Chapter IX
CHARTER-PARTY
Section 1. GENERAL PROVISIONS
Article 215. Charter-party
Charter-party is a contract entered into between the owner and charterer of the ship under which the owner gives the right to use his ship to the charterer within a specified period to fulfill specific agreed objectives and is paid freight by the charterer.
Article 216. Form of a charter-party
1. A charter-party is concluded in the form of either a time charter or demise charter.
2. A charter-party must be in writing.
Article 217. Re-letting of the ship
1. If contractually agreed upon, the charterer may re-let the ship out to the other third person but has to remain obligatory to perform the charter-party with the owner.
2. Rights and obligations of the ship owner provided for in this Chapter shall be applied similarly to the re-letting party.
Article 218. Rules for application of laws to the charter-party
Provisions pertaining to the rights and obligations of the ship owner and charterer set forth in this Chapter shall only be applied unless otherwise agreed upon between the ship owner and charterer.
Article 219. Statute of limitation for submission of a claim as to the charter-party
The statute of limitation for submission of a claim as to matters arising out of the charter-party lasts for 02 years from the date of termination of this charter-party.
Section 2. HIRING OF A SHIP FOR A SPECIFIED PERIOD OF TIME
Article 220. Time charter
1. A time charter refers to a contract for hiring of a ship whereby the ship owner provides a specific ship along with crew members for the charterer.
2. A time charter is composed of the following elements:
a) Name of the ship owner and charterer;
b) Name, flag, grade of the ship; weight, engine capacity, gross register tonnage, speed and fuel consumption;
c) Operating region, purpose of use of the ship and the term of the charter-party;
d) Time, location of and conditions for handover and return of the ship;
dd) Freight for hiring of the ship and payment method;
e) Other related contents.
Article 221. Obligations of the ship owner agreed upon in the time charter
1. The ship owner shall be obliged to hand over the ship to the charterer at the right place and time, ensure necessary technical safety conditions, and have sufficient supplies relevant to the purpose of use of the ship as agreed upon in the charter-party and keep the aforesaid unchanged during the time of hiring of such ship.
2. The ship owner shall be obliged to properly man the ship with competent crew members which are relevant to the purpose of use of the ship agreed upon in the charter-party, pay salary and ensure other legal benefits of seafarers during the time of hiring of the ship.
Article 222. Rights of the time charterer
1. The charterer shall be vested with the complete right to use dedicated areas on board the ship to carry goods, passengers and baggage.
2. The charterer shall not be accorded the right to use other areas on board the ship to carry goods, passengers and baggage, unless otherwise approved by the ship owner.
Article 223. Obligations of the time charterer
1. The charterer shall be obliged to use the ship to serve the right purpose agreed upon in the charter-party and must duly pay attention to exercise due care of benefits of the ship owner.
2. The charterer shall be obliged to ensure the ship is only used for carrying goods, passengers and baggage in a legitimate manner.
3. After the charter-party expires, the charterer shall be obliged to return the ship to the ship owner at the right place and time and ensure the technical conditions as agreed upon in the charter-party, except for the ship's natural wear and tear.
Article 224. Relationship between the ship owner, charterer and crew members in the time charter
1. During the term in which the ship is hired under the time charter, the ship master and other seafarers that belong to crew members on board the ship remain to be subject to the ship owner’s authority to manage employment. The ship owner shall be fully liable for issues relating to crew members.
2. During the ship's operations, the ship master shall act on behalf of the charterer and must carry out the order obtained from the charterer as agreed upon in the time charter.
3. The ship owner shall be held jointly responsible to the charterer for the ship master’s exercise of authority referred to in paragraph 2 of this Article, except when the ship master has clearly undertaken that he acts on behalf of the charterer to exercise such authority.
Article 225. Distribution of remuneration paid for rescue service in the time charter
Where the time-chartered ship participates in rescue activities within the term of the time charter, remuneration paid for rescue activities shall be evenly distributed among the ship owner and charterer after costs relating to such rescue activities and rewards to crew members for their rescue efforts have been deducted from such remuneration.
Article 226. Exceeding the term of time charter of the ship
On the basis of sound calculation, if the ship's last journey exceeds the time when the ship must present itself to the ship owner as agreed upon in the charter-party, the charterer shall be entitled to continue use of the ship to complete that journey; the charterer must pay demurrage for the extra time of use of the ship at the price specified in the charter-party; if the market freight rate imposed on hiring of the ship is higher than the freight agreed upon in the charter-party, the charterer must pay freight for hiring of the ship equal to the current market price of freight.
Article 227. Payment of freight for time chartering of the ship
1. The charterer shall be held liable for freight for ship time chartering calculated from the date of possession of the ship to the date of return of the ship to the ship owner.
2. The ship charterer shall not be held responsible for paying freight for the time when the ship is not brought into operation due to damage, lack of supplies of spare parts or ineligible crew members. In this case, the charterer shall be entitled to a relief from liability for costs incurred from maintenance of the ship.
3. Where the ship's incapability of being brought into operation is through the charterer's fault, the ship owner remains to be entitled to freight paid for hiring of the ship and compensation for any loss or damage concerned.
4. Where the chartered ship has gone missing, freight paid for hiring of the ship shall be accrued till the date on which the last message about that ship is received.
5. Where the charterer fails to pay freight agreed upon in the charter-party, the ship owner shall be accorded authority to detain goods, property on board the ship if such goods or property are in the charterer’s possession.
Article 228. Termination of the time charter
1. The charterer shall be entitled to terminate the charter-party and submit a claim for compensation for any related loss or damage if the ship owner commits fault in performing obligations referred to in Article 221 hereof.
2. Both contracting parties shall be entitled to terminate the charter-party without having to pay any compensation in the event that act of war, riots or application of coercive measures of competent regulatory agencies to hindering execution of the charter-party, which is unlikely to be terminated after a proper waiting time, occur.
3. The charter-party automatically becomes void and null if the ship has gone missing, is wrecked, destroyed or deemed subject to be unrepairably damaged or, if it is likely to be repaired, such repair is uneconomic.
Section 3. BAREBOAT HIRING
Article 229. Demise charter
1. A demise charter refers to a contract for hiring of a ship whereby the ship owner provides a specific ship without crew members.
2. A demise charter is composed of the following elements:
a) Name of the ship owner and charterer;
b) Name, flag and grade of the ship; weight and engine capacity of the ship;
c) Operating region, purpose of use of the ship and the term of hiring of the ship;
d) Time, location of and conditions for handover and return of the ship;
dd) Checking, maintenance and repair of the ship;
e) Freight for hiring of the ship and payment method;
g) Ship insurance;
h) Time of and conditions for termination of the charter-party;
i) Other related contents.
Article 230. Obligations of the ship owner agreed upon in the demise charter
1. The ship owner must exercise due diligence in performing his obligations to provide the seaworthy ship and relevant documents for the charterer at the location and time agreed upon in the charter-party.
2. During the term of demise charter, the ship owner shall not be allowed to mortgage the contractual ship without any written consent from the charterer; where the ship owner is in contravention of this regulation, compensation for any loss or damage imposed on the charterer must be awarded.
3. Where the ship is detained due to any dispute involving the ownership or debts of the ship owner, the ship owner must ensure that benefits of the charterer are not affected and compensate for any loss or damage imposed on the charterer.
Article 231. Obligations of the demise charterer
1. The demise charterer shall be obliged to take care of the ship and equipment installed onboard the ship during the term of demise charter.
2. The demise charterer shall be obliged to repair any damage to the ship during the term of demise charter and must notify the ship owner of this. The ship owner shall be liable for charges paid for repair service if damage arises outside the scope of liability of the charterer.
3. During the term of demise charter, the charterer shall be liable for fees for the ship insurance contract of which value and manner have been agreed upon in the charter-party.
4. During the term of demise charter, if any loss imposed on the ship charter results from the charterer’s use and operation of the ship, the charterer shall be obliged to provide relief or compensation for such loss.
Article 232. Obligations to return the ship, exceeding the term of charter-party and termination of the demise charter
Obligations to return the ship, exceeding the term of charter-party and termination of the demise charter shall be consistent with provisions laid down in paragraph 3 Article 223, 226 and 228 hereof.
Article 233. Payment of freight for demise chartering
The demise charterer shall be liable for freight for demise chartering as agreed upon in the charter-party. Where the ship is subject to total loss or gone missing, payment of freight for hiring of the ship shall be terminated from the date on which the ship is subject to total loss or on which the last information about the ship is received. An amount of pre-paid freight equivalent to the length of time when the ship has not been used must be refunded.
Article 234. Ship hire-purchase
1. When the demise charter includes terms and conditions concerning ship hire–purchase, the ownership of the ship agreed upon in the demise charter shall be assigned to the charterer.
2. The lessor who gives the ship under a hire-purchase contract and the lessor who provides the ship under a finance lease contract shall only keep the copy of the Certificate for registration of that ship.
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