TTM10415 - Ship leasing: Quantitative restrictions on allowances

Exceptions

Quantitative restrictions to allowances are subject to two exceptions.

First, they do not apply to ordinary charters where the lessor remains responsible for operating the ship, appointing the master and crew and defraying all expenses.

Secondly, where the ship is bareboat chartered out for a period not exceeding seven years in the ordinary course of the trade of operating ships.  Where the charter is to a group of companies, the lease must not exceed seven years in any period of ten years.  There must be no arrangement under which the lessee or a person connected with it may acquire the ship from the lessor.

The second exception is further subject to temporary rules that apply to leases entered into between 18 December 2002 and 16 April 2003.  For such leases the exception applies where the ship is chartered out to another person because of short-term over capacity and the lease is not for more than three years, or in relation to leases for more than three years in aggregate in any five year period, and the charterer or any person connected with it has no option to purchase the ship.

References

CAA01/PART2

FA2000/SCH22/PARA89A (quantitative restrictions not to apply to ordinary charters) TTM17491