Navigating Yacht Charter Disputes: The “Dos” and “Don’ts”

Yacht charters are associated with luxury and tranquillity, but disputes can and often do arise when expectations clash with reality.

In the years following the Covid pandemic, and in part because of the Covid pandemic, we have seen a noticeable increase in the volume of yacht charter disputes. Often, these disputes could have been avoided if both parties had taken a few simple precautions. Unfortunately, the same issues come up time and again, often turning minor frustrations into costly legal battles.

Whether you are a charterer or an owner, understanding some basic “dos” and “don’ts” can go a long way to saving you time, money and stress. This brief guide to smooth sailing will hopefully help you avoid, or at least minimise, potential disputes.

Do read the charter agreement properly. Remember, when you are signing your charter, you are likely to be signing an enforceable contract committing the parties to perform their respective obligations subject to the terms of said agreement. Typically, with charters based on the Mediterranean Yacht Brokers Association’s standard form charter, whilst the charterer may not be obliged to actually take up the charter and utilise the yacht, they cannot generally cancel without consequences. Unless the owner is willing to be flexible (and they are under no obligation to be so), the charterer should expect to pay the instalments of the charter fee by the dates agreed. If you are not sure about any terms, seek professional advice. Most disputes stem from simple misunderstandings regarding cancellation, damages or crew responsibilities. That is a trap you can easily avoid.

Don’t just walk off. Often we encounter disputes that arise because a charterer is unhappy with the quality of a yacht, including its crew, and therefore walks off. We would always caution against taking that drastic step. Walking off the yacht and expressing an intention to never return could be akin to wrongfully terminating the contract and you may face significant problems.

Do document everything. In the event of any issues  with the yacht – be it mechanical issues, safety concerns, or even service complaints – it is essential for both parties to document the issues and their respective positions in real time. This applies equally to complaints an owner may have with its charterer as well as complaints a charterer may have with the yacht. Take photos, record videos, notify the captain, the yacht’s manager and the charter broker in writing. This not only strengthens your case or defence but, particularly where you are an owner, also shows you are handling the situation responsibly.

Don’t ignore your flag or insurers. Commercial owners must comply with the obligations imposed on them by their flag state and insurers. Ignoring these can lead to serious consequences – know the rules and follow them.

Do get advice early. The obvious conclusion to this piece! If it looks like a dispute is brewing, don’t wait for things to spiral. Whilst it is not always possible to prevent a full-blown dispute, wherever possible they should be avoided. Disputes are time consuming, expensive and distracting and yacht charter disputes in particular can be complicated. Consulting a suitably qualified lawyer with experience of yacht charter disputes and a knowledge of the industry and its practices can often turn a potential crisis into a manageable situation.