The definition of a charter party arrangement is:
"a mercantile lease of a vessel; a specific contract by
which the owners of a vessel let the entire vessel, or some principal part of
the vessel, to another person, to be used by the latter in transportation for
his own account, either under their charge or his."
Charter arrangements usually fall into one of three
categories, each being distinguished by the degree of operational control over
the vessel which the charterer exercises. The three categories are:
Voyage charter - the charterer is "leasing" space
on the vessel (a cargo hold or tank) for one voyage only. The charterer is
essentially "along for the ride" since he exercises very little
operational control over the vessel.
Time Charter - the charterer leases the vessel for a period
of time (usually a year or more). The charterer shares operational control of
the vessel with the Vessel Owner, and the ship's Master answers to both
parties. The sharing of control normally divides between the vessel's cargo
operations (mostly under control of the charterer) versus vessel operations
(under the control of the Vessel Owner).
Bareboat (Demise) Charter - the charterer essentially stands
in the shoes of the Owner and leases the vessel for a significant period of
time. The charterer has full operational control over the vessel and bears all
the expenses to operate and maintain the ship. This arrangement allows a charterer
to "look like" a Vessel Owner but not carry the expense of this
costly asset on his balance sheet.
A charterer faces many of the same exposures to liability as
the Vessel Owner does, as well as specific obligations to the Owner. Examples
of the exposures the charterer faces vis-à-vis liability to third parties
include:
o Liability to cargo
o Pollution liability (in certain jurisdictions)
o Personal injury, property damage to third parties caused
by the charterer's negligence
o Fines (depending on the jurisdiction and/or contractual
obligations)
The charterer also has a long list of obligations and
exposures to the Vessel Owner. These involve damage to the hull arising out of
/ caused by:
o Liability for nominating an unsafe berth / unsafe port
o Hull and Machinery damage caused by Stevedores
o Damage caused by carriage of hazardous / dangerous goods
o Damage caused by poor / improper stowage of goods
o Damage to ships' engines caused by poor quality bunkers
o Liability to Owners arising out of General Average /
Salvage events.
It is often said that when things go wrong on board a ship,
they go very badly wrong. The charterer can face enormous liabilities and risk
of financial loss even when he is only tangentially involved in the event which
gave rise to the claim. What can a charterer do to manage these risks?
Charterers Liability insurance can be the solution. This
affords protection to the charterer in much the same way Protection and
Indemnity insurance shields the Vessel Owner from potentially catastrophic
loss.
The key to arranging proper charterer's liability insurance
is the insurance broker. A qualified marine insurance broker understands the
assured's business thoroughly. Further, the broker understands the marine
transportation and cargo risks, as well as the domestic and/or international
legal environment. The broker must also be an expert in the language of charter
party contracts which is replete with unique jargon and terminology. Finally,
the broker must have the knowledge of and access to the appropriate insurance
markets in order to secure the most comprehensive coverage, with sufficient
limits of liability, at the most cost effective premium. Visit https://www.surfcampsumatra.com/
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