Clyde Co Guide to Superyacht Law - Sixth Edition

Clyde Co Guide to Superyacht Law - Sixth Edition

S I X T H E D I T I O N

CONTENTS

Design & build Design

Insurance What are the possible risks? What insurances are required? Are there any insurance clauses that I need to pay particular attention to?

7 9

66 68

Intellectual property

Build contract

14 20

Warranty

70

Sale & purchase Top tips

Finance Documentation

23 26 27 28

76 77 79 79

Points for sellers to consider Points for buyers to consider

Security

Points to consider Post-drawdown

Basics of superyacht sale and purchase

thesuperyachtlawfirm.com

Tax Q&As

Additional considerations MYBA charter agreement

31

81

Operational Superyacht management

Bribery and know your client rules Bribery

37 40 44 46 48 50 52

85 86 92 93

Crewing matters

Know Your Client

Art on board

Litigation

Flag

Multi-jurisdictions

Arms on board

Key contacts About Clyde & Co Our global reach

Migrants

Helicopters

101 102

Toys Jet skis

57 58 60 62

Flyboards

Drones

Submarines

On Brexit, we have updated the pages to include the impact of Brexit on superyachts in relation to matters of employment, tax and the enforceability of English law judgements and English arbitration awards in the European Union. On insurance matters, in a market that has come under a great deal of pressure because of a spike in claims we look at how the market has responded. In May 2019 the sailing superyacht My Song was lost overboard on a transit from Palma to Genoa and therefore we examine the issue of superyachts as cargo when being transported. Finally, The Guide to Superyacht Law has been refreshed and expanded to reflect the latest developments in case law and best practice, as always, the latter gleaned from our continued position front and centre of the superyacht industry. We will continue to bring to you updates not only with this publication but also on our micro website thesuperyachtlawfirm.com and our Clydecast Superyacht Podcasts .

If a week is considered to be a long time in politics, the almost three years since the publication of the fifth edition of The Guide to Superyacht Law must be considered to be an eternity in the legal world. When we were first contemplating this sixth edition of The Guide we had in mind a publication that would be focused on the consequences of Brexit. The global pandemic caused by COVID-19 has changed how we do business and possibly increased the appetite of ultra-high net worth individuals to own or charter superyachts. Our fourth and fifth editions of The Guide were written in the maelstrom caused by the publication of both the Panama Papers and the Paradise Papers. Both these events have substantially changed people’s appetite for the acceptability of hidden wealth and tax avoidance and perhaps framed the moves by the European Commission to end aggressive tax benefits afforded to superyacht owners. There have been some very high-profile seizures of yachts in the last three years, most famously and, as a consequence of the 1MBD scandal, the seizure and eventual sale at auction of the yacht Equanimity . Consequently, we have updated the pages on tax and added new language relating to transparency, and in particular Know Your Client rules.

Clyde & Co the superyacht law firm

3

5

DESIGN & BUILD

DESIGN

Every person involved in the design process needs to understand what rights in the design of any superyacht they have. An owner needs to be surrounded by an experienced team to assist with the build process. Any owner needs to explore the following:

• What is the owner expecting from the designer? Will the choice of the design have an impact on the superyacht’s performance or compliance with regulatory obligations? Hire the designer or designers early. The exterior styling and the interior design may come from different design houses. Who has responsibility for the naval architecture? • What are the designer’s obligations? Are they only delivering the design, or should the designer also be responsible for ensuring the builder fulfils the design intent? • Does the design contract tie into the build contract? The designer should deliver the design in accordance with the design deliverables schedule of the build contract. Does the design contract clearly specify the designer’s responsibility towards the owner or towards the builder for defects attributable to the original design? Is there a clear and workable approval process for design drawings moving back and forth between designer, owner and builder?

• Is the designer protected from wrongful implementation of the design by the builder and from delays to the build not attributable to the designer’s fault? Does the design contract allow the designer to recover design fees for variations to the design requested by the owner above the initial scope of work and/or in respect of extra activity requested to the designer to assist the builder in the implementation of the design?

• Is the owner/builder protected from negligent design (including latent (or

‘hidden’) defects, of which particular care should be taken, especially by builders who can potentially be held liable for their failure to identify and correct technically flawed designs) or breaches of intellectual property? Does the designer have professional negligence insurance cover in place? It is expensive but designers should have it.

DESIGNING AND BUILDING A SUPERYACHT IS A COMPLEX PROCESS

7

INTELLECTUAL PROPERTY

• Does the design contract protect the designer’s intellectual property? Does the contract provide that any licence of the intellectual property rights granted by the designer are subject to payment of the design fees, and that if the designer is not paid the licence will be immediately withdrawn?

Design rights protect the outward appearance of an article resulting from its features, in particular, the shape, lines, contours, texture, colour, materials used and its ornamentation — for example, the shape of a superyacht hull or deck design may qualify for protection.

Intellectual property (IP) is concerned with creations, such as inventions, literary and artistic works, designs, and names and symbols used in a commercial context. IP can be legally protected, for example by way of copyright, designs, patents and trade marks. These rights can help to ensure that inventors and designers are recognised for and profit from their work, and are protected against the misuse and/or misappropriation of their works by others.

IP includes such rights as: confidential information and trade secrets, copyright, >Page 1 Page 2-3 Page 4-5 Page 6-7 Page 8-9 Page 10-11 Page 12-13 Page 14-15 Page 16-17 Page 18-19 Page 20-21 Page 22-23 Page 24-25 Page 26-27 Page 28-29 Page 30-31 Page 32-33 Page 34-35 Page 36-37 Page 38-39 Page 40-41 Page 42-43 Page 44-45 Page 46-47 Page 48-49 Page 50-51 Page 52-53 Page 54-55 Page 56-57 Page 58-59 Page 60-61 Page 62-63 Page 64-65 Page 66-67 Page 68-69 Page 70-71 Page 72-73 Page 74-75 Page 76-77 Page 78-79 Page 80-81 Page 82-83 Page 84-85 Page 86-87 Page 88-89 Page 90-91 Page 92-93 Page 94-95 Page 96-97 Page 98-99 Page 100-101 Page 102-103 Page 104-105 Page 106-107 Page 108

Made with FlippingBook - professional solution for displaying marketing and sales documents online