Dispute resolution is this edition’s legal topic. We contacted the lawyers and teams at the top of their game, where disputes are the core of their experience and expertise and in most cases form the bulk of their workloads Words: Claire Griffiths
Disputes and disagreements among the superyacht fraternity spring from a variety of sources and include yacht sale and purchase transactions, new build projects, vessel arrests, ownership claims, financing agreements, charter agreements, management contracts and other complex cross-border commercial relationships.Çağla Yeniaras is a Turkish Attorney-at-Law based in Istanbul, specialising in maritime law. She’s a key member of Mare Legal, a firm that focuses on yacht financing, luxury asset transactions and complex maritime legal matters. She says, “Given the inherently international nature of the industries in which we operate, disputes often involve parties, assets and legal systems spanning multiple jurisdictions. As a result, our first objective is often to explore negotiated solutions wherever appropriate.”Dilara Dayioglugil is a founder of Mare Legal and heads up the firm’s International Transportation and Maritime and Yachts Law practice.
She adds, “In our experience, negotiation can frequently provide a faster, more cost-effective, and commercially practical outcome than lengthy court or arbitration proceedings, particularly when parties are located in different countries and wish to avoid the time, expense and uncertainty associated with multi-jurisdictional disputes. Negotiated settlements can also help preserve valuable commercial relationships and allow clients to continue their business operations with minimal disruption.”Yeniarias points out that while the firm is fully equipped to represent clients in litigation, arbitration and mediation proceedings when necessary, it believes that successful dispute resolution is not measured by the number of cases that reach a hearing, but by achieving the best possible outcome for the client in the most efficient manner. “Our role,” she says, “is therefore not only to act as advocates in contentious proceedings but also to serve as strategic advisors, identifying practical solutions that align with our clients’ commercial objectives.
This approach has proven particularly valuable in the yacht and luxury asset sectors, where disputes often involve high-value assets, international stakeholders and time-sensitive considerations.’Mike Phillips is a partner in the Dispute Resolution Group of Watson Farley & Williams LLP, a sector-focused law firm with experience across energy, infrastructure and transport. Phillips specialises in shipping, contentious ship finance and ship and offshore vessel construction. He acts regularly in London arbitration and Commercial Court proceedings, as well as coordinating litigation involving Asia, Europe, the Americas and the Middle East.
HOW DID IT COME TO THIS?
“Disputes,” he explains, “are often high-value, multi-jurisdictional and typically involve arbitration, High Court litigation, mediation and strategic settlement.” Tom Kelly is a partner at Preston Turnbull LLP, a company that offers legal services in the areas of Shipping, International Trade, Marine Insurance. He is particularly known as a leading litigator in superyacht building disputes and acts regularly for large shipbuilding companies from South Korean shipyards to European superyacht builders. He has acted in some of the leading High Court cases on shipbuilding projects, including ‘The Star Polaris’ on shipbuilding warranty claims and ‘Adyard v Serco’ on project delay.
Kelly explains that disputes commonly arise over purchase; for example, he currently has a case before the High Court against the broker and surveyor in respect of negligent advice during a sale. He is also working on new-build disputes, especially where new ‘builders’ have sprung up in the current market of full order books but without the capacity to fulfil their promises, and where established yards are launching new lines which have proven to have defects in the first hulls. “The disputes therefore are over delays, warranty defects or even cancellations,” he explains.Yeniaras at Mare Legal reports that her workload also often focuses on purchase or new-build disputes and also charter arrangements and financing structures. She says, “In the yachting sector, common areas of contention include disagreements following pre-purchase surveys, defects discovered before or after delivery, delays in construction or delivery, contractual interpretation issues, deposit and payment disputes, and questions relating to ownership and title.”She also regularly advises on vessel arrests and enforcement actions, particularly where unpaid debts, agency fees, or other maritime claims are involved. Given the international nature of the industry, disputes often have a cross-border element, requiring coordination across multiple jurisdictions and legal systems.
BIT DIFFERENT
Purchase and construction are common nitty-gritty issues that form the basis of colossal arguments and the bread and butter of these specialist lawyers. Particularly challenging are the more unusual disputes: Dayioglugil at Mare Legal remembers an occasion that involved a client who had purchased a yacht in good faith and had owned it for several years before unexpectedly facing a challenge to their ownership. Dayioglugil explains, “The claimant relied on proceedings initiated in another jurisdiction and represented that a court decision existed in support of their claim. As a consequence, international enforcement measures, including an Interpol-related alert affecting the vessel’s status, became a significant concern.” What made the matter particularly unusual was that, upon detailed review, the legal and procedural background was far more complex than initially presented. The existence, scope, and effect of the foreign proceedings required careful scrutiny, as the position advanced by the claimant did not fully align with the procedural status of the case.
OUR ROLE, IS THEREFORE NOT ONLY TO ACT AS ADVOCATES IN CONTENTIOUS PROCEEDINGS, BUT ALSO TO SERVE AS STRATEGIC ADVISORS
Disputes are often to do with misrepresentation, condition, and failed transactions suggests Phillips at Watson, Farley & Williams. Things like delays, specification, quality and payment form the basis of disagreements during construction. And when it’s repair and maintenance issues, the problems include technical causation and warranty claims. Charter disputes usually involve performance, cancellation, off-hire, and liability allocation. Says Phillips, “These mirror broader maritime trends where disputes often turn on contract interpretation, technical evidence and commercial risk allocation.”Genoa-based Grimaldi Studio Legale is a company formed of lawyers specialised in navigation, transport, logistics and inter-modality law. Massimiliano Grimaldi is the founding partner. He says, “we often deal Dayioglugil explains, “This raised important questions regarding ownership rights, due process, international recognition of foreign decisions, and the extent to which actions taken in one jurisdiction could affect a bona fide purchaser in another. The case was a fascinating example of how yacht disputes can extend far beyond traditional contractual disagreements. It involved a combination of maritime law, international enforcement, asset ownership, and procedural issues across multiple jurisdictions, demonstrating the highly specialised and international nature of disputes within the luxury asset sector.”
PRESTON TURNBULL
Preston Turnbull are leading litigators and advisors in the yacht and superyacht market, acting across disputes and projects involving yacht owners, charterers, insurers and brokers. The team at Preston Turnbull acts for clients across the yachting industry including owners, charterers, insurers, brokers and shipyards and has advised on numerous large newbuild projects and sales. The firm has also acted in litigation involving some of the world’s largest and most iconic yachts. Preston Turnbull has particular expertise in handling disputes arising during projects for newbuild bespoke yachts, including claims arising from defects after delivery; insurance claims and MYBA charter party disputes. While able to deliver expert legal advice and support during any disputes, the team prides itself on adopting a commercial approach to assist with getting projects delivered while resolving problems along the way. www.preston-turnbull.com
ACROSS THESE MATTERS, THE CONSISTENT THEME IS COMBINING LEGAL ANALYSIS WITH DECISIVE COMMERCIAL STRATEGY
We are also starting to see various problems with new propulsion units, especially for electric propulsion units where the charging performance is less than is needed for the required cruising.”Mike Phillips remembers a new build dispute with a Turkish yard that became financially distressed during construction. That created both a contractual and enforcement problem. He explains, “We took rapid steps to secure the client’s position, including local proceedings in Turkey, while simultaneously managing the contractual termination and recovery strategy. Situations involving yard insolvency or financial instability remain relatively unusual, but when they arise they require fast, coordinated multi-jurisdictional action.”Çağla Yeniaras cites a particularly interesting dispute that arose from the acquisition of a yacht-owning company: “Rather than purchasing the yacht directly, our client acquired the shares of the company that owned the vessel, a structure frequently used in the yachting industry for tax, registration and operational reasons.
Prior to completion, the corporate documentation provided to our client appeared to be in order and did not reveal any material concerns. However, following the acquisition, it became apparent that the company’s share capital had previously been increased and that the corresponding capital contribution obligations had not been fulfilled. This issue had not been properly disclosed during the transaction and created significant uncertainty regarding the company’s financial and legal position.”The matter required a detailed examination of corporate records, shareholder resolutions, accounting documentation, and the representations made during the acquisition process.
As the issue only came to light after the client had completed the purchase, the dispute raised complex questions regarding disclosure obligations, corporate liability, and the legal consequences of inaccuracies in transaction-related documentation. Yeniaris explains, “We commenced legal proceedings to protect our client’s interests and successfully obtained a favourable judgment. The court accepted our client’s position, providing legal certainty and resolving a dispute that originated from circumstances predating the acquisition.” Yeniaris suggests this case serves as a reminder that in yacht transactions, the asset itself is not always the sole focus of due diligence. Where ownership is structured through a corporate vehicle, issues hidden within the company can be just as significant as issues affecting the yacht itself. It also highlights the importance of conducting both maritime and corporate due diligence when acquiring high-value assets through share purchase structures.
WIN WIN
We had a recent dispute where a Buyer had purchased a yacht with defects that were covered by the new-build warranty, yet had gone through five failed repair attempts,” says Tom Kelly.“Using commercial and legal pressure we were able to get the yard to address the problem correctly back in its main yard and redeliver the yacht for the summer season.” Kelly and the Preston Turnbull team have also been dealing with numerous refit issues – mostly between yard and subcontractors where ‘new-build’ contractors have been overstretched and failed to plan and execute work properly in a refit, leading to delays in delivery.To resist paying liquidated damages the contractor then raises spurious ‘interference’ and prevention claims, which in general simply fail under English law.“We managed to resolve a financially significant dispute between a yacht owner and a shipyard through a transaction, which often represents the best path to take as it avoids the risk of being faced with a much more unfavourable judgment,” says Massimiliano Grimaldi.
He adds, “The transactions represent, in other words, an important legal instrument to resolve disputes by making mutual concessions, when the outcome of the lawsuits is particularly uncertain.”Clearly much (or most) of the work of these professionals is confidential, but by way of example Mike Phillips can describe the following incident: “We acted in a vessel arrest dispute in West Africa, where a ship was detained on unmeritorious claims. By combining English law arbitration strategy with parallel proceedings elsewhere, we secured release of the vessel through structured security arrangements and preserved the client’s position for arbitration, ultimately achieving a favourable settlement.
”Phillips has also handled complex multi-party casualty disputes, including a case involving collision and cargo damage where he coordinated technical experts and achieved a negotiated settlement following arbitration and mediation, avoiding prolonged proceedings. He says, “In the construction space, we have managed shipbuilding and technical disputes, including multi-jurisdictional claims involving design, delay and performance issues, often resolved through carefully structured settlement frameworks rather than full hearings. For example, we have advised a buyer on a dispute against the yard in relation to a yacht construction under a shipbuilding contract, which was successfully resolved without proceedings.” Across these matters, the consistent theme is combining legal analysis with decisive commercial strategy.
MARKO LAW
Accumulating over 30 years of experience in practicing International Yachting Law, they have set the benchmark in the Eastern Mediterranean while expanding the clientele in Europe, Middle East, U.S.A and South Asia. The team have established a long time co-operation with most European shipyards and many of their dealers in Europe. They have also been acting as legal advisors and lawyers to a number of E.U. Banks, specialised in yacht financing and yacht leasing, together with co-operating with a number of insurance companies for all yachting matters. Throughout the years, they have built and still maintain excellent relations with major firms and key-people engaged in the sector (shipyards, agents, brokers, Custom Agents, Naval Agents, Port Authorities, State Authorities) whom they continue to work with throughout the year. www.markolaw.gr
POOR COMMUNICATION, BETWEEN THE PARTIES AND INTERNALLY WITHIN IS A COMMON IMPEDIMENT TO A SUCCESSFUL OUTCOME
IMPEDIMENTS IN THE OINTMENT
Not everything always goes right the way in efforts to resolve disagreements, and according to Tom Kelly the most common impediment is – emotion. Especially in the superyacht market the parties involved are heavily personally invested in the projects on both sides and feel very strongly about things going wrong.Says Kelly, “Parties reacting with too much emotion and becoming very entrenched in their positions means that the only way to resolve matters is often litigation/arbitration.”Edanur Senel works with colleagues at Mare Law. She believes that one of the most common obstacles to effective dispute resolution in the maritime and yachting sector is the cross-border nature of transactions and disputes. Parties are often located in different jurisdictions, contracts may be governed byforeign laws, and assets such as yachts frequently move between countries.
This can create challenges in relation to jurisdiction, enforcement, evidence gathering and securing claims.Explains Senel, “At Mare Legal, we address these challenges by taking a proactive and strategic approach from the outset. Given the international nature of the maritime industry, disputes often arise underforeign-law governed contracts and involve multiple jurisdictions. Our practice regularly involves the use of maritime-specific remedies and procedures, including yacht and vessel arrest actions, sailing prohibition measures, and enforcement proceedings aimed at securing claims before assets leave a jurisdiction.
We also represent clients in specialised maritime arbitrationforums and other dispute resolution mechanisms frequently used in the shipping and yachting industries.” Poor communication, both between the parties and internally within organisations (for example, between owners, insurers and financiers) is a common impediment to a successful outcome says Mike Phillips. He says, “The key to overcoming this is: early alignment of stakeholders, clear, structured communication, a disciplined strategy around evidence and decision-making. In practice, successful resolution often depends less on the underlying legal issue and more on how effectively communication is managed.”
CHANGING CHALLENGES
Geopolitical developments are increasingly affecting yacht transactions and deliveries. In recent years, challenges relating to regional conflicts, security concerns in key shipping routes and disruptions to global supply chains have had a direct impact on the movement of yachts between jurisdictions.Forexample, transporting a yacht from Asia to Europe may now involve additional considerations due to security concerns in and around the Red Sea and the Suez Canal. These circumstances can lead to delivery delays, increased transportation costs and contractual disputes regarding responsibilityforunforeseen events.As a result, clients are paying greater attention to contractual provisions dealing withforce majeure, delivery obligations, risk allocation and termination rights. As a consequence, Yeniaras has seen a growing needforlegal advice that anticipates these issues at the drafting stage, rather than addressing them only after a dispute arises.
MARE LAW
MARE LEGAL is an international law firm specialising in maritime, yachting, aviation, insurance and luxury asset matters. The firm advises ultra-high-net-worth individuals, family offices, yacht owners, brokers, financial institutions and private clients on complex cross-border transactions and high-value assets worldwide. Their services include yacht and aircraft acquisitions, finance and ownership structures, vessel registration, marine insurance claims, charter disputes and international commercial matters. Combining legal expertise with industry insight, MARE LEGAL delivers tailored, commercially focused solutions designed to meet the unique requirements of a global clientele. Built on discretion, excellence and personal service, MARE LEGAL assists clients in acquiring, protecting and managing their most valuable assets across jurisdictions, international markets and generations. www.marelaw.com
Mike Phillips has noticed two stand-out changes in recent legal issues he has worked on; sanctions and compliance have become increasingly significant, affecting payments, performance, insurance and enforcement. He adds, “There’s greater contractual complexity now, particularly in construction and refit projects, often driven by supply chain disruption and evolving technical requirements. Both increase the likelihood of disputes and add layers of complexity when they arise.”“Disputes involving small offshoots from established yards is fairly new,” adds Tom Kelly.“Given the healthy level of orders in the big yards, with most order books full, various engineers and project managers have been trying to start up their own yards and essentially ‘renting’ facilities like docks and workers.So far, that has not worked and I am dealing with one cancellation case where the yacht has been transferred to a more established yard for completion. Aside from that, new technology, for example in propulsion and fuels, generate new problems and legal issues.”“We’re noticing a growing awareness among yacht and superyacht owners about the importance of knowing in advance the regulations, in order to avoid legal issues,” says Grimaldi. “In this regard, we are receiving several assignments to verify the yacht’s compliance with the numerous and complex international industry and marine regulations.”
NEW WOES
“Sanctions, compliance, poorly run small off-shoot firms give clients sleepless nights but they are worried about other things too: supply chain stability and delays, for example. But also escalating costs of materials and specialist services, geo political risks, including the impact of ongoing conflicts on trade routes and project delivery,” explains Phillips. One of the main concerns will be risingoperating costsin the yachting sector. In particular, the limited marina capacity in Turkey is becoming a structural issue, and it may create even more pressure on both the superyacht industry and tourism goingforward suggests Senel. At the same time, offshore company jurisdictionsare introducing stricter compliance and security regulations.Clients who do not actively follow these regulatory changes or miss key deadlines may face difficulties in maintaining their corporate structures in good standing.
“Overall, we expect clients to focus more on cost efficiency, regulatory compliance and ensuring that their ownership structures remain fully up to date,”explains Senel.Sustainability and green regulations for vessels and yachts may well soon be introduced, depending on US input, and may affect cruising areas and requirements as well as the use of yachts. Kelly has seen plenty of attention focussed on the sustainability of superyachts, despite the tiny fraction of the marine sector that they represent.
THE WORK LOAD
Some adapt, others up the ante: At Preston Turnbull Kelly takes on an increasingly pressurised workload, handling more and more yacht sales and new build contract negotiations as well as the dispute side. All of the experts offer intentionally bespoke services and tailored dispute resolutions based on the particular risks in each project or transaction. Mike Phillips suggests that increasingly this includes: early-stage risk identification and dispute avoidance, strategic input during contract formation and negotiation, and integrated support across multiple jurisdictions and stakeholders. “Clients value a partner-led, commercially focused approach that is designed to resolve issues efficiently, rather than simply litigate them,” he says.
IT’S GOOD TO TALK
For all their experience, expertise and light years of legalese the lawyers urge for simplicity: avoid the arbitration, ditch the litigation and law courts.Go for a structured communication, a disciplined strategy, leave the heart at home, keep the head cool and…COMMUNICATE and if that doesn’t work, these legal Eagle Big Guns will bring home the bacon.
