We are analyzing what the methods of reporting complaints raised by a charterer during his rental are
by Federico Santini*
Clause 21 of the Myba Charter Agreement regulates the terms for reporting and solving any problems reported by the charterer during the charter period. The clause requires any complaints to be promptly notified to the captain who, in turn, informs the broker and stakeholder (the broker holding the balance of the charter fee) of the nature of the complaint and when exactly it was made.
Complaints may concern any issue arising on board, including the case of disablement or off-hire which was dealt with in recently, malfunctioning of the yacht or its equipment, or any issues with the crew. It’s the captain duty to try and resolve the matter on board immediately; if this is not possible, the charterer must notify the owner or the broker of the complaint in writing within 24 hours of the occurrence of the event, unless impracticable to do so due to malfunctioning communication channels or other problems; in this case, the charterer must provide evidence that the complaint could not be made promptly.
In any case the complaint may initially be made verbally, but must be confirmed as soon as possible in writing. The prompt written notification obligation is essential since, although not expressly provided in the contract, failure to do so may result in the charterer’s inability to subsequently claim for damages.
If, after a complaint has been duly notified in writing within 24 hours of the event, the captain does not succeed in resolving the issue and it is not amicably settled afterwards, the charterer may claim for damages.
Clause 23 of the Myba Charter Agreement (2014 revision) provides that any dispute arising out of the contract, including those related to complaints, shall be decided by arbitration in London and in accordance with UK law, unless otherwise agreed between the parties.
The arbitration shall be conducted in accordance with the London Maritime Arbitrators Association (LMAA) terms in force at the time when the arbitration proceedings are commenced. Although an analytic review of these terms is beyond the scope of this article, it is worth mentioning that the arbitration procedure is different depending on the value of the dispute.
Since May 2017, disputes worth less than Euro 50,000 will be dealt with using the “Small Claims Procedure 2017”. This entails a sole arbitrator jointly appointed by the parties or, failing agreement between the parties, by the LMAA President, and a very simple procedure consisting in the exchange of written statements of the parties without need of legal representation (however the appointment of a lawyer is always advisable) or an oral hearing unless requested by the arbitrator in exceptional circumstances. The costs of proceedings are also fairly low.
For disputes of between Euro 50,000 and Euro 400,000, the “Intermediate Claims Procedure 2017” rules apply, which allow the parties to agree on the composition of the arbitral tribunal. This may therefore consist of a sole arbitrator, or two arbitrators and an umpire, or three arbitrators.
These rules regulate a more complex but still simple procedure consisting in the exchange of written statements by the parties, disclosure of documents, including witness statements and expert evidence, and do not require an oral hearing unless requested by either party and permitted by the tribunal. Legal representation is required.
Disputes worth over Euro 400,000 will be dealt with under the general “LMAA Terms 2017”, which provide a complex procedure with written statements, documentary and oral evidence, witnesses hearings and expert surveys, if needed, and a number of oral hearings depending on the case.
It is worth noting that if arbitration proceedings are commenced, the stakeholder is not allowed to release funds held by them without the written agreement of the parties or an order by the arbitral tribunal. Normally, these funds should be kept in an escrow account controlled by the legal representatives of the parties or by a third party pending the result of the arbitration.
* Federico Santini: he is managing partner of the Santini & Partners Law Office in Rome. He is specialized in international law and maritime law, has consolidated experience in the yachting field especially in terms of super yachts transactions, the registration of yachts, international arbitration, insurance issues and tax related . He is a member of the Italian Association of Maritime Law and advisor for the most important law offices and of the international associations. For information or clarifications: [email protected]t
(How to raise complaints during a superyacht charter? – Barchemagazine.com – January 2019)