The Passenger Vessel Safety Act of 1993 has changed the criteria for an acceptable bareboat charter. In the past, vessel owners got around the vessel inspection requirements by chartering their vessels out under bare boat charters, in some cases with crews furnished or with the owner operating the vessel. The Coast Guard Navigation and Inspection (NVIC) Circular 7-94 explains the effects of the new law as it relates to vessels under 100 gross tons. Persons interested in more details should get NVIC 7-94 from their nearest Coast Guard Marine Safety Office.
Failure to follow the new law could not only result in civil or criminal actions against the owners for violation of the law, but in the case of an injury or death, could affect their liability and in some cases, whether the insurance is voidable.
The new law invalidates comments made in previous articles on charters appearing in this newsletter.
One of the most significant changes to the laws for passenger vessels requires chartered vessels carrying more than 12 passengers to have a certificate of inspection issued by the Coast Guard. The following is extracted from NVIC 7-93:
Bareboat charter agreements have traditionally been used in the maritime industry as a mechanism to allow long-term charterers the ability to assume operational control of a vessel. In these agreements the charterer assumes the rights and liabilities of ownership for the vessel. The charterer is usually responsible for conducting a pre-charter and post-charter vessel survey, providing the crew, and assuming complete operational control of the vessel.
Individuals soon began using bareboat charter agreements for short-term charters (as short as four hours in duration) to carry large numbers of people for events such as wedding receptions, graduation parties, or business meetings. Although these vessels were similar to comparable inspected vessels, under the previous statutes these vessels were neither subject to, nor inspected as, passenger vessels. Previous statutes did not limit the number of individuals that could qualify for the owner (charterer) exception to the definition of passenger and [the previous statutes] also contained an exception for guests carried on vessels being operated only for pleasure. The Act limits the exception for the owner (charterer) to one individual and eliminated the guest exception.
Additionally, many charter agreements allowed the owner of the vessel to either be a member of the crew or to provide the crew. The Act clearly delineates between charters that allow the owner to provide or specify the crew and those that do not. . . . [V]essels chartered with the crew provided or specified by the owner are subject to inspection as a small passenger vessel [when carrying more than six passengers]. . .
The Act provides for Coast Guard inspection and certification of vessels that are chartered without a crew provided or specified by the owner and carrying more than 12 passengers. . ..
NOTE: Vessels of less than 100 gross tons carrying more than six passengers one of which is for hire or are chartered with a crew provided are still subject to inspection. The 12 passenger threshold applies when such vessels are chartered without the crew provided or specified by the owner.
The Act amends and adds several definitions in Title 46 United States Code (USC) Section 2101. The Act provides a single consolidated definition of "passenger" for all passenger vessels. It also defines the terms "passenger for hire" and "consideration," and amends the definition of "passenger vessel," "small passenger vessel," "sailing school vessel," "submersible vessel," "offshore supply vessel" and "uninspected passenger vessel."
The goal of the Passenger Vessel Safety Act is to close the legal loophole which allowed owners to charter vessels which did not meet the safety standards of inspected vessels to people who then carried large groups of people.
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