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I am only making a couple of changes…

A few thoughts on the MYBA Charter Agreement…

Giovanna Cabbia, Clyde and Co and John Leonida, LP Squared, share common frustrations with the industry, this article explores those gripes and provides solutions from the perspective of those operating in the charter market...

Standard form contracts are designed to get the parties involved to signature much quicker than if the parties had to negotiate each contract afresh for each new deal. A good standard form contract will have terms which contemplate most eventualities. It’s when something out of the ordinary happens when the clients say, “how is it possible that this contract doesn’t deal with this?” We mention just a couple of those “out of the ordinary events” in this article.

Billionaire’s ASBO (antisocial behaviour order)

Not for the first time, we were called by a certain yacht manager who had a difficult charter guest on board. The details of the difficulty are unimportant, safe to say that the captain could have invoked the provisions of the Maritime Labour Convention and have the guests removed because the health of the guests was putting the health of the crew at risk. The owners had an obligation to provide a safe place of work for their crew, and these particular guests were compromising that safety. The standard MYBA Charter Agreement made it very difficult in these particular circumstances to terminate the charter. But they were prepared for the next occasion.

We drafted a standard addendum which we called the Billionaires ASBO. The ASBO was a very controversial piece of legislation created to tackle the serially badly behaved, originally introduced in England in 1998 by Tony Blair and imposed upon individuals whose conduct caused or was likely to cause harm, harassment, alarm or distress. We discovered, or rather our clients did, that a large bank balance did not buy you good manners or good behaviour. Therefore, we drafted language which allowed the captain to issue a notice to the charterers where the conduct of any charter guest was causing or was likely to cause harm, harassment, alarm or distress to any member of the crew or any other person on board the yacht; or had behaved in such a way as to compromise the yacht as a safe place of work. The notice allowed the charter to be immediately terminated without cost or liability to the owner.

Force majeure

The MYBA Charter Agreement is a document that has come under some scrutiny in the age of Covid-19, primarily because of the unilateral right of the owner to terminate charter in the event of a force majeure event happening with that same right being denied to charterers.

During last summer, in common with our colleagues at other firms, we had the very difficult task of explaining to charterers that they had no right to step away from the charter and cite the Covid-19 pandemic and the subsequent governmental action as impinging upon their ability to not only join the yacht they had chartered, but also, even if they could join the yacht, the cruising they were expecting was severely curtailed as ports and borders were closed and social distancing rules were invoked. In most cases, notwithstanding the strict legal position, owners behaved with good grace and appreciation of the difficult situation that we were all facing. However, that was not the universal outcome.

Equally, when charterers realised their limited legal rights, they sought to argue difficult English legal principles, in particular the doctrine of frustration, in order to attempt to persuade owners, that Covid-19 was a frustrating event that would render contractual obligations void. Frustration is a very difficult principle to successfully argue. It is a principle rarely successfully deployed.

MYBA responded in March 2020 with an addendum to the MYBA Charter Agreement, the essence of which was to keep the charter alive, albeit delayed if there was an expectation that Covid would impact upon the charter. However, the addendum suffered from the disease that impacts all emergency drafting, that is,  all the consequences of that drafting are not necessarily well thought through. The British statute books are full of ill-conceived pieces of legislation that have been rushed through Parliament. Legislate in haste, repent at leisure.

Therefore, we strongly suggest that the force majeure provisions of the MYBA Charter Agreement should be refreshed, not with Covid-19 in mind but as a stand-alone provision which doesn’t seek, as an objective, to preserve the charter. There needs to be recognition that in a particular set of circumstances the right thing to happen is for everyone to raise their hands and say that circumstances have arisen, and that those circumstances must be keenly considered, which allows more liability for non- performance to be excused. The consequences of a force majeure clause being invoked must take into account the special circumstances of a superyacht charter. For example, what happens if a yacht has been positioned to start a charter? Arguably the charter should pick up those costs. What about the food and beverage that has been ordered? It’s not straightforward, but certainly the addenda currently in circulation are problematic.

These are just a couple of areas which we think might need addressing in the MYBA Charter Agreement

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Clyde & Co

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