Yacht Charter Regulations: Unlocking the Intricacies for Yacht Owners

Set sail with us as we celebrate the first anniversary of The Yacht Law Podcast, with over 600 downloads from 44 different countries! We couldn't be prouder of our enlightening nine-episode journey, and we're thrilled to share insights that have resonated deeply with the yachting community. For this new episode, maritime attorney Michael Moore and yachting journalist Diane M. Byrne once again unravel the complexities of maritime law. The focus this time is why American yacht owners may be missing out on legal waivers to offer their foreign-flagged yachts for charter in U.S. waters. Together, we demystify yacht charter in the United States, including the confusion over the legal term bareboat chartering and what bareboat charter contracts require of charter guests. Along the way, we further untangle misconceptions that have long clouded the industry.

Michael and Diane specifically chart a course through the century-old Jones Act, unveiling its critical role in protecting U.S. maritime commerce and how it impacts everything from commercial fishing to superyachts. We then cast a spotlight on the Small Vessel Waiver Program, a little-known lifeline for non-U.S. built yachts wishing to conduct yacht charter activities in U.S. waters. Listen closely as we discuss the Act's implications on shipping routes and the challenging, but achievable, process for larger vessels to obtain the waivers.

In the final leg of our journey, we explore why so many American superyacht owners mistakenly believe their foreign-built yachts cannot charter stateside. Part of the problem certainly stems from brokerage listing disclaimers and the 1.5% customs duty, a critical tariff that fuels the U.S. economy. 

Whether you're a maritime enthusiast or a seasoned sailor, this episode equips you with the knowledge to navigate legal seas with confidence. Join us as we provide clarity on the charter nuances of these vessels, ensuring you're well-prepared to tackle the legal storms ahead.

Have a yacht law question? Email it to info@megayachtnews.com or michael@moore-and-co.com for your chance to have it answered on our podcast. All requests for confidentiality and/or anonymity are respected.

Hiring a lawyer is a big decision. Visit Moore & Company for the legal team's qualifications and experience. And, to learn the latest about superyacht launches, shipyards, designs, and destinations, visit Megayacht News.

Transcript

Speaker 1: 0:43

Welcome everybody. Michael, how are you today?

Speaker 2: 0:46

Doing great. Thank you very much.

Speaker 1: 0:49

So here we are at the end of 2023. I just got some really great statistics from our hosting company that I wanted to share with you and with everybody who's listening, because it's been a fabulous first year for the Yat Lua podcast. So to date, not including today, we have recorded nine episodes which have attracted drumroll plays, about 600 downloads in 44 countries. So I think that's really good. That's really impressive.

Speaker 2: 1:22

I'm excited that's from the starting point of zero to 600 souls who we maybe we helped in some way. That's a beautiful thing.

Speaker 1: 1:32

Absolutely. That's the whole goal Keep educating people and keep helping them out. So looking forward to continuing this upward trajectory and making more of a difference.

Speaker 2: 1:45

Absolutely.

Speaker 1: 1:46

So today's discussion, today's topic, was actually suggested to me by a charter broker, and I think it's a really good one. She has been in the industry for a long time and she says she's never understood why more American owners aren't taking advantage of certain legal waivers. And these are the waivers that allow American owned yachts under flags like the Cayman Islands, bermuda, et cetera, to charter in US waters. And I suspect that there's a couple of things behind it, but I think it would be really interesting to get your take on it and clear up the confusion that is out there, because I do believe, just as she does, that there is a misimpression that no way know how can a foreign flagged yacht ever charter in US waters despite being owned by an American. So why don't we get into it?

Speaker 2: 2:49

Right, it's a little complicated and I think that's why you have there's confusion out there, but I think that the starting point almost in all of these legal matters concerning maritime law and admiralty laws that sometimes called synonyms, something which is written into the Constitution, article 3, in giving exclusive jurisdiction to the federal courts If you think about that for a minute, it's easy to understand, because boats move around. They move from state to state, from Florida to Georgia and Georgia to South Carolina. What have you? You can't have a different law affecting that kind of activity for each state with each state that you go through. Now the difficulty it probably has very little to do with the beneficial owner. Okay, the beneficial owner can be a foreign national. There may be other rules that affect activities in the states in terms of, for example, rules on immigration or labor. All laws have to be complied with. So we'll put those aside. That may be for some follow up questions, but the reality is the boat itself has to be looked at and if a vessel is not US built, if it's not US built, that's a marker. That's the lobby of US builders that's been around a hundred years. If it's not US built, they're going to be limitations on what you can do with the boat.

Speaker 2: 4:34

But let's get right into. How do you, how do these vessels foreign, built, maybe foreign on, even foreign flagged how do they engage in chartering activities? That's the question and the answer, I think, is in this idea of what is called bare boat chartering. So the vessel, when you, when you bare boat charter, you're effectively transferring all in dish of ownership to the charter. That's what you're doing on a true bare boat charter. You may have several butts and that's okay, we can deal with all of them. This is what we actually do as maritime lawyers. We get a lot of calls from you know people, I want to do this, I want to do that, and I hear that you know, joe Blowdown, the road is doing it, or whatever. But bare boat chartering, fundamentally, to understand it, you understand that you're transferring ownership to the charter. That's how you get all these different words that kind of mean the same thing. The bare boat charter is also the despondent owner. He's also the owner pro hoc, we say, which is PRO HACC new word VICE, that means for this time in Latin. He is the owner for this time. So think about it for a minute.

Speaker 2: 6:14

Just transferring ownership to a second party is not the same thing as engaging in commerce. For example, it's not like bare boat, it's not like a trade charters or voice charters or time charters, all those kinds of things. That's just where the owner continues to own the vessel and is now charging a ticket, a price, to take someone from point A to point B. That's a voyage for five hours, that's time or some other structure or activity. But if you're not within the stream of commerce as a starting point, if you have not paid your customs duties and you're, therefore, you can cross into the stream of American commerce. That alone basically keeps you out of being engaging in activities in the waters of the United States. And the point of that is when you hear so, when you, when you, when you, it's one thing to give people a charge on a ticket, take them out of the bay for four hours, bring them back.

Speaker 2: 7:26

There's various laws that allow that, some of the so-called six-pack laws. Here again, depending on the vessel, that was far, if it was the US built. But the but the bareboat charter structure tries to get around all of that. The question becomes what is a true bareboat charter? And that's the question that is, I think a lot of people are scratching their heads these days and asking that question because there is a there is a storm cloud gathering in terms of what is a true bareboat charter. You know, calling a dog a duck is not going to make it a duck, it's going to. It's still a dog, right? That's when you get the old adage is it's quacking and waddling and it's got white feathers. That's a duck, it's not a dog. So that's my, that's my, opening comments. I think I've said something, and all of that that would lead you to ask a few questions, as if you are the proverbial yacht owner wishing to use your vessel to take advantage of a $100,000 charter, $200,000 charter or something.

Speaker 1: 8:29

Right. Right, and just for the for clarity too, if people are familiar with charter in the, the small quote unquote, boat world in the say that 30 footer or 40 footer. There's also that term bareboat charter. But it means something completely different. That's me, for example, and my friends going out and taking the boat by ourselves for the day. There's no captain, there's no crew. That's what, in that end of the world, bareboat means. This is a completely different definition and has its own whole set of rules. For those of you who might be thinking well, wait a minute, that's not what I thought a bareboat charter was. So I wanted to make sure that we we adjust that too.

Speaker 2: 9:14

Well, let me jump in there, okay. So you, you show up with your, your friends, and you decide to charter a vessel, and the vessel you're looking at is not us built, it's not us documented and it's not us endorsed to permit day chartering or boys charter or time chartering, where you just simply pay a fee and you get a captain and a crew that comes with you. You are looking at a boat that's not in the stream of commerce. Maybe it has paid its, its, its customs duty, you know, basically, to bring it into the stream of commerce, at least to that extent. The question now is, with respect to that vessel, what can you, what can you do? And the answer is well, I can, we can bareboat charter that vessel. What does that mean? You touched on it when you said you're getting the bareboat, you're just getting the boat, that's it, in other words, the owner, the true owner, also referred to as the beneficial owner, sometimes referred to as the record owner, meaning if you look at the document of the vessel, you know that's the record. And if you look on that record and it says uh, uh, incoming missiles LLC. Uh, then that is a structure that holds the vessel, that's the record owner and then behind that record owner there is a beneficial owner. Here again, it doesn't really matter that much if it's otherwise legally in the United States, in the U? S waters, it is, it is. It's here Now the question.

Speaker 2: 10:56

So then, uh, diane Burns shows up. She's got four friends with her, or five, to create a round number. Um, how is it that you can charter that vessel and pay money to the record owner of that vessel, uh, which the record owner would then pass through to the beneficial owner? And the answer is bareboat charter. So now you've got to sign a charter, which means you, the charterer, is now liable for the, the vessel. You are the owner. Prohawk, we say you are the owner for that time. You are the despondent owner, you are the person now with all the exposure and all of the risk. So let me just simply suggest to you that one of the things you might want to think about having is charterers insurance. So you might want to call up your friendly, uh, marine broker and say can I buy some chartering insurance? And maybe you're also looking at the vessel and think it's maybe a little bit too much for me to handle. It's a 50 foot boat or 60 foot boat. You probably pull it off if you really put your mind to it. But you think you know I'm going to be a lot more comfortable if I have a captain.

Speaker 2: 12:08

This, this is actually where most people get into trouble on bareboat chartering, and this is how they put the risk of loss and the liability on the true owner, the true record owner, the true beneficial owner, and that is because the captain is not properly retained by the charterer. The captain has to work for the charterer. If you think about it, well, you know, you got a bare boat, you got a bare boat, uh, uh, uh, under a bare boat charter. You got a bare boat, we got to have crew. So, yes, you could go and operate it yourself if the, if the charter agreement allows you to do that. But most of these charter agreements, even on the smaller boats that you see applying the waterways of South Florida, um, you have to have a separate contract where you hire the captain and the crew.

Speaker 2: 13:03

Now let me just say this. Let me just tell this gentleman I will call him back. Sorry about that. Um, I will now meet my phone for those of you who are listening to this podcast. Uh, like an error that I shall not make again, hopefully it happens.

Speaker 2: 13:23

I've all been there. Right by the middle of the funeral, you know the phone rings like um here's, but here's what happens. So you're coming into the dock and some uh, irresponsible yacht owner not that there really are any, but let's assume they're for the purposes of this podcast, that they're responsible yacht owners cuts in front of you, throws up a massive wake and everyone on your vessel, when it hits that way, goes flying. Some people come down hard and some are hurt. Well, these people are now called plaintiffs. They've suffered a personal injury.

Speaker 2: 14:05

They want to, they want to be. You know they're not happy about it, but they have an injury, so they're going to be looking to recover the medical. So they're now going to and recover. That's why you would need insurance, because they're going to sue you as the charterer for the liabilities that they've, uh, that you might have to them, potential liability, maybe a negligent operation liability. That's negligence, uh, or maybe, um, but on a passenger context usually it's negligence, but what? But maybe they want to also sue the vessel owner under some theory.

Speaker 2: 14:45

Well, it's a little bit more difficult now because that owner has divested itself of all the ownership. So if it's a true bare boat charter, that owner should have no operational exposure. He wasn't on board, that's not his crew, that's not his captain. So, right there, you want to make sure that when you retain that captain, that that captain was not working for the honor the day before the charter.

Speaker 2: 15:14

You want a third party and what you're now seeing on the internet, for example, are lists of qualified captains who are capable they're certified and qualified to run these smaller boats that go up and down the rivers and waterways of the United States. But you see them in an endless stream of charters in South Florida. I mean, it's just a, it's like a, it's like a boat parade every day. So you need to. You need to have as a charterer I mean most people, they focus on, you know, the owner the two entities you have to focus on the owner and the charter, or the true boat charter situation that the owner is divested of a lot of the responsibilities but then the charterer accepts all those responsibilities.

Speaker 1: 16:01

Right right now. A few minutes ago you were talking about ensuring that a vessel that's chartering in in US waters has a US built hull. That is from the Jones Act, something that a lot of people I'm sure have heard of but are not entirely familiar with. You know, in a nutshell, the Jones Act is sorry, excuse me everybody. The Jones Act is is a protective piece of legislation enacted for mostly the commercial and, I believe, military world, but it extends sorry, it extends to all vessels, it seems like by default. So that's where a lot of people, I think, are not entirely clear about the Jones Act. But the Jones Act basically says that for a vessel to engage in commerce in US waters it needs to have a US built hull. Is that correct? You know, I realize there's a lot more to it than that, but if that were a Lehman's explanation, would that be accurate?

Speaker 2: 17:05

That's accurate. The thing about that the so-called Jones Act is a is a law that is protectionist. Legislation is what it really is. It's it's been around since 1920, so it's 103 years old. It's basically it was passed to to protect the merchant marine of the United States and all aspects of the merchant marine. Now there are various theories and you know there's 120 years ago, so some of these ideas may not be correct, but the effect of it is well known because it simply means one aspect of it means that you cannot do what is called coast wise trade, and that is, you cannot go from Miami to Fort Lauderdale or from Lauderdale to Palm Beach. That's coast wise. So if your vessel is not, doesn't have a coast wise endorsement, you're not able to trade between those ports of the United States. Now, you're never going to get a coast wise endorsement unless you were built in the United States, flagged in the United States and beneficially owned by United States National.

Speaker 1: 18:28

Okay, the.

Speaker 2: 18:28

Jones Act is. It's also called the Merchant Marine Act of 1920, and it was there the senator who brilliantly passed it as a senator, so a man named Senator Wesley Jones, and that's how it became. You know, ironically he was in the from the state of Washington, which you think about, north of Washington's, canada, and then you got these vast distances of Oregon and the state of California. This to some extent a little bit unexpected that a senator from the state of Washington would be the spearhead be had something that's now lasted a hundred and twenty three years.

Speaker 1: 19:13

Right.

Speaker 2: 19:14

Well.

Speaker 1: 19:14

I think, as we've seen with other regulations, they they don't necessarily get changed for a variety of reasons, some of them quite good reasons. I completely understand the desire to protect American naval slash Merchant Marine vessels built in the US waters for US purposes, sending with the commercial world. Commercial fishing is very, very protective, as they should be, because when you get up to the West Coast, you get up to Alaska, for example the. You know the old joke from Sarah Palin that she could see Russia from her house. Well, there are, there are some areas in Alaska where it's it's no joke, it's a stone's throw away, and there are plenty of commercial fishing vessels on the Russian side that would love to come over to the US side and some of the US boats, of course, would love to go to the Russian side, but they're they're not permitted to. So you know those. Those protective rules are there for good reason.

Speaker 1: 20:14

Right but even even with the Jones Act, though the thing that I found very interesting is that there are certain exceptions, and it it's not a simple matter, but if someone follows the proper procedures, they can actually get permission to engage in coast wise trade, as the as the law says, and it would be under the small vessel waiver program. Right, this seems to be the aspect of the law that a lot of people are not aware of. So I know there are you a non-American built super yachts that have applied for this waiver and successfully obtained it and have engaged in charter in US waters. Washington DC, actually, is one area where you don't hear of a lot of charter activity, but there is a foreign built yacht that was engaged in charters there for some time, and I'm sure there are some other areas of the country as well where yachts have been able to successfully apply for and receive this waiver. So what? What does this program say in a nutshell, and what are, what are, some of the eligibility requirements?

Speaker 2: 21:30

Well, and let me let me mention, let me let me mention this one, one thing I once you deal with a lot of times in my world is a lot of people not quite, you know, they're not quite getting the, the answer, but they, they kind of hear things and they kind of, you know, they think they've discovered something. Well, you know, you got out of. My fallback is that, you know, the Phoenicians started this back in the day, and that was a couple of millennia ago, and everything that we're dealing with today is built on the, the, the, the sailing craft that that you know sailed out of what is modern day Lebanon by the, the first people to actually go to sea with the Phoenicians. But here's an example. Then I'm getting into the small vessel waiver program. I want to, I want to. This is a real, real world thing, but I just want to say it because it.

Speaker 2: 22:31

I want to just basically say that, hopefully, these podcasts are beneficial, but I need to ship a vessel from lower California, southern California, to Fort Lauderdale. I cannot do that directly from California to Fort Lauderdale, why? Because that's considered coast wise. You'd California to Florida, dana point to Fort Lauderdale. That's coast wise, right? So what is the work around? The answer is I can. I can touch in Sonata, for example, as a major port that has benefited greatly by the United States prohibition against coast wise trade. Or I can go all the way through the canal and get to the Bahamas and touch the Bahamas and then come into Fort Lauderdale, thereby once again not doing coast wise, because it's California, bahamas, fort Lauderdale. You see the point.

Speaker 1: 23:29

Right, that makes sense.

Speaker 2: 23:30

You're touching that intermediate port. Now I'm currently working on a matter of a ship that's going from New York City to Halifax, canada, halifax, nova Scotia, which is a province of Canada Frankly, I just don't know the answers yet but basically trying to get a waiver to allow that vessel it's a larger vessel to do that. What is a small vessel waiver program? I think that, generally speaking, in your world Diane, I think that just the name of your publication, the mega news, kind of says it all. The small vessel deal is a limited program that allows. It's actually a subset of the Jones Act, because the Jones Act requires vessels operating coast wise. That would be California to Fort Lauderdale. We have to touch in Sonata or touch Bahamas just to break up that problem and thereby circumventing legally the limitations on what is called coast wise trade. There are ways in which foreign bill vessels even foreign bill vessels, not US-built or vessels of unknown bills can actually come into commerce. There's different programs too many to discuss in a podcast but one of which is basically the so-called Passengership Services Act, which is a subset of the Jones Act that empowers Merad. That's called the Meritime Administration based in Washington. Lovely people, there's a couple of big organizations in Washington that we don't hear a lot about in the yachty world this is the Yacht Law podcast. But the two big ones I mean putting aside the biggest of the big, which is Homeland Security, that's your overall police force they enforce the laws, but the laws based a lot of times come out of what is called Federal Meritime Commission, the FMC, or from Merad, the Meritime Administration.

Speaker 2: 25:55

You can apply to Merad for a small vessel waiver. By that they mean a vessel that can carry no more than 12 passengers at a time. That's the first thing. It's got to be less than 12 or less passengers. It's not going to have anything to do with anything but passenger carriage Right away. You see, the big cruise lines might have a little bit of an interest, but probably not that much because they're only looking at from one to 12, but not 13 passengers at a time. They're okay with that. They can't do coast wise anyway, so they're not going to be worried too much about this waiver.

Speaker 2: 26:43

The boat must be owned by a US citizen. When we say citizen, they go right through the structures. They're talking beneficial ownership, not record ownership. You have to drill down all the way through the structures to get to the privilege of applying for a small vessel waiver. The vessel must be used. It's got to be at least three years old. That's basically. Those are basically the rules. There are other things that might get it to come into play, but they're numerous and quite extensive. Yes, you can get a small vessel waiver if you meet all those requirements. That will allow you to do some things on your vessel that would otherwise not be allowed. But again, the citizenship requirements, the age of the vessel requirements, the fact that it can only be used in passenger. You can apply for that kind of waiver but operationally it's pretty much the same as just a straight up bare boat charter.

Speaker 1: 27:53

Now why do they stipulate that the vessel needs to be at least three years old? Is it because the concern is that somebody might build something purposely to try to circumvent the law?

Speaker 2: 28:07

Exactly that is to protect the US boat builders. This exception is principally because it's a foreign-built exception, as before it's got to be US built. A Sunseeker is built in the UK, for example, would have to apply for a small vessel waiver, so it's basically protectionist legislation. Again, there are a lot of US boat builders. If you think about it. You go to, for example, the Brunswick Group or all the ones we know and love. Cobia's built by Maverick.

Speaker 1: 28:54

So sure it makes sense. So, in thinking about all of these stipulations and thinking about where people may not have ever heard of this waiver program, these are legal documents that are not exactly everyday conversational topics. I think that's of course, always going to be a reason why people are just not aware. But I'm wondering also if there might be something else at play. There's an often seen disclaimer on brokerage listings whether it's charter or sale, it says the vessel is not for sale or charter, while in US waters it might even sometimes additionally say to US citizens I'm wondering if that might be why there's this belief that no way, no, how can a foreign flagged vessel and a foreign built vessel at that charter in US waters? I'm guessing that a lot of people see that and just take it at face value.

Speaker 2: 30:03

Right. I think that what you're dealing with. There is purely one aspect of the entire network of laws and regulations and that is duty, customs duty. If you, if the vessel is not duty paid and the percentage of payment is 1.5% of the value of the vessel, when you pay 1.5% of the value and import that vessel, you are now you've now crossed over the borderline and into the stream of commerce, because you paid the ticket price at 1.5% and you have not done that.

Speaker 2: 30:49

You cannot offer that vessel for sale to a US resident, not citizen resident, because it is a, it is the, when you can be a citizen living in Morocco, which some which, by the way, they extradited someone the other day, which is kind of a big, a big news in the world of criminal suit escaped to Morocco. But that's, that's for another. Another podcast, the. You may remember a yacht owner, briefly, a fellow named Rothman. He was of South Florida, fraudstories, in prison, but he escaped to Morocco because they did not have an extradition treaty. Then he came back voluntarily and God was arrested in prison. Anyway, that's for another podcast. But the bottom line is, if you want to offer your vessel for sale legally, there's a couple of ways you can do it. We can touch on basically the two ways, maybe two or three ways, but fundamentally, if you want to have free, free hand, it would certainly be a value point for a vessel being offered for sale. If duty has been paid, it's, it's been imported, 1.5% was paid, that vessel can now be offered to any and all perspective buyers. Then you have a and very draconian, by the way rules for violating that, that law. Why, why, why are these rules so draconian? People say well, you know, forfeiture of the yacht just seems a little bit draconian. It's just isn't that just over the top. Well, every, when you look at the harmonized tariffs of the United States, that would that would probably use about in printed form, probably go on for like 12 feet, okay, on small print. That is the just the absolute key in many ways to the American economy. And every and my point is this when you the percentage of the percentage of shipments that are actually inspected that come across the board, the, the, the borderline, are less than 5%, okay, so 95% just come in, based on what the customs broker says, as in said to contain what's inside the container, only 5% of those things are actually inspected. So, for example, if you take a, like a coffee cup, there is no chance that the United States government can look at every coffee cup that comes across the border. Again, I can't. I can't really make it out, but chances are it was made in China Yep, made in China, but there's a duty on coffee cups.

Speaker 2: 33:54

I'm going to get back to yachts, but I think it's interesting to understand what's going on. Take coffee Well, america has this massive coffee lobby, just like the. The maritime people have the mass of maritime lobby and there's different subsets of that. Some are lobbyists for dredging. Can't have foreign bill dredges. No, no, thank you. You may have the Beck, galveston hurricane 1926, entire harbors full of boats, but we will not allow foreign dredges to come in here and pull those boats up and out. So so, so my point is that, back to yachts, obviously much more visible, but still it's an item.

Speaker 2: 34:37

Coming across the borderline into the customs territory is either duty paid or not. Now, let's take, let me just reverse that for you, just so people can sort of start to get a sense of it. Let's assume it's a Westport, let's assume it's a Delta, let's assume it's a burger, all built in the United States. But they are obviously duty paid. They don't have to pay duty. They're built in the United States. You but sometimes when the lawyers don't know what they're doing honestly, they they export these boats. Then you want to recapture that 1.5 percent and you do that under what is called a duty American goods return exception. In other words, we're replying for the American goods return. Sometimes you can get it, sometimes you don't. It depends on how the lawyer who preceded the the transactions in front of you did the deal. If the United States government concludes that there was an intent to export, you don't necessarily get the 1.5 percent benefit. When you bring it back in, you have to import it and pay 1.5 percent.

Speaker 2: 35:44

So the small vessel, the small vessel waiver, was principally this idea that well, we'll make an exception for used boats. We want to take, we want to help commerce, we want people to enjoy, we want to buy boats. There's a big yacht broker group out there for used boats. There's a lot of people that work on boats, insure boats, maintain boats, crew on boats and all that stuff. There's this vat. There's a few lawyers that make their living with boats.

Speaker 2: 36:17

It's kind of hard to believe, but all of this is because of these. You know these laws that you know fundamentally, to sell a boat to a resident of the United States you can be a French citizen, for example Can't, can't buy it if you're a resident. Because you're resident, you're in the United States. Boat's not duty paid, so you're going to have to pay the duty if you want to sell the boat. Now there's a couple of exceptions that might be worth just mentioning. One is a boat can come into the United States under into what is called a free trade zone, and there's a lot of free trade zones. It's kind of the new thing, you see it all the time. Ribovish has a free trade zone, lauderdale Marine Center has its free trade zone, yadhaven Grand in Miami has a free trade zone and you can apply to go in there and do work and be present and and so on and so forth and market.

Speaker 2: 37:17

But if you sell to what would be otherwise a resident of the United States, you would have to pay the duty at that point. The other exception is a lovely creature about thank you, thanks to the International Yacht Brokers Association, the so-called boat show bond. So you can post this bond, bring your boat into the boat show. There are limitations on it before from the date that you get your bond and extends for a period of time after the show. That allows you a period of time in which to do your deal. But you will not be fined or penalized for marketing your vessel at a boat show. Trying to sell your vessel at a boat show and ultimately, hopefully, you get a buyer, you can actually go to a contract without violating any US laws and because you had your boat show bond in place.

Speaker 2: 38:13

Now that that. But if you sell into a resident of the United States, you still wouldn't have to pay the duty. Now sometimes, I mean you will see, from time to time people actually magically come up with a buyer over in the Bahamas and so they, you know, they get together with that buyer in the Bahamas and then they, you know, they do their deal in the Bahamas and they flag it offshore and you know, voila, the vessel now makes entry as a foreign flag vessel under the usual terms of entry, which could include getting a current cruising permit. You don't have to have a cruising permit, but you, if you're going to navigate around US waters, it certainly would be smart to get a cruising permit, because it allows you to go in and out of ports of the United States as you navigate around. So that's, you're getting it. I mean, these are very esoteric subjects but, you know, ones that the maritime law community deals with frequently. The, you know, our, our colleagues and competitors is a fairly standard sort of thing.

Speaker 1: 39:15

Well, I think we have a topic for a whole new podcast the, the legalities of the importation and duties, et cetera, et cetera.

Speaker 2: 39:24

So and very and to emphasize the point, if I may, and forgive me for interrupting Diane, but the coffee, the coffee cup analogy. There's a wonderful podcast, a wonderful series that I'm watching these days called slow horses, and it's comes out of England and they were talking about the number of cargoes coming across the borderline and that are actually inspected by the government. And that's why it's a recognition that all of these things cannot be inspected, which means the draconian remedy for falsely declaring the country of origin, for example. That's the trigger. The country of origin for a sun seeker is England. The country of origin for a Lursen is Germany. The country of origin for I think you probably already got it, but we'll use a third and a fourth we probably already got it, but we'll use a third analogy for a Vanity is Italy.

Speaker 2: 40:29

Each one of those countries has a different tariff that applies, may have a different tariff that applies to the vessel. I don't know, you have to look at it and go. He said 1.5 or something else, but you don't want to mess with that. It is a very draconian penalty. If you offer a vessel that is not duty paid for sale, the government can come down on you very hard and even confiscate the boat. So it's.

Speaker 2: 40:58

I know of a very reputable yacht lawyer, who I will not name, but he ran afoul of the customs importation people and his clients suffered very, very grievous penalties and I'm sure it ruined his day and it took him quite a while to get out of it. But they made a deal. They kind of think they settled the case, but it was. They got the wrong customs agent. This person just said I'm going to enforce the law here and proceeded to do it on a vessel that entered San Diego. San Diego is a military port, so it's also full of a bunch of people that are on ready alert for things that are not done right.

Speaker 1: 41:42

All the more reason that people need to work with maritime lawyers understanding all the hurdles that need to be jumped over, filing the right paperwork, getting all the documents in a row, you know, making sure that everything is, as my dad likes to say every T is crossed and every I is dotted.

Speaker 2: 42:03

That's true Every day of my life. That's a very important thing you're doing in these as of this morning, as a recent deal and you know millions of dollars and you got to make sure everything is in order, everything any red flags are checked out, and make sure that it's all. Everything's on the up and up.

Speaker 1: 42:25

Right, absolutely Well, michael. Once again, thanks for your insight. Talking about the prevalence of the bareboat charter agreement, the Jones Act, what it says and why, the waiver program, the small vessel waiver program, and then the, you know the confusion over why boats are not for sailor charter in US waters, right when they're far and flagged, far and built. You know there's a lot to unpack there, but hopefully we helped educate a lot of people. So thanks for your time.

Speaker 2: 43:02

That's the whole idea. It's always a pleasure being with you and I look forward to our next podcast.

Speaker 1: 43:09

Yeah, we've got some good episodes coming up.

Speaker 2: 43:11

Exactly.

Speaker 1: 43:12

Well, everybody, thank you so much for your time and for listening. If you have a yacht law question that you would like us to address on an upcoming episode of the yacht law podcast, oh, I can say that 10 times fast. Contact Michael Moore or me. Our contact information is in the show notes for this episode. We want to help you make better educated decisions, whether you are a yacht owner, a crew member, a representative in the industry or someone who is seeking to learn more about the world of yachting, and we can keep you anonymous, if you so wish, until next time. I'm Diane Byrne. Michael, I'll give you the last word.

Speaker 2: 43:53

I'm Michael Moore, and it's always a pleasure.

Speaker 1: 43:57

Thanks everybody.

Speaker 2: 43:59

Bye-bye.