1. Introduction
Charter party agreements are a common and economically significant contractual mechanism in maritime commerce. These agreements, which govern the chartering of a vessel wholly or partially for a voyage or period of time, often give rise to legal disputes due to performance issues. This article explores the main areas of conflict that arise from late delivery of the vessel, failure to load cargo, and non-payment of hire, and it provides legal assessments based on Turkish Commercial Code and international maritime law practices.
2. Definition and Types of Charter Parties
A charter party is a contract between a shipowner and a charterer for the use of a ship. There are three primary types:
- Voyage Charter: The vessel is chartered for a single voyage. Payment is typically made as freight.
- Time Charter: The vessel is chartered for a fixed period. Hire is paid on a daily basis.
- Bareboat (Demise) Charter: The vessel is leased without crew, management, or provisions; full control is transferred to the charterer.
Each form allocates responsibilities and risks differently, which affects the nature of legal disputes that may arise.
3. Failure to Deliver the Vessel on Time
Under both time and voyage charters, the timely and proper delivery of the vessel is a fundamental obligation of the shipowner. Failure to do so can lead to:
- Delays in cargo loading,
- Cancellation of the voyage,
- Financial losses requiring mitigation through alternative arrangements.
🔹 Turkish Court of Cassation, 11th Civil Chamber, 2016/9752 E., 2017/13415 K.
“Failure to deliver the vessel on the agreed date constitutes a material breach of contract and entitles the charterer to claim damages.”
Legal Consequences:
- Compensation for delay or substitute charter costs,
- Termination of the contract,
- Enforcement of liquidated damages clauses (if stipulated).
4. Delayed Delivery of the Vessel
If the delay in delivery is caused by the negligence or fault of the shipowner, they may be held liable. However, where the delay is due to force majeure (e.g., war, weather, labor strikes), liability may be excluded.
Important Note:
In time charters, the vessel must be delivered in seaworthy condition and ready for service. Delivery of a defective vessel, even without delay, may constitute incomplete performance.
5. Failure to Load or Partial Loading of Cargo
Under voyage charters, the charterer is obligated to provide and load the agreed cargo within the laytime. If the cargo is not ready or is partially loaded:
- The owner may claim demurrage for delays in loading,
- If the full cargo is not provided, deadfreight (lost freight for unutilized capacity) may be claimed.
🔹 Turkish Commercial Code, Article 1142
“If laytime is exceeded, the charterer is liable for demurrage as agreed in the contract.”
Legal Consequences:
- Demurrage for excessive laytime,
- Deadfreight claims,
- Contract termination and damage claims.
6. Non-Payment of Hire
In time charter agreements, the charterer must pay hire periodically (e.g., daily or semi-monthly) in return for use of the vessel. If hire payments are not made:
- The shipowner may sue for outstanding hire,
- The charter may be terminated immediately if the contract permits,
- Interest and penalty clauses may apply.
🔹 Turkish Court of Cassation, 11th Civil Chamber, 2015/3878 E., 2016/2956 K.
“Persistent late payments by the charterer justify the owner’s unilateral termination and claim for damages.”
Enforcement:
If hire is due and evidenced by invoices or a clear written agreement, the owner may initiate debt enforcement through non-litigious procedures under Turkish enforcement law.
7. Dispute Resolution Mechanisms
Disputes arising from charter parties are often resolved through:
- Interim injunctions (e.g., arrest of the vessel),
- Arbitration (commonly London Maritime Arbitrators Association – LMAA),
- Commercial court litigation in Turkey,
- Enforcement of liquidated damages or compensatory claims.
8. Conclusion and Evaluation
Charter party agreements are complex and must be drafted with precision. Any ambiguity in delivery, loading, or hire provisions may lead to serious conflicts. Therefore:
- The vessel should be delivered on time and in seaworthy condition,
- Loading timelines must reflect port realities,
- Hire terms must be clearly defined,
- Demurrage, deadfreight, and penalty clauses should be explicit and enforceable.
To avoid costly and time-consuming litigation, parties should seek early legal advice and ensure that all contractual terms are properly negotiated and documented. Legal representation by experts in maritime and commercial law is strongly recommended in any dispute involving charter parties.
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