Maritime Chartering: Concept, Modalities and Legal Nature
Note: If you are interested in more information, I published an article at the "Revista Tributária e de Finanças Públicas" in 2018 about maritime chartering, its legal nature and modalities, and Brazilian taxes upon it. It is called "A Incidência de ICMS ou ISS na Atividade de Afretamento Marítimo, à Luz da Natureza Jurídica Contratual das Espécies de Afretamento", and you can read it in here. It is written in Brazilian Portuguese.
The maritime chartering is an ancient practice, originated from customs, which have always had a great influence on the activity of transporting goods by sea since the development of navigation.
It is important to note that much of the current regularization of maritime chartering, in which the owner of a ship transfers its use to a third party, upon payment of a certain amount, is still based on the uses and customs of the ancient practice of navigation. Because of that, although certain standards have been enacted in national laws, many of the rules are still based on routine maritime practice.
The charter contract deals with the use and exploitation of ships and other maritime structures (such as platforms, in the case of the oil industry). It occurs through the charter party, which is the contractual instrument that determines the form of the charter, and the rights and duties of the parties involved – the owner and the charterer. The bill of lading is the document that serves as the receipt of the transported cargo, including all of its important information (GIBERTONI, 2014, p. 277).
The owner is the one to whom the ship belongs (or at least the one that holds the rights of use upon the ship), who makes the vessel available for use to the charterer, trough the payment of a pecuniary benefit, called hire. The charterer may also be called carrier when he is responsible for equipping the ship, that is, to make it in seaworthy conditions. Although called this way, the carrier not necessarily is a freight transporter, who may be another figure in the charter contractual relation.
The charter contract involves both the commercial exploitation of the use of the ship and the chartered part of the ship itself. Regarding the chartered part, the contract can be a total or partial charter (depending on the extension of the ship that is chartered), and with regard to commercial exploration, the contract can be a bareboat charter party, a voyage charter party or a time charter party.
In terms of its legal nature, the charter contract is very complex. In the legal system of several countries, such as France, Italy and Mexico, charter and transport contracts are visibly different, with a distinction expressed in legal documents (in the case of Italy, there is a differentiation between the charter, lease and transport contract). In Brazil, although the charter contract is set out in the Brazilian Commercial Code, the normative framework does not appear to be effective, as the legal text contributes to the confusion between charter and transport by grouping the normative provisions together. The Commercial Code refers to bareboat and voyage charters, but not expressly, while Brazilian Law nº 9.432/97 directly conceptualizes such types of charter, but without regulating them.
According to Eliane Octaviano Martins, there are four doctrine currents that seek to frame the legal nature of the charter contract (MARTINS, 2015, p. 365): the first argues that the charter contract is a transport contract, with no differentiation between them; the second one understands that the charter contract has characteristics of transportation, rental and provision of services; the third argues that the charter contract is not to be confused with the transport contract, and that each type of charter has its own legal nature (except for variations, it is argued that bareboat charter would be a rental contract; the time charter, a provision of services contract; and the voyage charter, a transportation contract); and the fourth one, finally, supports the sui generis nature of the charter contract, so that it would be treated as an autonomous and special form of Maritime Law.
In this view, it is argued that the transport contract refers to the cargo transported, while the charter contract is based on the use and exploitation of the ship itself (MARTINS, 2015, p. 368), also covering the transport of people and cargo by sea, but not limited to that. Another difference between contractual forms, according to the author, is that the maritime transport contract is a contract of adhesion, in which there are rules that override the will of the parties (MARTINS, 2015, p. 369), while the charter party can be freely negotiated between the parties.
With regard to the forms of charter, it can, as stated, be partial or total. In total charter, the ship is fully made available to the charterer (MARTINS, 2015, p. 370), and in partial charter, only part of the ship is made available. The possibility of the charter being total depends on the way the ship is operated (bareboat, by time or by voyage). In bareboat chartering, the ship will always be chartered in its entirety, while in the time and the voyage modalities, availability can be both total and partial.
In the bareboat charter contract, the owner transfers the “bare” ship to the charterer, without equipment or crew. In the time charter, the owner is obliged to make the ship equipped, in seaworthy conditions, available to the charterer for a period pre-determined in the contract. In voyage charter, in turn, the owner grants the use of the ship to the charterer to carry out pre-established voyages (so that it can transport an agreed volume of cargo, make a specific number of trips at loading and unloading ports, or even for container transport).
Martins differentiates the nautical management and the commercial management of the ship within the charter contract. According to the author, nautical management refers to the ship's structure, that is, responsibility for equipment, ship maintenance and crew salaries, whereas the nautical management refers to operations related to “loading and unloading, stopover and port expenses” (MARTINS, 2015, p. 372). According to her, in bareboat chartering, both nautical and commercial management are the responsibility of the charterer. In the case of time and voyage charters, nautical management is the responsibility of the owner, and commercial management is the responsibility of the charterer. However, to Moysés Filho (2017, p. 115), in the voyage charter, both nautical and commercial management are the owner’s responsibility.
References
GIBERTONI, Carla Adriana Comitre. Teoria e Prática do Direito Marítimo. 3. ed. atual. rev. ampl. Renovar: Rio de Janeiro, 2014.
MARTINS, Eliane Maria Octaviano. Curso de Direito Marítimo. Vol. III – Contratos e Processos. Barueri: Manole, 2015.
MOYSÉS FILHO, Marco Antonio. Contratos de Afretamento de Navios. Curitiba: Juruá, 2017.
