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One step forward, two steps back

Failing to take refit seriously by Giovanna Cabbia, Clyde & Co and John Leonida of LP Squared…

The building of a superyacht is a matter of thought and contemplation. Designers are contracted, lawyers engaged in shipyards poked and probed. The refitting or rebuilding of the superyacht often isn't as measured or considered. Many years ago, at a  boat show, we sat down the presumptive client who had just acquired a superyacht of some vintage. The owner was relatively new to the industry was very chummy with his new captain, and he spoke in relaxed tones about his plans. In his mind, there was a simple scratch and shoot paint job to be done, a few cabins needed freshening up, and that was all. But when we prodded and questioned, the contemplated refit was a substantial piece of work.  It was clear that it cost several million euros and there was no specification, no real budget control to speak of, no designers engaged and the entire project was being left in the hands not of an experienced project manager but an excellent navigational captain. In short, a substantial project that lent itself to overruns and excessive change orders. Our advice then is our advice now:

 1. Take your time

Live with the yacht for a while, understand its nuances. What do you like? What don't you like? What don't you like but you can live with? What is tired and worn out? What does not reflect your personality or how you intend to use the yacht? What technology do you have to change, and what technology do you want to change? Talk to your crew about the day-to-day running of the yacht, what changes could or should be made that would make their job and, by extension, your experience onboard better. For example, is the galley adequate for the way that you want to dine? Once you have a wish list, engage a designer to help you visualise your reimagined yacht.

 2. Planning

Think realistically about how long you want your yacht to be out of commission. Will you want to do all the work in a single shipyard visit, or will you spread the work over two or three off-seasons? What will you do when you don't have access to your yacht? This is the time to write a definitive list of the works that you want to do to your yacht. It's also worth hiring a maritime surveyor to complete a condition survey of your yacht, or indeed you may have a condition survey if you have recently acquired the yacht. At this point, you will be in a position with your professional technical advisers and possibly captain to create a specification that should form the basis of the refit. In our experience, when we have advised on issues arising during refit, the root cause has often been a lack of certainty of what was expected to be done and what the procedures were when the refit became a movable feast. The specification should form the cornerstone of the contract between the refit yard and the owner.

 3. The Contract

There are two sensible routes to follow contractually because there are two widely available standard form refit contracts. The first is often used in commercial refits and is known as the BIMCO REPAIRCON 2018, which clearly sets out the owners and the refit yards obligations and incorporates at Annex A the owner's technical specification; the refit yards tender based on the owner's technical specification and any agreed relevant correspondence on the refit.  For example, any specific quality standards or photographs that might assist or agreed protocols. A sample of the contract is available at bimco.org.

Perhaps of more acceptability within the superyacht space is the ICOMIA (International Council of Marine Industry Associations) Standard Yacht Refit/Repair Contract (February 2021), which we also had a small part in drafting. Created by a committee of representatives superyacht refit yards, lawyers and other industry professionals, it provides a comprehensive and industry-specific superyacht refit contract. This is not to say that it's not tipped a little towards the refit yards; however, having a good understanding of expectations of the yards will help frame the relationship between the owner and the refit yard itself. In many respects, it is not wildly different from the BIMCO REPAIRCON.

An important part of the ICOMIA contract is that it puts a clear obligation on the owner to "accurately identify any existing damage and/or breakdown which may affect the yacht, her condition and structural integrity. Further, an owner shall provide the contractor with any necessary documentation and bleak or drawings that would be needed for the safe and smooth hauling out, launching or for the building of a safe cradle/support structure. In this respect, the owner shall exonerate the contractor from any liability for any damages whatsoever that may be suffered by the yacht during her hauling out or launching which ultimately due to attributable to the limited, inaccurate or insufficient information provided by the owner". The point here is that you simply cannot dump the superyacht at the refit yard and say to the yard "just get on with it". A refit requires careful contemplation and consideration that mirrors the careful contemplation and consideration that was given to the same yacht when she was originally built. Failure to do that will result in a refit project which is over budget and fails to meet expectations.

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Clyde & Co

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One step forward, two steps back

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