Suggestions and rules on how to deal with problems that may occur during yacht chartering, such as malfunctions and faults
by Federico Santini
Anybody chartering a luxury yacht for a relaxing holiday with family or friends normally has very high expectations about how wonderful the cruise will be, the correct functioning of the yacht and its toys, and the quality of services on board in general. If these undoubtedly reasonable expectations, considering the charter fee can amount to tens or hundreds of thousands of Euros are not completely met, the charterer’s holiday may be severely affected.
For this reason it is extremely important for the charterer, especially if inexperienced, to engage a professional broker, to be aware of what they can and cannot expect and of how to deal with any problems. The role of the broker is very important, both in choosing the charter yacht (which the broker should be familiar with, or should at least have personally inspected prior to charter), and providing assistance with any problems on board or complaints from the charterer during the charter.
What should the charterer expect? First of all, the yacht must meet the specifications in terms of services, toys and facilities as marketed by the charter central agent; the crew must have all the necessary certifications, and must treat the charterer with the same professionalism and attention as the owner; on-board comfort and services must match the standing of the yacht and the charter fee; and lastly, extra costs must be carefully managed (the APA).
What should the owner expect from the charterer? The charterer must respect the owner’s property and not damage any part of it; they must also respect the captain’s authority in choices related to cruising and mooring. The charterer should always keep in mind that the captain is only bound to comply with reasonable orders given by the charterer, and may therefore refuse any order that could put the yacht in danger, or cause damage to the yacht or passengers. Consequently, if the charterer orders the captain to cruise to a certain area, moor in a certain port, or allow any form of watersport, the captain will refuse if they believe, within reason, that the order may damage the yacht or its passengers.
During the charter the yacht may become disabled or malfunctioning and other issues may arise affecting the yacht’s use. In this case, the charterer has a series of rights that are normally regulated by the charter contract. The most used charter contract worldwide, the Myba Charter Agreement, states that if the yacht is unusable for more than 12 but less than 48 hours, the charterer has the right to refuse to pay the charter fee for that period, or to extend the charter period for the equivalent number of hours lost, provided that in either case the charterer notifies the captain or the broker immediately in writing.
It is important to clarify that if, despite the disablement, the charterer is still able to make “reasonable use” of the yacht, then the yacht will not be considered off-hire. For example, if the disablement occurs when the yacht is in port or at anchor and the charterer is able to do some sightseeing or use water toys during repairs, no refund or charter extension will be applicable, as well as in case of a disablement of less than 12 hours.
If the disablement lasts for a period of more than 48 consecutive hours, more than a tenth of the charter period, or if the yacht suffers an actual or constructive total loss, then the charterer is entitled to terminate the contract and to receive a refund of the charter fee for the remaining charter period. However, prompt notice of termination must be formally given in writing to the owner through the broker.
In any case of disablement, failure by the charterer to promptly notify the captain, the owner or the broker of their intention to take advantage of their contractual rights, said rights will be deemed as waived by the charterer, along with any right to claim damages. In the next issue we will look at other types of claim, and how to resolve them.
* 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