Superyachts moored in glitzy locations such as Monaco or Portofino have long been the playthings of oligarchs or tech billionaires, but until the 2008 financial crisis, their owners preferred to settle disputes over the vessels in private.
However, in the past few months a number of unprecedented legal battles over superyachts have been fought in public, giving a rare glimpse of an industry previously renowned for its gentlemanly discretion.
There are estimated to be no more than 6,000 40-metre-plus yachts in the world.
Famous names include Eclipse, owned by Russian oligarch and Chelsea football club owner Roman Abramovich, and the £120m Octopus, which belongs to Paul Allen, the billionaire co-founder of Microsoft.
This year, a host of high-profile superyacht cases have been fought in the High Court in London involving individuals such as the New York telecommunications entrepreneur Micharel Hirtenstein, financier Nat Rothschild and Russian property developer Kirill Pisarev.
John Leonida, partner of the law firm Clyde & Co, said parties were now more willing to fight court battles. “Before 2008, the causes of action were always there, but people didn’t litigate – it was sorted out by a phone call or behind closed doors,” he said.
He said that after the financial crisis there was a shift in attitude.
The High Court heard a dispute between Mr Hirtenstein and the law firm Hill Dickinson over a 47m luxury yacht called Il Sole.
Mr Hirtenstein, who had purchased the yacht in 2010, had brought a claim against the firm after Il Sole’s starboard engine suffered a failure 12 miles at sea. He sued Hill Dickinson for professional negligence in handling the purchase of the yacht, alleging the law firm failed to obtain a personal guarantee under which a claim could be made for loss.
A warranty of the yacht’s condition had been given by the seller Candyscape. Mr Hirtenstein had thought this was backed by a personal guarantee from property tycoon Christian Candy, the beneficial owner of the selling company and developer of London’s One Hyde Park building.
Mr Hirtenstein believed this as he had been told so by his lawyer at Hill Dickinson. But no such personal guarantee existed. In July the judge ruled in favour of Mr Hirtenstein against the law firm but said he had suffered no loss and was awarded nominal damages.
Other legal cases have involved disputes between the super-rich and their yacht brokers or over finance. The Court of Appeal in February ruled on a complex dispute involving the construction of a 71.5-metre luxury yacht called Project Nato commissioned by Swallowfalls, an Isle of Man company linked to Nat Rothschild.
Other cases have involved oligarchs from former Soviet Union. The late Boris Berezovsky lost a legal action in 2010 against yacht broker Edmiston over the sale of a 110-metre $148.5m yacht called Darius he had ordered to be built in a Bremen shipyard, and was ordered to pay €7.2m in commission.
In another case in April this year, Florida yacht brokers Moran Yacht and Ship Inc sued Mr Pisarev in London’s High Court over an alleged claim for commission over sale of the 47-metre yacht 4You. They claimed they showed the boat to wealthy Russian Alexander Miliavsky and one of his companies bought it 21 months later for €19.8m. They claimed they were entitled to commission but their claim was dismissed by the court.
Lawyers say the number of cases reaching the courts is the tip of the iceberg as most disputes involving the construction of super yachts have arbitration clauses and so are usually heard behind closed doors.
Before the financial crisis, new money made in the hedge fund industry or in technology poured into superyachts and rising prices of yachts meant that would-be owners were just keen to secure a boat.
“It is an industry in which large yachts often change hands quietly without the press even knowing,” said Richard Coles, partner at law firm Gateley and co-editor of Law of Yachts and Yachting. “So if there is a dispute, the last things people want is for their affairs to be aired in public so court is not usually the first option. But the amounts of money involved are large and times are not easy,” he added.
Quentin Bargate, partner at the law firm Bargate Murray, said some increase in litigation may have been because yacht brokers were finding life tougher after the financial crisis.
“There is a tendency to fight over every penny,” he said. “Money is tighter and the tax regulators have increased their interest in superyachts and are being more aggressive. Disputes that would have been dealt with by gentlemen’s agreements or by a handshake are now more likely to end up in the hands of lawyers like me.