the new aspects of racing rules, regattas and sports law, cybercrime and its insurance.

Why and when should a client instruct you?

Problems with superyachts do occur and generally require immediate action and a cross-border perspective. I have considerable experience in handling disputes across this spectrum. I am available 24/7 together with our firm´s emergency response team. Our experience derives from our long history as specialists in maritime law. Our team also has extensive practical sailing and sea-going experience on board yachts and superyachts, grand-prix racing yachts and private pleasure crafts giving us an in-depth understanding of the industry. I also work closely with our commercial, employment and ship finance groups so that I can advise clients on the broad range of superyacht matters. We have global reach with offices in countries also known for ‘yachting’ and ‘superyachting’ including France, Greece and Singapore as well as Spain and the UK. Our team and can readily advise on multi-jurisdictional issues affecting superyachts.

What are the pre-contract considerations an ultra high net worth owner should take into account before designing or purchasing their yacht?

The buyer or the future charterer of a superyacht has to take care of many legal issues and practicalities before ordering the design or the construction of a complex high-value project. Most probably, several jurisdictions will be involved with different applicable laws and several international treaties. Therefore, a reliable law firm, with international presence, and a lawyer with relevant experience are essential.

After the decision is made about the designer of the project, and before signing the contract with the builder, the owner should be given advice on the local legal advice on issues such as where the superyacht will be built; the possible use of a SPV; the finance, mortgages, tax lease schemes; the cross border tax implications; and the choice of registration and flag. They should also consider possible insolvency risks; refund and performance guarantees and variation of contracts.

What are the most problematic aspects of the contract when building or purchasing a yacht?

I would particularly highlight the following aspects: finance, leasing structures, cross border and tax implications, payment schedules, insolvency risks, delays in delivery, insurance, confidentiality, variations of contract, warranties, agreement of an effective dispute resolution clause, implications of the future commercial use of the superyacht and the crew problems.

How does insurance work in this area?

It is essential to liaise with a reliable insurance company, not only post-delivery (H&M, P&I, etc) but also to cover the design and building process. An in-depth analysis of policy covers should be undertaken with brokers and legal advice should be sought. I recommend requesting and reviewing the builder´s risks policy (with the insolvency cover) and always thinking carefully about the insurance value and the possibility of asking for a waiver of the yard´s rights, in case of negligence of the owner or the owner´s servants.

A version of this article was first published in Lawyer Monthly magazine.


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Penningtons Manches Cooper LLP

Penningtons Manches Cooper LLP is a limited liability partnership registered in England and Wales with registered number OC311575 and is authorised and regulated by the Solicitors Regulation Authority.

Penningtons Manches Cooper LLP