Abstract
In superyacht refit projects, contractual aspects operate within an environment characterised by multiple stakeholders, continuously evolving works and the frequent presence of cross-border elements. In this context, the contract does not merely regulate the parties’ obligations, but assumes a broader function of coordination and project governance.
The most widely recognised international standard forms, such as BIMCO REPAIRCON and the ICOMIA Superyacht Refit Contract, represent reference models in market practice. Although rarely adopted in their entirety, they are frequently used as the basis for hybrid contractual structures tailored to the specific characteristics of each project.
>This paper analyses the structure and role of such standard forms in international refit practice, highlighting their underlying contractual logic and their function in defining the balance between the parties.
1. A Recurring Scenario.
An owner engages a shipyard located in a jurisdiction different from that of the owner for the refit of a vessel originally operated as an exploration vessel and registered under a third-country flag, on the basis of a particularly extensive scope of work aimed at converting the unit into a private pleasure yacht.
The inherently evolving nature of the works often gives rise, during the execution phase, to issues requiring variations, additional works and extensions of the contractual timeline. At the same time, the involvement of multiple parties — including designers, owner’s contractors and suppliers — affects the operational structure of the project, altering the original allocation of responsibilities.
The main areas of tension concern cost management, compliance with delivery schedules and the identification of liabilities, with the concrete risk of escalation into international disputes. In such circumstances, economic issues (extra costs, liquidated damages and claims for compensation) are frequently accompanied by more complex matters relating to governing law, jurisdiction and dispute resolution in multi-jurisdictional contexts.
>It is precisely at this stage that the structure of the refit contract, together with the choices made during the assessment and negotiation phase, assumes a central role: not only in regulating the relationship between the parties, but also in anticipating and managing the potential criticalities of the operation.
2. From Refit Contracts to Project Governance in Multi-Jurisdictional Contexts.
Within the yachting industry, refitting may broadly be described as a series of transformation, upgrading or functional reconstruction works carried out on an existing vessel, often characterised by significant technical and organisational complexity and by a substantial impact on the overall economic value of the project.
In superyacht refits, the contractual relationship frequently operates within a context where the owner, the shipyard and the flag state are subject to different legal systems, with significant implications in terms of technical regulations, liability, governing law and dispute management.
One of the defining features of refit projects lies in the evolving nature of the works: while the object of the contract may initially be determined or determinable in its essential elements, market practice frequently requires progressive integration during the execution phase through variations, additional works and interventions not entirely foreseeable at the outset.
In this context, the contract increasingly performs a function comparable to project governance models, where the legal dimension becomes integrated with the operational management of the project (in a complementary perspective, the principal dispute-related issues arising in refit projects have been addressed in a separate article available on the firm’s websiteYacht Refit Contract in Italy: Managing Risks and Avoiding Disputes).
3. International Standard Forms and Contractual Practice in Refit Projects.
The increasing complexity of large yacht refit projects has encouraged, in international practice, the adoption of standard contractual forms, or contracts inspired by recognised industry models, intended to provide a common framework governing the relationship between the parties. Among the principal references are BIMCO REPAIRCON (ed. 2018) and the ICOMIA Superyacht Refit Contract (ed. 2021), both reflecting different operational and legal cultures.
BIMCO (Baltic and International Maritime Council) is one of the leading international organisations in the commercial shipping sector, widely recognised for drafting standard contractual forms used globally across the maritime industry.
ICOMIA (International Council of Marine Industry Associations) is an international organisation representing associations and operators within the recreational marine industry which, through its Superyacht Refit Group, developed a contractual model specifically tailored to large yacht refit projects.
3.1 The Structure of BIMCO REPAIRCON 2018.
REPAIRCON 2018 is structured as a standard ship repair form drafted according to the traditional BIMCO contractual approach, divided into a section containing commercial particulars and special conditions, and a second section incorporating the standard terms and conditions.
The structure of the form revolves around several core elements: identification of the parties, vessel description, shipyard designation, contractual period, scope of works, pricing structure, payment terms, redelivery, delays, liabilities, warranties and dispute resolution.
Particular significance is attributed to price certainty, the shipyard’s right to suspend the works in case of the owner’s default, the definition of the contract period and the inclusion of liquidated damages provisions for delay in redelivery.
The model reflects a contractual logic under which the agreement is conceived primarily as an instrument governing the execution of the works and the consequences arising from non-performance, in line with the traditional practice of commercial shipping.
3.2 The Structure of the ICOMIA Superyacht Refit Contract.
The ICOMIA Superyacht Refit Contract was developed within a framework specifically related to large yacht refits, where both technical and organisational aspects assume particular relevance.
Like REPAIRCON, it is divided into a first negotiable section, where the parties define the essential elements of the relationship (time schedule, price, liquidated damages, governing law, jurisdiction or arbitration), and a second standard section governing obligations, liabilities and execution procedures in greater detail.
The contract is characterised by a considerable density of clauses, reflecting the operational reality of superyacht refits, which are typically subject to a higher degree of customisation than traditional commercial shipping projects. Among its principal features, the following aspects deserve particular attention:
• Management of delays and contractual flexibility: the most distinctive feature arguably lies in the breadth of the permissible delays regime and in the relevance attributed to factors such as owner’s decisions, third-party contractors’ activities and design variations, all reflecting the inherently dynamic nature of refit projects;
• Owner’s contractors: the interaction between the shipyard and the owner’s contractors is specifically addressed through mechanisms such as handling fees, attribution of delays to the owner’s contractors and limitation or exclusion of the shipyard’s liability for damages arising from such interference;
• Owner’s representative: the role of the captain and the owner’s team is expressly integrated into the contractual structure through a communication and decision-making framework reflecting the operational reality of large yacht refits;
• Insurance integration: the insurance dimension also assumes particular significance within the ICOMIA model through coordination between the owner’s and the shipyard’s insurance policies, including the use of waiver of subrogation clauses.
The ICOMIA model, however, reflects an overall allocation of risk that is not always intuitive. In particular:
• the shipyard undertakes to perform the works in a proper and workmanlike manner;
• the owner retains custody and responsibility for the yacht throughout the duration of the works;
• Insurance coverage largely remains the owner’s responsibility.
In operational practice, however, such standard forms are rarely adopted in their entirety. Shipyards frequently rely on proprietary contractual conditions, often developed on a hybrid basis and incorporating elements derived, to varying degrees, from international standard forms.
From this perspective, reference to such forms allows for a more informed understanding of international refit contractual practice, where standard forms, shipyard conditions and negotiated provisions are frequently combined.
4. The Risk Dimension in International Contexts.
While the contractual structure represents the first level of regulation in refit projects, projects characterised by significant international elements increasingly require a preventive and structured approach to risk management.
It is precisely at this stage that risk assessment becomes particularly relevant, understood as the process of identifying and managing, at an early stage, the principal risks associated with international refit operations.
ADVISORY NOTE
Risk Assessment in International Refit Projects
In large yacht refits, preventive risk assessment has a direct impact on costs, timing and allocation of liabilities. The combination of an evolving scope of work, multiple stakeholders and a multi-jurisdictional framework requires an early-stage assessment of the principal risk factors which, if not properly structured ex ante, tend to emerge during execution in the form of variations, delays and disputes.
Shipyard Risk Assessment
The selection of the shipyard cannot be limited to production capacity and pricing alone. Experience with comparable refit projects, organisational structure, management of sub-contractors and overall operational reliability directly affect the shipyard’s ability to perform complex works without generating delays and cost overruns. In multi-jurisdictional contexts, issues relating to financial solidity and the management of advance payments become even more relevant, with direct implications for the owner’s exposure.
Governing Law & Dispute Strategy
In international refits, the coexistence of multiple legal systems (place of performance, flag state and owner’s nationality) requires careful consideration of the governing law, with direct effects on contractual interpretation, the enforceability of limitation of liability clauses and the possibility of obtaining interim or injunctive relief, also in light of any mandatory rules applicable at the place of performance.
Differences between common law and civil law systems are reflected in their respective approaches to contractual interpretation and dispute management. In this context, dispute resolution mechanisms — whether jurisdiction clauses, arbitration or, where appropriate, expert determination — should be calibrated according to the technical complexity of the project and the need to obtain effective and enforceable decisions within commercially sustainable timeframes.
Tax & Customs Risk Structuring
In international refit projects, tax and customs management directly affect cost structures and cash flow. The classification of the vessel (Union / non-Union status), the identification of the applicable customs regime (temporary admission, inward processing relief) and the treatment of onboard supplies may generate substantial differences in terms of VAT, customs duties and documentary obligations. In B2B relationships, consistency between invoicing, accounting treatment and customs compliance becomes crucial in order to avoid disputes with potentially significant economic consequences.
From this perspective, preventive risk assessment makes it possible to anticipate the principal critical issues arising in international refit projects, transforming the contract from a purely ex post regulatory instrument into a governance tool capable of structuring and managing the operation from its earliest stages.
5. Conclusions
In the international refitting of large yachts, the contract represents the primary instrument through which the balance between technical requirements, commercial interests and risk management is structured.
The adoption of standard forms such as REPAIRCON and the ICOMIA Superyacht Refit Contract does not eliminate the inherent complexity of the project, but allows it to be channelled within recognisable contractual frameworks, where risk allocation becomes more transparent and, to a certain extent, more predictable.
The actual effectiveness of such instruments, however, ultimately depends on the parties’ ability to adapt them to the specific characteristics of each individual refit project. In this context, a prior understanding of both contractual models and of the principal operational variables assumes particular importance in properly structuring the project from its earliest stages.
Waves & Law™ is an editorial publication curated by Avv. Gianmarco Capece Minutolo – Studio Legale Capece Minutolo. The content is provided for informational purposes only and does not constitute legal advice. © All rights reserved.
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