There are many areas to deal with when operating a superyacht, some with increased media attention
Providing services ranging from purely commercial and marketing services to full commercial, administrative and technical services such as: crewing, arranging superyacht and crew insurance, general administration, accounts, technical and ISM/ ISPS services. Superyacht managers can be reassuring to have as an asset for the operation of the superyacht and thus vitally important.
Do I need, or should I have a superyacht manager?
• Yes, an ISM-certified superyacht manager for commercially registered/operated super yachts over 500 GRT
• A superyacht manager is not strictly needed for privately registered/operated superyachts. On a smaller day boat, a captain can normally suffice. However, on the bigger tonnage, engaging a superyacht manager is recommended, for example, if the superyacht has a large crew employed or if the superyacht is to undergo works.
How do I choose one?
• Are they reputable? Is he or she appropriate for the services needed and superyacht size,intended use and area of operation? Seek references from industry experts and your friends
• What is market standard? Ensure you know what the manager is providing for their fee.Is the manager prepared to provide a manager’s undertaking on standard market terms to bankers, if you are borrowing funds to buy the superyacht?
What should I expect from the management agreement?
• An adapted version of the standard BIMCO Shipman 2009 is a good place to start.
• Do they have professional indemnity insurance in place? It is advisable to have it and for superyacht owners to request it.
• Limitation of liability – get the relevant clauses or disclaimers carefully reviewed to ensure the manager’s liability is not limited beyond what is standard or reasonable.
• Terms of the contract and termination provisions – ensure you are not locked into a contract for longer than you aim to be.
• Governing law and dispute resolution are also important. Advice from a local lawyer is advisable.
The crew is part of a global workforce increasingly deployed and managed through a network that links owners, managers and labour-supply agencies. It is important to ensure compliance, as the crew is central to the successful operation of the superyacht.
What protection is there for the crew?
• The employment contract will set out the crew members’ contractual rights.Further mandatory employment rights, for example protection against dismissal, may also be afforded to them.
• There is no model contract, however, certain flags require contracts to be approved by the irrelevant authorities. For example, UK flagged superyachts require contracts to be approved by the MCA.
What jurisdiction will govern a dispute?
• The express election of jurisdiction and choice of law in the contract is one factor. However, either party may be able to challenge this on a number of grounds, such as where the crew member carried out his or her duties, and where the owner is based.
What is the Maritime Labour Convention (MLC)?
The MLC provides a globally applicable standard for:
• Minimum requirements to work on a superyacht
• Conditions of employment
• Accommodation, recreational facilities, food and catering
• Health protection, medical care, welfare and social security protection
• Compliance and enforcement
The aim of the MLC is to set a standard for seafarers’ working conditions regardless of which flag they sail under. The MLC came into force on 20 August 2013.
Who will be covered by the MLC?
• The MLC applies to all super yachts ordinarily engaged in commercial activities, but only superyachts over 500 GRT can get certified. This makes it difficult for sub-500 GRT superyachts to prove complete compliance. It covers all crew who are employed or engaged or work in any capacity on board. It is important to note that on employment matters, the MLC will apply to existing superyachts and that superyacht owners will need to comply with the MLC requirements.
Can the owner avoid liability by registering a superyacht with a flag state that has not approved the MLC?
• No, all super yachts will be subject to inspection in the ports of any country that has approved the MLC. Even purported flag exemptions from MLC may not protect an owner from crew action or Port State Control.
What paperwork is required?
• Following an inspection, a certificate will be issued by the flag state certifying that the working and living conditions of crew satisfy the mandatory requirements.
• A declaration, as approved by the flag state, which states the national requirements for the working and living conditions for crew and sets out the measures adopted to ensure compliance.
You must carry on board the following: Maritime Labour Certificate, Declaration of Maritime Compliance, two copies of the most recent inspection, medical certificates for crew, employment contracts, records of hours of work and rest, complaints procedure.
Is MLC really important?
• Yes, penalties and corrective measures for breaches or obstructions will be imposed.
• The superyacht could be detained in port until breaches are rectified.
• Non-compliance of some parts of the MLC can lead to criminal sanctions on the captain and owner (for example breaches of hours of work and rest obligations).
Is there anything new with the MLC?
As the MLC is known as a ‘living’ document, we can expect developments and amendments as issues arise and levels of compliance evolve. Since its implementation, the MLC has been amended to add a mandatory requirement that shipowners have financial security to cover abandonment of crew, as well as death or long-term disability of crew due to occupational injury and hazard, taking effect from 2017. More recently, amendments have been agreed to give a greater emphasis on inspections to the health and safety risks of bullying and harassment of crew which will come into force in April 2018.
For some superyacht owners, housing their art collection on board is a necessity. It represents the style and tone that they wish to impart upon the superyacht. In doing so, there are a number of factors to consider to ensure art on board the superyacht is properly owned and well-maintained.
It is necessary to consider who owns the artwork onboard the superyacht to ensure they are aware of any tax, customs or insurance implications. Will the ultimate beneficial owner of the superyacht own the art work? Or will it be the superyacht owning company or a different company altogether?
A robust security/alarm system onboard the superyacht to prevent theft is essential. The captain should also keep an inventory of all artwork on board with appropriate documentation. It is also worth educating the crew about appropriate methods of care for different art pieces to ensure they are not inadvertently damaged.
You may need to have separate specialist cover for high-value items. This will require you to declare to your insurer the art on board the superyacht and its estimated value.
• Tax: If the art is not physically part of the superyacht, it may have its own tax treatment separate from the superyacht, which may not be consistent with the superyacht’s status.
If your art is covered by your standard insurance policy it is worth checking what limitations apply to its cover. For example, geographical limitations may apply.
Surprisingly, there is no legal requirement to fly a flag, but if you do not have a flag, Port State Control will probably stop you from sailing.
Choosing a flag relies on what regulatory regime you want to operate your superyacht under.
Within the superyacht sector:
-The British Red Ensign is the overwhelming flag of choice in all its variations, including the UK, Isle of Man, Gibraltar and the Cayman Islands – following the conclusion of the Brexit process this may change.
-In the USA, the Marshall Islands have a sizeable footprint, but for superyacht registration, they do not yet have a large presence in Europe.
-In recent years, the Maltese Flag has also become very popular with an attractive leasing scheme for pleasure superyachts.
-In Asia, Hong Kong is viewed as a popular registry for superyachts.
Owners should be aware that where superyachts are being chartered in European waters the interpretation by the Commission of EU Council Regulations mean non-EU flags may have issues with Port State authorities, although there is no evidence of active enforcement by Port State control against non-EU flags. With Brexit, this will mean the UK flag will no longer be an EU flag.
Points to remember
• A buyer will be denied access to flag’s records to check whether its building is being built to the letter of the law, unless you agree this with the builder during the contract negotiations.
• The documentary requirements when registering a superyacht will vary with flag, length and tonnage of the superyacht. All registries will require proof of ownership prior to first registration (ie a bill of sale or builder’s certificate), a certificate of survey, a tonnage certificate and, if registered elsewhere, the previous registry’s deletion certificate. If a superyacht has had a break in its registration history, you will have to fill in the gaps in a way acceptable to the registry.
Whether or not a superyacht can legally carry weapons depends on the type of superyacht, the laws of the Port State you are visiting and the flag state that the superyacht is flagged with.
In international waters, the laws of the flag state apply. Superyachts requiring protection of armed security guards generally engage private security firms to provide such services. Armed guards are usually only on board the superyacht while it is in a high risk area.
Use of force and rules for the use of force
Currently, no international conventions or regulations state what force and measures can be used lawfully to defend against a pirate attack. As a result, in international waters, the laws governing the use of force will be those of the flag state of the superyacht, which must be complied with by the captain, crew and security personnel at all times. It is advisable that the flag state is consulted at an early stage in the owner’s consideration of the decision to place armed guards on the superyacht to ensure that any statutory requirements are met.
On board the superyacht, the security team must be bound by clear Rules for the Use of Force (RUF), which should clearly set out the protocols and measures to be taken in the event of an attack by pirates. These should provide a detailed, graduated response plan to pirate attacks as part of the security team’s operational procedures, with the aim of preventing boarding using the minimal force necessary to do so.
In particular, the IMO guidance for the RUF states that firearms should not be used against persons “except in self-defence or defence of others against the imminent threat of death or serious injury, or to prevent the perpetration of a particularly serious crime involving grave threat to life”.
Chain of command and authorisation to use force
Requirements state that the captain of the superyacht has the overriding authority and responsibility to make decisions with respect to the safety and security of the superyacht. However, there are questions as to how the captain’s overall responsibility for security issues interplays with the need for a professionally trained security team to take quick and immediate decisions in the heat of an attack.
It has been widely argued that security personnel have an inherent right to use force in instances where it is necessary in their self-defence, and that the members of the security team should have a discretion under the RUF to use force without the captain’s consent in these circumstances.
Making sure that all relevant licences are in place for carrying weaponry and ammunition onboard during a voyage is a potential legal minefield, given that the laws of a number of legal jurisdictions may be involved. Laws and regulations governing weapons licences are frequently extremely complex, and potentially licences may be required from multiple government agencies.
There are potentially extremely serious civil and criminal sanctions, if there are breaches of weapons licensing laws.
Given that there are significant international concerns about the proliferation of arms,with fears that weapons could end up being used in crime, terrorism, or in civil war, security companies, as well as shipowners must be extremely careful. Appropriate legal advice needs to be sought to ensure that both the security personnel carrying weapons, and the company owning the weapons acquire all the necessary licences and consents. In particular, it should be noted that some jurisdictions, such as Egypt, have banned the presence of weapons and armed security teams on board when transiting its territorial waters.
Be mindful of any unplanned changes to your route, which may bring the superyacht into the territory in which the existing weapons licences are inadequate.
Superyacht owners and operators need to be aware and prepare for migrants at sea.
Obligations to rescue refugees and immigrants at sea
The captain of a superyacht has a legal obligation to give assistance to those in distress at sea irrespective of the nationality or status of those in need, or the circumstances they are found in.
The obligation goes further to say that you must, with speed attempt to rescue the distressed person/s providing you can do so without serious damage to the superyacht, the crew or any passengers or absent of “special circumstances”.
The level of assistance will initially depend on the situation. If there is nobody in the water, then it may be reasonable to wait alongside until the coastguard arrives and provide food and water. However, if someone is in the water or the vessel is at risk of sinking, life rafts or launching tenders must be deployed and access to your superyacht needs to be allowed.
Contracting states are obliged to provide assistance to captains and release them from their obligations with minimum further deviation from their journey. A captain cannot allow its superyacht to be used as floating accommodation and must disembark migrants at a place of safety.
Where is it appropriate to disembark those rescued?
While the obligation of seafarers to rescue those in peril is clear in legal documents, what happens next is murkier. The Convention on Search and Rescue specifies that a rescue is not complete until the rescued person is delivered to a place of safety. That could be the nearest suitable port, the next regular port of call, the superyacht’s home port, a port in the rescued person’s own country or one of many other possibilities.
A refugee or asylum seeker, however must not, under international law, be forcibly returned to a country where his or her life or freedom would be endangered, or, by extension, to a country where he or she would not be protected against such return.
Care should be taken when disembarking refugees, asylum-seekers and those indicating they fear persecution or ill-treatment in a particular territory to ensure that the requirements of the 1951 Refugee Convention are met.
How this would work in practice
When assistance is requested to the rescue of people in distress at sea, the captain of the superyacht should:
– Identify the superyacht’s equipment and life-saving appliances that maybe appropriate for the rescue operation.
– Determine if any special arrangements, additional equipment or assistance maybe required for the rescue operation.
– Implement any plans and procedures to safeguard the safety and security of the crew and the superyacht Inform the superyacht’s owner/operator and agent at the next intended port of call of the rescue operation, and,
– Provide the Rescue Coordination Centre responsible for the search-and-rescue region with the following specific information, if possible:
– Details of the assisting superyacht, position of the superyacht, maximum speed, and next intended port of call; current safety and security status, and endurance with additional people on board–Details of the rescued people, including: total number; name, gender, and age; apparent health and medical condition (including any special medical needs).
– Actions completed or intended to be taken by the captain.
– The captain’s preferred arrangement and location for disembarking or transferring the rescued persons, mindful that rescued persons should not be disembarked or transferred to a place where their life or safety would be at risk.
– Any help needed by the assisting superyacht due to limitations and characteristics of the superyacht’s equipment, available manpower, stocks of supplies for example, and
– Any special factors such as safety of navigation, prevailing weather conditions,time-sensitive cargo.
The use of helicopters on superyachts is becoming a common means of allowing guests to join the superyacht at their convenience.
Access to a helicopter is also invaluable in an emergency and it is therefore important to consider at an early stage in the design process, whether a helideck should be incorporated on the superyacht. With regard to commercial superyachts, ‘touch and go’ helidecks also have to fully comply with legislation. Touch and go helidecks which do not comply are illegal.
How much space will I need for a helideck?
The helicopter landing area should be designed for the largest helicopter which it is intended to use. It should be large enough to contain a circle of diameter ‘D’ equal to the largest dimension of the helicopter when the rotors are turning. The ‘D’ circle should be totally unobstructed. This does not have to mean that the entire deck will be devoted to the helideck as the out-board edges of the landing area may be engineered to retract or fold to a closed position when the landing area is not in use, providing the overall safe landing area.
Does the helideck need to comply with any regulations?
Commercial super yachts seeking compliance with Large Yacht Code (LY3) or Passenger Yacht Code (PYC) require a Helicopter Landing Area Certificate (HLAC) to be issued by an aviation inspection body recognised by the relevant flag. While a pleasure superyacht does not need to comply with the aforementioned codes,many owners will build their helideck so that it does comply to maximise the superyacht’s resale value. Particularly important, should a future owner wish to register the superyacht as a commercial superyacht or the owner wants to charter their superyacht.
Once my helideck is certified, can I land any helicopter on my superyacht?
No. The HLAC will indicate the maximum size of helicopter in terms of ‘D’ value and the maximum take-off weight of the heaviest helicopter in terms of ‘T’ value for the helideck. You will not be able to land anything larger or heavier.
Does the captain and crew need additional training?
In accordance with LY3 or PYC, the person in charge of each helicopter landing area operations team should be in possession of an Offshore Petroleum Industry Training Organisation (OPITO) and an Approved Helicopter Landing Officer (HLO) certificate. All other crew assigned duties within the helicopter landing area should be in possession of an OPITO Approved Offshore Emergency Helideck Team Member certificate. All crew should undergo familiarisation training regarding helicopter operations.
Do I need any specialist fire-fighting equipment?
Regardless of whether the helicopter is stored on deck,the helideck structure should be adequate to protect the superyacht from fire hazards associated with helicopter operations. Fire-fighting equipment should be provided in close proximity to the helideck (near the access point for the helideck) and crew should also be trained in fire-fighting techniques.
Helicopters and temporary impact relief
Do not assume that a superyacht’s 18month relief extends to helicopters kept onboard in the EU. The relief for helicopters is only six months.