Chartering and Charter Parties: How Ships Are Hired

A charter party is the contract by which a shipowner hires out a ship, or a share of its carrying capacity, to a charterer. Four structures do almost all of the work in the market, and they differ on one axis above all others: how much of the ship passes across to the charterer, and therefore which costs and which risks travel with it. Under a voyage charter the owner sells a transport service and keeps the ship. Under a time charter the owner keeps the ship and the crew but sells commercial control for a period. Under a bareboat or demise charter the owner hands over the ship itself and keeps only the title and the hire. A contract of affreightment sits alongside these as a commitment to carry cargo without committing a named ship.

Everything that follows from a fixture is set by which of those structures the parties chose, which printed form they wrote it on, and which clauses they amended: who pays for the fuel, who carries the risk of a slow port, who answers a cargo claim, and who can refuse an order into a war zone.

The four charter structures

The distinction between the structures is a distinction about possession and control. The further the charterer reaches toward full possession, the more of the running cost and the operational risk moves onto them, and that single idea predicts the answer to most cost allocation questions in chartering.

Voyage charter

A voyage charter engages the owner to carry a stated cargo between named ports, or within named ranges, for a freight. The owner provides the ship, the crew and the bunkers, and bears the voyage costs: fuel for the laden and ballast legs, port charges and disbursements at both ends, and canal dues where the routing transits the Suez Canal or the Panama Canal . The charterer’s core obligations are to provide the agreed cargo and to pay the freight.

Freight is quoted per metric tonne of cargo in dry bulk, as a lump sum, or as a Worldscale percentage in tankers. The owner’s commercial exposure is the voyage estimate: if the ports run slow or bunker prices move, the owner absorbs it, because the freight was fixed at the fixture. Whether that freight is earned on shipment or only on delivery is a drafting question with real consequences, covered in voyage charter freight and when it is earned .

The pressure point in a voyage charter is time in port, and the charter prices it through laytime and demurrage. The owner allows the charterer an agreed quantity of laytime to load and discharge; time used beyond that allowance puts the ship on demurrage. The detail sits in laytime , demurrage and reversible laytime and despatch . The full form is treated in voyage charter party .

Time charter

A time charter hires the ship for a period, at a daily rate of hire. The owner crews, maintains, insures and navigates the ship; the charterer directs where she trades within agreed limits and pays the voyage-variable costs. Bunkers, port charges, canal dues and cargo-handling costs sit with the charterer, while the owner keeps crew wages, stores, lubricating oil, maintenance, hull and machinery insurance and the capital cost.

Hire runs continuously from delivery to redelivery and is payable in advance. Under NYPE 2015 clause 11(a) it is payable fifteen days in advance, with the first payment due on delivery; SHELLTIME 4 pays per calendar month in advance. A charterer who fails to pay punctually exposes the charter to withdrawal of the vessel for non-payment of hire , though NYPE 2015 clause 11(b) requires three Banking Days written notice first. The structure is treated in full in time charter party .

Trip time charter

A trip time charter hires the ship on time charter terms for one named voyage rather than for a period. The payment mechanism is daily hire, so the charterer still pays the bunkers and port costs, but the contract ends at a redelivery range rather than on a fixed date. It sits between the voyage and period markets and is quoted as a daily rate, which makes it directly comparable with a period fixture and comparable with a voyage fixture only after conversion to a time charter equivalent . Because it ends at a range rather than a date, the legitimacy of the final voyage is the recurring dispute, treated in trip time charter and redelivery and last voyage orders .

Bareboat or demise charter

A bareboat charter, also called a demise charter, transfers possession and control of the ship to the charterer, commonly for several years. The charterer mans the ship with its own master and crew, takes over technical and commercial operation, and pays every operating cost including maintenance, drydocking and the hull, machinery and protection and indemnity insurance. The owner retains legal title and a reversionary interest and is paid hire, but no longer runs the ship.

The legal hinge is that the master and crew become the servants of the charterer, so the charterer answers for the ship’s operation in a way a time charterer never does, and becomes the company for ISM Code purposes. The bareboat charter is the closest thing in shipping to a finance lease of the asset, which is why it sits behind much ship finance and asset valuation and behind sale-and-leaseback structures. The standard form is BARECON 2017 , and the structure is treated in bareboat charter party .

Contract of affreightment and slot charter

Two adjacent structures do not fit the possession spectrum because they do not hire a particular ship at all. A contract of affreightment commits an owner to carry a stated quantity of cargo between agreed ranges over a period without naming a ship, operating as a series of voyage charters drawn down by nomination. A slot charter buys a fixed number of container spaces on a ship rather than the ship, on BIMCO’s SLOTHIRE form of 1993, and is the contractual backbone of liner consortia and vessel-sharing arrangements on the container ship trades. A consecutive voyage charter sits closer to the voyage family, committing the ship to a run of voyages under one contract.

Who pays what under each structure

Cost allocation is the fastest way to hold the structures apart, and the pattern follows the possession line: the further possession has moved toward the charterer, the more of the cost sits on the charterer’s side.

This table is a Shipping-Wiki.com construction summarising the unamended standard forms as at 1 September 2026, not a rule for any particular fixture. The FIOST line in the cargo-handling row marks the most common variation: a voyage charter can be on gross terms, where the owner pays for loading and discharging, or free in and out, stowed and trimmed, where the charterer takes that cost. Insurance rows interact with hull and machinery insurance and the P&I clubs , and an owner exposed to hire suspension may buy loss of hire insurance against it.

Choosing a structure: what each one is for

The choice between structures is a choice about which risks a party wants to own, not simply a choice about price. A cargo interest with one parcel to move buys a voyage charter because it wants a delivered transport service at a known freight and does not want to manage a ship. An operator who expects to keep a ship busy across several voyages takes a time charter, because it can then arbitrage the ship against the market and capture the upside of running her efficiently.

A voyage charter puts port-time risk on the charterer through demurrage but leaves speed, consumption and voyage cost risk with the owner. A time charter reverses much of that: the charterer pays for every day including delay days, so it carries port risk directly through hire, while the owner gives a performance warranty and carries the risk of the ship failing to perform. That is why an owner facing a weak market may prefer a period fixture for the earnings certainty, while a charterer expecting rates to fall prefers voyage cover.

A bareboat charter is not really a chartering decision at all in most cases. It is a financing or fleet-structuring decision, chosen where a party wants the economics of ownership without the balance sheet, or where a tonnage provider wants to own steel and let someone else operate it. Because possession passes, the owner’s protection has to come from the contract rather than from control, which is why BARECON 2017 deals at length with insurance, maintenance standards, inspection rights and redelivery condition.

The standard charter party forms

Almost no fixture is drafted from a blank page. The market runs on a small set of printed standard forms, mostly published or co-published by BIMCO , the Baltic and International Maritime Council, and amended through a recap that records the agreed changes. Using a known form means both sides start from settled wording with a body of case law behind it, which is why a broker quotes a fixture as GENCON 2022 as amended rather than spelling out the whole contract.

GENCON: the dry cargo voyage form

GENCON is BIMCO’s uniform general charter, drafted to suit a wide range of trades rather than one commodity. Two editions are in live use. GENCON 1994 served the market for nearly three decades and remains in circulation. GENCON 2022 was published on 25 October 2022 alongside CONGENBILL 2022, a century after GENCON was first developed in 1922.

GENCON 2022 is a substantially fuller contract: roughly ten more pages and about twice as many clauses. Clause 2 replaces the old owners’ responsibility clause with a Hague-Visby style regime whose defences extend to all claims concerning the owners’ performance. The laytime provisions expand into three sections and incorporate the Laytime Definitions for Charter Parties 2013, so laytime now runs continuously with weather as an exception rather than as an interruption, shifting between berths in the same port falls on charterers, and completion of cargo operations is defined. Clause 16 is wholly new: owners may suspend performance on non-payment and may terminate, or discharge the cargo, after a 96-hour notice. GENCON 1994 had nothing equivalent.

NYPE: the dry cargo time charter

NYPE is the New York Produce Exchange form, the most widely used time charter party in the dry cargo trades on the publishers’ own account. The current edition is NYPE 2015 , whose copyright line names the Association of Ship Brokers and Agents (U.S.A.), Inc. (ASBA) and whose footer records joint authorship by ASBA, BIMCO and the Singapore Maritime Foundation. It succeeds NYPE 93 and NYPE 1946 , both of which remain on live fixtures and in sub-charters.

NYPE matters well beyond the fixtures written on it. Its clause 17 off-hire wording is the reference point the time charter market reasons from, and its clause 8 cargo responsibility wording is what the Inter-Club Agreement keys off, so the form’s language reaches into charters drafted on other paper. Clause numbering differs between the editions, which is a live drafting trap when a rider clause written against one edition is fixed on another.

SHELLTIME 4 and SHELLVOY 6: the oil-major forms

SHELLTIME 4 is the standard tanker time charter, issued by Shell in December 1984 and revised in December 2003. It loads the owner’s performance obligations more tightly than a dry cargo time charter does. Clause 21(a) bites on each and every occasion that there is loss of time, whether by interruption in the vessel’s service or from a reduction in her performance, so a performance shortfall alone can put the ship off-hire without any listed event. Clause 24 measures speed and consumption during the currency of the order, so the warranty runs continuously rather than being tested once at delivery.

SHELLVOY 6 is the voyage counterpart, issued in 2005 and drafted as a berth charter, which pushes waiting-time risk toward the owner because the ship must generally reach the berth before laytime can begin.

ASBATANKVOY: the tanker voyage form

ASBATANKVOY is the dominant tanker voyage charter party, published by ASBA with an edition date of October 1977 and used across the crude and product trades on oil tanker and chemical tanker fixtures. It sets freight on a Worldscale basis, defines laytime and demurrage for tanker loading and discharge, and carries the pumping and heating obligations particular to liquid cargo.

ASBATANKVOY 2025, announced in April 2025 and published with ASBATANKBILL 2025, is the first overhaul of the form since 1977. Its arbitration provision mirrors the BIMCO Law and Arbitration Clause 2020, offering London, New York, Singapore and Hong Kong with New York as the default, and it is drafted with the stated aim of requiring fewer rider clauses. Both editions are in circulation, so the recap must name which one applies.

BARECON, BALTIME and SUPPLYTIME

BARECON 2017 is BIMCO’s bareboat standard. It descends from BARECON A and BARECON B of 1974, amalgamated and revised in 1989, then revised in 2001 and 2017. It is built in parts so one document serves both a straight bareboat hire and a financing structure: Part III carries the newbuilding provisions switched on at Box 27, Part IV a purchase option at Box 28, and Part V the bareboat charter registry provisions at Box 29, which matter where the ship is to be flagged in the charterer’s flag State for the charter period. The 2017 edition replaced the hire-purchase mechanism of BARECON 2001 with a purchase option.

BALTIME 1939 (as revised 2001) is BIMCO’s period time charter, generally regarded as more owner-friendly than the NYPE line, with a narrower off-hire provision. SUPPLYTIME 2017 is the offshore support vessel time charter, defined by a knock-for-knock indemnity regime under which each party bears loss of its own property and injury to its own personnel regardless of fault.

Part I boxes and Part II printed clauses

The standard forms share an architecture: a boxed front page where the variable fixture details go, and a body of printed clauses behind it that the recap amends. The fixture-specific data lives in the boxes; the legal machinery lives in the clauses. That is why a recap can be short. It records the box entries and the clause amendments, and the printed form supplies everything left unstated.

Edition discipline follows from the same architecture. GENCON 1994 and GENCON 2022 are materially different contracts on liability, laytime and cancellation, so quoting GENCON without a year is an invitation to a dispute about which terms apply.

How a fixture is made

A fixture is made through brokers who carry offers and counters between the parties, and the contract is normally formed when the last subject is lifted rather than when main terms are agreed. The sequence runs from a cargo order and a position list, through an indication, a firm offer with a stated validity and a counter, to agreement on main terms and then a recap.

Subjects, and when the contract binds

A fixture agreed on subs is agreed subject to outstanding conditions, most commonly subject to shippers’ or suppliers’ approval, subject to management approval, or subject to stem. English law separates a pre-condition, which turns on a party’s own judgment and prevents any contract coming into existence, from a performance condition, which depends on an external event and does not. In Nautica Marine Ltd v Trafigura Trading LLC (The Leonidas) [2020] EWHC 1986 (Comm), decided on 28 July 2020, Foxton J held a suppliers’ approval subject to be a pre-condition, so no charter party existed and the charterer owed no duty to take reasonable steps to lift it. The drafting consequences are treated in charter party subjects .

The recap

The fixture recap records the ship, the cargo or the period, the freight or hire, the laycan, the trading limits, the named standard form with its edition, and every amendment to that form. A recap reading GENCON 2022 as amended per recap pulls in the whole printed form and overlays only the listed changes, which is why the edition and the amendments in the recap are the substance of the deal. The fixture process as a whole, including the broker’s role and the treatment of commission, sits in its own article.

Laycan and cancelling

The laycan is the window within which the ship must arrive and tender notice of readiness: not before the first layday, and not after the cancelling date, after which the charterer may cancel. The cancellation right does not depend on fault, so a ship delayed by any cause can lose the fixture. GENCON 2022 structures the consequence by letting owners give a new expected time of arrival once, with charterers electing to accept it or cancel, where GENCON 1994 deemed the new cancelling date to be the seventh day after the owner’s new readiness date with no election. The mechanics sit in laycan and cancelling .

Charter chains, disponent owners and back-to-back terms

A fixture rarely sits between a single owner and a single end user, and the charter structure travels down the chain with the rights and duties it carries. An owner may time-charter the ship to a charterer, who then voyage-charters her out to a cargo interest; to that second charterer, the first charterer looks like the owner.

That intermediate party is the disponent owner: it does not own the ship but holds her on a head charter and disposes of her down the chain, taking the spread between what it pays and what it earns. A chain can run several links deep, each link a separate charter party, often on different forms and different terms. The standing hazard is a back-to-back mismatch, where a liability incurred on the head charter is not recoverable on the sub-charter because the wording diverges or because the time bars differ. Chains, sub-chartering consent and the lien on sub-freights are treated in charter chains and sub-chartering .

The clauses that carry the risk

A charter party is a stack of clauses, but a handful do most of the commercial and legal work. They are the clauses parties negotiate hardest, litigate most, and amend most often.

Laytime and demurrage

Laytime is the time the owner allows the charterer, under a voyage charter, to load and discharge without extra payment. When it is used up and the ship is still working cargo, the ship goes on demurrage: the charterer pays a daily sum agreed at the fixture as liquidated damages for detaining the ship. Demurrage is not a penalty and not a renegotiated freight.

Definition 30 of the Laytime Definitions for Charter Parties 2013 provides that demurrage is not subject to the exceptions which apply to laytime unless the charter party specifically says so, which is the contractual expression of the common law rule usually quoted as once on demurrage, always on demurrage. That rule can be contracted out of, as The Dias [1978] 1 WLR 261 confirms. Where the cargo work finishes inside the laytime, many charters pay the charterer despatch, commonly at half the demurrage rate, though that rate is market convention rather than anything the 2013 definitions fix.

Demurrage also liquidates the whole of the damages for the delay. In K Line Pte Ltd v Priminds Shipping (HK) Co Ltd (The Eternal Bliss) [2021] EWCA Civ 1712, decided on 18 November 2021, the Court of Appeal held that an owner could not recover a cargo claim settlement caused by the delay as an additional loss on top of demurrage, unless the charter provided otherwise.

Notice of readiness

Laytime does not start because the ship arrives. It starts when the ship is an arrived ship at the agreed point, is physically and legally ready to load or discharge, and the owner tenders a valid notice of readiness that the charterer receives. Each condition is a fighting point. Whether the ship has arrived turns on whether the charter is a berth or a port charter, and the port charter test from The Johanna Oldendorff [1974] AC 479 asks whether she is at the immediate and effective disposal of the charterer. Readiness means holds clean and clear or tanks ready, with the right certificates. A defective notice, tendered before the ship is ready or to the wrong party, can fail to start the clock at all, and the port-time record that feeds the calculation is the statement of facts .

Off-hire

Under a time charter the charterer pays hire continuously, so the off-hire clause is its protection against paying for a ship that is not performing. NYPE 2015 clause 17 lists the events that stop hire: deficiency, default or strike of crew, deficiency of stores, fire, breakdown or damage to hull, machinery or equipment, grounding, detention by arrest, detention by port State control for vessel deficiencies, detention by average accident, and drydocking.

The wording decides how much comes off. A net loss of time clause, which is what NYPE 2015 clause 17 is, stops hire only for the time actually lost; a period clause stops all hire for the whole duration of the event. Off-hire is a defined deduction, not a damages claim, and the burden sits on the charterer: the risk of delay under a time charter is fundamentally on the charterer, who pays unless the facts fall within the plain words of the clause, as Rix LJ put it in The Doric Pride [2006] EWCA Civ 599. The mechanics are in off-hire and performance claims .

Speed and consumption warranties

A time charterer pays for the bunkers, so the speed and consumption warranty is among the most valuable clauses in the charter. The owner warrants a stated speed at a stated daily fuel consumption in defined good-weather conditions, commonly winds up to Beaufort 4 with a defined sea state and no adverse current. If the ship is slower or burns more, the charterer has a performance claim for the lost time and the over-consumed fuel, calculated only over the weather windows in which the warranty applies. Which periods qualify is the usual dispute, and the calculation is worked through in charter party speed and consumption warranties .

Withdrawal and anti-technicality

An owner’s remedy for unpaid hire is withdrawal, exercised by notice under the express clause. Modern forms qualify it: NYPE 2015 clause 11(b) requires three Banking Days written notice to rectify before clause 11(c) permits withdrawal. Punctual payment is not a condition of the contract under English law. In Grand China Logistics Holding (Group) Co Ltd v Spar Shipping AS [2016] EWCA Civ 982, decided on 7 October 2016, the Court of Appeal held the obligation to be an intermediate term and declared The Astra wrongly decided, leaving owners to withdraw under the express clause or to terminate for renunciation.

Safe port and safe berth warranties

A charterer nominating a port warrants that it is safe for the particular ship. The test from The Eastern City [1958] 2 Lloyd’s Rep 127 asks whether the ship can reach, use and return from the port without, in the absence of some abnormal occurrence, being exposed to danger which cannot be avoided by good navigation and seamanship. In The Ocean Victory [2017] UKSC 35 the Supreme Court held the combination of conditions at Kashima to be an abnormal occurrence, so the warranty was not breached. United States law diverges: in The Athos I, decided on 30 March 2020, the Supreme Court held the ASBATANKVOY safe berth clause to be a warranty of safety rather than a duty of due diligence. The subject is treated in safe port and safe berth warranties , and the port-side context in ports and terminals .

Employment and indemnity

The employment and indemnity clause gives the time charterer the right to direct the commercial employment of the ship and gives the owner an indemnity for the consequences of complying. It is the hinge of the time charter bargain: the charterer buys commercial control while the owner keeps possession, navigation and the crew, so the owner needs protection against loss caused by orders it did not choose.

War risks clauses

The war risks clauses let an owner refuse an order that would expose ship, cargo or crew to war risk. The current editions are CONWARTIME 2025 for time charters and VOYWAR 2025 for voyage charters , adopted on 9 April 2025; the 2013 editions are archived and BIMCO recommends replacing them by rider.

Under CONWARTIME 2025 charterers reimburse owners’ Insurance Costs, a defined term covering additional war risk premiums and additional kidnap and ransom cover, but only costs actually incurred, net of discounts including any no-claims bonus, and within 15 days. Owners must on request show they used reasonable endeavours to obtain cover on reasonable terms. Crew bonuses are reimbursed on the same basis against a signed receipt or crew-manager confirmation. The 2025 editions also defined Area and Insurance Costs, deleted the separate piracy definition as redundant, added a liberty to leave an area, confirmed that sailing in convoy keeps the ship on hire, and extended the alternative discharge port nomination window to 72 hours. The underlying cover is war risks insurance .

Sanctions clauses

The BIMCO sanctions clauses do the parallel job for trade restrictions. The Sanctions Clause for Time Charter Parties 2020, published on 19 December 2019, merges and replaces both the 2010 sanctions clause and the Designated Entities Clause for Charter Parties 2013. It defines Sanctioned Activity, Sanctioning Authority and Sanctioned Party, takes mutual warranties from both sides covering their contractual counterparties, and gives an express termination right on breach. Where the ship is already on sanctioned employment, charterers must issue alternative voyage orders within 48 hours of the owners’ notice; failing that, owners may discharge any cargo on board at a safe port or place including the loading port, the ship stays on hire, and charterers bear the extra cost.

Bunker clauses and ice clauses

Bunker clauses allocate fuel responsibility, which under a time charter is the charterer’s, and cover delivery and redelivery quantities, sampling, testing and emission control area trading. The quantities and prices at each handover are treated in bunkers on delivery and redelivery , and the cost side of a voyage estimate interacts with the bunker adjustment factor .

Ice clauses protect an owner where a nominated port can freeze, letting the owner decline to enter or leave, or discharge at a near alternative, and allocating the cost and time of the diversion. They matter on Baltic, Great Lakes, Arctic and St Lawrence trades, where a ship that follows an order into closing ice can be held for a season.

The Inter-Club Agreement

Cargo claims are where time charter owners and charterers most often collide, because a receiver can sue the owner on the bill of lading or the charterer on the sale contract, and the loser then looks to the other. Rather than litigate the apportionment ship by ship, the market uses a mechanical split: the Inter-Club New York Produce Exchange Agreement , formulated by the International Group of P&I Associations in 1970 and current as the ICA 2011 (as amended July 2025), made on 14 July 2025.

Clause 1 applies it to charters on the NYPE 1946 or 1993 forms or the Asbatime Form 1981, or any subsequent amendment of those forms, so it is a dry cargo instrument and does not reach tanker charters. Clause 8 apportions by cause:

• 8(a) claims arising from unseaworthiness or from error or fault in navigation or management: 100% owners, unless the owner proves the unseaworthiness was caused by cargo handling, when 8(b) applies instead.
• 8(b) claims arising from loading, stowage, lashing, discharge, storage or other handling of cargo: 100% charterers, or 50/50 where the words “and responsibility” are added in clause 8, but 100% owners where the charterer proves the handling failure was caused by unseaworthiness.
• 8(c) shortage and overcarriage: 50/50 unless there is clear and irrefutable evidence of pilferage or of act or neglect.
• 8(d) all other cargo claims including delay: 50/50 unless there is clear and irrefutable evidence of act or neglect.

Clause 6 carries a time bar that overrides contrary charter wording: recovery is absolutely barred unless written notification is given within 24 months of delivery or of the date the cargo should have been delivered, extended to 36 months where the Hamburg Rules apply compulsorily. The July 2025 amendment touched only clauses 3(c) and 4(c), confirming that defence costs are recoverable even where a claim is successfully defended or withdrawn, and that a claim adjudicated by a court or tribunal counts as settled. The percentages were unchanged.

Cesser, lien and protective clauses

A cesser clause provides that the charterer’s liability ceases on shipment, and it is conventionally read as effective only so far as the owner has an equivalent and workable lien to fall back on. The lien on cargo is possessory; the lien on sub-freights operates as a right to intercept a payment, exercised by notice to the payer, and its enforcement varies by jurisdiction. Enforcement against the ship itself runs through maritime lien and ship arrest .

Three further protective clauses recur. The Himalaya clause extends the carrier’s defences and limits to servants, agents and independent contractors such as stevedores. The Both-to-Blame Collision Clause addresses the consequences of a collision where both ships are at fault. The New Jason clause preserves the carrier’s right to a general average contribution on a United States-touching voyage, which connects to general average and the York-Antwerp Rules . Deviation from the contractual route is separately treated in deviation in charter parties , and the narrow doctrine that discharges the contract entirely in frustration of charter parties , alongside express force majeure wording.

The regulatory overlay on a modern fixture

A fixture made today carries compliance costs that the printed forms predate, and those costs have to be allocated by clause or they fall where they land. Three regimes bite hardest, and all three are regional rather than global.

Under BIMCO’s ETS Emission Trading Scheme Allowances Clause for Time Charter Parties 2022, the party that provides and pays for the fuel, the time charterer, provides the emission allowances. The clause transfers allowances rather than reimbursing their cost, which keeps allowance price movements out of the dispute, and it obliges owners to monitor and report emissions and to disclose the calculation basis. The scheme itself is covered in EU ETS for shipping .

BIMCO’s FuelEU Maritime Clause for Time Charter Parties 2024, adopted on 25 November 2024, keeps the shipowner as the responsible company under the regulation but shifts the financial burden to the charterer, who must either bunker compliant fuel or meet the penalty. FuelEU Maritime applied from 1 January 2025, so a fixture made in 2025 or later without such a clause carries an unallocated compliance cost. Carbon intensity obligations interact through the BIMCO CII clauses , which allocate control over the operational decisions that move a ship’s rating.

There is no charter party clause allocating a global IMO carbon price, because there is no adopted global measure to allocate. The IMO mid-term Net-Zero Framework measure was adjourned in October 2025 and has not been adopted, so any clause purporting to pass through an IMO carbon cost is allocating a liability that does not yet exist. Charterer-side climate reporting runs separately through the Sea Cargo Charter .

The carriage-of-goods foundation

A charter party does not float free of the wider law of carriage, but the carriage regime does not reach the charter on its own force. Article V of the Hague-Visby Rules provides that the Rules are not applicable to charter parties, though bills of lading issued under a chartered ship must comply with them.

Hague-Visby and the clause paramount

The Hague Rules, signed at Brussels on 25 August 1924 and in force from 2 June 1931, set the carrier’s minimum duties and maximum liability for goods carried under a bill of lading : due diligence to make the ship seaworthy, proper care of the cargo, a catalogue of excepted perils, and a package or weight limitation. The Visby Protocol of 23 February 1968 and the SDR Protocol of 21 December 1979 set that limit at 666.67 units of account per package or unit, or 2 units of account per kilogram of gross weight, whichever is higher.

Because Article I(b) confines a contract of carriage to one covered by a bill of lading or similar document of title, a charter brings the Rules in as contract terms through a clause paramount . That distinction matters in practice: incorporated by contract, the Rules bind as terms, and Article III rule 8, which strikes down clauses lessening the carrier’s liability, has no independent purchase on the charter itself. Article X, not Article V, decides when the Rules apply compulsorily to the bill. The regime is treated in full in the Hague-Visby Rules , and the competing regimes, the Hamburg Rules of 1978 in force from 1 November 1992 and the Rotterdam Rules of 2008 which are not in force, in the same place.

How charter allocation and cargo liability interact

The two systems run in different directions and meet at the bill. The charter party allocates cost and commercial risk between owner and charterer; the carriage regime allocates cargo liability between the carrier and the holder of the bill. A time charterer who orders the loading and a master who signs the bills can each affect where a cargo claim lands, which is exactly the problem the Inter-Club Agreement exists to cut through by splitting the result on cause rather than on who was sued. Where cargo is delivered without production of the bill, the practice runs on a letter of indemnity , which is a commercial substitute for a legal right rather than an equivalent to one.

How a charter rate is set

A charter rate is set by the market for the ship type and route, not by the cost of running the ship, and the two sides of the market quote in different units. Dry bulk voyage fixtures are quoted in dollars per tonne of cargo, tanker voyage fixtures as a percentage of the Worldscale nominal rate for the route, and period fixtures in dollars per day.

Because the units differ, comparing a voyage fixture against a period fixture requires converting the voyage result into a daily figure, which is what the time charter equivalent does: gross freight less voyage costs, divided by the round-voyage days.

The published market layer sits behind those quotations. The Baltic Exchange produces the freight assessments that the physical and derivative markets reference, including the Baltic Dry Index and its constituent indices , built from submissions by a panel of shipbroking firms reporting defined routes with defined ship descriptions. On the tanker side, Worldscale supplies the nominal rate schedule that converts a percentage into dollars per tonne, and AFRA provides a separate assessment family. Those assessments are what forward freight agreements settle against, which is how an owner or charterer hedges a physical position without fixing a ship. The people who intermediate all of it are shipbrokers , paid by commission on the freight or hire with address commission deducted for the charterer’s account. The underlying voyage arithmetic is voyage estimation , and the liner market prices differently again through ocean freight rates and freight cost and surcharges , which sit above the sale contract terms in Incoterms .

Ships themselves change hands in a parallel market, and a period fixture attached to a hull affects its value, which is the bridge to ship sale and purchase . The ship types the forms serve run from the bulk carrier and the LNG carrier through to specialised offshore tonnage, and towage and salvage services are contracted on their own forms rather than on charter parties, as towage and salvage operations and the Salvage Convention 1989 and SCOPIC set out.

Governing law, arbitration and time bars

Charter parties almost always carry an arbitration clause rather than submitting to a court, and the clause names both the governing law and the seat. The BIMCO Law and Arbitration Clause 2020 offers London, New York, Singapore and Hong Kong, and ASBATANKVOY 2025 adopts it with New York as the default.

The four principal regimes each have current terms. The LMAA Terms 2021, with the Intermediate Claims Procedure 2021 and the Small Claims Procedure 2021, all took effect on 1 May 2021; the Small Claims Procedure applies where the claim and any counterclaim each do not exceed USD 100,000, and the Intermediate Claims Procedure above that up to USD 400,000, in both cases exclusive of interest and costs. The SMA Maritime Arbitration Rules 2024 apply to contracts made on or after 1 October 2024, the SCMA Rules 4th edition came into force on 1 January 2022, and the HKMAG Terms 2021 apply to appointments on or after 1 September 2021. In England the Arbitration Act 2025 received Royal Assent on 24 February 2025 and came fully into force on 1 August 2025, amending the 1996 Act. The regimes are compared in maritime arbitration .

Four distinct time bars can defeat a charter claim, and they run on different triggers. The Hague-Visby Article III rule 6 one-year bar extinguishes the right rather than merely barring the remedy. The general limitation period applies to the contract claim. The Inter-Club Agreement carries its own 24-month bar under clause 6, extended to 36 months where the Hamburg Rules apply compulsorily. The demurrage bar is purely contractual and usually the shortest, commonly 90 days with a documentary condition precedent, and it is the one that most often defeats an otherwise good claim. Those bars, and what counts as a supporting document, are treated in cargo claim time bars and demurrage time bars and documentation .

The cost of the process is itself a commercial factor. A small demurrage claim may not be worth the arbitration spend, which is the calculation behind many settlements and behind the existence of the small claims procedures.

Limitations

This article is a map of the charter structures, the standard forms and the clauses that allocate risk. It is not a substitute for the forms themselves, and it is not legal advice on any fixture. The standard forms are amended on almost every deal, and a recap can change the default allocation of any cost or risk described here. The cost table shows the pattern of the unamended forms as at 1 September 2026, not a rule for a particular charter. Read the recap and the amended clauses, not a generic description, when a real liability is in play.

Form editions move. The editions stated here are GENCON 1994 and GENCON 2022, NYPE 1946, NYPE 93 and NYPE 2015, SHELLTIME 4 of December 1984 as revised December 2003, SHELLVOY 6 of 2005, BARECON 1974, 1989, 2001 and 2017, ASBATANKVOY of October 1977 and ASBATANKVOY 2025, BALTIME 1939 as revised 2001, and SUPPLYTIME 2017. BIMCO and the other publishers revise forms and clauses periodically and archive superseded editions, so confirm a clause number and its wording against the current published form before relying on it. Clause numbering in particular differs between editions of the same form.

The case law cited is English unless stated otherwise, and English law is one system among several rather than the international default. Where a point differs materially in the United States, as it does on the safe berth warranty, that divergence is named. A fixture governed by another law, or seated elsewhere, can produce a different answer on the same wording. No party count is given for the Hague family of conventions: ratification of the Visby Protocol operates as ratification of the Convention, so the published lists overlap and cannot be added together.

The Inter-Club Agreement apportionment is summarised by cause and by clause. The agreement carries further conditions on security, on what counts as a material amendment and on the evidence needed to displace a 50/50 split, and it applies only to charters that incorporate it. Nothing here covers the treatment of charters entered into before 14 July 2025 that incorporate an earlier ICA text by reference to amendments, a question practitioners regard as less settled than the position for later fixtures.

Related Articles

• Voyage charter party : the owner-carries-cargo structure, freight, laytime, and the GENCON and ASBATANKVOY forms in depth.
• Time charter party : hire, redelivery, off-hire, and the NYPE and SHELLTIME structures.
• Bareboat charter party : the demise structure, BARECON 2017, and ship-finance leasing.
• Contract of affreightment : the volume contract and its nomination mechanics.
• NYPE 2015 time charter form : the dry cargo time charter form clause by clause.
• GENCON charter party : the dry cargo voyage workhorse and the 2022 revision.
• Inter-Club Agreement : the cargo claim apportionment scheme clause by clause.
• Laytime : the voyage-charter time accounting that feeds demurrage and despatch.
• Demurrage : the daily detention payment when laytime is exceeded.
• Off-hire and performance claims : hire suspension and speed and consumption claims under a time charter.
• Safe port and safe berth warranties : the Eastern City test and the abnormal occurrence limb.
• The fixture process : from cargo order to lifted subjects.