What happened
On 9 January, a fire broke out on board M/Y Naisca IV in Port de la Lave, west of Marseille. It reportedly originated from a lithium-ion battery, often used on board tenders and in equipment on luxury superyachts, although this is yet to be verified.

The fire destroyed Naisca IV and purportedly spread to two nearby yachts. The second yacht was also destroyed, while the third sustained severe damage to her port side. Oil booms were deployed to mitigate the environmental harm.

Considering liability
Liability for fire damage largely depends on the facts and available evidence. 

If the fire originated from Naisca IV, the owners and their insurers (if covered) could be liable for third-party damage to other yachts, the marina and the environment. 

The marina might issue a claim against Naisca IV and its owner for the resulting marina damage and clean-up expenses, as well as costs incurred to manage the fire. Naisca IV may also be held liable for pollution damage (although steps were taken to minimise that risk). If oil slicks were to contaminate other boats in the marina, additional third-party claims may also arise for hull cleaning costs. While, mercifully, there do not appear to be any human casualties in this case, yacht owners could be held liable for personal injury sustained by others in a fire.

The owners of the second and third yachts, if insured, might claim under their respective hull policies for repair or replacement costs. Their insurers may then pursue a subrogated recovery action against Naisca IV or their insurers.

Subject to the cause of the fire, the owner of Naisca IV might consider whether there are grounds to pursue a recourse claim, for example, against the manufacturer of the potentially faulty battery or surveyors who may have failed to detect issues during inspection or a charterer whose act or omission may have resulted in the fire. Liability could rest with the owner, however, if it transpires that the battery was not used or maintained properly.

Implications for the yacht owners and their insurance
Marine policies typically respond to damage resulting from fires, subject to any exclusions for unseaworthiness, negligence or deliberate actions of the owners and specific policy terms which may invalidate the policy if not complied with.

For the owner of Naisca IV, hull insurance may cover damage to the yacht if it was seaworthy and no policy terms were breached.  Given the extent of the fire damage, the yacht could be deemed a constructive total loss and the owner might seek compensation from its insurers for the full insured value. Depending on the outcome of investigations into the cause of the fire, the insurers might then pursue subrogated claims against any third party who might seem to hold ultimate responsibility.

Incidents like this highlight the value of third-party liability or protection and indemnity insurance for yacht owners, to protect them in respect of claims by other yachts or third parties; without this coverage, yacht owners are exposed to potentially significant personal liability.

The recent increase in claims like this are pushing up premiums for yacht owners. They often result in complex cross-jurisdictional litigation, or arbitration with multiple parties, where legal costs can quickly mount. 

Legal protection
The law can offer a certain amount of protection for yacht owners in fire-related incidents.

Yacht owners may be able to limit their liability under applicable contracts via their mooring and charter agreements, depending on what terms they have agreed. In addition, the Convention on Limitation of Liability for Maritime Claims (LLMC), provides yacht owners with a cap on liability which is calculated by reference to the certified gross tonnage of the yacht, provided that the damage was not caused by their actual fault or privity. There is also a separate limit available for pollution damage, if applicable, under the International Convention on Civil Liability for Oil Pollution Damage (CLC). For example, if the CLC applies, a 3,000gt yacht would be able to limit its liability to approximately £2.9 million. Pollution liability can be significant in monetary terms, so this can be valuable protection.

Adequate insurance coverage remains a primary safeguard. Prudent yacht owners should ensure they have both hull and third-party liability coverage. Owners are advised to check their limits and applicability of coverage, carefully reviewing terms to avoid action (or inaction) that could invalidate the policy.  

That said, preventative measures are undoubtedly the most effective means of protecting against fire-related damage. Fire regulation is continually evolving. Yachts must comply with fire safety standards set by their Flag state (some of which are more stringent than others) and adhere to local fire safety regulations when docking in ports and marinas. This may include spacing requirements, firefighting resources and protocols for fuel handling. There are also specific guidelines in place, such as the MCA’s Guidance note (MGN 681) which addresses fire safety for electric powered craft, in response to the growing use of lithium-ion batteries on yachts.

In this case, whether or not preventative measures were followed by the Naisca IV remains to be seen, but yacht owners are advised to keep up to date with evolving regulations and maintain comprehensive insurance cover to mitigate the risks and financial exposure of fire-related incidents.

You can read an in-depth article on this topic by News Editor Conor Feasey – ‘We didn't start the fire ... but are we fanning the flames?’ in issue 222 of The Superyacht Report – Owners Focus. All issues are currently available to read for free as part of our Open-Source strategy, designed to make our Reports accessible to everyone in an interactive digital format.

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