10 May 2023
Last revised
minutes
3
Reading time
While adherence to classification society Rules is often mandatory, don’t think of these organisations as being there to impose health and safety restrictions and add to an already considerable mound of paperwork. They have their limitations, but they are useful sources of technical knowhow, and their experts can add real value to your build.
minutes
3
Reading time
10 May 2023
Last revised
While adherence to classification society Rules is often mandatory, don’t think of these organisations as being there to impose health and safety restrictions and add to an already considerable mound of paperwork. They have their limitations, but they are useful sources of technical knowhow, and their experts can add real value to your build.
Classification societies establish and apply standards (Rules) for design, construction, and maintenance of yachts, focusing on technical aspects.
Building and keeping a yacht in Class can boost resale value and ensure compliance with Flag State requirements and insurance policies.
Classification societies can provide additional consultancy services during builds and refits, assisting with design development.
The connection between classification and insurance dates back to the 17th century, with societies like Lloyd's Register providing vessel information to underwriters.
The leading classification societies are members of the International Association of Classification Societies (IACS), which aids in developing regulations.
Societies have limitations, including their focus on physical aspects and potential reliance on sampling instead of full examinations due to their experience with larger ships.
Claims against societies for mistakes during the build or regular surveys can be challenging due to the choice of law, historical links to specific countries, and liability exclusions in the agreement.
When choosing a society, consider membership in IACS, acceptance by insurance underwriters, openness to new ideas, and a deep understanding of large yachts.
Establish a good working relationship with the society's surveyor, considering them as an integral part of the build team.
Classification does not guarantee build quality or vessel maintenance; it primarily focuses on technical compliance.
Societies have limitations, including their focus on physical aspects and potential reliance on sampling instead of full examinations due to their experience with larger ships.
Claims against societies for mistakes during the build or regular surveys can be challenging due to the choice of law, historical links to specific countries, and liability exclusions in the agreement.
When choosing a society, consider membership in IACS, acceptance by insurance underwriters, openness to new ideas, and a deep understanding of large yachts.
Establish a good working relationship with the society's surveyor, considering them as an integral part of the build team.
Classification does not guarantee build quality or vessel maintenance; it primarily focuses on technical compliance.
Classification societies establish and apply standards (Rules) for design, construction, and maintenance of yachts, focusing on technical aspects.
Building and keeping a yacht in Class can boost resale value and ensure compliance with Flag State requirements and insurance policies.
Classification societies can provide additional consultancy services during builds and refits, assisting with design development.
The connection between classification and insurance dates back to the 17th century, with societies like Lloyd's Register providing vessel information to underwriters.
The leading classification societies are members of the International Association of Classification Societies (IACS), which aids in developing regulations.
Classification societies (sometimes known just as ‘Class’) are privately-organised groups of engineers and surveyors. They are experts in the technical aspects of yacht construction and maintenance. Their principal role is to research, establish and apply standards (known as ‘Rules’) for design, building and maintenance. The Rules are highly detailed, covering the integrity of the hull, machinery and key safety systems.
Depending on your yacht’s size, and whether it’s going to be chartered-out, your chosen Flag State, may require the vessel to be built according to Rules, and, on launching, be kept ‘in Class’. Societies also offer additional consultancy services, going beyond basic classification, during builds and refits. Building to Rules and keeping your yacht in Class can boost the resale value whether or not it is chartered. Where must, as a matter of law, be kept in class, then failing to do so may invalidate insurance policies.
Even before the build agreement is signed, the society can review the proposed plans, and in particular any novel features or materials. As well as assessing Rule compliance, they can assist with design development – in a relatively cost-effective way, too.
CLASS & INSURANCE
The connection between classification and insurance goes back a long way. The oldest society, Lloyd's Register, was named after a 17th-century London coffee house that was frequented by merchants, ship owners and insurance underwriters. Keen to encourage patrons to stay longer, coffee house owner, Edward Lloyd, printed and circulated industry news. The customers set up the Society for the Registry of Shipping in 1760, with the aim of recording information about vessel quality, thereby enabling the underwriters to make more informed decisions about risk. The records were listed, rated and classed in the Society’s Register Book. Subscriptions generated by the Register Book paid for surveyors to examine the vessels.
Today, the leading 11 societies are all members of the International Association of Classification Societies (IACS) - a non-governmental organization covering over 90% of the world’s shipping tonnage. IACS is a non-governmental organization, which helps the International Maritime Organization to develop regulations.
LIMITATIONS
Societies have two principal limitations. Firstly, they only consider the physical aspects of the yacht and its equipment, not how they are used. Secondly, because they are more used to examining ships ten times the volume of even the largest yachts, there can be a reliance on sampling rather than full examinations: things can be missed. Classification doesn’t automatically assure build quality or vessel maintenance.
LIABILITY
Society surveyors are human and make mistakes. An owner might want to claim against a society where there has been a mistake made during the build process. More common are omissions made during the regular surveys, especially where the maintenance of the yacht ‘in Class’ is a reason underpinning a purchase. The latter may be an important route to getting compensation, given that the societies are large organisations with deep pockets, whereas the seller is often just an owning company with no other assets once the vessel is sold.
What makes claims against societies difficult is that while commercial parties often automatically choose English law, the societies all have historical links to particular countries, and often insist on the law of their ‘home’ country. Further, there are still no international conventions on this subject, despite some initiatives. The choice of law is normally agreed in the contract, of course, but this may not automatically be respected by certain courts, and such a choice may be meaningless to third party buyer who was not party to original contract for classification services.
Societies will, where possible, expressly exclude their own liability in the terms of the agreement with the owner. These attempts have largely been upheld. Amazingly, terms will commonly state, for example, that the society ‘does not warrant the accuracy of any information or advice supplied…’ and ‘…will not be liable for any … act, omission, error, negligence, or … any inaccuracy in any information or advice given’. Indeed, the society may also state if there has been negligence on their part, then they will compensate the owner, but only up to the amount of the society’s fees paid – which will usually be a fraction of the damages sought.
CHOICE OF SOCIETY
You should choose a society which:
Is a member of IACS,
Is acceptable to the proposed insurance underwriter,
Is receptive to new ideas and solutions, and
Really understands large yachts.
The last point is particularly important where your build includes novel designs or materials. Much can be at the discretion of the society’s surveyor, so a good working relationship is vital. Think of the surveyor as an integral part of your build team.
Thank you to all our Members who contributed to this article. Unless otherwise stated, this article broadly describes, by way of illustration, the situation in the United Kingdom waters in respect of United Kingdom-registered vessels. This piece does not provide or replace legal advice.
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