Dealing with difficult charterers

 In Legislation

By Milly  Brooks, Shipowners Club Deputy Syndicate Manager – Claims.

The MYBA Charter Agreement is widely used in the luxury yacht market. The Club has recently assisted with several cases involving charterers committing multiple breaches of clause 13. This is the clause that governs the way in which the charterer and their guests shall use the yacht during the charter period. These cases have illustrated that, in practice, careful consideration needs to be given to an owner’s options when dealing with poorly behaved charterers under the MYBA Charter Agreement.

OWNERS’ RIGHT TO TERMINATE

There are certain actions of a charterer that give rise to an owners’ right to terminate forthwith, without giving due and specific warning to the charterers. The first such action is if the charterer or any of their guests commit an offence contrary to the laws and regulations of any country. The offence must result in a crew member being detained, fined or imprisoned, or to the yacht being detained, arrested, seized or fined. If this occurs, not only can an owner terminate the Agreement forthwith by notice to the charterer, but the charterer is also required to indemnify the owner against all loss, damage and expense incurred by the owner as a result. The second such action is if the charterer or their guests breach the ‘zero tolerance policy’ by having in their possession any illegal drugs or weapons.

The Club has recently assisted a number of Members in cases involving potential breaches of clause 13. These cases have illustrated that, in practice, it can be difficult for the owners to exercise their right to terminate without fear that they are committing a repudiatory breach of the Agreement. This can mean that owners may not always have an effective remedy in situations involving a difficult or poorly behaved charterer, particularly so in the case of short-term charters.

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