TTM15110 - Background material: Shipping contracts

Bareboat charterparties

A charter on ‘bareboat charter terms’ is defined (FA00/SCH22/PARA143) as meaning a hiring of a ship for a stipulated period on terms which give the charterer possession and control of the ship, including the right to appoint her master and crew.

Another name for such a charter is ‘charter by demise’.  This term is used in the legislation at FA00/SCH22/PARA18(6)(b), see TTM03180.

A finance lease of a ship to an operator is another form of charter by demise, and is therefore a bareboat charter for tonnage tax purposes.

A bareboat charter is more of an investment in an asset, rather than the operation of that asset, which is why SCH22 equates a bareboat charter in as equivalent to ownership and does not regard a bareboat charter out as operation of a ship, except in limited circumstances.

Standard bareboat charters are produced by organisations such as BIMCO (Baltic and International Maritime Council), which may be modified by the addition or subtraction of particular clauses.  The Tonnage Tax Technical Adviser can provide further details.

In practice non-bareboat charters will be either time charters or voyage charters.

References

FA00/SCH22/PARA143 (meaning of ‘on bareboat charter terms’) TTM17791
Operating a ship: chartered to the company TTM03100
Operating a ship: bareboat charters out TTM03150
Contracts of affreightment TTM15100
Time charterparties TTM15120
Voyage charterparties TTM15130
Contact points TTM01120