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SUPERYACHT #13
Summer 2007

Article selected from our quarterly magazine dedicated to the largest and most luxurious boats with information, interviews, technical articles, images and yachting news


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Article by
Andrea Petragnani Ciancarelli


THE EVOLUTION OF INTERNATIONAL STANDARDS AND THEIR INFLUENCE ON YACHTING CONTRACTS

Part two | Part one

Yacht management contracts was the subject matter we analysed in the preceding article. On this occasion we'll look at sale and purchase contracts for yachts. Most deeds of sale are based on the international forms of sale for ships, in turn taken from the well known "Saleform 1995".

The forms, furthermore, are also used by the Documentary Committee of The Baltic and International Maritime Council, (BIMCO) which is the most authoritative international organisation that has constantly revised all of the principal maritime forms since 1956. In practical terms, that is in the drawing up of a single contract, a uniformity of contract certainly allows for a greater understanding between the parties involved, even more so when those concerned are of different nationality.

Upon establishing which Law should apply, contracts usually carry some clause near their end which elects Arbitrators in case of any arising dispute. In this instance, and having taken into account the Anglo Saxon origins of both establishments, the Maritime Court of Arbitration of London was elected as the suitable mediator. The decision of a "technical" committal to judgement in case of controversy, certainly makes sense in terms of know how of the judging body.

It is a known fact that the bigger the yacht the slighter will be the differences with the merchant naval world. This is of course due to the adoption of the directives, customs and form which have belonged to the somewhat 'heavier' international maritime world. Certain is the fact however, that the signatories of a given agreement will be in no doubt whatsoever regarding the competence of the judging body. The choice of deferring the decision to a technical Arbitrator certainly has its advantages in terms of speedier decision making as well as being a recognized and competent available authority world wide.

Indeed, the choice of electing Arbitrators during the somewhat delicate and thus most important preliminary contract phases, would certainly increase the chances of the contract being signed in the first place. This is, as we have seen in the case examined which involves an American seller, a buyer from the Australian hemisphere and the yacht lying in Mediterranean waters, the insertion in the pro-forma contract of an authoritative third party such as the Chamber of London, certainly contributed to the signature of the contract. Another important aspect of the transaction, was coordinating the requirements of each Register attaching documents to the contract that had institutional, technical and financial relevance.

Fortunately however, in this instance, a great contribution was given by the common language of the parties involved, English, but also, more specifically, by the common ground for both flags in respect of registration and de-registration of the respective flags and other formalities. The efficiency of the American banking system in extinguishing the existing loan in favour of the seller, complemented by the rather homogeneous procedures adopted by the two Registries involved, considerably contributed to a complete and rather quick conclusion of the sale.

In fact, the Anglo-Saxon system accepts the declarations of citizens regarding the authenticity of documents upon trust alone, and there is also a formal willingness by the pertinent bodies, to begin work on the strength of documentation sent via modern routing systems whilst awaiting for the originals to reach destination. There is also uniformity between the two flags regarding the documents to be attached, starting from the Anglo Saxon Bill of Sale and ending with those documents certifying condition and equipment on board which are commonly acceptable to both flags involved.

Furthermore, evaluating the principals of International Law regarding which Law should apply, taking into account the citizenship and nationality of both parties, whether companies or individuals, the flag of origin and of the new Registry, but also the place or better still the waters in which the vessel was lying at the time of sale, all proved to be of utmost importance.

In conclusion, the importance International Yachting Law being finally adopted has once again been proven by the nature of the transaction described. Much has been written on the subject in an attempt to jolt the competent institutional bodies into action. Finally, things now appear to be moving in the right direction. We can but hope.

For further information: www.petragnaniciancarelli.it.