A bareboat charter https://danil-hristich.com/en/bareboat-charter-general-guide/ is fundamentally a lease agreement in which the shipowner transfers full possession and control of the vessel to the charterer. Upon entering into the charter, the charterer essentially becomes the temporary owner of the vessel. In this arrangement, the shipowner provides only the vessel itself—excluding the crew and captain—and earns a fee, known as hire.

Conversely, a time charter or voyage charter operates more like a service contract for the transportation of goods. In these cases, the shipowner maintains ownership and control of the vessel, including its crew and captain, while the charterer benefits from the cargo transport service.

Bareboat charters are often employed not just for cargo transportation but as part of financial strategies. For example, a bank might finance the purchase of a vessel, holding ownership until the shipowner repays the loan. During this time, the vessel is placed under a bareboat charter to the borrower as part of the loan repayment structure.

It's worth mentioning that Ukrainian law does not have a clear consensus on categorizing a bareboat charter as either a lease or a service contract. Nonetheless, various legal texts, such as the Merchant Shipping Code and the Ship Arrest Convention of 1952, contain indirect references suggesting that a bareboat charter is a lease contract.

Responsibilities and Obligations of the Parties

The shipowner's obligations are relatively straightforward, primarily requiring them to deliver the vessel in the agreed condition. The charterer, however, bears more significant responsibilities, including the navigation, maintenance, operation, and insurance of the vessel.

Regarding liability, since the crew and captain are employed by the charterer, the charterer assumes responsibility for their conduct. The shipowner may still be liable for non-contractual issues, such as if a crew member is injured due to a defect in the vessel that the shipowner knew about but failed to address. In most scenarios, though, the charterer is liable to third parties, often providing the shipowner with a guarantee against such claims.

Complexities can arise when a legal claim is made against the vessel itself, known as an in rem claim, such as in the case of a collision. Although the charterer is generally liable, the shipowner may still become involved in the legal process because the claim is directly tied to their vessel.

Additional Characteristics of a Bareboat Charter

Beyond the primary aspects, a bareboat charter involves several other notable features:

• The shipowner loses the ability to exercise a lien on the cargo if the charterer fails to pay the hire, as they no longer possess the vessel.
• The charterer, rather than the shipowner, serves as the carrier under bills of lading since the charterer hires the master, who acts on their behalf.
• If a charterer operates a vessel under a bareboat charter and owns another vessel that is subject to a maritime claim, the vessel under the bareboat charter may also be arrested in relation to that claim. This scenario would not occur if the vessel were under a time or voyage charter.