COVID-19 Chartering Concerns

9 April 2020 By Lauren Beck

If you’re like us, you’re adjusting to a life of self-isolation. Or maybe it’s a lockdown, quarantine, or stay in place order. But is everyone following the guidelines? One crewmember reached out to us about their concerns that they’re still being asked to take out people. Specifically, he asked if they should be taking out the owner’s friends during a shutdown. The crewmember was concerned that refusing to do so could cost his job.

“This is really a question that each individual boat captain needs to answer in collaboration with the yacht owner, flag state, etc. and based on circumstances where they are located and the dates of the charter,” says Melanie Burke, a retail charter broker with Fraser Yachts. “The situation is so fluid, there is no one answer to this question.”

Legally, there are two angles to these questions, says Benjamin Maltby, a partner at Keystone Law in the UK, who points out that considerations should include the law of the country where the vessel is — port state law — and that of the country where the vessel is registered — flag state law. “Employment contracts may introduce another country’s laws,” Maltby says. “The questions must be considered under all applicable laws. While normally this leads to complicated answers to simple questions, with COVID-19, the issues are both novel and very serious. Under the laws of every country, employers owe employees a duty of care: this means not exposing them to unnecessary risk.” Currently, he notes, testing for COVID-19 is not easy — “So one would have to assume that crew and guests alike pose a risk to each other unless they can prove otherwise.”

Maltby says that this threat could be mitigated if all people wear personal protective equipment and undertake continual disinfecting, but he also points out that this might make for a less than relaxing charter. “Most countries have now introduced lockdowns and social distancing rules, both of which would be broken by chartering, almost certainly making the owner’s instructions to go ahead with the charter unlawful, which in turn would making firing a crewmember very difficult,” Maltby says. For now, he recommends that crew seek guidance from port and flag state administrations. “These trump the owners’ wishes,” he says.

Attorney Michael Moore of Moore & Company in Miami agrees with Maltby — “Crew can never be ordered to do something that is unsafe and by all accounts the kind of interaction required is unsafe,” he says. “Working with guests and fellow crew would put the crew at risk. They should not have to do it.” Any discharge would be wrongful, he says. “You cannot be fired for refusing to do something which is unsafe, and you certainly cannot be fired for refusing to break the law or a government dictate, which has the force of law.”

Moore also notes that the owner should be concerned as there could be lawsuits for recklessness and negligence. “Any seaman who falls ill will be entitled to full medical benefits until maximum medical improvement is attained,” Moore says. “This benefit does not require proving liability. The doctrine applies irrespective of fault.”

Nicola Moore Gothar, senior manager, information, at the Cayman Registry shared the Cayman Registry’s position, noting that provided all commercial requirements are met, the registry has no specific charter restrictions. “All local restrictions where the yacht is operating will apply as they would for anything else,” says Moore‑Gothar. “Many countries have imposed complete lock downs with no entrance at all; some countries are 'open for business;' many countries require all crew to ‘self-isolate’ on arrival (both on the yacht or by air). It is for the vessel and their managers to ensure that they comply with all the requirements where they are operating, noting that restrictions can be imposed or changed at short notice.” For more from the Cayman Registry, check out their guidance notices.

So it seems we’re in a wait and see situation, and that may remain for a while. “We are not sure yet if any areas will open up again for private yacht cruising by May (may be possible for Bahamas, Caribbean, Galapagos, South Pacific, for example) but I cannot say for certain,” says Burke. She thinks the Med could also still be questionable in June. “We are all just monitoring the situation as it progresses.”

But there’s no doubt that the pandemic will have lasting effects on the way we conduct business. Burke notes that charter brokers and managers are working with their clients, both owners and charterers, to negotiate “special addendums to be added to existing and also new charter contracts to account for various scenarios relating to COVID-19 that are not presently addressed in any existing charter agreement,” she says. “I expect some sort of ‘COVID-19 addendum’ will be signed in addition to every charter agreement going forward for the foreseeable future.”

Fraser Yachts, she explains, now also has a special cancellation offer that 30 owners within their fleet have agreed to — this allows cancellation of any charter for any reason for most yachts with a full deposit refund up to May 31. Fraser will also reevaluate the global situation before the end of May and will consider extending that deadline. This will hopefully spur (penalty-free) charter bookings for summer. “If they do continue to go forward with the contract past that deadline, then the normal terms of the charter agreement will be in effect,” Burke says.

Northrop & Johnson is also offering free charter cancellation insurance. According to an April 2 press release, any new charter booked through a Northrop & Johnson charter broker between April 1 and April 30, 2020, will receive the free insurance. “Our professional, dedicated charter brokers are keeping up with the latest government advisories and restrictions and are in communication with yacht captains and owners and can advise clients on the best options for their summer holidays,” the press release stated. “While we are vigilantly watching COVID-19 and its progression, we also are optimistic that the summer charter season will be open.”

Once it’s safe to fly and travel resumes as usual, Burke believes charter will resume until it’s back to a normal pace. “We hope that the heightened travel restrictions that have been implemented around the world, the public awareness, extensive measures being taken to cancel public gatherings, and the extra precautions individuals are taking to limit community spread will cause a marked decrease in the spread over the course of the next couple of months,” she says. “Time will tell.”

For more related content:

Keep on Track

The Current Crew Market

Crew Consequences of COVID-19

COVID-19 Precautions

COVID-19 Effects: Events, Travel, and Operations

Staying Calm on Facebook

Silver Linings