On August 20, 2013, the Maritime Labor Convention (MLC) came into force. It will impact owners’ ability to commercially charter their yachts and will change the way we build yachts.

Devised to protect the unprotected crew, the MLC adds another burdensome layer of governance on yachting. As of August 20, yachts governed by MLC will have to: 1) increase the size of the crew sleeping and recreation accommodations, 2) create written employment agreements between crew and yacht owners, 3) pay crew wages no less frequently than monthly, 4) provide crew with uniform hours for work and rest, 5) provide crew with paid annual leave and repatriation at no cost to them, and 6) supply crew with health care protection and access to prompt medical care while working (at no cost to them). Some believe that the MLC opens the door to allow unionization of crew. Bottom line, be prepared to spend more money on yachting. These standards will require you to give crew more time off, hire additional crew during charters and modify yacht design.

The MLC applies to all ships and yachts, whether publicly or privately owned, that are ordinarily engaged in commercial activities upon entering the ports of nations adhering to the MLC (port states), as well as to all yachts flying the flag of states which have ratified the MLC (flag states).

The MLC defines a ship as a ship if it is not a vessel that navigates exclusively in inland waters or within sheltered waters. This definition is vague and you are likely to ask whether a yacht is a ship under this definition. Whether or not a yacht would be considered a ship within the meaning of the MLC will depend on the definition of a ship under the port or flag state’s national law.

The MLC also does not define “commercial activities” so, again, it will be for the port or flag states to decide what are and are not commercial activities. However, if the yacht is generally chartered for profit then the MLC will most likely apply. If the yacht is used exclusively or almost exclusively for an owner’s leisure, then the MLC might not apply.

A port state that has ratified the MLC will require that all yachts entering its port adhere to the MLC. The flag state will exercise its control over yachts that fly its flag by ensuring MLC compliance. Both port and flag states will do this by conducting regular inspections and monitoring their yachts. Port and flag states have the right to detain and commandeer non-MLC-compliant yachts. If your yacht is in the middle of a charter, it will cause a contract breach and much embarrassment.

To date, there are 48 countries that have ratified the MLC, and the nations relevant to yachting include the Marshall Islands, Bahamas, St. Vincent, Jamaica, Australia, Canada, Greece, Spain and the United Kingdom. The U.S. has not ratified the MLC yet, nor is it likely to.

The MLC leaves us with many questions that will not be answered without the actual real-time MLC enforcement by the port and flag states. The one sure thing is that pleasure yachts not engaged in chartering are not required to comply with MLC. However, if you are planning to charter, then you must realize that MLC will affect what you do and how you do it.

Danielle J. Butler is a maritime attorney and partner at Hill Betts & Nash, Fort Lauderdale, Florida. She handles transaction and litigation matters for pleasure yachts and commercial vessels. She is admitted to practice law in New York, Florida and District of Columbia. She may be reached at [email protected] and hillbetts.com.