The MYBA MOA Mania

Today once again, for what feels like the 1000th time, I received the following statement from brokers´ end:

“The MYBA contract is mandatory in the branch as it is based on the experience of the members of MYBA and thousands of sales. It has been made by maritime lawyers and improved along the years.”

Sounds nice, but is legally not convincing at all and wrong. Such a general claim to ubiquitous validity is simply without substance and wrong. The astonishing thing about these kind of statements, which are usually made quite aggressively and indignantly, is that nothing more comes of the request to substantiate them professionally. Instead, this “we’ve done it a thousand times before and that’s fine” is repeated like a prayer wheel. This does not make it better, on the contrary…

In this specific example-case the Seller is a German private person. The potential Buyer is an Israelian private person.

Here some profound arguments:

  1. According to applicable International Law, German law applies, Art. I ROM I. And the Seller is NOT willing to agree on a different law.
  2. The MYBA MOA template is not fitting to the case even though the brokers want to declare it. It follows the logic and the rules of Common Law. This is completely different to Civil Law e.g. German
  3. There is no effective connection to England and for his protection, the law of his place of residence applies in accordance with Art 6 ROME I. Under no circumstances would I advise against agreeing to English law, as this is very complex in its pursuit and, due to the four-corner-rules, requires more intensive regulations than those provided for in the template.
  4. Facing BREXIT in a few days, I never ever would allow a German party under my guidance agree on English law and jurisdiction without emergency. At present, the Member States recognize judgments of the other Member States without the need for an exequatur procedure. Recognition is based on mutual trust between EU Member States and the same rules to which they are subject. Currently, we have a standard process of submission of certain documents from the sentencing state to the competent enforcement authority in the state of recognition, which means that the enforcement of a judgement from another EU country can be carried out almost as quickly as a national one. However, an exequatur procedure, in whatever form, required after 31 December would make the enforcement of judgments extremely difficult compared to the current legal situation. Without going into details, it should be stressed that the procedure for enforcement of a judgment in the UK is extremely complex and expensive. We have already had to argue for clients on the basis of such contracts in England, where in the end the costs were higher than the value in dispute.
  5. You cannot just agree on an addendum to that MOA and change from Common Law Template to Civil Law law and jurisdiction. The legal systems are different and the logic to design contracts especially. This would be as if you try to put the wheels of a truck onto a sportscar or vice versa. The truck does not become a sportscar and the sportscar not truck, but both are spoiled and disturbed.
  6. In English Law it is possible to mix up all these parties and stakeholders, nor in German law, where contracts are to made between the parties who are directly concerned and between whom there is an exchange relationship. A broker’s commission is regulated separately between him and his client.
  7. The argument that the MYBA template has been used so and so often does not in any way mean that it is legal and compliant in the specific case. By the way, I know of many such contracts which, if examined closely, are not legal and would not withstand any legal action. We have such contracts on the desk all the time.
  8. Last but not least, but of great importance is, that German Law knows as very intense law of “General Terms and Conditions.” When one now tries to localize a Common Law Contracts by an addendum or clause to German Law, lots of these MYBA MOA clauses will become invalid. Contracts coming from a UK legal background do not function under German law as two very different legal worlds collide. Things just work differently. Contracts are drafted differently, have a different logic and system. You cannot rape one logic via the other.

One of the more peculiar concepts of German contract law is the “Law on General Terms and Conditions”. In a nutshell, the idea is this: If, one uses standard contracts, the terms and conditions of those contractual documents are subject to the so-called “content control”. “Content control” means that the vast majority of well-thought-out terms and conditions are only valid and able to shape the contractual relationship with another contractual party if they pass a test to the effect that the terms must not be “unreasonably disadvantageous” (i.e. overly unfair) for your client.

  • is not compatible with essential principles of the statutory provision from which it deviates, or
  • limits essential rights or duties inherent in the nature of the contract to such an extent that attainment of the purpose of the contract is jeopardized.

The thinking behind this is that if one of the parties works with pre-drafted standard contract forms, there is a good chance that the other party is at a considerable disadvantage with regard to what the contractual relationship will look like in the end. As a result of the “content control” one is effectively restricted on what clauses you can use in your standard contracts: Or, to be more precise, if you use clauses that don’t pass the test, they are  invalid and won’t be applied to the contractual relationship; and are subject to coming under attack from your competitors (less likely, because they will mostly want to use the very same kind of clauses) or consumer protection institutions or other comparable associations.

The latter just happened to Facebook, for example, who were dragged before the District Court of Berlin over (inter alia) a variety of its terms and conditions – and lost…

Please read additionally:

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