The Nature of a Bareboat Charterer

For practical purposes, shipping charters are classified into three types:

• Bareboat (demise)
• Time charter
• Voyage charter

However, the English doctrine often divides charters into:

• Bareboat charters
• Other charters (voyage and time charters)

What is the Point of this Division?

A bareboat charter is essentially a pure lease/hire contract where the ownership and use of the vessel are entirely transferred from the shipowner to the charterer. The charterer effectively becomes the owner of the vessel during the term of the contract. Under a bareboat charter, the shipowner leases only the vessel (without crew and master) and receives a fee—the hire.

In contrast, a time charter, and especially a voyage charter, is more akin to a service contract for carriage. The shipowner retains ownership, outfits the vessel with crew, and appoints the master, while the charterer receives the service of cargo transportation.

Bareboat charters are often used not for cargo transportation but as part of a financial arrangement. For instance, a bank might finance the purchase of a vessel. The bank, as the owner (until the loan is repaid), leases the vessel to the customer under a bareboat charter as part of the loan repayment plan.

Notably, Ukrainian legislators lack a unified approach to defining a bareboat charter (lease or carriage). Various indicators in acts such as the Merchant Shipping Code and the Ship Arrest Convention 1952 suggest that a bareboat charter is a lease contract.

Duties and Responsibilities of the Parties

The shipowner has minimal obligations: primarily to hand over the vessel in the agreed condition. The charterer, however, must manage navigation, repairs, operation, and insurance.

Regarding responsibility, since the crew and master are hired by the charterer, the charterer is accountable for their actions (or inactions).

The shipowner may also be liable for torts (non-contractual wrongdoings). For example, if a seaman is injured due to a known but uncorrected defect in the ship, the shipowner could be held liable. In most other cases, the charterer is typically liable to third parties. The charterer usually provides the shipowner with a guarantee against third-party claims for a certain amount, as stipulated in most charters.

Complications arise when a claim is made against the ship itself—in rem (e.g., in a collision). Although the charterer is formally liable, the shipowner may be drawn into the dispute because the claim targets the vessel directly.

Other Features of a Bareboat Charter

In addition to the points mentioned, a bareboat charter includes the following features:

• Since the shipowner effectively loses possession of the vessel, they cannot exercise a lien over cargo in case of non-payment of hire.
• The charterer, not the shipowner, acts as the carrier under bills of lading because the master hired by the charterer serves as the charterer's agent.
• If a charterer hires a ship under a bareboat charter and also has a second ship against which a maritime claim is made, the first ship (hired under a bareboat charter) may also be arrested in support of that claim. This would not be possible if the vessel were chartered under a voyage or time charter.