TTM15110 - Background Material: Shipping contracts

Bareboat charterparties

A charter on ‘bareboat charter terms’ is defined (paragraph 143) 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 Schedule 22 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, which may be modified by the addition or subtraction of particular clauses. The Tonnage Tax Unit can provide further details.

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

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