Yacht Refit and Newbuild Disputes: Delay, Defective Work and the Yard’s Final Invoice

A refit planned for four months takes eleven, a newbuild yard delivers a vessel that does not meet the specifications, or a yard holds the yacht until the balance is paid although the work is defective. In all three cases the owner faces a professional who holds the vessel, the technical documentation and the initiative on the calendar.

This page sets out the rules governing refit and shipbuilding contracts, the points on which these cases are won or lost, and how the firm intervenes, from the first delay to acceptance with reservations.

The risk: an unbalanced contract and a mishandled acceptance

Refit and newbuild fall under the contract for work (Articles 1787 et seq. of the French Civil Code) and, for construction, the specific regime of the Transport Code. Yards’ standard contracts organise staged payments, transfer of title and delay penalties, almost always in the yard’s favour: capped penalties, broad suspension grounds, a lien on the vessel.

The decisive moment is acceptance. Acceptance without reservation covers apparent defects and starts time limits; acceptance refused without serious grounds exposes the owner to payment of the balance and storage charges. In between, acceptance with precise, quantified and dated reservations preserves rights without blocking delivery.

The legal answer: document delay and non-conformity in real time

Delay is proved by the contractual schedule, signed change orders and correspondence; non-conformity by the specifications annexed to the contract and an independent technical survey. Delay penalties apply as agreed, and the court may moderate or increase them if manifestly excessive or derisory (Article 1231-5 of the Civil Code).

In case of serious defects, the owner has the remedies of Article 1217 of the Civil Code: withholding performance, specific performance, price reduction, termination and damages. The yard’s lien is discussed against the sum actually due and the retention provided in the contract.

How the firm works

From the first significant delay, the firm sends the yard a notice fixing responsibilities and reserving penalties, then organises a joint inspection with a marine surveyor. Approaching delivery, it prepares the acceptance report with reservations and negotiates release of the vessel against a retention or a bank guarantee.

If the disagreement persists, the firm applies to the urgent applications judge for release of the vessel or a court-ordered survey, then brings the action on the merits or the arbitration provided in the contract. For foreign yards, it coordinates with a local correspondent and ensures enforcement of the decision.

Based in Paris, the firm acts in all French ports, from Le Havre to Marseille and from Nantes-Saint-Nazaire to Antibes, as well as before the Chambre arbitrale maritime de Paris, and works in English with shipowners, P&I clubs and foreign counsel.

Typical cases handled

The situations below are illustrative, anonymised scenarios. They show when the firm steps in and what the work consists of.

An eleven-month refit for four planned

The yard invokes additional work discovered during the refit; the owner signed no change order. The firm relies on the contractual schedule, obtains application of the penalties and negotiates a reduction of the balance.

Newbuild not conforming to specifications

The delivered vessel displaces 12% more than specified, with a top speed below the guarantee. The work bears on acceptance with reservations, on the survey and on price reduction.

Vessel held for a disputed balance

The yard holds the yacht for a balance of 180,000 euros while defects are recorded. The firm obtains release against deposit of part of the balance, then deals with the merits.

Frequently Asked Questions

Can I refuse to pay the balance because of defects?

Partly, and with care. French law allows a party to withhold performance where the other’s performance is seriously defective, but the refusal must be proportionate to the defect and it is judged after the event. Withholding the whole balance for a limited defect exposes the owner to interest, to a claim for breach and, where the yard holds the vessel, to a retention right. The safer course is to pay the undisputed part, to withhold a sum matching the defects assessed by a surveyor, and to set out that reasoning in writing before the due date.

Can the yard hold the yacht?

It can, where the work was carried out on that vessel and the invoice relating to it is unpaid. A retention right is a powerful commercial lever and it becomes expensive quickly, because berthing, insurance and a lost season are added to the dispute. It is not unlimited: it must relate to the unpaid work rather than to other invoices, and it cannot be used to force payment of sums that are seriously contested. Summary proceedings can obtain release against a guarantee, which is usually faster than arguing the merits with the yacht immobilised.

What time limit applies after acceptance?

Acceptance of the works starts the clock, and its terms decide what remains open. Reservations recorded at acceptance must be lifted within the agreed period, while defects that were apparent and not reserved are generally closed. Hidden defects revealed afterwards are actionable within two years of their discovery, and a construction contract may add contractual guarantees with their own durations. Where the yacht is a new build delivered by a professional yard, the sale regime and the works regime can overlap. Reading the acceptance protocol before signing it is worth more than any later argument.

Who bears the cost of delay in a refit?

The contract decides, and most yard conditions cap or exclude liability for delay while providing a liquidated sum per day or per week. Those clauses are usually effective, but they fall where the delay results from the yard’s gross fault, and they do not cover work the yard undertook outside the contract. The owner’s position improves considerably where variation orders are documented, because the majority of refit delay disputes are in reality arguments about who asked for the additional work and when. Keeping the variation trail in order is the single most useful precaution.

What happens if the yard becomes insolvent during a build?

Everything depends on who owns the hull and on the security taken. A construction contract can provide for title to pass progressively as instalments are paid, and registration of the vessel under construction, where it is available, makes that ownership opposable. Without such a clause the owner is an ordinary creditor for the instalments already paid, which in practice means recovering very little. A bank refund guarantee, staged payments matched to verified progress and a clear title clause are the three protections that make the difference, and they are negotiated before the first payment.

Which law and which forum apply to a yard contract?

Usually the law of the yard’s country and its local courts, or an arbitration seat chosen by the yard, because the standard conditions are drafted by the yard. That choice has real consequences for limitation periods, for the validity of exclusion clauses and for the guarantees available. An owner contracting with a Dutch, German or Italian yard is not contracting under French law merely because the yacht will be based in France. The clause is one of the few points genuinely negotiable before signature, and it deserves attention at that moment.