The Maritime Navigation Act (MNA) governs naval management and therefore affects some aspects of charter management.
Title V, Chapter I, of Act 14/ 2014, of 24 July, on Maritime Navigation, among other things, pertains to so-called ancillary navigation contracts, which include naval management contracts, shipping agency contracts, pilot contracts and port handling contracts. From the recreational boating point of view, it affects especially naval management contracts. By means of a naval management contract, a (physical or juridical) person undertakes, in exchange for remuneration, to manage all or some of the aspects involved in operating the ship on account and on behalf of the ship owner. Those aspects may concern the business, nautical, labour or insurance management of the ship.
In the nautical sector, and particularly in chartering, it is normal for yachts to operate according to what is known as a charter management contract, which in our opinion may be included in the “commercial management” contract of the M.N.A.. And in some cases, going beyond the mere commercial management, the charter management contract may even include naval and labour management.
This article looks at how the new regulation affects the relationship between the boat owner and the charteree and their relationship with their clients.
The charter management contract
Today, anyone wanting to charter a yacht does so via specialised providers or on the Internet, where the offer for chartering services is particularly abundant. Charterees can be divided in three different groups:
1) Companies that own and exploit yachts for commercial purposes
2) Companies that hold and exploit yachts for commercial purposes
3) Brokering companies
We must make a distinction between the owner and the holder of a yacht. The owner, if you'll excuse the repetition, owns the yacht, the holder has possession of the yacht, whether or not they own it, and uses it for commercial purposes. The M.N.A. also defines another figure, the ship-operator, who exploits the boat but is not the owner nor the holder, a similar figure to the charteree in a chartering management contract.
Having clarified this, we can say that in the first (1) case, as no intermediaries are involved, the owner exploits their own boat, therefore there is no “naval management”. In this case the relationship with the users/clients will be regulated by the chartering contract signed by the parties and by the chartering regulations, with or without crew, set by the M.N.A. Even if it is beyond the scope of this article, it is worth pointing out that some provisions of the chartering contract are mandatory and therefore cannot be derogated by the parties.
In the second (2) case, quite common, the holder exploits and manages the operation of a yacht owned by a third party, for commercial purposes. In this type of contract, the holder has exclusive possession and stipulates, on his own behalf or on behalf of the owner, depending on the agreement between the parties. Also in this case the relationship with the users/clients is regulated by the chartering contract and by the chartering regulations, with or without crew, set by the M.N.A..
Lastly, in the third (3) case, also quite common, we can have two different situations:
1) The broker only puts the owner in contact with the contractor;
2) The broker enters into a contract with the contractor.
In case (1) the broker is not responsible for the fulfilment of the obligations set in the contract. In case (2) the broker is responsible, unless he has acted on behalf and in name of the owner. Obviously, the broker will need to be duly authorised to act in name of the owner.
For example, the parties involved in MYBA chartering contracts include the owner, the contractor and the broker. In this contract model, the broker is not responsible of the performances, however, for this to be the case, the contract must be signed by the owner or holder of the yacht or by the broker in his name and on his behalf.
As we mentioned, one of the aspects that need to be highlighted is that the broker is responsible for the obligations derived from the contract, unless he has expressly acted in name of the owner or holder of the vessel.
For this to be the case, there must be a contract, not necessarily in writing, between the broker and the owner/holder of the vessel. According to the Spanish law, with the exception of some rare cases, a written contract is not required, but it is nevertheless an important element of proof. Imagine a broker who enters into a contract in name of the owner/holder of the vessel but does not have written authorisation. It will be hard for the broker to prove that he has the authority to act in name of the owner/holder of the vessel.
Therefore, with regard to the relation between the owner/holder of the vessel and the broker, the M.N.A. says that the brokering contract will apply, or in its absence, the provisions that regulate agency agreements or commercial contracts will apply, depending on the length of the relationship. It is worth mentioning that agency agreements forbid agents, in our case brokers, to offer their services to other companies in the same sector without the expressed authorisation of their client. Take the case of a brokering company appointed by a boat owner to manage his yacht for commercial purposes. Basically, to offer it for charter to third parties in name of the owner; quite a normal situation. Unless the parties agree otherwise in the contract, the brokering company cannot provide other yachts to other clients, and should it do so the owner would have a claim for disloyalty.
On the other hand, the commercial contract to which the M.N.A. refers in the case of occasional naval management, which is frugally regulated in the Code of Commerce, allows the contractor to act for any owner. However, contractors acting on their own behalf must not be included in the naval management contracts provisions; because as we mentioned this is a naval management contract regulated by the M.N.A. in which the broker can act in name of the owner.
Lastly, it is important to highlight that the M.N.A. says that the owner is co-responsible with the broker for any damages that may be caused to third parties. This is certainly an advantage for the broker since, with few exceptions, the risk of the owner’s insolvency is covered by the value of the boat.
This article is for information purposes only, the author shall not be liable for any consequences that may result from its application to real cases.
Yamandú Rodríguez Caorsi
Nauta Legal Abogados