Chartering a vessel — whether under a voyage charter for a one-off carriage, a time charter for operation over a set period, or a bareboat charter for full operation of the vessel — creates precise reciprocal obligations between owner and charterer. Rigorous contract drafting, anticipating the main points of friction, avoids a significant share of the disputes that arise in practice.
Distinguishing the Three Forms of Charter
A voyage charter covers one or more specified voyages, with the owner remaining responsible for the nautical and commercial management of the vessel; a time charter places the vessel, with its crew, at the charterer's disposal for a set period, with the latter directing the commercial operation; a bareboat charter transfers full nautical management of the vessel to the charterer, including recruiting the crew. This distinction, far from purely theoretical, directly determines how obligations and liabilities are allocated between the parties should difficulties arise.
The Demurrage Clause: A Frequent Source of Disputes
The time allotted for loading and unloading operations, known as laytime, is generally specified in the contract, and exceeding it gives rise to demurrage payments, compensation owed to the owner for the vessel's additional detention. Precisely calculating this period, including the exact definition of the days and hours counted as well as the events that suspend the count, is one of the most frequent sources of charter disputes, which justifies particularly careful drafting of this clause.
The Vessel's Seaworthiness
The owner has an obligation to deliver a seaworthy vessel, fit to carry out the intended voyage or operation under reasonable safety conditions. A breach of this obligation, discovered during operation, can justify terminating the contract at the owner's fault and awarding damages to the charterer for harm resulting from the vessel's unavailability or malfunctions.
Freight and Payment Terms
The freight amount, its currency, its payment terms, and the consequences of a delay or default in payment must be specified with the utmost rigor, particularly in international charters involving parties of different nationalities. Some contracts provide for the owner's right of lien over the cargo in case of unpaid freight, a powerful mechanism whose implementation must nonetheless meet strict conditions to be valid.
Early Termination Clauses
Unforeseen circumstances — a major breakdown, administrative requisition, embargo, a conflict affecting the intended navigation zone — can make performing the contract impossible or excessively burdensome for one of the parties. Well-drafted early termination clauses, specifying the triggering events and the financial consequences of termination, help secure these situations rather than relying on a later contentious interpretation of general contract law rules.
Allocating Costs and Risks
A well-drafted charter party systematically specifies which party, owner or charterer, bears each category of costs related to operating the vessel — fuel, port charges, insurance, routine maintenance — as well as the risks tied to each item. An imprecise or incomplete allocation of these costs is a recurring source of disagreement during performance, particularly when unforeseen expenses arise and the contract remains silent on who bears them.
The Inspection Clause and the Vessel's Condition
Providing for a joint inspection of the vessel at delivery and at redelivery, with a detailed report signed by both parties, helps prevent later disputes over the vessel's condition and any damage that occurred during the charter period. This precaution, simple to implement but often skipped to save time, provides effective protection for both parties should a disagreement arise over responsibility for damage noted at redelivery.
Choice of Governing Law and Jurisdiction
International charter parties almost systematically include a clause designating the governing law and the court or arbitral body with jurisdiction in the event of a dispute, a choice with considerable practical consequences for the likely outcome of any litigation. Carefully negotiating this clause, rather than passively accepting the standard terms proposed by the economically stronger party, is often a decisive precaution.
When Should You Consult a Lawyer?
Negotiating and drafting a balanced charter party, or defending one's interests in a dispute over the performance of such a contract, require an in-depth command of international maritime practice and law. Anticipating these difficulties from the negotiation stage, rather than discovering their consequences during performance, remains the most effective and least costly approach. The Cabinet Kaboury, in Rabat, supports owners and charterers in negotiating and litigating their maritime charter party contracts.