ShipCalculators.com

Time charter party

A time charter party is a contract under which a shipowner places a named vessel at a charterer’s disposal for an agreed period - ranging from a few months to several years - while retaining technical management, crewing, and class obligations. The charterer pays a daily or monthly rate called hire, directs the vessel’s trading pattern, and supplies bunkers; the owner bears the costs of operating the ship. This structure sits between a voyage charter, where the owner undertakes a specific passage for freight, and a bareboat or demise charter, where the charterer takes full possession including crew and management. Time chartering is the dominant mechanism through which liner operators, commodity traders, and industrial shippers secure long-term tonnage, and its standard forms - NYPE, Baltime, Shelltime, BOXTIME - underpin billions of dollars of shipping contracts each year. ShipCalculators.com provides dedicated tools covering hire calculations, off-hire deductions, time-charter equivalent returns, and bunker adjustment factors. The ShipCalculators.com calculator catalogue groups these under its chartering and commercial section, giving operators quick access to the arithmetic behind every key clause.

Contents

Background and history

The conceptual separation between owning a ship and directing its employment is ancient; classical Athenian records from the fourth century BCE describe arrangements by which merchants hired vessels for periods rather than voyages. The formal English-law instrument, however, took its recognisable shape during the 19th century when the expansion of steam navigation and regular liner services created demand for a hiring arrangement that allowed merchants to plan schedules independently of the shipowner’s commercial judgment.

Early time charters were bespoke documents negotiated through shipbrokers, with printed forms appearing in the latter half of the 19th century. The New York Produce Exchange form - the ancestor of the NYPE family - was first published in 1913, codifying the practices of the North Atlantic grain and bulk trades. Baltime, the Baltic and International Maritime Council’s version, appeared in 1909 in response to European tramp trades. These two instruments dominated time chartering for most of the 20th century and remain the reference documents against which all modern amendments are measured.

The proliferation of specialist vessel types after the Second World War produced sector-specific variants. Shell’s Shelltime form emerged for tanker fixtures. Container shipping’s growth in the 1970s and 1980s generated the need for liner-compatible clauses; BOXTIME followed in 2004. Offshore operations demanded their own framework, satisfied by BIMCO’s SUPPLYTIME series. The underlying logic of each form is the same - period hire, owner’s technical management, charterer’s employment directions - but the detailed risk allocation differs substantially between sectors.

BIMCO has been the principal harmonising body for standard charter party forms since the mid-20th century, producing and revising NYPE 1993, NYPE 2015, Baltime 2001, GENTIME, SUPPLYTIME 2017, BARECON 2017, and a series of optional standard clauses that parties can incorporate by reference. The Comité Maritime International (CMI) and specialist P&I clubs have contributed associated legal frameworks and club rules that interact with the standard forms.

Structure of a time charter

The tripartite distinction

Maritime chartering law recognises three principal instruments. In a voyage charter the owner undertakes a specific service - loading a cargo at one port and discharging it at another - for a lump-sum or per-tonne freight. In a time charter the owner provides the vessel and crew for a period; the charterer directs employment, bears bunker cost, and pays hire. In a bareboat or demise charter the charterer takes possession of the hull without crew and assumes all technical and commercial management, effectively becoming the operator for the charter period. The bareboat structure is used for long-term financing arrangements and is governed by BARECON 2017, BIMCO’s current standard demise charter form; the SPACE technical management separation within BARECON allows a registered owner to separate finance ownership from technical operation.

The time charterer’s position is intermediate: it controls where the vessel goes and what cargo it carries, yet it has no responsibility for the crew’s competence, the hull’s seaworthiness, or class maintenance. This division of control creates the principal tensions in time charter law - who bears loss when the ship’s deficiency causes a commercial setback, and who is responsible when the charterer’s trading instructions expose the ship to a risk that materialises.

Hire as freight

The consideration paid by a time charterer is called hire, not freight. Hire is calculated on a per-day basis (or per calendar month in older forms) and is payable in advance, typically every 15 days under NYPE and every 30 days under Baltime. The per-day rate is fixed at the date of fixture and, under traditional forms, does not vary with the vessel’s actual productivity or trading pattern. Under NYPE 2015 and modern tanker forms, graduated hire scales, index-linked rates, or profit-sharing provisions are sometimes appended, but the daily-rate baseline remains the norm.

Because hire does not depend on the completion of any voyage, it is distinct from freight in legal character. The obligation to pay hire arises on the due date by the effluxion of time; it does not depend on the charterer having issued orders. Conversely, if the vessel is off-hire for any period, hire ceases to accrue for that period by operation of the off-hire clause rather than by any breach.

The time charter equivalent (TCE) is the standard metric for comparing period hire rates with voyage earnings. TCE expresses voyage profit as a notional per-day rate after deducting voyage costs - port dues, canal transit fees, and bunkers - from gross freight and dividing by sea days. The TCE voyage calculator applies this conversion; the Capesize TCE decision calculator compares fixing a vessel on period time charter versus executing voyage charters in the spot market.

Standard form instruments

NYPE 1946, 1993, and 2015

The New York Produce Exchange form has undergone three major revisions. The 1946 version, still widely encountered in older fixtures or in jurisdictions where it has not been superseded, is notable for its brevity and the correspondingly large body of case law that has accumulated around its ambiguous provisions. The 1993 revision incorporated BIMCO’s Inter-Club Agreement framework for cargo liability, clarified the employment clause, and added a war risks clause. NYPE 2015 is the current recommended form; it introduced a suite of environmental and compliance clauses, restructured the hire payment and withdrawal mechanism, clarified off-hire language, and incorporated an optional CII clause reflecting the IMO’s Carbon Intensity Indicator regime introduced by MARPOL through MEPC 76 (2021). The NYPE 2015 CII Clause allocates responsibility for CII compliance between owner and charterer, recognising that the vessel’s rating under the CII attained framework depends on the trading instructions the charterer provides.

Baltime 1939 and 2001

Baltime, the Baltic and International Maritime Council’s time charter form, was first published in 1909 and substantially revised in 1939. The 2001 edition modernised the language and incorporated war risks provisions. Baltime differs from NYPE in several material respects: hire is payable monthly rather than every 15 days; the maintenance standard is expressed differently; the safe port warranty is framed as an obligation rather than a representation; and the arbitration clause traditionally specified London with English law. Baltime remains common in European short-sea and Baltic fixtures and in some liner sub-charter arrangements.

Shelltime 4 and Shelltime 5

Shell’s tanker time charter forms are sector-specific instruments developed for oil tanker trades. Shelltime 4, the long-standing industry reference, contains detailed provisions on tanker-specific matters including cargo segregation, gas-freeing, crude oil washing, vetting requirements (SIRE inspection compliance), and the Intertanko TOVALOP/CRISTAL liability framework. Shelltime 5, published in 2021, updated Shelltime 4 to reflect modern regulatory requirements, MARPOL Annex VI changes, the IMO 2020 sulphur cap, fuel oil quality provisions under ISO 8217:2017, and digital communication standards. Both forms are supplemented by Shell’s own rider clauses addressing specific operational requirements.

INTERTANKTIME is an alternative tanker time charter form developed by Intertanko. BPTime 3 is BP’s proprietary form, similarly detailed on vetting and operational compliance.

BOXTIME 2004

BOXTIME, developed jointly by BIMCO and the Container Ship Time Charter Party Committee, is the standard container ship time charter form. It addresses the specific requirements of cellular container vessels: slot-sharing arrangements, container equipment, reefer power supply, bill of lading issuance by the charterer under the master’s authority, and the interaction between the time charter and the service contracts the charterer operates with shippers. LINERTIME addresses liner service sub-charter arrangements.

BIMCO SUPPLYTIME 2017

SUPPLYTIME 2017 governs the time charter of offshore support vessels (OSVs), anchor-handling tug supply vessels (AHTS), and platform supply vessels (PSVs). It differs from dry cargo and tanker forms in several respects reflecting the offshore service context: the vessel performs active work directed by the charterer’s offshore installation operations rather than simply carrying cargo; the “knock-for-knock” liability regime limits each party’s exposure to its own personnel and property regardless of fault; and the hire structure accommodates standby and reduced-rate provisions for vessel downtime attributable to charterer’s convenience.

GENTIME and other BIMCO forms

GENTIME is BIMCO’s general-purpose time charter form, designed for vessels that do not fit neatly into the bulk carrier, tanker, container, or offshore categories. It is widely used for project cargo, multi-purpose, and heavy-lift vessels. BIMCO also publishes Shipman 2020, a ship management agreement rather than a charter party, which governs the relationship between a registered owner and a professional ship manager taking over technical and crew management - a function that in a bareboat charter would fall to the demise charterer.

Key clauses

Delivery and redelivery

The delivery clause specifies the port or range where the charterer takes the vessel, the expected time of delivery, and the condition in which the vessel is to be delivered. Condition requirements typically include that the vessel be seaworthy, in a thoroughly efficient state of hull and machinery, clean and tight, with holds swept and ready to receive cargo. The vessel is delivered “on hire” at the moment she passes the delivery port’s dropping-out anchor or, in modern forms, at a specified position.

Redelivery provisions mirror the delivery structure: the charterer must redeliver the vessel at an agreed port or range within a stated window. Redelivery outside the contractual range or condition gives rise to a damages claim. The condition-on-redelivery obligation requires the vessel to be returned in the same condition as delivered, fair wear and tear excepted. Disputes about bunker quantities on delivery and redelivery are common; the standard approach is for charterer to take over and redeliver bunkers at then-current market price, with quantities surveyed by a bunker surveyor.

Hire rate and payment mechanics

Under NYPE the hire rate is expressed in US dollars per day per deadweight ton or, more commonly in modern fixtures, as a flat daily rate. Hire is payable in advance - typically by banker’s transfer - every 15 days for the period next following. Late payment provisions, grace periods, and interest on late hire are negotiated by rider clause. The 2015 NYPE revision included a 72-hour anti-technicality notice requirement before withdrawal for non-payment; the charterer has that period to remedy any genuine banking failure after receipt of owner’s notice.

The daily hire and MPA calculator enables operators to model market hire against minimum performance adjustments and total hire accrual over a charter period.

Off-hire

Off-hire clauses suspend the hire obligation for periods when the vessel is not at the full disposal of the charterer due to circumstances within the owner’s sphere of responsibility. The NYPE off-hire clause (Clause 15 in the 1946 form) lists triggering events: breakdown of machinery or equipment, damage to hull, deficiency of men or stores, fire, deviation for hull or cargo damage, drydocking for bottom cleaning or painting, and detention by port state control attributable to the vessel’s condition.

The legal test under English law for whether an event puts the vessel off-hire is whether there has been a relevant prevention of the full working of the vessel: see The Mareva AS [1977] 1 Lloyd’s Rep 368 and the subsequent line of cases. The distinction between a period off-hire clause (hire ceases for the whole period of inefficiency) and an hour-by-hour clause (only the actual hours lost are deducted) is critical to the quantum of any deduction. NYPE 1946 Clause 15 is a period clause; many rider clauses convert it to an hour-by-hour formulation.

The off-hire deduction calculator applies the NYPE methodology to compute hire lost for a given off-hire event, accounting for duration, daily rate, and any bunker saving during the period. The charter off-hire deduction tool and the off-hire grace period calculator extend this analysis to grace period and threshold provisions.

Drydocking off-hire is a specific sub-category. Most time charters entitle the owner to drydock for periodical survey and hull cleaning, with the time in drydock counting as off-hire. The place and notice requirements for drydocking are often subject to charterer’s approval if trading convenience is affected.

Port state control detention is off-hire where the detention arises from the vessel’s own deficiencies, but not where it arises from cargo problems attributable to the charterer’s loading instructions. The distinction matters in practice: where a vessel is detained following a port state control inspection that reveals deficiencies in the vessel’s structural, equipment, or documentation condition, hire ceases; where the detention results from cargo documentation irregularities or misdeclaration by the shipper, the vessel remains on hire.

Speed and consumption warranties

Speed and consumption warranties are among the most commercially contested clauses in any time charter. The typical form warrants that the vessel will perform at about a stated speed on about a stated quantity of fuel, in good weather conditions defined by a Beaufort scale limit and a Douglas Sea State limit. A representative warranty might read: “about 14.0 knots on about 32 metric tonnes IFO 380 cst per day in laden condition, and about 12.0 knots on about 28 metric tonnes IFO 380 cst per day in ballast condition, weather permitting up to Beaufort Force 4 and Douglas Sea State 3.”

The word “about” introduces a tolerance that English courts have interpreted narrowly. In The Gas Enterprise [1993] 2 Lloyd’s Rep 352 the Court of Appeal held that the warranty is an absolute obligation, not merely a contractual best-efforts standard, and that the “about” tolerance is approximately 0.5 knots on speed and half a tonne on consumption. Deviation from the warranty in good weather entitles the charterer to a performance claim calculated over the entire charter period on the basis of the vessel’s actual performance data, typically derived from the deck log.

Performance claims for speed underperformance are calculated by comparing the voyage duration actually taken (at the speed achieved) with the duration that would have resulted from performance at the warranted speed, and multiplying the excess days by the daily hire rate. Overconsumption claims measure the additional bunker cost incurred because the vessel consumed more fuel than warranted. The voyage speed-power fit calculator assists in fitting actual performance data to the speed-power curve. The voyage fuel and CO2 calculator translates consumption figures into cost and emissions terms.

The good-weather threshold means only periods of Beaufort 4 or below (or whatever the charter specifies) count in the performance calculation. Owners typically seek to define “about” broadly and to exclude weather periods generously; charterers seek the opposite. In The Didymi [1988] 2 Lloyd’s Rep 108 the Court of Appeal confirmed that consecutive-voyage averaging over the charter period is the correct methodology for measuring underperformance rather than analysing voyage-by-voyage.

Modern charters increasingly reference ME (main engine) power logs, noon reports certified by the master, and third-party performance monitoring data from hull performance systems. The slow steaming savings calculator illustrates the fuel-cost arithmetic when a vessel is instructed to reduce speed below its warranted speed, a situation that requires careful analysis of whether the underperformance warranty continues to apply at the reduced regime.

Safe port warranty

The safe port warranty is a fundamental charterer’s obligation. In its classic form the charterer warrants that every port ordered will be one that the vessel can safely reach and leave, and safely use throughout its stay, with an ordinary ship of the vessel’s characteristics, in the absence of some abnormal occurrence. The warranty is prospective - assessed at the time of nomination - but is also understood to impose a continuing obligation: if a port becomes unsafe after nomination and the vessel has not yet reached it, the charterer must substitute an alternative.

The leading case is The Eastern City [1958] 2 Lloyd’s Rep 127, where the Court of Appeal set out the test in terms that remain authoritative: a port is safe if, in the relevant period of time, the particular ship can reach it, use it, and return from it without, in the absence of some abnormal occurrence, being exposed to danger which cannot be avoided by good seamanship. The UK Supreme Court’s decision in The Ocean Victory [2017] UKSC 35 addressed the meaning of “abnormal occurrence” in the context of a vessel that grounded at Kashima after waiting at the berth in deteriorating weather. The court held that the coincidence of two independently abnormal conditions - long swell and northerly gale - was itself an abnormal occurrence, so the port was not unsafe. The decision has been criticised for setting the abnormal occurrence threshold too broadly and is subject to ongoing academic and practitioner commentary.

Employment clause

The employment clause, Clause 8 in NYPE 1946, places the master under the orders of the charterer as regards employment, agency, and other specified matters, while leaving him under the owner’s authority for navigation, safety, and cargo care. The distinction between “employment” orders and “navigation” decisions has produced significant case law. Charterers’ orders as to ports, berths, loading sequence, cargo mix, speed, and routing are employment matters; the master retains discretion on weather routing, collision avoidance, and compliance with SOLAS and MARPOL obligations.

The Kos [2012] UKSC 17 examined whether owners could recover hire when the vessel was detained during a port call made at the charterer’s direction. The Supreme Court held that the charterer was not obliged to indemnify the owner for ordinary consequences of complying with lawful employment orders, but that indemnity was available where the order was unlawful or caused the owner loss beyond the normal incidents of the service.

The employment clause also grants the charterer authority to sign bills of lading on behalf of the master - typically through agents authorised by the charterer. This creates significant exposure for owners: bills of lading signed by charterer’s agents may impose obligations that conflict with the charter party. NYPE Clause 8 includes an indemnity whereby the charterer indemnifies the owner against consequences of following employment orders, including the issuance of clean bills for cargo known to be defective.

Trading limits and Institute Warranty Limits

Time charters routinely define the trading area within which the vessel may be employed. The classic reference point was the Institute Warranty Limits (IWL), a series of geographical zones specified in the Institute Time Clauses - Hulls, breach of which required additional premium or cancellation of the hull policy. While the IWL were formally withdrawn by the Lloyd’s Market Association in 2003 in favour of a notification-based approach, the phrase “within Institute Warranty Limits” or “within trading limits as per Institute Warranty Limits” remains common in charter party trading limit clauses as a shorthand for excluding ice, war, and high-risk areas.

Modern trading limits clauses typically exclude specific high-risk trading areas by reference to war risks and joint war committee designations, prohibit trading to countries subject to UN or US/EU/UK sanctions, and incorporate BIMCO’s standard Sanctions Clause. The BIMCO Sanctions Clause for time charter parties allocates the risk of sanctions-related trading restrictions between owner and charterer, typically permitting the owner to refuse employment orders to sanctioned destinations and providing for off-hire or termination in specified circumstances.

Polar operations are subject to trading limit carve-outs referencing the Polar Code, which entered into force on 1 January 2017, requiring vessels operating in polar waters to hold a Polar Ship Certificate and comply with specific operational standards.

Maintenance and redelivery condition

The owner’s maintenance obligation under a time charter is to maintain the vessel in a thoroughly efficient state throughout the charter period, encompassing hull, machinery, accommodation, and equipment. Class must be maintained without suspension or reduction. The maintenance obligation is separate from seaworthiness: the vessel must be maintained continuously, not merely at the beginning of the charter as in voyage chartering.

On redelivery the charterer must return the vessel in the same good order and condition as at delivery, fair wear and tear excepted. Disputes frequently arise over the condition of cargo holds, paintwork, equipment wear, and hull fouling attributable to the charterer’s trading instructions (e.g., tropical trading accelerating fouling beyond normal rates). Some charters include detailed redelivery condition surveys, cargo hold cleaning standards, and hold paint condition schedules.

Arbitration and jurisdiction

NYPE 1946 provides for arbitration in New York under Society of Maritime Arbitrators (SMA) rules. NYPE 1993 and 2015 offer alternative London arbitration under LMAA (London Maritime Arbitrators Association) terms, which is the dominant choice in international markets. Baltime traditionally provides for London arbitration. The LMAA Terms 2021 include expedited and small claims procedures for lower-value disputes.

The arbitration cost and time budget calculator and the LLMC liability cap calculator assist parties in evaluating the economics of pursuing or settling time charter disputes. The distinction between arbitration clauses in different standard forms - New York law vs. English law - has material consequences for how courts approach implied terms, off-hire clause construction, and the availability of anti-suit injunctions.

Off-hire in detail

Triggering events

The standard NYPE Clause 15 off-hire events are breakdown of machinery or equipment; deficiency of men or stores; damage to hull or equipment; fire; deviation for hull or cargo damage; drydocking or periodical survey; detention by authorities. The enumeration is exhaustive under English law: an event that falls outside the list does not trigger off-hire even if it renders the vessel commercially useless. This is the “net loss of time” principle established in The Laconian Confidence [1997] 1 Lloyd’s Rep 139.

Crew illness can trigger off-hire under “deficiency of men” if the illness prevents the vessel from performing fully. A crew member’s incapacity that requires medical evacuation, hospital treatment ashore, or repatriation, reducing the complement below working strength, qualifies as deficiency. By contrast, a crew member confined to quarters with no impact on the vessel’s working ability does not.

Deficiency of stores - fuel, water, provisions, lubricating oil - can trigger off-hire where the deficiency prevents the vessel from proceeding. In practice this arises rarely, because if bunkers run out the cause is usually the owner’s failure to arrange adequate stem fuel rather than a stores deficiency in the traditional sense.

Withdrawal for non-payment of hire

The owner’s right to withdraw the vessel for non-payment of hire is one of the most commercially important provisions in a time charter. Under traditional forms (NYPE Clause 5) the owner has the right to withdraw on non-payment of hire when due. English courts long held this right to be absolute and near-automatic: The Brimnes [1975] QB 929 confirmed that withdrawal was effective without prior notice once hire fell due and unpaid, provided the owner acted within a reasonable time.

Later cases refined the analysis. In The Astra [2013] EWHC 865 (Comm) Flaux J held that the obligation to pay hire punctually was a condition of the contract rather than merely an innominate term, so that any late payment - regardless of the amount or the length of the delay - entitled the owner to elect to treat the charter as repudiated. The decision was controversial and has been subject to academic criticism; parties should not assume that minimal accidental late payments will invariably give rise to a right to treat the charter as terminated, as NYPE 2015 includes anti-technicality provisions designed to address precisely this scenario.

The charter withdrawal calculator computes the hire balance outstanding and models the financial exposure in a withdrawal scenario, including bunkers on board and redelivery costs.

Contractual liens are commonly appended to time charters: the owner asserts a lien on cargo on board for unpaid hire. The exercisability of such liens in practice depends on whether sub-bills of lading give notice to cargo interests, whether the cargo is owned by the charterer or a third party, and the law of the jurisdiction where the lien is exercised.

Performance claims

Speed and consumption analysis

Performance claims are brought by charterers where the vessel has failed to maintain the warranted speed or has consumed more fuel than warranted. The methodology requires three elements: identification of periods of good weather (within the contractual Beaufort/DSS limits); measurement of actual performance in those periods from deck logs and noon reports; and comparison of actual against warranted performance to compute the excess time or excess consumption.

Speed claims quantify the hire paid for “wasted” time: if the vessel would have completed the same voyages at warranted speed in, say, 240 days rather than the 250 days actually taken, the charterer has paid 10 days’ hire unnecessarily and is entitled to recover that sum. Consumption claims quantify the additional bunker expenditure: if the vessel consumed 33 t/day against a warranty of 32 t/day over 250 sea days in good weather, the charterer has consumed 250 excess tonnes of bunkers and may claim their market value.

The parties frequently dispute the selection of weather data (log entries vs. NOAA/ECMWF hindcast) and the baseline consumption rate (at what load factor and speed does the warranty apply when the vessel is ordered at a speed different from the warranted speed). The bunker adjustment factor calculator assists in computing the BAF component of freight adjustments in connection with consumption variances.

The Gas Enterprise and Didymi principles

Two Court of Appeal decisions establish the framework for performance claim quantification under English law. In The Gas Enterprise [1993] 2 Lloyd’s Rep 352 the court confirmed that the warranted speed is a firm obligation, not a target, and that “about” introduces only a narrow tolerance. Performance across all good-weather periods in the charter must be averaged rather than assessed voyage-by-voyage; a vessel that is fast on some voyages and slow on others will have its average measured against the warranty.

In The Didymi [1988] 2 Lloyd’s Rep 108 the Court of Appeal addressed the allocation of time under a combined speed-and-consumption claim where the vessel was both slow and overconsumptive. The court confirmed that the two claims are conceptually separate but may overlap in quantum: a charterer cannot recover twice for the same bunkering cost, but may recover the full excess cost attributable to each breach independently calculated.

Hire calculation

Daily hire and TCE

Daily hire is the simplest element of time charter arithmetic: the agreed rate multiplied by the number of days on hire produces gross hire for the period. Deductions include off-hire periods, performance claim adjustments, and any agreed hire reductions (e.g., for slow steaming orders). The daily hire off-hire calculation provides a structured template for computing net hire payable after deductions.

The time charter equivalent transforms voyage economics into a per-day rate comparable to a time charter hire quote, enabling an owner to decide whether to fix on time charter or trade spot. TCE equals gross freight minus voyage costs (bunkers, port dues, canal dues, commissions) divided by sea days. The TCE calculator performs this computation; the TCE voyage form structures the underlying voyage data input.

Bunker adjustment

Hire rates in time charters are sometimes quoted on a bunker-included basis (where the owner supplies bunkers and the rate reflects an assumed fuel price) or on a bunker-excluded basis where the charterer takes delivery of bunkers on handover and redelivers them at market price. More commonly, time charters are settled on a hire-and-bunker basis: charterer supplies and pays for all bunkers, takes delivery of on-board bunkers from owner at agreed price on delivery, and redelivers remaining bunkers to owner at agreed price on redelivery.

The bunker adjustment factor calculator models BAF provisions where the hire rate incorporates a fuel cost assumption that is adjusted periodically against a bunker price index. The bunker density and temperature correction calculator assists in converting bunker quantities between volume and mass when settling delivery/redelivery bunker accounts.

Last voyage and redelivery

The narrow redelivery window

The redelivery obligation creates one of the most operationally difficult aspects of time charter management. A charter expiring in a narrow range - “80 to 90 days, redelivery one safe port Singapore range” - requires the charterer to plan the final voyage to arrive within the window. If the charterer gives last voyage orders that cannot be performed within the charter period, the owner is entitled to elect whether to accept the orders (and recover damages for any overage) or to refuse them as being outside the charter. The permissible margin for computation was examined in The Peonia [1991] 1 Lloyd’s Rep 100, where the Court of Appeal confirmed that the charterer may give orders for a last voyage only if there is a legitimate expectation - at the time of giving the order - that the vessel can complete the voyage and redeliver within the charter period.

Where the vessel is redelivered late, the owner is entitled to damages for the overage period. If the market rate has risen above the charter hire rate during the overage period, the owner may recover the difference between market and charter rates as damages. Where redelivery is accompanied by the vessel being in a condition worse than at delivery, the charterer owes repair costs.

Bunkers on redelivery

The standard treatment of bunkers on redelivery is symmetrical with delivery: the owner takes over the on-board bunkers at the price agreed in the charter party, which may be market price at the date of redelivery, fixed price, or a hybrid formula. Disputes arise over the quantity of remaining bunkers, particularly when the vessel has consumed more bunkers than anticipated on the final voyage and the charterer has insufficient fuel to redeliver within the agreed range. The voyage bunker, density and ROB calculator assists in planning final-leg bunker requirements.

Environmental and compliance clauses

BIMCO environmental clauses for NYPE 2015

The 2015 revision of the NYPE form introduced or anticipated several environmental rider clauses that have since become standard in the market. The NYPE 2015 CII Clause allocates CII performance responsibility between owner and charterer, recognising that operational decisions during the charter period - speed instructions, trading routes, port choice, idle time - directly affect the vessel’s annual CII rating. The clause typically requires the owner to provide a vessel capable of achieving the required CII rating when operated in accordance with warranted speed and consumption, and requires the charterer to operate the vessel in a manner that does not cause the rating to fall below the minimum required level. The relationship between CII compliance and time charter performance obligations is discussed in what is CII and slow steaming and CII.

EU ETS and FuelEU Maritime clauses

The extension of the EU Emissions Trading System to shipping from 1 January 2024 created an immediate allocation problem in time charter relationships: who pays for EUA purchase? BIMCO’s ETS Allowances Clause for time charters (published 2022 and revised 2023) typically places the obligation to surrender EUAs on the registered owner (the “shipping company” under the EU MRV Regulation) but grants the owner the right to recover EUA costs from the charterer, since it is the charterer who directs the trading pattern generating the emissions. The EU ETS for shipping article and the FuelEU Maritime article discuss the regulatory framework in detail. The Sea Cargo Charter alignment calculator assists in benchmarking charter party obligations against Sea Cargo Charter targets.

The FuelEU Maritime Regulation’s compliance balance mechanism similarly creates a time-charter allocation issue from 2025: the owner is the entity responsible for the GHG intensity of fuel used, but the charterer supplies the bunkers and directs the trade mix. BIMCO’s FuelEU Maritime Clause addresses this by requiring the charterer to supply compliant fuels and to bear any penalty attributable to non-compliance arising from its operational decisions. The FuelEU penalties and pooling multipliers article surveys the penalty structure that these charter party clauses are designed to allocate.

BIMCO Cyber Security Clause 2019

The BIMCO Cyber Security Clause for time charters (2019, revised 2021) requires each party to maintain cyber security management systems aligned with IMO Resolution MSC-FAL.1/Circ.3 (Guidelines on Maritime Cyber Risk Management) and the ISM Code requirement (as amended by MSC-FAL.1/Circ.3 guidance) to address cyber risk in SMS documentation by 1 January 2021. The clause delineates owner responsibility (cyber security of on-board systems - ECDIS, AIS, AMS, engine control) from charterer responsibility (commercial systems - cargo booking, EDI, port agent interfaces). The IACS UR E26 cyber resilience calculator assists operators in screening vessel cyber resilience against the IACS UR E26 requirements that classification societies now apply to newbuildings and, progressively, to existing tonnage.

The ISM Code framework requires ship managers to address cyber risk within their Safety Management System, and classification societies - see classification society - increasingly audit cyber resilience as part of their annual surveys.

Notable cases

The Spar Shipping AS v Grand China Logistics (2016)

In Spar Shipping AS v Grand China Logistics Holding (Group) Co Ltd [2016] EWCA Civ 982 the Court of Appeal reconsidered the relationship between hire payment obligations and the right of withdrawal. Grand China had persistently paid hire late across three time charter parties. The owners eventually withdrew the vessels. The Court of Appeal, distinguishing The Astra, held that the obligation to pay hire punctually was not a condition of the contract, so that late payment did not in itself amount to a repudiation entitling the owner to accept repudiation and claim damages. Rather, the correct analysis was breach of an innominate term; whether that breach was repudiatory depended on whether it went to the root of the contract. The case illustrated the continuing doctrinal uncertainty in this area and the importance of careful anti-technicality clause drafting.

The Kos (2012)

Gard Marine & Energy Ltd v China National Chartering Co Ltd (The Kos) [2012] UKSC 17 arose from an incident where the charterers gave orders to load a cargo that proved contaminated, necessitating off-hire and cleaning. The Supreme Court examined the charterers’ implied indemnity obligation under the employment clause. The court held that the indemnity extends to losses caused by compliance with charterers’ orders that are not normal incidents of the service but fall outside the scope of what the owner voluntarily accepted under the charter. The distinction is fact-sensitive: routine port calls, congestion delays, and weather losses do not attract indemnity; positively harmful instructions that cause damage to the vessel or cargo - or detain the vessel in circumstances not inherent in the service - may do so.

The Doric Pride (2006)

Stolt Tankers Inc v Landmark Chemicals SA (The Doric Pride) [2006] EWCA Civ 373 addressed the safe port warranty in the context of US port security measures following the September 2001 attacks. The Court of Appeal held that a US port that was temporarily inaccessible to a vessel whose master was of a nationality listed in a US security directive was not unsafe within the meaning of the safe port warranty: the restriction was a political/administrative matter rather than a physical danger to the vessel. The case narrowed the scope of “safe” in safe port analysis and confirmed that legal restrictions on entry - as distinct from physical hazards - are not straightforwardly covered by the warranty.

Bareboat (demise) charter

A bareboat or demise charter is a distinct arrangement under which the charterer takes exclusive possession of the vessel without crew, assumes full operational and technical responsibility, and becomes the disponent owner for the charter period. The owner (registered or beneficial) retains title but has no management role. BARECON 2017 is the current BIMCO standard form; it distinguishes between vessels delivered without any existing mortgage encumbrance and vessels subject to a finance lease (Box 28 in BARECON 2017 permits the inclusion of a hire-purchase option or mandatory purchase obligation, creating a lease-finance hybrid common in newbuilding finance structures).

The SPACE technical management separation in BARECON 2017 allows the registered owner to appoint a technical manager under a separate Shipman agreement to carry out ISM and ISPS compliance functions on the vessel while the bareboat charterer serves as the “company” for ISM Code purposes. This tri-party structure - registered owner, bareboat charterer/ISM company, and technical manager - is common in sale-and-leaseback and tonnage tax structures. The ISM Code and ISPS Code obligations that follow the “company” designation are critical in determining which party bears liability in bareboat structures.

Bareboat charters are not time charters in the legal sense: the bareboat charterer pays hire but does not receive a manned ship. Performance obligations, off-hire, and safe port analysis apply differently or not at all. A bareboat charterer who encounters a port that damages the vessel cannot make a safe port claim against the registered owner; the charterer is the operator and has accepted responsibility for operational decisions.

Comparison with voyage and bareboat charters

The three principal charter forms distribute risk and responsibility differently across the owner-charterer divide.

In a voyage charter the owner assumes full voyage risk: the hire equivalent (freight) is payable only on completion of the voyage, the owner supplies bunkers, and the owner bears delay risk in port through the demurrage/despatch mechanism. The owner is responsible for seaworthiness at the beginning of the voyage and for cargo care throughout. The voyage charter party article analyses these obligations in detail.

In a time charter the owner retains the ship and crew but transfers commercial risk: the charterer pays hire regardless of voyage outcomes, supplies bunkers, and bears the cost of port charges and canal dues. The owner is responsible for maintenance and seaworthiness; the charterer is responsible for the consequences of its trading decisions.

In a bareboat charter the charterer assumes most risk: the owner receives a capital-equivalent hire payment for the use of the hull but bears no operating costs, no crew liability, and no ISM/ISPS obligations as operator. The bareboat charterer stands in the same position as an owner for most regulatory and liability purposes.

The commercial charter party standard form picker assists operators in identifying which standard form is appropriate for their vessel type and chartering purpose.

Cargo liability under time charters

Inter-Club Agreement

The allocation of cargo liability between time charterers and shipowners is governed by the New York Produce Exchange Inter-Club Agreement (ICA). The ICA was first published in 1970 and revised in 1984 and 1996; the current version, known as the Interclub NYPE Agreement 1996 (as amended 2011), is incorporated by reference in NYPE 1993 and NYPE 2015 and widely adopted in the tanker and dry bulk sectors.

The ICA provides a formula for sharing cargo claims between owner and charterer depending on the cause of the loss or damage. Claims resulting from the seaworthiness of the vessel or the neglect of the crew in navigation or management of the vessel are allocated 100% to the owner. Claims resulting from loading, stowage, securing, tallying, dunnaging, or discharge operations - typically where the charterer or its appointed stevedores have directed the operation - are allocated 100% to the charterer. Claims that are genuinely mixed - where both navigational neglect and cargo-handling deficiency contributed - are split 50/50. The practical effect is that both owner and charterer carry separate P&I club entries covering their respective ICA exposures.

The ICA only applies between owner and charterer; it does not bind cargo claimants, who continue to sue under the bill of lading against the carrier of record. Where the master has signed bills of lading as agent for the charterer under the employment clause, the owner may nonetheless face primary liability to cargo claimants and must look to the charterer for an indemnity. The indemnity under the employment clause and the ICA allocation between the parties are complementary mechanisms addressing the same underlying risk from different directions.

Bills of lading and the Hague-Visby interface

Under a time charter the charterer is authorised to issue or cause to be issued bills of lading covering cargo loaded under the charter. Where the charterer issues bills on its own house form or the master countersigns the charterer’s bills, the relationship between the bill of lading holder and the owner depends on whether the bill is charterparty-incorporated or stands alone. If the bill incorporates the charter party by reference, a holder may be bound by the charter party arbitration clause; if it does not, the holder sues under the bill of lading on Hague-Visby terms in whichever jurisdiction the bill designates.

The bill of lading article analyses the Hague-Visby liability framework in detail. For time charter purposes the key risk is the “Himalaya” problem: where a charterer has over-issued bills (e.g., bills for more cargo than was loaded) or issued clean bills for damaged cargo, the owner’s exposure to cargo claimants may exceed what the ICA or the employment clause indemnity can recover from the charterer, particularly if the charterer becomes insolvent.

Data and reporting obligations

IMO DCS and the time charter relationship

The IMO Data Collection System (IMO DCS), established under MARPOL Annex VI Regulation 22A from 1 March 2018, requires ships above 5,000 GT to collect and report fuel consumption data annually. The “company” for IMO DCS purposes is the ISM Code company - in a time charter, the registered shipowner or the technical manager acting under the owner’s authority. The charterer has no direct reporting obligation under IMO DCS, but its operational decisions (speed, cargo loads, routes) determine the fuel consumption data that the owner must report.

This creates a data-access obligation: the owner needs accurate voyage data to discharge the DCS reporting obligation, while the charterer possesses that data. Time charter parties increasingly include data-sharing provisions - sometimes embedded in the CII clause - requiring the charterer to provide certified noon report data, bunker delivery notes, and cargo quantity information to enable the owner to compile an accurate IMO DCS annual report. The IMO DCS vs EU MRV article surveys the two parallel reporting regimes that owners and charterers must navigate.

SEEMP and the charter party

The Ship Energy Efficiency Management Plan (SEEMP), required under MARPOL Annex VI Regulation 22, is an owner/operator document but its content depends substantially on how the vessel is operated. Part III of the SEEMP (introduced from 2023 for vessels subject to the CII framework) must include a plan of corrective actions if the vessel falls below its required CII rating. If operational decisions - speed instructions, idle time, port calls - that drive CII underperformance are within the charterer’s control, the owner faces a regulatory obligation to correct conduct it cannot unilaterally change. The NYPE 2015 CII Clause addresses this by giving the owner the right to take over operational control of speed and routing if the charterer’s instructions risk causing a CII rating of D or E.

Market practice

Fixture negotiation and broking

Time charter fixtures are negotiated through shipbrokers - typically a combination of the owner’s broker, the charterer’s broker, and sometimes a central broker - on terms circulated in the market as “subjects” before being firmed up as a “fixture.” BIMCO’s standard printed forms provide the baseline; nearly all fixtures include a schedule of rider clauses that modify, expand, or supersede the standard provisions. The rider clause schedule is attached to and incorporated into the charter party and governs in the event of any conflict with the printed form.

The Baltic Exchange publishes time charter assessment rates for major vessel types and routes (e.g., the Baltic Handysize Index, Baltic Supramax Index, Baltic Panamax Index, Baltic Capesize Index). These indices are used as settlement references in Forward Freight Agreements (FFAs), which allow owners and charterers to hedge future hire rate exposure without fixing physical vessels. The FFA settlement calculator computes FFA final settlement amounts against monthly average index rates.

Hire rates and market cycles

Time charter rates are cyclical and driven by vessel supply, trade demand, and bunker costs. Fixture databases maintained by Baltic Exchange members and specialist platforms show that rates for a modern 180,000 DWT Capesize on 12-month time charter ranged from under US$10,000 per day in depressed markets (2015-2016) to over US$60,000 per day in peak markets (2021). Tanker rates exhibit similar but independently driven cycles. Container ship time charter rates reached historic highs of over US$100,000 per day for large vessel classes in 2021-2022 before correcting sharply.

The relationship between spot voyage rates and time charter rates reflects market expectations about future earnings. When spot rates are high relative to time charter rates, owners are reluctant to commit vessels to period fixtures at rates below current earnings; when markets are expected to soften, charterers are reluctant to pay premium period rates. The TCE conversion enables direct comparison, and the round voyage profit and loss calculator provides the voyage P/L context against which period hire decisions are evaluated.

BIMCO standard clauses

Beyond the core standard forms, BIMCO publishes a library of optional clauses that parties can incorporate into any time charter by reference. The most commercially significant for current practice include:

The NYPE 2015 CII Clause, which addresses IMO CII compliance allocation. The BIMCO ETS Allowances Clause (2022/2023), which allocates EU ETS liability for EU ETS compliance. The BIMCO FuelEU Maritime Clause, addressing compliance under the FuelEU Maritime Regulation. The BIMCO Sanctions Clause, prohibiting trading to designated sanctioned territories and providing owner withdrawal rights. The BIMCO Cyber Security Clause 2019, requiring each party to maintain cyber risk management consistent with IMO guidelines. The BIMCO Piracy Clause, addressing additional costs and procedures in high-risk areas. The BIMCO ISPS/Maritime Security Clause, addressing ISPS Code compliance costs.

Each of these clauses represents the market’s accumulated response to a regulatory or commercial risk that the original printed forms did not anticipate. The process of clause development - consultation by BIMCO’s Documentary Committee, circulation for comment, publication, and adoption - typically takes two to four years from regulatory trigger to published clause.

See also

References

  1. BIMCO, New York Produce Exchange Form (NYPE) 2015, Copenhagen: BIMCO, 2015.
  2. BIMCO, Baltime 2001: Baltic and International Maritime Council Uniform Time Charter Party, Copenhagen: BIMCO, 2001.
  3. BIMCO, SUPPLYTIME 2017: Offshore Support Vessel Time Charter, Copenhagen: BIMCO, 2017.
  4. BIMCO, BARECON 2017: Standard Bareboat Charter, Copenhagen: BIMCO, 2017.
  5. BIMCO, BOXTIME 2004: Standard Time Charter Party for Container Vessels, Copenhagen: BIMCO, 2004.
  6. Shell International Trading and Shipping Company, Shelltime 5, London: Shell, 2021.
  7. The Gas Enterprise [1993] 2 Lloyd’s Rep 352 (CA).
  8. The Didymi [1988] 2 Lloyd’s Rep 108 (CA).
  9. The Brimnes [1975] QB 929.
  10. The Astra [2013] EWHC 865 (Comm).
  11. Spar Shipping AS v Grand China Logistics Holding (Group) Co Ltd [2016] EWCA Civ 982.
  12. Gard Marine & Energy Ltd v China National Chartering Co Ltd (The Kos) [2012] UKSC 17.
  13. Stolt Tankers Inc v Landmark Chemicals SA (The Doric Pride) [2006] EWCA Civ 373.
  14. The Ocean Victory [2017] UKSC 35.
  15. The Eastern City [1958] 2 Lloyd’s Rep 127 (CA).
  16. The Peonia [1991] 1 Lloyd’s Rep 100 (CA).
  17. The Mareva AS [1977] 1 Lloyd’s Rep 368.
  18. The Laconian Confidence [1997] 1 Lloyd’s Rep 139.
  19. Cooke, J., Young, T., Taylor, A., et al., Voyage Charters, 4th edn, London: Informa Law from Routledge, 2014.
  20. Wilford, M., Coghlin, T., and Kimball, J.D., Time Charters, 7th edn, London: Informa Law from Routledge, 2016.
  21. BIMCO, ETS Allowances Clause for Time Charter Parties, Copenhagen: BIMCO, 2022 (revised 2023).
  22. BIMCO, Cyber Security Clause for Time Charter Parties, Copenhagen: BIMCO, 2019 (revised 2021).

Further reading

  • Summerskill, M., Laytime, 5th edn, London: Sweet & Maxwell, 2004 (foundational companion text on laytime and demurrage in charterparty practice).
  • Davies, D. and Dickey, A., Shipping Law, 4th edn, Sydney: Thomson Reuters, 2016 (comparative analysis including Australian and US dimensions).
  • IMO Resolution MSC-FAL.1/Circ.3 (5 July 2017), Guidelines on Maritime Cyber Risk Management (the IMO baseline for the BIMCO Cyber Security Clause).
  • IACS, Unified Requirements E26 and E27 on Cyber Resilience, London: IACS, 2022 (technical requirements now incorporated into classification society survey programmes).
  • Baltic Exchange, Shipping KPIs Standard, London: Baltic Exchange, 2020 (methodology for speed/consumption performance benchmarking).