Denys Hickey

A closely related way of meeting shipping requirements is to enter into a

bareboat or demise charter, under which the legal owner of the vessel charters the
vessel out on a long-term basis on terms that the charterers will take care of all of
insurance, maintenance and crewing requirements. A consequence of this is that the
charterer will also be regarded for legal purposes as being in control of the vessel and
will be legally liable for the operation of the vessel and any resulting liability. Such
bareboat charters can have tax advantages in some jurisdictions and can be useful if
a company wishes to keep the ships off its balance sheet, or as part of a financing
package.
However, the most common forms of shipping arrangements encountered in the
oil and gas sector are time or voyage charters. In summary, the difference between
the two forms of charter is that under a time charter the vessel is hired out for a
period which could be as short as one or two months, but more commonly will be
one or more years. With a voyage charter, in contrast, the vessel is only chartered for
a single voyage, or sometimes a series of consecutive voyages.
In the case of both time and voyage charters it is normal for chartering to be
carried out on the basis of standard forms of charter, the detailed terms of which are
subject to amendment during negotiation of the individual charter concerned. The
most commonly used time charter forms are BPTime and Shelltime. In the case of
voyage charters the most commonly used forms are Asbatankvoy, BPvoy and
Shellvoy. It is, however, important to point out that there are many other different
company forms in use; and although there are common features, many of the
detailed terms vary quite considerably.
In the case of both time and voyage charters, the large charterers tend to have
their own preferred additional clauses which are themselves subject to further
negotiation during the chartering negotiations. It is therefore very common to see
charters where the printed standard form has been amended and charterers standard
additional clauses have also been amended.
The main features of time charters and voyage charters are discussed next.

2.1 Time charters

The main feature of a time charter is that in return for a daily rate of hire the owner
agrees to allow the charterer full access to the vessel, and agrees for the vessel to be
used within certain geographical limits for the carriage of specified cargoes.
Normally, the limits are set fairly widely, but there will always be some limitations,
in particular based on the fact that an owner will not want the vessel employed in
areas which are subject to hostilities. Equally, he will not want the vessel to be
employed in areas such as Canadian waters in wintertime unless the vessel is
specifically adapted for ice. There may be other limitations on the use of the vessel
depending on her construction, and on whether or not she has permits and
approvals to trade freely within the relevant area. In general terms, this means that
the standards required for a vessel to trade within Europe or to the United States will
be higher than, for example, a vessel which is only required to trade within the
Arabian Gulf, or between the Arabian Gulf and the Indian subcontinent. The general
trend worldwide is, however, for stricter standards to be imposed, which means that

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