Study and characterization of the content of a vessel charter agreement for a time, which is one of the types of property lease agreement - rental of a vehicle with a crew. Determining the size of a time charter agreement.
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Federal Agency for Maritime and River Transport
Federal State Budgetary Educational Institution of Higher Education
"State University of Maritime and river fleet named after Admiral S.O. Makarov"
Faculty of Navigation and Communications
Department of Commercial Management and Law
Abstract on the discipline: “Maritime Law”
On the topic: “Agreement for chartering a vessel for a time (time charter)”
Completed by: cadet of group 311
Osipov V.I.
St. Petersburg 2017
A vessel charter agreement for a time is one of the types of property lease (lease) agreement - lease vehicle with the crew. Therefore, relations arising from such an agreement are governed by the rules contained in Section 1.3 of Chapter 34 of the Civil Code. In addition, the specifics of renting a vehicle such as a sea vessel with a crew are reflected in the rules of Chapter 10 of the KTM.
In the definition of a contract, first of all, its parties are named - the bearers of powers and subjective obligations. The parties to the agreement are the shipowner and the charterer. According to Article 8 of the MCC, a shipowner is recognized as the owner of the ship or another person operating it on another legal basis, in particular, a shipowner, in addition to the owner, is any person operating a ship under the right of lease, economic management, operational management, trust management, etc. .
The shipowner, on his own behalf, charters the vessel for a period of time to another person - the charterer. The latter needs a ship and therefore, on its own behalf, charters it for a certain period for the purposes of merchant shipping.
The use of such concepts characteristic of maritime law as “shipowner”, “charterer”, in contrast to the general civil terms “lessor” and “tenant”, indicates that a vessel charter agreement for a time cannot be equated to a general civil lease agreement.
The first responsibility of the shipowner is to provide the vessel to the charterer. In this case, provision is understood primarily as the transfer to the charterer of the right to use, the right to commercially operate the vessel on its own behalf.
The vessel is provided to the charterer temporarily, i.e. for a specified period, after which the charterer is obliged to return it to the shipowner. This period can be expressed in a calendar period from several months to several years (sometimes up to 10-15 years) or in the time required to complete one or more flights.
Time chartered vessels can be used to transport cargo. Therefore, standard time charter proformas are built taking into account the fact that a certain cargo will be transported on the vessel.
Along with the transportation of cargo, the commented article also mentions the transportation of passengers and “other purposes of merchant shipping,” which means fishing for aquatic biological resources associated with the use of vessels, exploration and development of mineral and other non-living resources of the seabed and its subsoil, pilotage and icebreaker assistance. and etc.
The ability to charter a vessel for purposes other than transportation of merchant shipping is one of the differences between a time charter and an agreement for the carriage of goods by sea and, in particular, from an agreement for chartering a vessel for a voyage charter.
A vessel temporarily chartered may only be operated for merchant shipping purposes. Under this agreement, the vessel cannot be used as a hotel, warehouse, or restaurant. This is what distinguishes a vessel charter agreement for a time from a property lease agreement.
The right to own the vessel is temporarily transferred to the Charterer. In matters of commercial operation, the ship's crew is subordinate to him. But in this case the ship does not leave the possession of the shipowner. Crew members remain his employees; his orders relating to the management of the ship are binding on all crew members. Therefore, there is every reason to talk about temporary dual ownership(or co-ownership) of the vessel.
The second responsibility of the shipowner is to provide the charterer with services for managing the ship and its technical operation. The strictly formal provision of such services goes beyond the scope of the lease and brings time charter closer to contracts for the provision of services, the results of which do not have a material form. However, in the Civil Code, contracts for the lease of vehicles with the provision of management and technical operation services are classified as one of the types of lease agreements. Thus, the legislation has finally resolved the issue of the legal nature of time charter, which was previously controversial.
The definition of a time charter establishes the charterer's obligation to pay the freight, since the vessel is provided to him for a specified fee. The contract, therefore, is of a compensatory nature. The amount of freight does not depend on the quantity of cargo carried or the efficiency of the vessel's operation in any other way.
Each party to this agreement has powers and bears legal obligations. A time charter is recognized as concluded from the moment the counterparties reach an agreement on all its essential conditions. Finally, a time charter is a paid obligation. Hence, time charter is bilaterally binding, consensual and compensation agreement.
The terms of a time charter are determined primarily by agreement of the parties. Consequently, the provisions of the agreement take precedence over the provisions of Chapter X of the KTM. Thus, the rules contained in Chapter X of the MLC (with the exception of Article 198) are dispositive in nature. This means that they are subject to application if they do not contradict the agreement between the parties, or regulate relations that are not resolved or not fully resolved in such an agreement.
According to Art. 200 KTM “The time charter must indicate the names of the parties, the name of the vessel, its technical and operational data (carrying capacity, cargo capacity, speed, etc.), navigation area, purpose of chartering, time, place of transfer and return of the vessel, freight rate, validity period time charter."
The absence in the contract of any data from those specified in Article 200 of the Labor Code does not entail the invalidity of the contract, but may reduce the evidentiary value of the document formalizing the obligation.
The contract usually states geographical area, in which the charterer can operate the ship. When determining the boundaries of this area, both the technical and operational parameters and characteristics of the vessel, as well as the commercial and political interests of the parties, are taken into account. The area of the world's oceans in which a vessel is allowed to navigate is usually determined by establishing a ban on operating the vessel in high latitudes or areas dangerous for navigation, or entering the ports of a certain coastal strip or of a particular state (states). This condition of the contract means that the ship can be sent to any geographical area with exceptions agreed upon by the parties and established in the contract.
Purpose of chartering may be specified in a time charter with varying degrees of certainty and detail. The contract, for example, may only indicate the type of activity: “for the transportation of legal goods,” “for the extraction of mineral resources.” The parties can also agree on transportation certain type cargo, such as grain, ore, timber, or the extraction of certain minerals. The agreement may determine the type of marine fishing or scientific research activity in cases where it is intended to use the vessel for these purposes.
The time charter specifies the time of transfer of the chartered vessel by the shipowner to the charterer and the time of its return (release from the lease).
This time is often indicated by specifying the period in which the ship must be transferred or returned (“from: to:”). Sometimes, along with the dates, the contract specifies the hours at which the transfer or return should be made (“between 9 a.m. and 6 p.m.:”). Typically, the return of the vessel should at least approximately coincide with the end of the period for which the time charter was concluded.
The shipowner is obliged to hand over the vessel for use to the charterer at an accessible berth or dock. The contract, as a rule, includes a condition that the vessel is in a safe condition at the berth or dock and is always afloat.
Time charter freight amount is determined on the basis of the daily rate for the vessel as a whole or the monthly rate for each ton of deadweight. The level of freight rates is determined taking into account conditions on the global freight market. The freight rate is influenced by information about the vessel, the area of its operation and other terms of the contract.
The period for which the contract is concluded, can be specified in the form of a period (usually from 2 to 10 years) or the time required to complete one or more voyages to transport cargo, tow or salvage operations, etc. (trip charter). The calculation of the period begins from the moment the vessel is provided for use by the charterer.
In practice, a time charter is concluded on the basis of printed proformas ( standard forms) time charters, which set out the most commonly used terms of these contracts. The use of proformas speeds up and facilitates the process of developing and agreeing on the content of the contract and makes it possible to concentrate on agreeing on the conditions that individualize the contract. In addition, the use of proformas to a certain extent contributes to the unified regulation of relations arising on the basis of the contract.
According to paragraph 2 of Article 162 of the Civil Code, failure to comply with the form required by law entails the invalidity of the transaction only in cases expressly specified in the law or in the agreement of the parties. Article 633 of the Civil Code, while requiring the conclusion of a rental agreement for a vehicle with a crew in writing, does not provide for the recognition of the agreement as invalid due to non-compliance written form. Therefore, violation of the requirements of the law regarding the simple written form of the contract is associated with procedural and legal consequences: the fact of concluding the contract and its content in the event of a dispute can be proven by other written evidence (letters, telegrams, radiograms, telexes, faxes, etc.) and any other evidence other than witness testimony. chartering vessel rental
According to the terms of the time charter, the vessel must be properly equipped, i.e. equipped with everything necessary equipment, tools and equipment for the deck and engine room (cranes, booms, winches, cargo pumps, chains, ropes, replacement and spare parts, navigation instruments, etc.). When equipping a ship, the shipowner is obliged to equip it with items suitable for use for the purposes of the contract.
The shipowner is also obliged to fully staff the ship with a sufficient number and qualified crew.
In accordance with the terms of a time charter, the shipowner is obliged to maintain the ship in seaworthy condition during the term of the contract. In time charter forms this obligation is set out in more detail. The obligation to maintain the seaworthiness of the vessel presupposes that the shipowner ensures that the vessel is technically seaworthy throughout the entire contract and provides it with necessary materials and supplies, with the exception of the bunker.
Under the terms of a time charter, the shipowner is required to pay the costs of insuring the vessel. Typically, insurance is carried out in relation to war risks, as well as risks relating to the ship's hull and its equipment, when the ship is used within the limits established in the time charter.
When providing a vessel for use by a charterer on the basis of a time charter, the shipowner, as an employer in relation to crew members, is obliged to pay for the maintenance of the crew. Crew costs include: wages crew, payment for provisions and drinking water, consular fees insofar as they relate to the crew, and expenses associated with the crew members going ashore. The shipowner is also obliged to pay state social insurance contributions for crew members.
The contract for the carriage of goods is drawn up using a charter for a flight, a booking note, a bill of lading, a sea waybill, and other shipping documents. By signing such documents, the charterer assumes the responsibility of the carrier. By Russian legislation this means, firstly, that claims related to non-preservation of cargo must be brought against him, and not the original shipowner, and secondly, liability for these claims is determined on the basis of the rules on the carrier’s liability for non-preservation of cargo (Article 166- 176 KTM).
According to Russian law, the charterer under a time charter (the carrier under a contract for the carriage of goods by sea) is liable to the cargo owner - a third party on the basis of Article 166-176 of the KTM. By compensating the cargo owner for damage, the charterer acquires the right reverse demand(right of recourse) to its time charter counterparty - the shipowner. The latter's liability for a recourse claim is determined by the terms of the time charter. Consequently, the reality of compensation under a recourse claim depends on how the relevant conditions on the shipowner’s liability to the charterer in the time charter are formulated.
The captain and other crew members obey the orders of the shipowner related to navigation, internal regulations on the ship and the crew. In navigation matters, the ship's crew is subordinate to the shipowner, who is obliged to ensure the safety of navigation.
While remaining employees of the shipowner, the captain and crew members are required to ensure effective technical operation the vessel itself, all its mechanisms, apparatus, and devices. The charterer must not interfere with either the navigational control of the ship or its technical operation, unless this directly affects the commercial operation of the ship.
The vessel must be equipped with a sufficient number and qualified crew. The size of the crew is determined by the shipowner, and the charterer has the right to insist on increasing it only when the number of crew does not meet the seaworthiness requirements of the vessel.
With regard to the commercial operation of the vessel, the captain and other crew members are subordinate to the charterer. The provision on the captain's subordination to the orders and instructions of the charterer regarding the use of the vessel is enshrined in the time charter proformas. In global merchant shipping, this condition (“implementation clause”) is called an employment and agency clause.
The subordination of the captain and other crew members to the charterer in matters of using the vessel means the implementation of his orders and instructions regarding business relations with contractors, port, customs, and sanitary services.
Payment of freight to the shipowner “in the manner and within the terms provided for by the time charter” means, first of all, the definition in the contract of the type of payment for freight. Time charter proformas usually state that freight is payable in cash. This condition should not be taken literally, since payment in cash also means in this case all types of payment equivalent to such payment, in which the payment is irreversible and gives the shipowner an unconditional and immediate opportunity to take advantage of the freight.
The contract usually also stipulates in what currency the freight is paid, the currency conversion rate, and the place of payment.
Article 198. Definition of a vessel charter agreement for a time (time charter)
Under a contract for chartering a vessel for a time (time charter), the shipowner undertakes, for a specified fee (freight), to provide the charterer with the vessel and the services of the vessel's crew members for use for a certain period of time for the transportation of goods, passengers or for other purposes of merchant shipping.
Article 199. Application of the rules established by this chapter
The rules established by this chapter apply unless otherwise established by agreement of the parties.
Article 200. Contents of a time charter
IN The time charter must indicate the names of the parties, the name of the vessel, its technical and operational data (carrying capacity, cargo capacity, speed, etc.), navigation area, purpose of chartering, time, place of transfer and return of the vessel, freight rate, period of validity of the time charter.
Article 201. Form of time charter
A time charter must be in writing.
Article 202. Contract for subchartering a vessel for a time (subtime charter)
1. Unless otherwise provided by the time charter, the charterer, within the limits of the rights granted by the time charter, may enter into, on its own behalf, contracts for the charter of a vessel for a time with third parties for the entire period of validity of the time charter or for a part of such period (subtime charter ). The conclusion of a subtime charter does not relieve the charterer from fulfilling the time charter concluded with the shipowner.
2. The rules established by this chapter apply to the subtime charter.
Article 203. Seaworthy condition of the vessel
1. The shipowner is obliged to bring the ship into a seaworthy condition at the time of its transfer to the charterer - to take measures to ensure the suitability of the ship (its hull, engine and equipment) for the purposes of chartering provided for by the time charter, to man the ship and to properly equip the ship.
2. The shipowner is not liable if he proves that the unseaworthiness of the ship is caused by defects that could not have been detected when he exercised due care (hidden defects).
3. The shipowner is also obliged, during the term of the time charter, to maintain the ship in seaworthy condition, to pay the costs of insuring the ship and its liability, as well as for the maintenance of the ship’s crew members.
Article 204. Obligations of the charterer for the commercial operation of the vessel and its return
1. The charterer is obliged to use the ship and the services of its crew members in accordance with the purposes and conditions of their provision, determined by the time charter. The charterer pays the cost of the bunker and other costs and fees associated with the commercial operation of the vessel.
Income received as a result of the use of a chartered ship and the services of its crew members is the property of the charterer, with the exception of income received from salvage, which is distributed between the shipowner and the charterer in accordance with Article 210 of this Code.
2. Upon expiration of the time charter, the charterer is obliged to return the vessel to the shipowner in the condition in which he received it, taking into account normal wear and tear of the vessel.
3. If the vessel is not returned on time, the charterer shall pay for the delay of the vessel at the freight rate provided for by the time charter, or at the market freight rate if it exceeds the freight rate provided for by the time charter.
Article 205. Liability of the charterer to the cargo owner
If the vessel is provided to the charterer for the carriage of cargo, he has the right, on his own behalf, to enter into contracts for the carriage of cargo, sign charters, issue bills of lading, sea waybills and other transportation documents. In this case, the charterer is liable to the cargo owner in accordance with the rules established by Articles 166 - 176 of this Code.
Article 206. Subordination of ship crew members
1. The captain of the ship and other members of the ship’s crew shall obey the orders of the shipowner relating to the management of the ship, including navigation, internal regulations on the ship and the composition of the ship’s crew.
2. The captain of the ship and other members of the crew of the ship are subject to the charterer’s instructions regarding the commercial operation of the ship.
Article 207. Release of the charterer from liability for losses caused by the salvage, loss or damage of the ship
The charterer is not liable for losses caused by the salvage, loss or damage of the chartered vessel, unless it is proven that the losses were caused by the fault of the charterer.
Article 208. Payment of freight
1. The charterer pays the freight to the shipowner in the manner and within the time limits provided for by the time charter. The charterer is exempt from paying freight and expenses for the vessel for the time during which the vessel was unfit for operation due to unseaworthiness.
If the ship becomes unfit for operation due to the fault of the charterer, the shipowner has the right to freight provided for in the time charter, regardless of compensation by the charterer for losses caused to the shipowner.
2. If the charterer is late in paying the freight for more than fourteen calendar days, the shipowner has the right to withdraw the ship from the charterer without warning and recover from him the losses caused by such delay.
Article 209. Loss of the vessel and payment of freight
In the event of the destruction of the vessel, freight is payable from the day provided for in the time charter to the day of the vessel's destruction or, if this day cannot be determined, to the day of receipt of the last news about the vessel.
Article 210. Remuneration for the provision of rescue services
The remuneration due to the vessel for salvage services provided before the end of the time charter is distributed in equal shares between the shipowner and the charterer, minus the cost of salvage and the share of remuneration due to the crew of the vessel.
Let's give an example from practice:
In 1978 The case Apollonius English Court... held that, from a business perspective, commercial considerations clearly required the applicability of the ship's speed at the date of the time charter, regardless of the date of the charter. Based on this, it was decided that the charterer was entitled to compensation for damages (in accordance with the Baltime proforma), since the vessel was described as capable of reaching a speed of about 14.5 knots, but in fact could move when put on time charter at a speed of 10.61 knots due to fouling of the bottom.
Often the agreement specifies specifications the ship is approximately "about". Disputes may arise precisely in connection with determining the tolerance for deviations from the specified characteristics of the vessel. Here's an example:
“In 1988, when resolving an arbitration dispute, the question was: what tolerance can be recognized (if any) in connection with the word “about”? It was noted that the shipowner knew (or should have known) specific data about the performance of his ship. This made it tempting not to make any allowances for the word “about.” However, the court considered that it could ignore language that was expressly agreed between the parties and included in the charter, so the word "about" must be taken into account. In the circumstances of this case, it was decided that the word "about" would properly refer to a speed deviation of a quarter of a knot, rather than of half a knot, as had often been done in the past by London maritime arbitrators. The view that the word "about" should always allow for a deviation of half a knot or five percent of speed was also rejected by the English Court of Appeal in the Arab Maritime Petroleum Transport Co. case. v. Luxor Corp. (The Al Bida) it was decided: the deviation should strictly depend on the design of the vessel, its size, draft, trim, etc. It is difficult for shipowners and charterers to predict in advance what deviation limits will be set.”
Navigation area; purpose of chartering. This point is also of fundamental importance. The vessel must be used on legal voyages to transport eligible legal cargo within the cargo area. The purpose can either be specified specifically or be of a group nature (for example, for transportation purposes). Accordingly, charterers undertake not to use the vessel, or allow the vessel to be used, other than in accordance with the terms of the insurance documents (including any warranties contained therein, express or implied), without the prior consent to such use of the vessel from the insurer and without compliance with such requirements as an additional insurance premium, or other instructions of insurers (clause 2 Baltime).
Most time charters have a clause requiring the charterers to use the vessel for voyages between safe ports. For example, clause 3 of the Linertime charter stipulates that “the vessel must be used in the lawful carriage of lawful goods only between good and safe ports or places...”. Clause 2 of the Baltime charter contains similar wording. Taken literally, these words place absolute responsibility on the charterers should the port to which they send the ship prove unsafe.
“In connection with the English case Leed Shipping v. Society; francaise Bune (the Eastern City) judge of the court of cassation gave in 1958 following definition safe port: “a port is considered safe if, during a relevant period of time, a particular ship can enter, use and return from it without being exposed - in the absence of any extraordinary events - to a danger that could have been avoided by proper navigation and navigation ..."
This definition is widely accepted as a correct description of the possible components of a "safe port". It covers both geographical and political security. It was taken as the basis for the definition of “Safe Port” by the authors of the “Definitions of terms used in charters relating to sailing, 1980.”
English House of Lords in the case of Kodros Shipping Corporation v. The Empresa Cubana de Fletes interpreted this obligation as requiring only the presumptive security of the port at the time of its designation.
The ship, chartered according to the Baltime proforma, arrived in Basra and was unable to leave the port due to the outbreak of the Iran-Iraq war. The shipowner claimed that the charterers violated the safe port clause of the charter. The House of Lords did not agree with him: the charter was not violated by the charterer, since the port at the time of appointment was presumably safe. The port became unsafe following the arrival of the vessel as a result of an unforeseen and extraordinary event.”
Time, place of transfer and return of the vessel. Charterers are obligated to return the vessel to a safe and ice-free port upon expiration of the charter period. Charterers are required to send preliminary notices to shipowners at least 30 days in advance, and final notices at least 14 days in advance, indicating the expected date, area of the ship's return ports, port or place of return. Any subsequent changes in the vessel's position must be immediately communicated to the shipowners (Baltime).
Typically, the contract includes a cancellation clause. According to this condition, if the vessel is not put into time charter by the date specified in the agreement, the charterers have the right to cancel the charter. If the ship cannot be put into time charter by the cancellation date, charterers, if there is such a request from the shipowners, must declare within 48 hours after receiving notification of the delay from the shipowners whether they are canceling the contract or accepting the ship for time charter (clause 22 Baltime).
If the ship is sent on a voyage the duration of which may exceed the charter period, charterers may use the ship until the completion of the voyage, provided that a reasonable calculation of such voyage allows for the return of the ship approximately within the time specified for the charter.
When the vessel is returned, it is inspected. Shipowners and charterers appoint their surveyors to determine and agree in writing on the condition of the vessel at the time of delivery and return of the vessel. At the same time, shipowners bear all the costs of survey when putting the ship into lease, including loss of time, if any, and charterers bear all costs of survey when taking the ship out of lease, including loss of time, if any, at the rental rate per day or proportionally for part of the day, including the cost of docking, if required in connection with the survey.
Freight rate. The charterer pays the freight to the shipowner in the manner and within the time limits provided for in the time charter. As a rule, freight is set for each calendar month. The contract must also indicate in what currency the freight is paid and the place of payment.
It is important to emphasize that the charterer is exempt from paying freight and expenses on the vessel for the time during which the vessel was unfit for operation due to unseaworthiness. If the ship becomes unfit for operation due to the fault of the charterer, the shipowner has the right to freight provided for in the time charter, regardless of compensation by the charterer for losses caused to the shipowner.
It should be emphasized that requirements for payment in “cash” may turn out to be a trap for rash businessmen, and this is exactly what is contained in the text of most proformas.
Let's give an example from practice:
“The Chikuma vessel was chartered under the Knipe charter. Payment for the vessel was transferred to the shipowners to their bank account in Genoa on time. However, the paying bank, located in Genoa, indicated in the telex transfer that the money was credited to the bank account four days later. In accordance with Italian banking practice, this meant that shipowners could not withdraw money from the account without paying interest until the date the money was credited to the bank account. The shipowners recalled the vessel from charterers' service. The dispute reached the House of Lords. Her decision: When payment fell due, the charterers failed to pay in cash. Accordingly, the shipowners had the right to withdraw the ship from operation in accordance with clause 5 of the charter. It was stated: “When payment to a particular bank is made in funds other than cash in the truest sense of the word, that is, by draft with payment in dollars or other legal securities(which no one expects), there is no “cash payment” within the meaning of clause 5, since the creditor does not receive the equivalent of cash or funds that can be used as cash. The accounting entry made by the shipowners' bank on maturity into the shipowners' account was certainly not a cash equivalent... it could not be used to earn interest, that is, immediately transferred to a deposit account. The deposited amount could only be withdrawn from the account subject to a (possible) obligation to pay interest.”
Thus, parties interested in non-cash forms of payment must change the corresponding clause of the pro forma.
Duration of the time charter. Can be specified in days, weeks, or years. The period may be extended.
In accordance with Article 201 of the Code of Labor Code of the Russian Federation, a time charter must be concluded in writing. It is not the term of the contract (say, less than a year), nor the subject composition that matters. Written form only. As we emphasized, in certain cases, the contract requires state registration.
When considering the form of a charter agreement, a logical question may arise: does failure to comply with the written form entail the invalidity of the transaction?
According to clause 2 of Article 162 of the Civil Code of the Russian Federation, failure to comply with the form required by law entails the invalidity of the transaction only in cases expressly specified in the law or in the agreement of the parties. Whereas Article 201 of the Code of Labor Code of the Russian Federation and Article 633 of the Civil Code of the Russian Federation do not provide for the recognition of a contract as invalid due to failure to comply with the written form.
Sourcenicknames
1 “Maritime transport lease agreement” (
2. Merchant Shipping Code (MCM) Chapter X. Vessel charter agreement for a time (time charter)
3. Legal reference book on merchant shipping (
4. Commentary on the Merchant Shipping Code Russian Federation(Edited by G.G. Ivanov)
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Contract for chartering a vessel for a period of time (time charter).
According to Art. 198 KTM of the Russian Federation and Art. …..MK of Latvia, under a contract for chartering a vessel for a time (time charter), the shipowner undertakes, for a specified amount (freight), to provide the charterer with the vessel and the services of the vessel’s crew members for use for a certain period of time for the transportation of goods.
This vessel charter agreement for a time is one of the types of property lease (lease) agreement - rental of a vehicle with a crew. Therefore, relations arising from this agreement are governed by the rules of the Civil Code.
In the definition of this agreement, first of all, its parties are named - the bearers of powers and subjective duties. The parties to this agreement are the shipowner and the charterer. According to Art. 8 of the Code of Labor Code of the Russian Federation, a shipowner is recognized as the owner of a ship or another person operating it on another legal basis, in particular, a shipowner, in addition to the owner, is any person operating a ship under the right of lease, economic management, operational management, trust management, etc.
The shipowner, on his own behalf, charters the ship for a period of time to another person - the charterer, and since the latter needs the ship, so he, on his own behalf, charters it for a certain period for the purposes of merchant shipping.
The use of such concepts characteristic of maritime law as “shipowner” and “charterer”, in contrast to the general civil terms “lessor” and “tenant”, indicates, in my opinion, that a ship charter agreement for a time cannot be equated to a general civil property lease agreement.
The first obligation of the shipowner is to provide the vessel to the charterer, and provision is understood primarily as the transfer to the charterer of the right to use, the right to commercially operate the vessel on its own behalf.
The vessel is provided to the charterer temporarily, that is, for the period specified in the contract, after which the charterer is obliged to return it to the shipowner. This period can be expressed either in a calendar period from several months to several years (sometimes up to 10-15 years), or in the time required to perform one or several flights.
Vessels insured for a period of time can also be used to transport cargo, so standard time charter forms are built taking into account the fact that a certain cargo will be transported on the ship.
A vessel temporarily chartered may only be operated for merchant shipping purposes. Under this agreement, the vessel cannot be used, for example, as a hotel, restaurant or warehouse. And it is precisely this aspect that distinguishes a vessel charter agreement for a time from a property lease agreement.
Speaking about the provision of the vessel for the use of the charterer, I note that the latter also temporarily has the right to own the vessel. in matters of commercial operation, the crew of the ship is subordinate to him, but in this case the ship does not leave the possession of the shipowner. The crew members remain his employees, and his orders relating to the management of the ship are binding on all crew members. That is why there is every reason to talk about temporary dual ownership (or co-ownership) of a vessel.
The second responsibility of the shipowner is to provide the charterer with services for managing the ship and its technical operation. The strictly formal provision of such services goes beyond the scope of the lease and brings time charter closer to contracts for the provision of services, the results of which do not have a material form. However, I note that in the Civil Code of both the Russian Federation and Republic of Latvia lease agreements for vehicles with the provision of driving and technical operation services are classified as one of the types of lease agreements. Thus, the national legislation has finally resolved the issue of the legal nature of time charter, which was previously controversial.
The definition of a time charter establishes the charterer's obligation to pay the freight, since the vessel is provided to him for a specified fee. Thus, the contract is of a compensatory nature. The amount of freight does not depend on the quantity of cargo carried or the efficiency of the vessel's operation in any other way.
This analysis of the definition of a time charter shows that each of the parties to this agreement has powers and bears legal obligations. A time charter is considered concluded from the moment the counterparties reach an agreement on all its essential terms. And finally, a time charter is a paid obligation. Therefore, a time charter is a bilaterally binding, consensual and compensated agreement.
The terms of the charter are determined primarily by the agreement of the parties. Consequently, the provisions of the agreement take precedence over the norms of national legislation regarding the transportation of goods under a time charter. Thus, the rules contained in national legislation (with the exception of definitions) are of a discretionary nature. This means that they are subject to application if they do not contradict the agreement between the parties, or regulate relations that are not resolved or not fully resolved in such an agreement.
A time charter is concluded in writing. In practice, a time charter is concluded on the basis of printed proformas (standard forms) of time charters, which set out the most commonly used terms of these agreements. The use of these proformas speeds up and facilitates the process of developing and agreeing on the content of the contract and makes it possible to concentrate on agreeing on the conditions that individualize this contract. In addition, I note that the use of proformas to a certain extent contributes to the unified regulation of relations arising on the basis of the contract.
When concluding a time charter, the universal time charter pro forma “Baltime” was widely used. This form was developed BIMCO in 1939, and in 1950 - amended and supplemented by the Documentation Council of the British Chamber of Shipping. Shipowners and charterers in Germany widely use the Deutzeit time charter proforma, while French shipowners and cargo owners use the Francotime proforma. For the transportation of goods from the ports of the American continent, the New York Produce form, developed in 1913 and last revised in 1946, is often used.
As noted in the Civil Code of Latvia, failure to comply with the form required by law entails the invalidity of the transaction only in cases expressly specified in the law or in the agreement of the parties. Violation of the requirements of the law regarding the simple written form of the contract is associated with procedural and legal consequences: the fact of concluding the contract and its content in the event of a dispute can be proven by other written evidence (for example, letters, telegrams, radiograms, faxes, etc.) and any other evidence, except for testimony.
According to Art. 200 KTM RF and art. …. The Latvian MC time charter must contain the following data: name of ship, name of the vessel, its technical and operational data (carrying capacity, cargo capacity, speed and others), navigation area, purpose of chartering, time, place of transfer and return of the vessel, freight rate, validity period time charter. This list is not exhaustive; Contract proformas contain a wider range of data included in the contract.
The absence in the contract of any of the data specified above does not entail the invalidity of the contract, but may reduce the evidentiary value of the document formalizing the obligation.
The contract specifies the names of the parties - the shipowner and the charterer, and their addresses. This exact name is required for their subsequent notification in all necessary cases, as well as to distinguish them from agents (attorneys) signing the agreement on behalf of their principals, but not entering into any legal relations under the agreement.
The name of the vessel serves as a way of individualizing it. That is, if the ship is named, the shipowner can replace it only if there is an appropriate replacement clause (substitution) in the contract or the charterer’s consent to such a replacement. If there is no corresponding clause in the contract and the charterer does not agree to replace the vessel, the death of the latter before it is provided to the charterer or during the period of his use of the vessel means termination of the contract. The charterer cannot be required to accept another vessel, even if it matches the previous one in terms of its characteristics and parameters.
Since under a time charter the commercial operation of the vessel is carried out by the charterer, he is interested, in comparison with the carrier under a contract for the carriage of goods by sea, in a wider range of indicators that characterize the vessel and affect the level of operating costs. Thus, to determine the legal capacity of the vessel and calculate operating costs, the contract specifies: deadweight of the vessel, including bunker reserves, other materials and water for boilers, the capacity of its cargo and bunker spaces, register capacity, speed in good weather and calm seas, class, year of construction, engine power, consumption and type of fuel. When chartering a vessel for the purpose of using it to transport cargo, data on the number of holds, tanks, decks, the size of hatches, the presence of cranes, booms and other cargo mechanisms is of no small importance. From a political and commercial point of view, it is also important for the charterer which flag the ship is flying, since this will certain time(for example, during the war, which is important in light of latest events in Iraq) depends on the safety of the vessel or the ability of the charterer to carry out trading operations.
The discrepancy between the data about the vessel recorded in the contract and its actual condition may have negative consequences for the shipowner.
In the international practice of chartering ships for a time, the charterer can cancel the contract and recover losses incurred by him due to an incorrect description of the ship if one of three conditions is met:
an incorrect description of the vessel affects the essence of the contract and leads to a significant deprivation of the charterer’s profit;
the shipowner is unable to comply with the requirement that the ship is suitable or ready for the date concentrating and thereby eliminate the discrepancy between the description of the vessel and its actual condition;
the shipowner cannot bring the ship into a condition that meets its description under the contract, or refuses to do so.
If there are no grounds to cancel the contract, the charterer may recover losses incurred by him as a result of an incorrect description of the vessel in the contract.
Usually the contract specifies the geographical area in which the charterer can operate the ship. When determining the boundaries of this area, both the technical and operational parameters and characteristics of the vessel, as well as the commercial and political interests of the parties, are taken into account. The area of the world's oceans in which a vessel is allowed to navigate is usually determined by prohibiting the vessel from operating in high latitudes or areas dangerous for navigation, or from entering the ports of a certain coastal strip or of a particular state (states). This condition agreement means that the ship can be sent to any geographical area with exceptions agreed upon by the parties and established in the agreement.
The purpose of chartering in a time charter can be specified with varying degrees of certainty and detail. The contract, for example, may only indicate the type of activity: “for the transportation of legal goods”, “for the extraction of mineral resources”. When using a ship to transport cargo, the contract may specify the type of cargo that is not accepted on the ship due to its properties that pose a danger from a technological or commercial point of view (for example, harmful flammable or dangerous goods, weapons and military equipment, smuggling, etc.). d.) The parties can also agree on the transportation of a certain type of cargo, for example, grain, ore, timber.
The time charter specifies the time of delivery of the chartered vessel by the shipowner to the charterer and the time of its return (release from the lease). This time is often indicated by specifying the period in which the ship must be handed over or returned (“from... and to..."). Sometimes, along with the dates, the contract specifies the hours at which the transfer or return should be made (“between 9 a.m. and 6 p.m.…”). Typically, the return of the vessel should at least approximately coincide with the end of the period for which the time charter was concluded.
The contract usually does not indicate a specific port in which the ship should be handed over to the charterer, but a section of the coastline within which the charterer has the right to choose the port of acceptance and return of the ship, that is, the range.
The shipowner is obliged to hand over the vessel for use to the charterer at an accessible berth or dock. The contract, as a rule, includes a condition that the vessel is in a safe condition at the berth or dock and is always afloat. Sometimes the terms of the contract require that the delivery port be ice-free.
The charterer is obliged to fill the port and berth, giving the shipowner a notice of this several days before the delivery of the vessel. In the event that the berth was not nominated or was unavailable to the vessel, for example due to a congestion of ships, the shipowner is entitled to receive the agreed freight for the entire waiting period.
The amount of freight under a time charter is determined based on the daily rate for the vessel as a whole or the monthly rate for each ton of deadweight. The level of freight rates is determined taking into account the situation on the global freight market. The freight rate is influenced by information about the vessel, the area of its operation and other terms of the contract.
The term for which the contract is concluded can be specified in the form of a period (usually from 2 to 10 years) or the time required to complete one or more voyages for the transportation of cargo. The period begins to run from the moment the vessel is provided for use by the charterer.
During the period of validity of the time charter, the charterer has the right, on his own behalf, to charter the vessel for a period of time to a third party, that is, to enter into a subcharter agreement for a time (subtime charter). The charterer may enter into such an agreement in all cases unless otherwise provided by the parties' agreement. However, many time charter forms specifically stipulate this right of the charterer.
According to the general rule, which applies to all other types of lease, the conclusion by the lessee of a sublease agreement is possible only with the consent of the lessor. But when concluding a time charter in maritime transport, the lessee (charterer), unless otherwise provided by the agreement, has the right, without the consent of the shipowner, to hand over the ship to a subtime charter, that is, sublease.
In this case we're talking about on an agreement, which by its legal nature coincides with the main contract for chartering a vessel for a time.
In connection with the chartering of the vessel to a third party, the charterer under the main agreement becomes the shipowner under the subcharterment agreement. in this sub-contract, a third party acts as a charterer. The shipowner under the main contract is not a party to the sub-chartering agreement, and the charterer under the sub-chartering agreement (third party) is not a party to the main contract. Therefore, the shipowner under the main contract and the charterer under the subcharterment agreement are not bound by any legal relations arising from a contract for chartering a vessel for a time. Consequently, they have no powers and do not bear obligations to each other either under the main contract or under the sub-chartery agreement.
The charterer has the right to enter into a sub-chartering agreement with a third party during the validity period of the main agreement. However, the main agreement and the subcharterment agreement may not coincide in validity. The charterer has the right to enter into a sub-chartering agreement at any time during the validity of the main agreement: immediately after its conclusion or after a certain time has passed. This means that a sub-chartering agreement can be concluded for the entire duration of the main contract or part of it.
The charterer, when concluding a subcharter agreement with a third party, is obliged to act within the limits of the rights granted to him under the time charter. This does not mean that the subcharter agreement must duplicate the terms of the main agreement, since the charterer has the right to charter the vessel on more favorable terms than those under which it was chartered by him under the main agreement. Thus, if the amount of freight depends on the agreement of the parties, the freight rate under the sub-freight agreement may be higher and, therefore, more profitable for chartering than under the main contract. The charterer also has the right to transfer to a third party part of the costs of maintaining the vessel assigned to him under the terms of the main contract. However, the charterer must not go beyond the limits of his powers under the main contract: he can provide a third party with powers only to the same extent as under the main contract, or to a lesser extent. The limits of the charterer’s powers established by the main contract become mandatory for him when concluding a sub-chartering agreement.
The limits of transfer of powers by the charterer to a third party relate primarily to the purposes of chartering the vessel. The vessel is transferred to the charterer for use for merchant shipping purposes. Therefore, the charterer has no right to transfer it to a third party for other purposes (for a warehouse, hotel, restaurant, etc.). In the case where the main contract establishes a restriction regarding the type of activity (for example, transportation of goods, fishing, etc.) or the type of cargo transported, these restrictions also exist for a third party when concluding a sub-chartering agreement.
The area in which the subinsured is permitted to operate the vessel may correspond to or be limited in comparison with the area specified in the main contract. The owner does not have the right to expand or indicate a different area than the one defined in the main agreement.
The inclusion in the time charter of conditions that the operation of the vessel is permissible only between safe ports and that the vessel must remain safe and always afloat obliges the charterer under the main agreement to transfer them to the subcharterment agreement.
Since, under the terms of a time charter, only the premises of the vessel intended for chartering purposes are transferred to the charterer for use, the charterer does not have the right to allow a third party to use any other premises.
Let me note that the conclusion of a subtime charter does not relieve the charterer from fulfilling obligations to the shipowner under the time charter. The charterer is obliged to pay freight in deadlines, operate the vessel in accordance with the terms of the contract. He is liable for losses caused by the salvage, damage or loss of the chartered vessel, if it is proven that the losses were caused by his fault. Upon expiration of the contract, the charterer must return the vessel to the shipowner with a certain supply of fuel and in the same good condition in which it was delivered, but taking into account natural wear and tear.
One of the responsibilities of the shipowner under a time charter is to make the vessel seaworthy. The concept of seaworthiness of a vessel chartered for a time (time charter) is defined primarily as the suitability of the vessel (its hull, engine, equipment) for the purposes provided for by the agreement. Therefore, the content of the concept of seaworthiness of a particular vessel in each individual case depends on the purpose of its use, defined in the contract. But for whatever purposes of merchant shipping a ship is chartered, it must first of all be prepared for sailing.
Thus, when concluding an agreement for the carriage of goods by sea, the seaworthiness of the vessel must be ensured in accordance with the characteristics of a particular voyage in the area of operation of the vessel. When chartering a vessel for a time, the charterer has the right, within the limits established in the contract, to determine the direction of voyages. Therefore, the shipowner is obliged to ensure that the ship is seaworthy in geographical boundaries, in which the operation of the vessel is permissible. The shipowner is not required to ensure that the ship is seaworthy in areas excluded from its permissible scope of use.
With regard to the suitability of the vessel for receiving, stowing and safely transporting cargo, in accordance with international merchant shipping practice, a time chartered vessel must be suitable for cargo operations usual for vessels of this type. The shipowner is not required to put the ship in a condition suitable for any particular cargo that the charterer is entitled to load on the ship.
In cases where the contract expressly stipulates that a temporarily chartered vessel is to be used to transport unusual cargo, the shipowner is obliged to specially equip the vessel. The provision by virtue of which this obligation can be transferred from the shipowner to the charterer applies in the contract only in the absence of an express provision in the contract regarding the carriage of unusual cargo and, therefore, when such carriage is undertaken at the initiative of the charterer.
Under the terms of the time charter, the vessel must be properly equipped, that is, equipped with all the necessary equipment, tools and inventory for the deck and engine room (cranes, booms, winches, cargo pumps, chains, ropes, replacement and spare parts, etc.) . When equipping a ship, the shipowner is obliged to equip it with items suitable for use for the purposes of the contract.
Based on the definition that a time charter is the chartering of a vessel for a period of time with a crew, the shipowner is also obliged to fully staff the vessel with a sufficient number and qualified crew. In the international practice of merchant shipping, as a rule, it is recognized that illness or injury to one or more crew members during the operation of the ship by the charterer under a time charter does not indicate a violation of the shipowner’s obligation to man the ship. This obligation of the shipowner cannot be considered fulfilled if the crew member was actually unable to begin performing his duties because he was not allowed on the ship, for example, due to quarantine.
If, as a result of the ship's unseaworthiness, damage to the cargo is caused, the shipowner is obliged to compensate for the damage incurred by the charterer (usually compensation is made through a recourse claim of the charterer, responsible for the cargo to a third party - the cargo owner). And, in turn, according to the general rules of liability of the debtor for improper performance of an obligation, the shipowner is obliged to compensate the charterer for losses caused by the temporary decommissioning of an unseaworthy vessel.
The discovery that a vessel is unseaworthy during its operation under a contract may also lead to the termination of the contract due to the impossibility of its execution. In this situation, the obligation is terminated without any legal consequences if the unseaworthiness of the ship is caused by circumstances for which the shipowner is not responsible, for example, due to hidden defects of the ship.
In accordance with the terms of a time charter, the shipowner is obliged to maintain the vessel in seaworthy condition during the term of the contract. in time charter forms this obligation is set out in more detail. The obligation to maintain the seaworthiness of the vessel involves ensuring that the shipowner is technically seaworthy throughout the entire contract, providing it with the necessary materials and supplies. The condition that the shipowner must maintain the class of the ship, often included in a time charter, should be understood as his obligation to ensure that the ship maintains the class assigned to it and does not allow its loss or reduction. If a ship is chartered for the carriage of cargo, the shipowner is required to take steps to ensure that it is suitable for normal cargo operations. The obligation to maintain the seaworthiness of the vessel throughout the entire charter period does not contradict the fact that the vessel must be seaworthy at the beginning of the charter period and that in the future the shipowner is not obliged to adapt the vessel to the characteristics of each new voyage.
When providing a vessel for use by a charterer on the basis of a time charter, the shipowner, as an employer in relation to crew members, is obliged to pay for the maintenance of the crew. expenses associated with the maintenance of the crew include wages of the crew, payment for provisions and drinking water, consular fees insofar as they relate to the crew, and expenses associated with the crew going ashore. The shipowner is also obliged to pay state social insurance contributions for crew members.
If a chartered vessel is used by the charterer to transport his own cargo, the relationship between the co-owner and the charterer is regulated by a time charter. According to its terms, the shipowner becomes liable for the cargo.
The charterer often uses a temporarily chartered vessel to transport goods of third parties. At the same time, he concludes an agreement for the carriage of goods by sea not on behalf of the original shipowner, but on his own behalf, acting in relation to third parties - cargo owners as a carrier. It follows that in this case, along with the relationship between the shipowner and the time charterer, a relationship arises between the carrier acting as a charterer under the first contract and the cargo owner, who is a third party in relation to the parties to the first contract.
The contract for the carriage of goods is drawn up using a charter for a flight, a bill of lading and other various documents. By signing these documents, the charterer assumes the responsibility of the carrier. This may mean, firstly, that claims related to the failure of the cargo should be brought against him, and not the original shipowner, and secondly, liability for these claims is determined on the basis of the rules on the carrier’s liability for the failure of the cargo.
In all cases, the time charter charterer bears responsibility to the cargo owner - a third party identical to the responsibility of the carrier under the contract for the carriage of goods by sea. Having compensated for the damage to the cargo owner, the charterer acquires the right of recourse against its counterparty under the time charter - the shipowner. the latter's liability for a recourse claim is determined by the terms of the time charter. Consequently, the reality of compensation under a recourse claim depends on how the corresponding conditions regarding the shipowner’s liability to the charterer in the time charter are formulated.
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Our company is ready to offer clients the following types maritime law services:
- drawing up a time charter agreement;
- support of the entire time charter transaction (agreement, negotiations, protocols of disagreements, approval, consultations, etc.);
- defending the client’s interests under a time charter agreement (subtime charter) in court;
- legal analysis existing time charter agreements;
- legal consultation under time charter, etc.
time charter agreement in Russian law
At its core, a time charter is a rental agreement for a vehicle or vessel (air or sea) together with a driver (crew). Therefore, lawyers often apply the norms of the Civil Code of the Russian Federation to a time charter agreement, which allows for a more complete use of the legal aspects of the agreement. Thus, time charter is used in two main guises - air and maritime law.
In accordance with Art. 198 of the Merchant Shipping Code of the Russian Federation (KTM), under a contract for chartering a vessel for a time (time charter), the shipowner undertakes, for a specified fee (freight), to provide the charterer with the vessel and the services of the vessel’s crew members for use for a certain period of time for the transportation of goods, passengers or for other commercial purposes. navigation. However, it is worth understanding that KTM is internal normative document, valid on the territory of the Russian Federation and not always (and more often not) applied in contractual relations between a resident of the Russian Federation and a non-resident.
KTM gives full freedom to the parties to the transaction to determine all the necessary terms of the contract. However, if the parties do not agree on something, the KTM regulates the unspecified rules. Thus, for the most part, the CTM is a dispositive document.
At the same time, foreign companies are often parties to charters. And from this follows the reluctance of foreign companies to apply Russian jurisdiction and law. A common occurrence become pure proforma charters recommended by one or another maritime legislation organization (most often Jencon from BIMCO). In this case, domestic shipowners and charterers face a number of difficulties that may affect their activities in the future. The application of English law, as Gencon promises, can lead to very unfavorable consequences. You must understand that Jencon is not a mandatory form of agreement; changes can and most often need to be made to it! Cases have become more frequent when both parties to an agreement are residents of the Russian Federation, and the application of legislation is English law, and moreover, jurisdiction in London. This needs to be corrected, at least by signing an additional agreement, but it also needs to be drawn up correctly, which we recommend doing through the mediation of a specialist (lawyer) in maritime law.
subtime charter
According to Art. 201 of the Code of Labor Code, unless otherwise provided by the time charter, the charterer, within the limits of the rights granted by the time charter, may conclude on its own behalf contracts for chartering a vessel for a time with third parties for the entire period of validity of the time charter or for part of such period (subtime charter ). The conclusion of a subtime charter does not relieve the charterer from fulfilling the time charter concluded with the shipowner.
essential terms of the time charter agreement
In accordance with Art. 200 KTM in a time charter must indicate the names of the parties, the name of the vessel, its technical and operational data (carrying capacity, cargo capacity, speed and others), navigation area, purpose of chartering, time, place of transfer and return of the vessel, freight rate, period of validity of the time -charter. At the same time, the Air Code does not clearly define the essential conditions of an air time charter (there is no such concept at all in the Air Code). However, the use of time charter in air law is very relevant. Regarding chartering, the RF CC has Article 104. However, it is sparse in content and does not have much meaning.
judicial and arbitration proceedings (disputes) under the time charter agreement
During litigation or arbitration disputes under a time charter agreement, our company is ready to provide assistance and support the following problems in arbitration or arbitration courts(including international):
- challenging the very essence of the contract (general legal disputes: terms of the contract, invalidity of the time charter, challenging the deadline);
- challenging and recognizing notices;
- challenging lumpsum amounts or exemption from payment of demobilization fees (mobilization fees);
- challenging the actions of the port (agent, etc.);
- office problems;
- determination and payment (exemption from payment) of disbursement expenses;
- challenging the unreasonable docking of a vessel (mooring, engagement of an aircraft);
- issues of responsibility for repairs and the burden of maintaining the vessel and crew;
- issues of ship logs;
- and etc.
international time charter
In international merchant shipping, the following standard forms of time charter are currently most often used for dry cargo ships: "Baltime"2 1939/1950, used primarily for transactions involving the European region; "Deuzeit" 1912 | used primarily for transactions "Franctime", I of local significance; "Produce-2", 19463, is used primarily for transactions carried out in the area of the American continent; "Linertime" 4 is used when chartering vessels for work in liner shipping (published and used from 1/IX-1968), sometimes instead of "Produce-2".
Another source of international time charter rules are INCOTERMS (revisions 1953, 1967, 1976, 1980, 1990, 2000, 2010). However, do not forget that INCOTERMS are rules international treaties supplies. But this does not exclude the possibility of their inclusion in the charter agreement.
In addition to those listed above, there are some others on the international freight market when transporting dry cargo ships. standard forms charter agreement on the condition of time charter.
Tanker time charters are usually carried out under the "Oil Tank Vessel Time Charter Party", known as; to the "Stryker" form (after the name of its publisher "S. Striker and Son, _"i", London"). Charters "Baltime", "Prodyos-2" and "Linertime" are the most frequently used by Soviet charterers. Chartering of transport ships on time charter terms has received widespread development over the past decades. This form of chartering finds all greater application and in Soviet merchant shipping.
An important point is the fact that there is a UN Convention “On the International Transport of Goods” dated March 31, 1978 (Hamburg, Germany). Most of these rules are maritime countries. However, Russia does not participate in them, which complicates the process of negotiations between residents of the Russian Federation and non-residents. But in accordance with international rules and the legislation of the Russian Federation, it is optionally possible to include the terms of these rules in a charter (time charter) agreement, but this should only be done with the help of an experienced lawyer.
The rules governing the relationship between the parties when chartering a vessel for a time (time charter) are contained in Chapter X of the IMC. In practice, the provisions of this chapter are used relatively rarely, since in maritime shipping there are various proformas developed by BIMCO or other organizations. Thus, such proformas as “Baltime”, “New York Produce” (universal charters), also proformas “STB TIME”, “BPTIME” (for tankers), “Incharpas” (for passenger ships), linear time- charter "Linertime", time charter for refrigerated cargo "Reeftime" and some others. At the same time, according to Art. 199 MKM, the rules established by Chapter X apply unless otherwise established by agreement of the parties, i.e. These rules are dispositive in nature.
When analyzing Chapter X of the MCC, as well as other relevant chapters, it should be borne in mind that, according to Art. 1 KTM property relations arising from merchant shipping are regulated by the KTM in accordance with the Civil Code of the Russian Federation. The Civil Code (Chapter 34 “Rent”) includes for the first time provisions on the rental of vehicles, including the rental of a vehicle with the provision of management and technical operation services (Articles 632 - 641). According to Art. 641 of the Civil Code, transport charters and codes may establish other, in addition to those provided for in § 3 of Chapter 34, features of the rental of certain types of vehicles with the provision of management and technical operation services. Thus, issues of the time charter agreement that are not regulated in Chapter X of the KTM are regulated by the rules of the Civil Code, and primarily contained in § 3 of Chapter 34.
As established by Art. 201 KTM, a time charter must be concluded in writing. The same provision is contained in Art. 633 of the Civil Code - with the addition that the written form is applied regardless of the term of the contract. The point is that Art. 609 of the Civil Code (clause 1) requires the conclusion of a lease agreement in writing if the agreement is concluded for a period of more than a year (if one of the parties to the agreement is a legal entity - regardless of the term). Therefore, in all cases it must be in writing.
Another important clarification, missing in the MCM, is contained in Art. 633 of the Civil Code: the provisions on state registration of real estate lease agreements provided for in paragraph 2 of Art. 609 of the Civil Code (in one of the cases considered by the MAC, the defendant referred to the lack of state registration as a basis for the invalidity of the time charter agreement).
Finally, the rules regarding the renewal of a lease agreement do not apply to this agreement. indefinite term and on the tenant’s pre-emptive right to conclude a lease agreement for a new term, provided for in Art. 621 Civil Code.
The definition of a time charter agreement is contained in Art. 198 KTM, according to which, under a contract for chartering a vessel for a time (time charter), the shipowner undertakes, for a specified fee (freight), to provide the charterer with the vessel and the services of the vessel’s crew members for use for a certain period of time for the transportation of goods, passengers or for other purposes of merchant shipping.
This definition basically corresponds to the definition of a lease (time charter) contained in Art. 632 of the Civil Code, however, there are certain clarifications. Firstly, in Art. 632 refers to the rental of a vehicle, regardless of the purposes for which it will be used, while Art. 198 MKM specifies that the ship is provided for use for merchant shipping purposes. Secondly, in Art. 632 we are talking about temporary possession and use (and not just use), which more precisely defines the powers of the charterer (when determining the party to the time charter agreement, the legislator uses the same term as in Article 787 of the Civil Code in relation to the party to the contract for the carriage of goods).
In contrast to the 1968 MLC, in which the definition of a time charter agreement did not mention the services of the ship's crew members as separate conditions, since it was understood that we were talking about leasing a fully equipped and crewed ship, in the definitions contained in Art. . 632 Civil Code and Art. 198 KTM, talks about two obligations of the shipowner - to provide the ship and to provide the services of crew members. Without discussing the advisability of dividing the shipowner’s single obligation to provide a time charter with a equipped and manned vessel into two independent obligations, it should only be suggested that this was caused by the need to more clearly distinguish the lease agreement for a vehicle with a crew from the same agreement, but without a crew.
The time charter must indicate the names of the parties, the name of the vessel, its technical and operational data (carrying capacity, cargo capacity, speed, etc.), navigation area, purpose of chartering, time, place of transfer and return of the vessel, freight rate, period of validity of the time charter (Article 200 KTM).
The parties themselves determine the content of the time charter. There is data that is primarily of interest to the charterer - about the vessel being leased, and data that is of interest to the shipowner: the purpose of chartering, the area of navigation, etc. Of course, both parties are interested in establishing the time and place of transfer and return of the vessel, the rental period, the rate freight, etc.
As already noted, the relevant conditions are elaborated in numerous pro forma charters. For example, according to the Baltime charter proforma, the name of the vessel, its gross and net tonnage, class, engine power, deadweight, type of bunker used, and speed are indicated. The location of the vessel, the port in which the vessel is to be leased, the time and place where the vessel will be returned to the shipowner are also indicated. With regard to the area of navigation and the type of cargo transported, the pro forma provides for the possibility of the vessel sailing between any safe ports and transporting any legal cargo, with the exception of dangerous goods. These general provisions are subject to clarification in additional articles. It is known that it is specifically stipulated that the vessel will not be used to transport goods to and from the ports of states subject to international sanctions, or states whose port entry is associated with a subsequent boycott of these vessels in the ports of other countries.
Usually the vessel is put on time charter for a certain date calendar months in the port specified in the charter, and is returned to the shipowner in the specified port on the specified day (from 9 am to 6 pm). Since the vessel is usually on a voyage at the end of the contract, the parties stipulate the possibility of completing it, and the return of the vessel from the lease does not always coincide with the date specified in the contract. Of course, the charterer, when sending the ship on such a voyage, must take into account the expiration date of the contract and not allow it to be unreasonably exceeded. If the market freight rate turns out to be higher than the rate established in the contract, the charterer is obliged to pay freight at the market rate for a time exceeding the contract period.
According to Art. 202 of the Code of Labor Code, unless otherwise provided by the time charter, the charterer, within the limits of the rights granted by the time charter, may conclude on its own behalf contracts for the charter of a vessel for a time with third parties for the entire period of validity of the time charter or for part of such period (subtime charter ). The conclusion of a subtime charter does not relieve the charterer from fulfilling the time charter concluded with the shipowner. This norm mainly reflects the provision of paragraph 1 of Art. 638 of the Civil Code, in which, in derogation from general rule, enshrined in paragraph 2 of Art. 615 of the Civil Code, establishes the right to sublease a vehicle without the consent of the lessor (unless otherwise provided by the lease agreement). This provision follows commercial practice. Thus, according to clause 20 of the Baltime charter, charterers have the right to sub-charter the vessel, duly notifying the shipowner of this, while remaining responsible to him for the implementation of the time charter. Since in Art. 202 of the Code of Labor Code does not say anything about the charterer’s obligation to notify the shipowner about the conclusion of a subtime charter agreement with third parties; it should be assumed that such an obligation may arise for him if it is provided for in the agreement.
The subtime charter agreement is concluded by the charterer within the limits of the rights granted by the time charter, i.e. The charterer does not have the right to stipulate other operating conditions for the vessel than those under which it was leased by himself. First of all, this concerns navigation areas, transported goods, safe ports, etc. Of course, the terms of a subtime charter may be more favorable to a third party. For example, the freight rate may be lower than the freight rate stipulated in the time charter. Despite this, the charterer is fully responsible to the shipowner for the performance of the time charter. Since the main contract is subject to the rules of Chapter X of the CTM, and the charterer, concluding a subtime charter, acts within the limits determined by this agreement, the rules of Chapter X apply to the subtime charter.
In accordance with Art. 203 the shipowner is obliged to bring the ship into a seaworthy condition at the time of its transfer to the charterer: to take measures to ensure the suitability of the ship (its hull, engine and equipment) for the purposes of chartering provided for by the time charter, to man the ship and to properly equip the ship. The shipowner is not liable if he proves that the unseaworthiness of the ship is caused by defects that could not have been detected by due diligence (hidden defects). The shipowner is also obliged, during the term of the time charter, to maintain the vessel in seaworthy condition, to pay the costs of insuring the vessel and its liability, as well as for the maintenance of the vessel's crew members.
The provisions of this article differ only slightly from the rule formulated in Art. 124 KTM, regarding the carrier’s obligation to make the vessel seaworthy. In general, the lessor’s obligation to maintain the vehicle is also enshrined in Art. 634 of the Civil Code, according to which the lessor, throughout the entire term of the lease agreement for a vehicle with crew, is obliged to maintain the proper condition of the leased vehicle, including carrying out routine and major repairs and providing the necessary accessories. It should be noted that the MLC 1968 (Article 181) avoided using the terminology inherent in a contract for the carriage of goods in relation to the obligations of the shipowner under time charter. This was also consistent with commercial practice (see, in particular, paragraph 3 of the Baltime pro forma). Although the names of Articles 124 and 203 of the MLC are identical (“Seaworthiness of the vessel”) and their content largely coincides, there is one thing between them fundamental difference: if transportation is carried out on the basis of a bill of lading, the agreement of the parties, contrary to Art. 124 KTM, is void, while the rules of Art. 203 CTM are dispositive in nature.
If the ship is leased for the carriage of goods, the shipowner’s obligations to bring the ship into a seaworthy condition will not differ significantly from those established by Art. 124 KTM. Since in most cases, during the term of a time charter, the charterer can transport any cargo (with the exception of cargo, the carriage of which is not expressly permitted under the terms of the contract), when the vessel is leased, it must be brought into a condition suitable for the carriage of goods, usually transported on ships of this type.
Responsibilities between the shipowner and the charterer under a time charter are usually divided in the following way.
The shipowner ensures normal and safe operation of the vessel in accordance with the contract. Crew members are employees of the shipowner, and, therefore, the captain and other members of the ship's crew are subject to the orders of the shipowner related to the management of the ship, including navigation, internal regulations on the ship and the composition of the ship's crew (clause 1 of Article 206 of the MCC). Under normal circumstances, the charterer himself is not interested in interfering with technical processes operation of the vessel. However, pro forma contracts provide for this possibility. For example, according to clause 9 of the Baltime proforma, if the charterer has reason to be dissatisfied with the actions of the captain, his assistants or mechanics, then the shipowner, upon receipt of the charterer's complaint, is obliged to urgently investigate it and, if necessary and appropriate, replace the relevant crew members.
The charterer is obliged to use the vessel and crew services in accordance with the purposes and conditions of their provision, defined by the time charter (Clause 1, Article 204 of the Code), and his orders regarding the commercial operation of the vessel are binding on the captain and other members of the vessel’s crew. However, these orders, firstly, must be given within the framework of the contract (operation of the vessel for the purposes specified in the time charter; transportation of specified cargo and in specified areas; provision of calls at safe ports, etc.); secondly, they should not affect the safety of navigation. The master is not entitled to carry out such instructions from the charterer, even if they relate to commercial operation.
According to paragraph 1 of Art. 204 KTM, the charterer pays the cost of the bunker and other costs and fees associated with the commercial operation of the vessel, i.e. costs and fees that are variable and the availability of which depends entirely on the operation of the vessel. In the KTM, only bunker costs are directly mentioned, while in pro forma contracts this provision is disclosed in some detail. Thus, according to clause 45 of the Baltime proforma, charterers are required to pay, in addition to fuel, port dues, canal, dock, municipal and other fees, costs of loading and unloading cargo, the cost of fumigation and disinfection, etc. At the same time, all income received as a result of the use of the chartered vessel and the services of crew members are the property of the charterer (with the exception of remuneration for the provision of rescue services). As defined in Art. 210 KTM, the remuneration due to the ship for salvage services provided before the end of the time charter is distributed in equal shares between the shipowner and the charterer, minus the cost of salvage and the share of remuneration due to the crew of the ships. Salvage services are outside the scope of the time charter agreement, however, since they are provided by members of the crew of the vessel under lease, i.e. at the disposal of the charterer, they are distributed equally between the latter and the shipowner. The amount remaining after deducting all salvage expenses, including freight paid under the charter for the period spent on salvage, the cost of fuel consumed, repairs, etc., is distributed.
At the end of the time charter period, the charterer is obliged to return the vessel to the shipowner in the condition in which it was received by him, taking into account normal wear and tear (clause 2 of article 204 of the KTM; clause 7 of the Baltime proforma). Typically, the contract provides that the charterer is required to give the shipowner notice (for example, at least 10 days in advance) indicating the port and date of return of the ship from the time charter.
As already noted, the charterer has the right to transfer the vessel to a subtime charter without the consent of the shipowner. Along with this, the charterer, as part of commercial operation, may, without the consent of the shipowner, if the ship is provided to the charterer for the carriage of cargo, enter into contracts for the carriage of cargo on its own behalf, sign charters, issue bills of lading, sea waybills and other shipping documents. Thus, the charterer becomes the carrier in the sense of Art. 115 KTM and bears the responsibility established for the carrier to the shipper, i.e. in accordance with Art. Art. 166 - 176 KTM. For example, if the charterer transports cargo on the basis of a charter, his responsibilities (bringing the vessel into a seaworthy condition, period of liability), the amount of liability and its limitation, etc. will be determined by the relevant provisions Chapter VIII CTM, which in this case are of a dispositive nature. Where carriage is carried out on the basis of a bill of lading or where the bill of lading issued for carriage under a charter governs the relationship between the charterer-carrier and the recipient who is not a party to the contract for the carriage of the goods, the liability of the charterer for the goods will be determined taking into account the mandatory rules of Chapter VIII. For example, if the charter of a vessel is carried out on pro forma "Baltime" terms, the shipowner is liable to the charterer for loss or damage to cargo on board the vessel if the vessel was not made seaworthy and prepared for the voyage due to the fault of the shipowner or his manager or as a result of other actions or inaction of the shipowner himself or his manager (clause 13). Consequently, if the failure of the cargo or the delay occurred for other reasons, the charterer-carrier, having compensated for the damage to the recipient of the cargo transported under the bill of lading, does not have the right to fully recover it from the shipowner by way of recourse.
Otherwise, the issue of the charterer's liability for losses caused to the shipowner has been resolved. As a general rule contained in Art. 639 of the Civil Code, in the event of death or damage to a rented vehicle, the lessee is obliged to compensate the lessor for losses incurred if the latter proves that the death or damage to the vehicle occurred due to circumstances for which the lessee is responsible in accordance with the law or the lease agreement. Thus, in contrast to the principle of presumed guilt in force in the civil legislation of the Russian Federation, when renting a vehicle, the burden of proving the tenant’s guilt rests with the lessor. Such a shift in the burden of proof is fully justified, since the technical operation of the vehicle is carried out by the lessor’s employees and the occurrence of damage in many cases is associated with the actions (inaction) of these persons.
It should be noted that in the pro forma contracts the conditions of liability of the shipowner and the charterer do not completely coincide. As noted above, the shipowner is liable for losses if they are caused own actions or inaction of the shipowner or his manager. The charterer is liable for loss or damage resulting from the cargo being loaded in breach of the terms of the charter, improper or negligent loading, stowage, unloading and other negligent or improper acts on the part of both the charterer and his servants.
According to Art. 207 KTM, the charterer is not liable for losses caused by the salvage, loss or damage of the chartered vessel, unless it is proven that the losses were caused by the fault of the charterer. It is not difficult to notice that, keeping general approach contained in Art. 639 of the Civil Code, KTM supplements the list of circumstances with a reference to rescue operations, which is also quite logical, since the rescue operation begins by decision of the shipowner and is carried out by his employees.
As for liability for damage caused to third parties by a ship under time charter, it is determined in accordance with Art. 640 GK. According to this article, liability for damage caused by a vehicle, its mechanisms, devices, equipment is borne by the lessor in accordance with the rules provided for by Chapter 59 of the Civil Code, i.e. regardless of guilt - as the owner of a source of increased danger. The shipowner can be released from liability only in cases force majeure or the intent of the victim (clause 1 of Article 1079 of the Civil Code). If damage is caused to a third party through the fault of the charterer, the shipowner has the right to make a recourse claim against him for compensation of amounts paid to third parties, but the burden of proving that the damage arose through the fault of the charterer rests with the shipowner.
Freight rates, terms and procedures for its payment are specified in detail in the charter forms. Thus, according to clause 6 of the Baltime charter, the rent is paid every 30 days in advance. If the freight is not paid, the shipowner has the right to withdraw the ship from service from the charterer, without taking into account his objections and without resorting to compulsory procedures. At the same time, the charterer has the right not to pay freight if the vessel is docked or undergoing repairs, if it is not staffed with a crew or with the necessary supplies, and in other cases that delay the normal operation of the vessel for more than 24 hours. The amount paid in advance is subject to return or is taken into account in further calculations. Shipowners have a lien on cargo and subfreight due to the charterer during commercial operation in respect of amounts due to the shipowner. In turn, the charterer has a lien on the vessel to secure the amounts paid in advance.
If the parties have not settled the issues of freight payment in the contract, the provisions of Art. 208 KTM. According to this article, the charterer is exempt from paying freight and expenses for the ship for the time during which the ship was not suitable for operation due to its unseaworthiness. If the ship becomes unfit for operation due to the fault of the charterer, the shipowner has the right to freight provided for in the time charter, regardless of compensation by the charterer for losses caused to the shipowner.
If the charterer is late in paying the freight for more than fourteen calendar days, the shipowner has the right to withdraw the ship from the charterer without warning and recover from him the losses caused by such delay. Compared to the conditions of clause 6 of the Baltime charter, art. 208 KTM provides the charterer with an additional period for payment of freight, only after the expiration of which the shipowner has the right to repossess the ship.
Unless the parties agree otherwise, the loss of the vessel entails the termination of payment of freight. Thus, according to clause 16 of the Baltime pro forma, if the ship is lost or missing, the rent is not paid from the date of the ship's death. If the date of death cannot be established, then the rent is paid in half from the date of receipt last message about the ship before the estimated date of arrival at the port of destination. In the MLC (Article 209), the issue of payment of freight in the event of the death of a vessel is resolved as follows: in the event of the death of a vessel, freight is payable from the day provided for by the time charter to the day of the death of the vessel or, if this day cannot be determined, to the day of receipt of the last news of ship
A vessel charter agreement for a time is one of the types of a property lease (lease) agreement - the lease of a vehicle with a crew. Therefore, relations arising from such an agreement are governed by the rules contained in Section 1.3 of Chapter 34 of the Civil Code. In addition, the specifics of renting a vehicle such as a sea vessel with a crew are reflected in the rules of Chapter 10 of the KTM.
In the definition of a contract, first of all, its parties are named - the bearers of powers and subjective obligations. The parties to the agreement are the shipowner and the charterer. According to Article 8 of the MCC, a shipowner is recognized as the owner of the ship or another person operating it on another legal basis, in particular, a shipowner, in addition to the owner, is any person operating a ship under the right of lease, economic management, operational management, trust management, etc. .
The shipowner, on his own behalf, charters the vessel for a period of time to another person - the charterer. The latter needs a ship and therefore, on its own behalf, charters it for a certain period for the purposes of merchant shipping.
The use of such concepts characteristic of maritime law as “shipowner”, “charterer”, in contrast to the general civil terms “lessor” and “tenant”, indicates that a vessel charter agreement for a time cannot be equated to a general civil lease agreement.
The first responsibility of the shipowner is to provide the vessel to the charterer. In this case, provision is understood primarily as the transfer to the charterer of the right to use, the right to commercially operate the vessel on its own behalf.
The vessel is provided to the charterer temporarily, i.e. for a specified period, after which the charterer is obliged to return it to the shipowner. This period can be expressed in a calendar period from several months to several years (sometimes up to 10-15 years) or in the time required to complete one or more flights.
Time chartered vessels can be used to transport cargo. Therefore, standard time charter proformas are built taking into account the fact that a certain cargo will be transported on the vessel.
Along with the transportation of cargo, the commented article also mentions the transportation of passengers and “other purposes of merchant shipping,” which means fishing for aquatic biological resources associated with the use of vessels, exploration and development of mineral and other non-living resources of the seabed and its subsoil, pilotage and icebreaker assistance. and etc.
The ability to charter a vessel for purposes other than transportation of merchant shipping is one of the differences between a time charter and an agreement for the carriage of goods by sea and, in particular, from an agreement for chartering a vessel for a voyage charter.
A vessel temporarily chartered may only be operated for merchant shipping purposes. Under this agreement, the vessel cannot be used as a hotel, warehouse, or restaurant. This is what distinguishes a vessel charter agreement for a time from a property lease agreement.
The right to own the vessel is temporarily transferred to the Charterer. In matters of commercial operation, the ship's crew is subordinate to him. But in this case the ship does not leave the possession of the shipowner. Crew members remain his employees; his orders relating to the management of the ship are binding on all crew members. Therefore, there is every reason to talk about temporary dual ownership(or co-ownership) of the vessel.
The second responsibility of the shipowner is to provide the charterer with services for managing the ship and its technical operation. The strictly formal provision of such services goes beyond the scope of the lease and brings time charter closer to contracts for the provision of services, the results of which do not have a material form. However, in the Civil Code, contracts for the lease of vehicles with the provision of management and technical operation services are classified as one of the types of lease agreements. Thus, the legislation has finally resolved the issue of the legal nature of time charter, which was previously controversial.
The definition of a time charter establishes the charterer's obligation to pay the freight, since the vessel is provided to him for a specified fee. The contract, therefore, is of a compensatory nature. The amount of freight does not depend on the quantity of cargo carried or the efficiency of the vessel's operation in any other way.
Each party to this agreement has powers and bears legal obligations. A time charter is recognized as concluded from the moment the counterparties reach an agreement on all its essential terms. Finally, a time charter is a paid obligation. Hence, A time charter is a bilaterally binding, consensual and compensated agreement.
The terms of a time charter are determined primarily by agreement of the parties. Consequently, the provisions of the agreement take precedence over the provisions of Chapter X of the KTM. Thus, the rules contained in Chapter X of the MLC (with the exception of Article 198) are dispositive in nature. This means that they are subject to application if they do not contradict the agreement between the parties, or regulate relations that are not resolved or not fully resolved in such an agreement.
According to Art. 200 KTM “The time charter must indicate the names of the parties, the name of the vessel, its technical and operational data (carrying capacity, cargo capacity, speed, etc.), navigation area, purpose of chartering, time, place of transfer and return of the vessel, freight rate, validity period time charter."
The absence in the contract of any data from those specified in Article 200 of the Labor Code does not entail the invalidity of the contract, but may reduce the evidentiary value of the document formalizing the obligation.
The contract usually specifies the geographical area in which the charterer may operate the vessel. When determining the boundaries of this area, both the technical and operational parameters and characteristics of the vessel, as well as the commercial and political interests of the parties, are taken into account. The area of the world's oceans in which a vessel is allowed to navigate is usually determined by establishing a ban on operating the vessel in high latitudes or areas dangerous for navigation, or entering the ports of a certain coastal strip or of a particular state (states). This condition of the contract means that the ship can be sent to any geographical area with exceptions agreed upon by the parties and established in the contract.
Purpose of chartering may be specified in a time charter with varying degrees of certainty and detail. The contract, for example, may only indicate the type of activity: “for the transportation of legal goods,” “for the extraction of mineral resources.” The parties can also agree on the transportation of a certain type of cargo, for example grain, ore, timber, or the extraction of certain minerals. The agreement may determine the type of marine fishing or scientific research activity in cases where it is intended to use the vessel for these purposes.
The time charter specifies the time of transfer of the chartered vessel by the shipowner to the charterer and the time of its return (release from the lease).
This time is often indicated by specifying the period in which the ship must be transferred or returned (“from: to:”). Sometimes, along with the dates, the contract specifies the hours at which the transfer or return should be made (“between 9 a.m. and 6 p.m.:”). Typically, the return of the vessel should at least approximately coincide with the end of the period for which the time charter was concluded.
The shipowner is obliged to hand over the vessel for use to the charterer at an accessible berth or dock. The contract, as a rule, includes a condition that the vessel is in a safe condition at the berth or dock and is always afloat.
Time charter freight amount is determined on the basis of the daily rate for the vessel as a whole or the monthly rate for each ton of deadweight. The level of freight rates is determined taking into account conditions on the global freight market. The freight rate is influenced by information about the vessel, the area of its operation and other terms of the contract.
The period for which the contract is concluded, can be specified in the form of a period (usually from 2 to 10 years) or the time required to complete one or more voyages to transport cargo, tow or salvage operations, etc. (trip charter). The calculation of the period begins from the moment the vessel is provided for use by the charterer.
A time charter must be in writing.
In practice, a time charter is concluded on the basis of printed proformas (standard forms) of time charters, which set out the most commonly used terms of these agreements. The use of proformas speeds up and facilitates the process of developing and agreeing on the content of the contract and makes it possible to concentrate on agreeing on the conditions that individualize the contract. In addition, the use of proformas to a certain extent contributes to the unified regulation of relations arising on the basis of the contract.
According to paragraph 2 of Article 162 of the Civil Code, failure to comply with the form required by law entails the invalidity of the transaction only in cases expressly specified in the law or in the agreement of the parties. Article 633 of the Civil Code, while requiring the conclusion of a rental agreement for a vehicle with a crew in writing, does not provide for the recognition of the agreement as invalid due to failure to comply with the written form. Therefore, violation of the requirements of the law regarding the simple written form of the contract is associated with procedural and legal consequences: the fact of concluding the contract and its content in the event of a dispute can be proven by other written evidence (letters, telegrams, radiograms, telexes, faxes, etc.) and any other evidence other than witness testimony.
According to the terms of the time charter, the vessel must be properly equipped, i.e. equipped with all necessary equipment, tools and inventory for the deck and engine room (cranes, booms, winches, cargo pumps, chains, ropes, replacement and spare parts, navigation instruments, etc.). When equipping a ship, the shipowner is obliged to equip it with items suitable for use for the purposes of the contract.
The shipowner is also obliged to fully staff the ship with a sufficient number and qualified crew.
In accordance with the terms of a time charter, the shipowner is obliged to maintain the ship in seaworthy condition during the term of the contract. In time charter forms this obligation is set out in more detail. The obligation to maintain the seaworthiness of the vessel involves ensuring that the shipowner is technically seaworthy throughout the entire contract, providing him with the necessary materials and supplies, with the exception of the bunker.
Under the terms of a time charter, the shipowner is required to pay the costs of insuring the vessel. Typically, insurance is carried out in relation to war risks, as well as risks relating to the ship's hull and its equipment, when the ship is used within the limits established in the time charter.
When providing a vessel for use by a charterer on the basis of a time charter, the shipowner, as an employer in relation to crew members, is obliged to pay for the maintenance of the crew. Costs associated with maintaining the crew include crew wages, provisions and drinking water, consular fees as they relate to the crew, and expenses associated with crew members going ashore. The shipowner is also obliged to pay state social insurance contributions for crew members.
The contract for the carriage of goods is drawn up using a charter for a flight, a booking note, a bill of lading, a sea waybill, and other shipping documents. By signing such documents, the charterer assumes the responsibility of the carrier. According to Russian legislation, this means, firstly, that claims related to non-preservation of cargo must be brought against him, and not the original shipowner, and secondly, liability for these claims is determined on the basis of the rules on the carrier’s liability for non-preservation of cargo (Article .166-176 KTM).
According to Russian law, the charterer under a time charter (the carrier under a contract for the carriage of goods by sea) is liable to the cargo owner - a third party on the basis of Article 166-176 of the KTM. Having compensated for the damage to the cargo owner, the charterer acquires the right of recourse (right of recourse) to its counterparty under the time charter - the shipowner. The latter's liability for a recourse claim is determined by the terms of the time charter. Consequently, the reality of compensation under a recourse claim depends on how the relevant conditions on the shipowner’s liability to the charterer in the time charter are formulated.
The captain and other crew members obey the orders of the shipowner related to navigation, internal regulations on the ship and crew composition. In navigation matters, the ship's crew is subordinate to the shipowner, who is obliged to ensure the safety of navigation.
While remaining employees of the shipowner, the captain and crew members are obliged to ensure the effective technical operation of the ship itself, all its mechanisms, apparatus, and accessories. The charterer must not interfere with either the navigational control of the ship or its technical operation, unless this directly affects the commercial operation of the ship.
The vessel must be equipped with a sufficient number and qualified crew. The size of the crew is determined by the shipowner, and the charterer has the right to insist on increasing it only when the number of crew does not meet the seaworthiness requirements of the vessel.
With regard to the commercial operation of the vessel, the captain and other crew members are subordinate to the charterer. The provision on the captain's subordination to the orders and instructions of the charterer regarding the use of the vessel is enshrined in the time charter proformas. In global merchant shipping, this condition (“implementation clause”) is called an employment and agency clause.
The subordination of the captain and other crew members to the charterer in matters of using the vessel means the implementation of his orders and instructions regarding business relations with contractors, port, customs, and sanitary services.
Payment of freight to the shipowner “in the manner and within the terms provided for by the time charter” means, first of all, the definition in the contract of the type of payment for freight. Time charter proformas usually state that freight is payable in cash. This condition should not be taken literally, since payment in cash also means in this case all types of payment equivalent to such payment, in which the payment is irreversible and gives the shipowner an unconditional and immediate opportunity to take advantage of the freight.
The contract usually also stipulates in what currency the freight is paid, the currency conversion rate, and the place of payment.