Shelltime Time Charterparty

Shelltime Time Charterparty

The Shelltime time charterparty is one of the most important tanker time charter forms used in oil, petroleum products, chemical, and gas-related trading. It is built around the commercial reality that a charterer requires operational flexibility, trading control, bill of lading machinery, vetting reliability, and performance accountability, while the shipowner retains navigation, technical management, crewing, class, maintenance, insurance, and the ultimate responsibility for operating the ship safely.

Shelltime 4 was first issued in December 1984 and later revised in December 2003. The 2003 revision was placed on BIMCO’s online document platform and later treated as a living form capable of amendment by version. In practice, that feature makes careful identification of the exact version essential. A recap or charterparty should not simply say “Shelltime 4” where a particular edition, revision date, or version controls the commercial bargain.

The form is more than a tanker adaptation of a dry cargo time charter. It contains detailed provisions on ship description, safety management, oil major acceptability, HSE reporting, cargo documentation, off-hire, performance, bunkers, war risks, sanctions-style export restrictions, and mandatory bill of lading clauses. Many disputes under Shelltime turn not on general time-charter principles alone, but on the interaction of several specialised tanker clauses.

Commercial Character of the Shelltime Form

A Shelltime charter is not a demise charter. The charterer receives the commercial use of the ship for the agreed period, but the ship remains in the possession and technical control of the shipowner. The master, officers, and crew are appointed and controlled by the shipowner, even though they must comply with the charterer’s lawful employment orders within the charter limits.

This division of control runs through the entire form. The charterer may decide where the ship trades, what lawful cargo she carries, how cargo operations are commercially arranged, and which bills of lading are required. The shipowner must provide a fit, classed, properly crewed, documented, insured, and safely managed tanker, and must exercise the required level of diligence in maintaining that condition during the charter.

Because tanker employment is operationally sensitive, Shelltime provisions are often stricter and more detailed than those found in dry cargo forms. The charterer may depend on oil major acceptance, terminal approvals, vetting history, cargo compatibility, tank cleanliness, pump performance, speed, bunker consumption, and the master’s responsiveness to voyage orders. A weakness in any of these areas can have an immediate commercial effect.

Clause 1: Ship Description, Condition, and Safety Management

Clause 1 is central to the structure of Shelltime 4. It sets out the condition, classification, equipment, certificates, canal compliance, ship particulars, safety management systems, reporting duties, and SIRE inspection obligations expected from the shipowner. The clause is both descriptive and operational: part of it concerns the condition of the ship at delivery, while part of it concerns how the ship is managed during the charter period.

The delivery description normally includes class, general fitness for service, machinery condition, tank and valve condition, fuel-consumption arrangements, Suez and Panama Canal compliance, certificates, documents, equipment, and the ship particulars questionnaire. These statements are not casual representations. They form part of the ship’s contractual description and can affect whether the charterer must accept delivery or can claim damages for misdescription.

Where Clause 1 describes the ship at the date of delivery, the obligations are generally absolute. If the ship does not match the promised description, it is normally irrelevant that the shipowner exercised due diligence. The question is whether the ship was in the promised condition at delivery. That approach is illustrated by the legal treatment of tanker description cases such as The Fina Samco, The Trade Nomad, and related authorities on delivery condition.

The position is different where a cargo claim is governed by a Hague, Hague-Visby, or Hamburg Rules regime incorporated through the charter. In that setting, an otherwise absolute seaworthiness obligation may be reduced, for that claim, to a duty to exercise due diligence to make the ship seaworthy. This is one of the most important intersections between Shelltime delivery obligations and incorporated cargo liability rules.

Fitness for the Charter Service

The phrase that the ship must be “tight, staunch, strong” and fit for the service is not limited to the absence of visible physical defects. It concerns whether the ship is commercially and technically capable of performing the service contemplated by the charter. However, fitness must be assessed with commercial realism. Not every minor deficiency, inconvenience, or delay-producing defect will necessarily make the ship unfit for the whole charter service.

The decision in The Arianna shows the importance of commercial significance. A defect in a tank-cleaning system may breach a particular contractual requirement, but the wider question of fitness depends on the effect of the defect on the charter service. If the defect is unlikely to cause more than minor delay in exceptional trading circumstances, the conclusion may differ from a case where the defect prevents ordinary tanker employment.

Shelltime drafting is still more demanding than many older forms because the ship particulars questionnaire and specific equipment obligations can create detailed contractual commitments. A charterer relying on a particular cargo system, pump capacity, tank configuration, heating capability, or certification requirement should make sure the relevant matter is expressed clearly in the fixture and incorporated documents.

Continuing Promises During the Charter Period

The words “throughout the charter period” require careful reading. They should not automatically convert every delivery description in Clause 1 into an absolute continuing warranty that the ship will never lose any of those characteristics. Such a reading would sit uneasily with Clause 3, which creates a due diligence obligation to maintain or restore the required condition after delivery.

A more commercially coherent reading is that the delivery description applies at delivery, while the continuing wording applies mainly to operational undertakings such as management systems, HSE records, reporting, ownership and management stability, environmental procedures, accident reporting, and periodic SIRE inspection requirements. This interpretation preserves the distinction between an absolute delivery promise and a due diligence maintenance obligation.

Oil Major Acceptance and Vetting

Oil major acceptability is particularly important in tanker chartering. A ship may be physically sound, classed, and properly crewed, yet commercially unattractive if she is rejected by a major oil company, terminal, or vetting system. Shelltime 4 deals expressly with the commercial consequence of oil major unacceptability, and additional clauses often expand this area in detail.

Cases such as The Seaflower (No. 2), The Rowan, and The Savina Caylyn demonstrate that oil major approval language can be commercially decisive. A statement that the ship has certain approvals, or that the shipowner guarantees approval within a stated period, may operate as a condition where the contract shows that the parties treated the approval as fundamental to the fixture.

Modern tanker practice has moved away from simple standing approvals. References to oil major approval may now require analysis through SIRE inspection records, vetting status, terminal acceptance, and whether a named oil company has rejected or not rejected the ship for a particular trade. A fixture should therefore define exactly what “approval”, “acceptance”, or “oil major acceptability” means.

Clause 2: Shipboard Personnel and Crew Duties

Clause 2 deals with the master, officers, and crew. It requires a full and efficient complement, valid certificates, appropriate training, compliance with flag-state requirements, STCW standards, adequate English-language capability for safe cargo work, acceptable employment terms, and in many cases ITF-related documentation such as a Blue Card.

The personnel requirements existing at delivery form part of the ship’s description. A shortage of qualified crew, invalid certificates, inadequate training, or insufficient communication ability can therefore be a delivery problem, not merely an operational inconvenience. A tanker charterer depends heavily on the competence of the officers and crew because cargo operations, safety systems, tank cleaning, pump work, inert gas procedures, and terminal communication all require specialist capability.

Clause 2 also imposes ongoing service duties. The master, officers, and crew must prosecute voyages with the required despatch, render customary assistance, and load or discharge cargo as rapidly as reasonably required by the charterer, subject always to the law of the port, flag-state rules, safety limits, and the master’s overriding responsibility for the ship.

Customary Assistance and Safe Cargo Work

The obligation to render customary assistance is not an unlimited promise that the crew will perform every task requested by the charterer. The work must be within the normal scope of shipboard service, lawful, safe, and consistent with crew qualifications, rest-hour rules, and port regulations. It may include assistance with cargo systems, tanks, pumps, hoses, documentation, communications, and coordination with terminals, but it does not turn the crew into shore labour or make the charterer their employer.

The master remains entitled, and in some circumstances obliged, to refuse unsafe orders. A charterer may control commercial employment, but cannot compel the master to overload equipment, disregard stability limits, breach local law, ignore terminal safety restrictions, or carry out cargo operations in a dangerous manner.

Clause 3: Duty to Maintain

Clause 3 is one of the most important Shelltime provisions. It distinguishes between the condition promised at delivery and the shipowner’s duty after delivery. Once the ship has entered the charter service, later deterioration caused by time, wear and tear, events, regulatory changes, or operational requirements normally engages a due diligence obligation to maintain or restore the required condition.

The due diligence standard does not guarantee that every defect will be prevented or immediately removed. It requires the shipowner to act with proper care, skill, speed, and organisation, using reasonable measures to maintain or restore the ship. A shipowner that delays repairs, ignores class or terminal findings, fails to source parts, or cannot demonstrate an adequate plan may fall short of the contractual standard.

The distinction is crucial. Clause 3(a) addresses deficiencies arising after delivery. It does not usually cure or dilute an absolute breach that already existed at delivery under Clause 1 or Clause 2. The reasoning in The Fina Samco and The Trade Nomad shows why the Shelltime maintenance clause cannot be read as converting every delivery obligation into a mere due diligence promise.

Hire Reduction, Notice, and Termination Under Clause 3

Clause 3(b) gives the charterer a reduction of hire where the ship fails to comply with specified delivery or space requirements and the failure causes loss. Where the failure affects the time taken to perform the charter service, the hire reduction is calculated by reference to the value of the time lost. The clause operates without prejudice to other remedies, but the same loss should not be recovered twice.

Clause 3(c) gives the charterer a specific remedy where the shipowner is in breach of the due diligence maintenance obligation. The charterer must notify the shipowner in writing and identify the complaint. If, after the contractual period, the shipowner has failed to demonstrate due diligence to the charterer’s reasonable satisfaction, the ship may be placed off hire until the required diligence is shown.

Clause 3(d) and Clause 3(e) deal with failed inspections and commercial inoperability. These provisions are significant in modern tanker trading because a failed port-state, governmental, terminal, oil major, or similar inspection can prevent ordinary employment even if the ship remains physically capable of moving. The shipowner must inform the charterer and explain the proposed remedy, while the charterer may have an off-hire option if normal commercial operation is prevented.

Clause 3(f) gives the charterer a termination option while the ship is off hire under specified parts of Clause 3. That right must be read carefully. A hire reduction under Clause 3(b) is not necessarily the same thing as the ship being off hire under Clause 3. The distinction matters because termination rights are commercially drastic and are not lightly expanded beyond the wording of the clause.

Clause 4: Period, Trading Limits, and Safe Ports

Clause 4 covers the charter period, trading limits, additional time, delivery and redelivery areas, and the charterer’s obligation concerning safe ports and places. The Shelltime safe-port obligation is narrower than the traditional absolute safe-port warranty in many dry cargo forms because it is expressed as an obligation to exercise due diligence.

The charterer must use due diligence to ensure that the ship is employed only between and at places where she can proceed, lie safely afloat where required, load, discharge, and depart without unacceptable risk. The clause may cover ports, berths, docks, anchorages, submarine lines, single-point moorings, offshore locations, ship-to-ship locations, and other places used in tanker trading.

Where a fixture recap uses unqualified words such as “safe ports” without making clear that the Shelltime due diligence wording is intended to control, disputes may arise over whether the charterer has assumed an absolute obligation instead. Careful recap drafting is therefore essential.

Safe Port Due Diligence

The correct method is to ask first whether the port or place was unsafe for the particular ship at the relevant time. If it was unsafe, the next question is whether the charterer exercised due diligence. Due diligence in this context means reasonable care. The charterer is not an insurer of port safety, but cannot ignore information that should cause a careful charterer to investigate or avoid the nomination.

The Saga Cob and The Chemical Venture show how the analysis works in politically dangerous trading areas. A foreseeable possibility of attack does not always make a port unsafe. The risk must be sufficiently connected with the port or approach so that ordinary safe navigation and reasonable precautions cannot meet it. Where the charterer knows the facts that make the port unsafe and proceeds without proper justification, the due diligence obligation may be breached.

The scope of the due diligence obligation can extend beyond the charterer’s own office. In Dow Europe v. Novoklav, the delegated selection of a berth by a port authority or terminal did not necessarily protect the charterer. Unless the wording restricts the obligation to personal diligence, due diligence may be required from those through whom the charterer’s obligation is performed.

Delivery, Redelivery, and Last Cargo

Shelltime 4 allows the parties to identify delivery and redelivery places and to specify the last cargo before delivery or redelivery. These details are not merely administrative. The condition of tanks, residues, cargo compatibility, bunker quantities, and the position from which the ship enters or leaves service may influence hire, bunkers, claims, and later employment.

Where the shipowner nominates a delivery port under an option reserved to the shipowner, the charterer’s safe-port obligation may not operate in the same way as when the charterer selects the port. Conversely, where the charterer controls redelivery, the charterer must comply with the redelivery range, timing, notice, and any agreed final cargo requirements.

Clause 5: Cancelling

Clause 5 gives the charterer the option to cancel if the ship is not ready and at the charterer’s disposal by the cancelling date. Readiness under Shelltime normally means readiness according to the delivery obligations that define the ship’s condition and service capability, not necessarily every collateral promise in the charterparty.

The approach in The Arianna illustrates the point. A cancelling clause should not be given an unlimited reading that permits cancellation for every possible breach present at delivery. The breach must relate to the contractual readiness required for delivery, unless the clause or the wider charter clearly says otherwise.

Clauses 6 and 7: Allocation of Expenses

Clause 6 identifies expenses for the shipowner’s account. These normally include officers and crew, insurance, stores, maintenance, repairs, and other matters connected with owning and technically operating the ship. The shipowner must bear those expenses because the charterer has not taken over possession, manning, maintenance, or nautical management.

Clause 7 identifies expenses for the charterer’s account. These commonly include bunkers, port charges, pilotage, towage, agency, cargo loading and discharging costs, canal dues, and other expenses generated by the commercial employment of the ship. The clause also needs to be read with provisions placing fuel for off-hire or shipowner-purpose periods back on the shipowner’s account.

The practical accounting can be complex. The charterer may buy and own the bunkers, while the shipowner may owe a credit for fuel consumed during off-hire, repairs, testing, deviation for shipowner’s purposes, or other periods allocated to the shipowner. Shelltime accounts should therefore separate physical purchase, property in bunkers, consumption records, and final economic allocation.

Clause 8: Computation of Hire

Clause 8 fixes hire from delivery to redelivery and uses local time unless the form provides otherwise. This removes the uncertainty that can arise where a ship delivers in one time zone and redelivers in another. In long-period tanker fixtures, even a small dispute about the relevant clock can be material because hire accrues continuously.

Delivery and redelivery are not simply words of location. They mark the commencement and end of the hire obligation, the transfer and repurchase of bunkers, the start and end of performance calculations, and the point at which the charterer’s commercial control begins and ends.

Clause 9: Payment of Hire and Withdrawal

Clause 9 deals with advance payment of hire, deductions, banking responsibility, default, withdrawal, and interest. Hire must be paid in the contractual manner and in immediately available funds. A transfer that is visible to the receiving bank may still be defective if the shipowner does not obtain an unconditional right to use the funds.

The charterer’s deduction rights must be approached carefully. Clause 9 does not permit every anticipated claim to be deducted from the next hire instalment. Some deductions require the relevant amount to have been ascertained, while others allow a reasonable estimate under specified provisions. The difference between actual off-hire, hire reduction, performance adjustment, and set-off for damages should always be preserved in the hire statement.

Where hire is not properly and timely paid, Shelltime does not usually allow instant withdrawal. The shipowner must give the contractual notice and allow the charterer the agreed period to cure the default. Interest may also have to be paid, and a cure that pays the principal but omits contractual interest may not be sufficient.

Clause 10: Space Available to Charterers

Clause 10 gives the charterer the agreed cargo and operational space, subject to limited accommodation and areas reserved for the master, crew, shipowner’s suite, provisions, stores, and ordinary ship requirements. If the promised space is not available, the charterer may have a hire-reduction remedy under Clause 3(b), together with any other available claim.

In tanker trading, space is not limited to cubic capacity. It may include practical availability of tanks, lines, pumps, heating systems, segregation, tank coatings, and compatibility for nominated cargoes. If the shipowner’s reserved space or onboard stores interfere with the commercial service promised, the issue may become a measurable hire or damages claim.

Clause 12: Instructions, Logs, and Operational Records

Clause 12 deals with charterers’ instructions, the master’s reporting obligations, and access to logs or voyage records. Tanker employment depends on accurate operational evidence, including instructions, noon reports, cargo documents, engine records, pump logs, weather entries, tank-cleaning records, and communications.

The master and shipowner are normally expected to comply promptly with lawful employment orders. However, immediate compliance may not be required where there are reasonable doubts about legality, authority, safety, sanctions, cargo title, war risk, or the validity of instructions. The Houda shows that, in exceptional circumstances, the shipowner and master may be entitled to pause for a reasonable time to verify instructions before acting.

Clause 13: Bills of Lading and Delivery Orders

Clause 13 is central to tanker time chartering. The master signs bills of lading as the charterer or its agents require, subject to the charterparty and the shipowner’s protection against the consequences of complying with those orders. The clause recognises that cargo documentation can expose the shipowner to liabilities outside the immediate time-charter account.

The master’s obligation to sign bills is not a licence for the charterer to require inaccurate, misleading, or unsafe documentation. If a bill of lading contains irregularities, misstates quantities, requires delivery without original documents, changes the discharge place, or departs from the charter requirements, the indemnity provisions become critical.

Shelltime 4 contains a detailed indemnity for delivery without original bills of lading, discharge at a place other than the bill of lading destination, or discharge of a quantity different from the bill of lading quantity. The indemnity is designed to protect the shipowner against cargo claims, arrests, security demands, legal costs, and other consequences of acting on charterers’ instructions.

Discharge Without Original Bills of Lading

The Houda remains a key warning. In the absence of an express contractual provision, a time charterer cannot necessarily compel the shipowner or master to discharge cargo without production of original bills of lading, even where the charterer believes that no cargo owner will be prejudiced. Shelltime 4 now addresses that issue expressly, but the protection depends on compliance with the clause.

Even under an express Shelltime indemnity, the shipowner should not ignore actual notice of a competing claim to possession. If one party demands delivery without original bills while another party claims entitlement and can produce or rely on original bills, blind compliance may expose the shipowner to serious liability. The master and shipowner should preserve evidence and seek urgent instructions before discharge.

Clause 15: Bunkers at Delivery and Redelivery

Clause 15 governs the bunker transfer mechanism. The words requiring the charterer to accept and pay for bunkers at delivery have been treated as transferring property in those bunkers from the shipowner to the charterer. Bunkers supplied during the charter ordinarily remain the charterer’s property, although they are physically held on board and consumed by the master in performing charterers’ employment orders.

At redelivery, or at an earlier termination where the clause so provides, the shipowner normally accepts and pays for the bunkers remaining on board. The revised Shelltime wording uses the price actually paid and applies a first-in-first-out approach to identify which bunker purchases are represented by the remaining quantities. Proper paid invoices and bunker records are therefore essential.

The Saetta shows the risk created by retention-of-title clauses in bunker supply contracts. A charterer may not have acquired full property in the bunkers if the supplier remains unpaid and the supply contract reserves title. A shipowner taking over and consuming remaining bunkers after withdrawal may face unexpected claims if the charterer never owned the bunkers free of the supplier’s rights.

Clause 16: Stevedores, Pilots, and Tugs

Clause 16 deals with stevedores, pilots, and tugs. Although the charterer may provide and pay for these services, the legal consequences do not always follow the invoice. Payment by the charterer does not by itself make a pilot or tug the charterer’s servant for all purposes, nor does it necessarily transfer navigation responsibility from the shipowner.

The charterer may be responsible for stevedore damage, especially where the contract makes stevedores the charterer’s agents or places liability for their acts on the charterer. The shipowner should keep strict records of damage, give prompt notice, support the claim with evidence, and allow inspection where the clause requires it. Late notice can make causation and recovery more difficult.

Where pilots and tugs are used, the master remains responsible for navigation and safety. A pilot’s negligence may not become the charterer’s responsibility merely because pilotage is paid by the charterer. Shelltime drafting and later tanker forms may expressly state that the shipowner remains responsible for acts of pilots and tug boats, reinforcing the non-demise character of the charter.

Clause 17: Supercargo and Representatives

Clause 17 permits the charterer to place a supercargo or representative on board, usually at the charterer’s expense and subject to accommodation and safety requirements. This right assists cargo coordination, operational supervision, and communication, but it does not give the charterer technical control of the ship.

A supercargo must comply with the master’s lawful safety instructions and cannot override the authority of the master, officers, or shipowner in navigation, ship management, crew discipline, safety, pollution prevention, or compliance matters. Any role, cost, liability, and access rights should be clearly defined in the fixture.

Clause 18: Sub-Letting and Shell Group Assignment

Clause 18 normally allows the charterer to sub-let the ship while remaining responsible to the shipowner under the head charter. Shelltime also reflects the commercial reality of group trading by allowing assignment or novation within the Royal Dutch/Shell group in defined circumstances.

Sub-letting does not remove the head charterer’s obligations unless there is a valid novation or release. The head charterer must still pay hire, comply with trading limits, provide bunkers, protect the shipowner under bill of lading indemnities, and ensure that sub-charter arrangements do not expose the shipowner to risks outside the head charter.

Clause 19: Final Voyage

Clause 19 deals with the final voyage and the problem of redelivery near the end of the charter period. A charterer may wish to use the ship until the last practical moment, but the final order must still fit within the period clause unless the charterparty clearly authorises an overrun.

The distinction between Shelltime 3 and Shelltime 4 is important. The World Symphony treated the Shelltime 3 final voyage clause as giving strong protection where the clause operated notwithstanding the period provision. In The Ambor, however, the Shelltime 4 wording did not have the same effect. The charterer could not rely on Clause 19 to legitimise a final voyage that would otherwise breach the contractual redelivery period.

Clause 20: Loss of the Ship

Clause 20 deals with actual and constructive total loss. Even without an express provision, destruction or commercial loss of the ship will normally terminate a time charter because the subject matter of the service has disappeared. Shelltime 4 goes further by addressing constructive total loss, hire, advance payments, and bunkers.

Where the clause links termination to agreement by underwriters that the ship is a constructive total loss, the timing may become sensitive. Under marine insurance principles, constructive total loss often involves a notice of abandonment and underwriters’ acceptance. If underwriters refuse to agree, frustration principles may still become relevant where the ship can no longer perform the charter service.

Clause 21: Off-Hire

Clause 21 is a detailed off-hire provision and one of the most litigated areas of tanker time chartering. Shelltime 4 is framed as a net loss of time clause. It covers loss of time caused by specified events, including deficiency of personnel or stores, repairs, breakdown, drydock-related matters, damage to the ship, industrial action by the master, officers or crew, medical deviation, quarantine delays, smuggling or local law infractions by the crew, and detention attributable to the ship or shipowner.

Because Shelltime 4 is a net loss clause, any service given or distance made good while off hire must be credited in assessing the deduction. This is different from Shelltime 3, which was treated in The Bridgestone Maru No. 3 as a period clause. Under a period clause, no hire may be payable for the entire off-hire period even if the ship performs some useful service.

The service immediately required of the ship is decisive. In The Fina Samco, boiler trouble interrupted discharge, but once the ship was ordered away from the berth because of weather, the immediate service required became waiting at anchor. If the ship could perform that waiting service, continued boiler trouble did not automatically keep the ship off hire for the whole weather period.

Similarly, The Berge Sund shows that tank cleaning may itself be the service required by the charterer. If the charterer’s current order is to clean tanks and the ship is able to do that work, the ship is not necessarily off hire merely because she is not yet ready to load the next cargo. The cause of the need for cleaning, and whether there was crew negligence or breach, must be analysed separately.

Neglect of Duty, Detention, and Position After Off-Hire

Shelltime off-hire may also arise from breach of orders or neglect of duty by the master, officers, or crew. Alleged failures in tank cleaning, cargo preparation, navigation, or operational response require careful evidence. The fact that an operation takes longer than expected does not by itself prove neglect of duty.

Detention by authorities can also trigger off-hire where it is attributable to legal action against the ship, the shipowner, or regulatory breach, unless brought about by the charterer’s act or neglect. The Greek Fighter illustrates how detention linked to sanctions or local law enforcement may require close analysis of whether the charterer caused or contributed to the intervention.

For hire to recommence, the ship must again be ready and efficient from a position not less favourable to the charterer than where the loss began. The Trade Nomad shows that this does not always require return to the identical berth or exact geographical point. The test is commercial favourability in the circumstances, not mechanical sameness.

Clause 22: Periodical Drydocking

Clause 22 gives the shipowner the right to periodical drydocking and creates a structured mechanism for timing, location, off-hire, bunkers, tank cleaning, gas-freeing, and the choice between an offered port and a special port. Drydocking is a shipowner’s technical obligation, but its timing can disrupt the charterer’s employment programme.

If the charterer offers a drydocking port, that port must have suitable accommodation for the intended periodical drydocking. Suitability is not limited to theoretical physical capacity. A drydock that is appropriate in size but not available when the ship is placed at the shipowner’s disposal may not be suitable for the contractual purpose.

At the same time, the shipowner must cooperate by giving proper information about the expected scope of work and drydock requirements. If delay arises because the shipowner failed to provide information that the charterer reasonably needed to select suitable accommodation, the risk of that delay may fall on the shipowner.

Clause 23: Charterers’ Inspection Rights

Clause 23 allows the charterer to inspect the ship during the charter period as often and at such intervals as the charterer considers necessary, subject to the usual limits of safety and non-interference. Such inspections may relate to cargo readiness, vetting, terminal requirements, performance, condition, or HSE compliance.

The clause also protects the charterer against liability merely because it exercises or does not exercise an inspection right. That protection should be read narrowly. It should not be assumed to protect negligent conduct by representatives on board unless the loss truly arises from the exercise or non-exercise of the inspection right as the clause describes.

Clause 24: Speed, Consumption, and Performance

Clause 24 sets out detailed speed and bunker-consumption guarantees. Shelltime 4 differs from Shelltime 3 by excluding off-hire periods and defined adverse-weather periods from the performance assessment, while still requiring adjustment for mileage steamed during those excluded adverse-weather periods.

The clause uses service speed, ordered speed, average speed, guaranteed consumption, adverse-weather definitions, and annual review periods. Claims are usually calculated by comparing actual performance with the guaranteed table, then valuing time lost and bunkers over-consumed. Where the calculation produces a balance in the charterer’s favour, it may support a hire reduction or claim. Where performance is better than guaranteed, Shelltime 4 does not generally give the shipowner an additional hire bonus.

Cases on other tanker forms, including Didymi Corporation v. Atlantic Lines & Navigation, The Gas Enterprise, The Al Bida, The Larissa, and The Evanthia M, show the importance of distinguishing between the weather conditions used to prove capability and the period over which loss is assessed. A speed warranty often concerns capability in stated conditions, while the commercial loss may extend over a wider passage if the clause so provides.

Clause 25: Salvage

Clause 25 deals with salvage and the financial allocation where the ship assists others or becomes involved in saving life or property. The form allows liberty to go to the assistance of ships in distress and coordinates that liberty with the wider despatch and employment obligations.

The clause generally requires the charterer to share certain expenses of a salvage attempt, while excluding contribution to loss of or damage to the ship, tort liability to third parties, and salvage remuneration payable by the ship herself. The dividing line can be fine. A contract tug hired because of a salvage attempt may be treated differently from a salvage liability incurred by the ship.

Clause 26: Liens

Clause 26 gives the shipowner a lien on cargoes, sub-freights, and demurrage for amounts due under the charter. The reference to demurrage alongside sub-freights supports the view that the lien is directed to voyage freight-type earnings rather than sub-time-charter hire, unless the wording is expanded.

Lien rights are powerful but must be exercised carefully. The shipowner must identify the debt, the property or receivable against which the lien is asserted, the contractual chain, and the risk of interfering with third-party cargo interests. A mistaken or excessive lien may create liability rather than security.

Clause 27: Exceptions and Cargo Claims

Clause 27 contains general exceptions and liberties, but it must be read with the specific cargo-claim machinery in the same clause and the Clause Paramount required by Clause 38. General exceptions do not automatically cover negligence unless the wording clearly does so, and they may be displaced by specific provisions.

The exceptions reflect many expressions found in Hague Rules language, including errors in navigation or management, perils, restraints, and other recognised maritime risks. However, Shelltime 4 ties reliance on some exceptions to the absence of breach of Clauses 1, 2, 3, or 24. This makes the relationship between description, maintenance, performance, and exceptions highly important.

Clause 27(c)(i) removes the benefit of the exceptions for specified damage to berths, docks, jetties, cranes, and other works. Clause 27(c)(ii) then deals with claims arising from loss of or damage to, or in connection with, cargo. Those cargo-connected claims are made subject to whichever of the Hague, Hague-Visby, or Hamburg Rules applies through the relevant bill of lading machinery.

Clause 28: Dangerous Cargo and Capture Risks

Clause 28 restricts dangerous, injurious, or prohibited cargoes and also prevents voyages or cargoes that expose the ship to capture or seizure by rulers or governments. The clause operates alongside, but not necessarily identically with, Hague or Hague-Visby dangerous goods provisions.

Where the shipowner’s claim is for damage to the ship caused by dangerous cargo, Clause 28 may provide the primary contractual route. Where the claim concerns cargo loss or cargo-connected liability, the rules incorporated through Clause 27(c)(ii) may control the defence. The parties should therefore identify whether the claim is a ship damage claim, a cargo claim, or a wider cargo-connected claim.

The words “capture” and “seizure” are likely to receive a commercial rather than overly technical meaning. Their purpose is to prevent orders that expose the shipowner to loss of possession or control of the ship through governmental, warlike, or coercive action.

Clause 29: Bunker Grade and Quality

Clause 29 deals with bunker grades and quality. The charterer must supply bunkers meeting the contractual specifications, commonly linked to recognised standards. Fuel that is off specification, unstable, incompatible, contaminated, or unsuitable for the ship’s machinery may cause engine problems, delays, debunkering, tank cleaning, testing, and serious claims.

The shipowner still has responsibilities in handling bunkers once they are on board. Proper sampling, segregation, testing, purification, storage, heating, and operational management may determine whether a problem is attributable to bad fuel supplied by the charterer or mishandling by the shipowner’s side.

Clause 30: Cash Advances to the Master

Clause 30 allows for cash advances to the master where required. These advances are normally made for operational purposes and are accounted for with an agreed commission or deduction mechanism. The clause is practical rather than decorative, especially in trades where local expenses must be settled quickly.

Modern electronic banking has reduced the everyday use of master’s cash advances, but the underlying issue remains relevant. Any advance should be authorised, documented, applied to charter service expenses, and reconciled in the hire account.

Clause 31: Laying-Up

Clause 31 gives the charterer a laying-up option in defined circumstances. The charterer may wish to suspend active employment during weak markets, lack of cargo, or operational pause. If the option is used, the ship must be laid up at a safe place and the financial terms must be adjusted according to the clause.

A lay-up place is not the same as an ordinary loading or discharging port. It must be safe for the ship to remain inactive, taking account of weather, moorings, security, port authority requirements, class, crew access, environmental risk, and the ability to resume service. The safe-place obligation may not always be limited by the due diligence wording used for normal employment ports.

Clause 32: Requisition

Clause 32 addresses requisition by government or authority. Requisition involves a taking or compulsory placing of the ship at governmental disposal, not every governmental direction or routing instruction. A direction to call somewhere, wait, or alter route may fall short of requisition if the ship is not taken over for governmental employment.

Even where the clause allocates consequences of requisition, a prolonged or fundamental taking may still raise frustration issues. The longer the ship is removed from charter service, and the less realistic the prospect of return within the commercial purpose of the charter, the more likely it is that ordinary charter-performance analysis will be insufficient.

Clause 33: Outbreak of War

Clause 33 gives cancellation rights if war breaks out involving specified countries. The meaning of war may be approached commercially rather than only through technical public international law. What matters is how commercial parties in the shipping market would understand the situation, the countries involved, and the risk to performance.

The option must be exercised within a reasonable time. A party that waits too long after becoming entitled to cancel may lose the practical benefit of the option or face arguments that it affirmed the charter. Clear notice, careful timing, and evidence of the triggering event are essential.

Clause 34: Additional War Expenses

Clause 34 requires the charterer to reimburse additional insurance premiums, crew bonuses, and other reasonable expenses arising from orders to trade in areas affected by war or threat of war, subject to the clause requirements. The expression “threat of war” should be read commercially and may include a situation where shipowners and charterers would reasonably regard the area as exposed to war risk even without a formal declaration.

The clause is connected with insurance and subrogation. Where the shipowner obtains a waiver of underwriters’ subrogation rights, the charterer’s reimbursement of extra premium may reduce the risk of later subrogated claims. However, payment of additional premium does not necessarily give the charterer a risk-free right to nominate an unsafe port or place. Uninsured losses, deductibles, excess exposure, and losses outside the insured risk may still remain live issues.

Clause 35: War Risks

Clause 35 gives the master and shipowner protection where a place becomes dangerous, impossible, prohibited, blockaded, or affected by war, hostilities, warlike operations, civil war, civil commotions, revolutions, or international law. The clause also permits compliance with directions from governments, local authorities, or war risk insurers.

If the ordered place is a place of peril, the charterer must be notified and may nominate an alternative place within the charter limits. If no timely orders are given, the shipowner may be allowed to discharge affected cargo at a place selected under the clause, with that discharge treated as due fulfilment for the cargo concerned.

The Kanchenjunga confirms the importance of the master’s bona fide assessment of danger under war risk wording. Even where the shipowner may have waived an earlier safe-port objection, the master may still be entitled to refuse to load or proceed if the war risk clause gives that discretion and the danger is genuinely considered.

The Product Star provides the counterweight. A war risk discretion must be exercised honestly, in good faith, and not arbitrarily or capriciously. If the parties fixed the charter in full knowledge of existing regional risks, the shipowner may need to show that the danger has materially changed or increased before refusing an order that falls within the agreed trading pattern.

War Risks and Safe Port Obligations

War risk provisions do not automatically replace safe-port obligations. In The Chemical Venture, the Shelltime war-risk structure was not treated as a complete code that excluded the safe-port due diligence obligation. A charterer cannot rely on a general exceptions or war-risk clause to escape the consequence of its own failure to exercise due diligence in nominating a dangerous port.

Whether a war clause is a complete code depends on the wording of the particular charter. The mere fact that the charterer pays extra war risk premium does not necessarily release the charterer from safe-port responsibility. Express waiver of subrogation, insurance structure, named risks, and the scope of covered losses must all be examined.

Clause 36: Both-to-Blame Collision Clause

Clause 36 requires bills of lading issued under the charter to include a Both-to-Blame Collision clause. The clause responds to the U.S. collision law problem under which cargo on the carrying ship may recover from the non-carrying ship, and the non-carrying ship may then seek contribution from the carrying ship.

If the required clause is not included and the shipowner loses protection that would otherwise have been available, the charterer may be liable in damages. This is why Shelltime treats bill of lading incorporation clauses as substantive risk-allocation provisions, not clerical boilerplate.

Clause 37: New Jason Clause and General Average

Clause 37 provides for general average and requires a New Jason clause to be included in bills of lading. The New Jason clause is designed to preserve the carrier’s ability to recover general average contribution in circumstances where U.S. law might otherwise prevent recovery following negligence in navigation or management.

The clause commonly refers to the York-Antwerp Rules and to adjustment in London under English law and practice, while recognising that U.S. law and practice may become relevant in some circumstances. If the charterer fails to include the New Jason clause in bills of lading and the shipowner loses recovery, the shipowner may claim damages equivalent to the lost protection.

Clause 38: Clause Paramount

Clause 38 requires the charterer to procure that all bills of lading contain the specified Clause Paramount. The clause generally applies the Hague-Visby Rules unless Hague Rules or Hamburg Rules legislation compulsorily applies under the governing law of the bill of lading.

Clause 38 does not directly incorporate those rules into the time charter for every purpose. Its indirect significance comes through Clause 27(c)(ii), which applies the relevant cargo liability rules to claims arising from loss of or damage to, or in connection with, cargo. This can affect seaworthiness standards, time bars, liability limits, exceptions, and the treatment of cargo-connected financial loss.

Failure to insert the required Clause Paramount into bills of lading is a serious breach. It may deprive the shipowner of liability limits, time bars, defences, or general average rights that the form intended to preserve.

Clause 39: Insurance and ITOPF

Clause 39 contains warranties about ownership or demise chartering status, P&I entry, International Group cover, pollution cover, hull and machinery insurance, war risk insurance, ITOPF arrangements, and documentary evidence of insurance. For tanker trades, this clause is commercially important because oil terminals, cargo interests, and regulators require reliable financial responsibility and pollution response arrangements.

The shipowner’s obligation to insure is not merely a cost allocation. It supports the commercial acceptability of the ship. However, the way insurance is placed, the underwriter selected, and the precise terms of cover usually remain matters for the shipowner, provided a prudent shipowner would regard the cover as appropriate for the agreed trading.

Clause 40: Export Restrictions

Clause 40 addresses export restrictions affecting cargo. It prevents the master from being required to proceed or deliver in a way that would breach laws, rules, or prohibitions governing export from the country of origin or shipment. It also requires the relevant clause to be inserted into bills of lading.

Unlike some bill of lading clauses, the export restriction wording applies to the charter itself as well as to bills of lading. This gives the shipowner a direct contractual answer where a cargo or destination becomes prohibited and protects against being forced into unlawful carriage or delivery.

Oil Major Termination Rights

Shelltime 4 includes a significant provision allowing the charterer to terminate if the ship becomes unacceptable to any oil major during the charter period. This provision must be distinguished from a delivery promise that the ship has a particular status at the commencement of the charter. It usually operates where the ship was acceptable and later becomes unacceptable.

The phrase “oil major” may be defined in bespoke clauses. If it is not defined, evidence may be needed as to which companies count as oil majors in the relevant market at the relevant time. The Savina Caylyn demonstrates that expert evidence and commercial context can become necessary when the form does not identify the relevant companies.

Security, ISPS, and Modern Compliance

Later Shelltime provisions address security compliance, including ISPS Code obligations and U.S. security legislation. These provisions reflect the modern tanker environment, where terminal access, cargo operations, port entry, and charterer acceptability may depend on security plans, declarations, documentation, and cooperation between ship and shore.

Security failures can overlap with off-hire, inspection failure, oil major acceptability, delay, export restriction, and bill of lading issues. The parties should avoid treating compliance clauses as standalone administrative language. In tanker trading, a paperwork or security defect may make the ship commercially unusable even where she remains mechanically sound.

Law and Arbitration

Shelltime 4 provides for English law and arbitration. Earlier versions allowed disputes to be determined by English courts unless arbitration was elected, but the revised form makes arbitration the mandatory route. The clause should be read with any rider provisions, seat, appointment mechanism, time limits, and incorporated cargo rules that may affect cargo-connected claims.

Where Hague, Hague-Visby, Hamburg, or COGSA-style regimes apply to cargo-connected claims, time limits may interact with the arbitration clause. Commencement of arbitration, notice requirements, and the exact claim characterised as cargo-related or non-cargo-related can become decisive. Parties should not assume that a general contractual limitation period will always be enough.

Clause Headings and Interpretation

Shelltime contains a provision limiting the use of clause headings in construction. This is common in detailed commercial forms because headings may be abbreviated, imprecise, or inherited from earlier versions. The operative wording of the clause controls, not the convenience label placed above it.

This point matters in Shelltime because some clause titles do not fully match the legal operation of the text. For example, a clause headed “Duty to Maintain” may also contain delivery-related remedies, inspection-related off-hire rights, and termination machinery. The whole provision must be read as part of the contract, not reduced to its heading.

Practical Drafting Lessons

A Shelltime fixture should identify the exact form version, all amendments, and any rider clauses that alter the standard balance. Where the recap contradicts Shelltime wording on safe ports, oil major acceptance, performance, or war risks, the contract should state which provision prevails. Ambiguity in tanker chartering is expensive because operational decisions are often urgent.

Delivery obligations should be checked against the ship particulars questionnaire, class status, SIRE history, oil major vetting, certificates, flag requirements, ITF documents, cargo systems, tank coatings, pumps, heating capability, inert gas arrangements, and any cargo-specific equipment required by the charterer.

Maintenance and inspection provisions should state how defects are reported, how due diligence is demonstrated, when the ship may be placed off hire, whether a failed inspection makes the ship commercially inoperable, and when termination becomes available. The charterer should not rely on informal displeasure with vetting results if the contract requires a specific failure, notice, or period.

Performance clauses should define good-weather or adverse-weather periods, ordered speed, excluded periods, review dates, weather data sources, evidence, calculation method, deduction rights, bunker pricing, and whether overperformance may offset underperformance. Without a clear calculation method, speed and consumption claims can become disproportionate to their value.

Bills of lading clauses require disciplined administration. The Both-to-Blame Collision clause, New Jason clause, Clause Paramount, export restriction clause, delivery indemnities, and charter-party incorporation wording must be inserted accurately. A missing clause can change the parties’ exposure long after the commercial voyage has ended.

War risk clauses should be coordinated with trading limits, safe-port language, insurance premium reimbursement, subrogation waivers, crew bonuses, sanctions and export restrictions, and the master’s right to refuse danger. Payment of extra premium should never be assumed to remove all other rights or liabilities unless the charter clearly creates a complete code.

Operational Lessons for Shipowners

Shipowners should treat Shelltime as a document-driven charter. They need accurate delivery records, class and certificate files, crew certificates, HSE systems, SIRE schedules, oil major communications, tank records, bunker evidence, speed and consumption data, inspection responses, and documentary proof of due diligence. In many Shelltime disputes, the party with better records holds the stronger position.

Where an order raises concern, the master and shipowner should respond promptly, give reasons, preserve messages, and distinguish between commercial reluctance and genuine safety, legal, war risk, cargo, or bill of lading concern. A reasonable pause for verification may be defensible, but silence, delay, or inconsistent conduct can weaken the shipowner’s position.

Operational Lessons for Charterers

Charterers should ensure that the ship they fix is actually suitable for their cargo programme, terminal list, vetting expectations, bunker strategy, and trading pattern. Shelltime gives charterers significant rights, but many of them depend on timely notice, reasonable judgment, proper evidence, and correct use of the contractual mechanism.

When making deductions from hire, charterers should identify the clause relied on, the period affected, the service immediately required, the calculation method, the value of time lost, any service or distance made good, bunker values, and any overlap with other claims. Overbroad deductions may invite withdrawal notices or arbitration.

Commercial Importance of Shelltime 4

The Shelltime form reflects the complexity of tanker time chartering. It balances charterers’ need for commercial flexibility and shipowners’ control of ship safety and technical management. Its drafting is detailed because tanker employment exposes the parties to cargo contamination, terminal rejection, vetting failure, pollution risk, regulatory delay, sanctions, war risk, and large third-party claims.

The form also shows why time charterparty clauses must be read together. A single incident may engage safe-port due diligence, war risk provisions, off-hire, additional premiums, bills of lading, cargo claims, bunkers, speed and consumption, inspections, oil major acceptability, and termination rights. The contractual answer is rarely found in one clause alone.

Conclusion

Shelltime Time Charterparty is a sophisticated tanker charter form built for commercial employment under close operational, regulatory, and documentary control. Its key structure is the continuing separation between commercial employment by charterers and technical operation by shipowners, but that separation is refined by detailed clauses on description, maintenance, crew, off-hire, performance, bunkers, bills of lading, war risks, insurance, vetting, and arbitration.

The most effective use of Shelltime requires precise fixture drafting, exact identification of the form version, careful treatment of amendments, and disciplined operational records. Shipowners must prove that the ship is properly described, maintained, crewed, insured, and managed. Charterers must exercise due diligence in employment, preserve contractual notice rights, use bill of lading machinery correctly, and calculate hire deductions carefully.

When Shelltime clauses are drafted and operated with that discipline, the form provides a workable framework for complex tanker employment. When they are treated as standard boilerplate, the same clauses can produce disputes over delivery fitness, vetting, safe ports, war risk, off-hire, performance, cargo documentation, bunker title, and final redelivery.