The role of the superyacht lawyer

When people ask me what I do for a living and I tell them that I am a superyacht lawyer, the next question is usually: ‘So, what exactly does that mean?’ This is perhaps unsurprising, given that only a very privileged few members of society own a superyacht. Therefore, the opportunity for most people to gain an appreciation for the legal challenges associated
with my sector are rare.

With the above in mind, however, I hope to offer some insight into my role. To do so necessitates a touch of background about superyachts generally.

A superyacht is a luxury yacht (motor or sail-powered), which is usually professionally crewed and traditionally has a loadline length of 24 metres or more.

Some yachts are either used exclusively by their owners or are available part-time for commercial charter, while others are operated all year round as a charter business. The number of very large yachts has grown rapidly since the 1990s, and the increasing number of ‘small’ superyachts has led to the introduction of terms such as megayacht and gigayacht to delineate the elite (100 metres plus) among luxury yachts.

The typical price tag on such a purchase fluctuates greatly according to its size, builder, the interior fit out, whether it is new or second-hand, its age, and its overall condition, together with other factors personal to the potential buyer. However, it is not uncommon for a superyacht to cost anywhere from €10m right up to €200m (and sometimes more).

Legal challenges

There are a whole host of legal challenges associated with the ownership and operation of such a high-value, highly movable mechanical asset. Some of the key areas in which I am involved are highlighted below (however, this list is by no means exhaustive):

• Sale and purchase: Would you buy a house without having a professional settle the contract and negotiate the terms? One of the most common tasks is to handle the sale and purchase. This can include negotiating the sale terms and preparing the contract, negotiating finance terms, organising insurance, terminating crew employment contracts, preparing the corporate documentation associated with the sale, the bills of sale, and other title-conferring documents, attending the closing meeting, and if acting for the buyer, arranging for the registration of the yacht in their name. It’s a very involved job and something I spend a great deal of my time on.
   

• Shipbuilding: You wouldn’t consider building a large skyscraper in central London without legal support, and the same is true of yacht building. The process can take up to four years – sometimes longer, depending on the size of the vessel – and a significant amount of money often changes hands throughout the build process. Generally speaking, my goal is to safeguard my client’s interests and investment in the unfinished yacht. This is achieved in a number of ways, but the focal point is the negotiation and drafting of the underlying shipbuilding contract, which usually runs to several hundred pages including the specification. This job involves preparing refund and performance guarantees, drafting builder’s warranties, and covering matters as broad as protecting the owner’s intellectual property in the yacht, the schedule for sea trials, ensuring that the yacht meets the class standards of its chosen classification society, and structuring payments by the future owner to the shipyard in a balanced manner. These are just some of a very lengthy list of issues to consider during the build and they often require the input of naval architects, designers, and regulatory authorities. It is very much a team job.
   

• Crew employment: Some of the yachts that I have the privilege of dealing with have over 30 full-time crew members. In August 2013, the Maritime Labour Convention 2006 (MLC 2006), the most comprehensive piece of international maritime labour legislation, came into force. Another significant part of my practice is advising owners and yacht managers on compliance with this legislation, preparing MLC 2006-compliant seafarer employment agreements, resolving disputes, and managing the hiring and termination of crew members. In many respects, all of the employment challenges associated with running an SME with 30-plus employees are at play.
   

• Dispute resolution: Sometimes disputes can arise in relation to matters such as the build of a yacht, the method of construction or materials used, the sale and purchase process, insurances, and contracts with third parties. Many of these disputes are referred to arbitration under the London Maritime Arbitrators Association rules, and a few are resolved through the courts. As with other disputes, specialist legal assistance is essential to ensure a client’s rights and interests are protected and enforced. SJ

Mark Needham is a senior associate at boutique firm Bargate Murray, which specialises in superyacht-related legal work