That a vessel cannot sail after an accident does not mean that all payments under the charterparty stop automatically. First, the type of contract, the applicable law and the provisions on the accident are determined. The off-hire deduction in a time charter, the freight and demurrage calculation in a voyage charter, and separately assertable damage claims rest on different bases. For the shipowner and the charterer alike, the first need is to match the accident and repair timeline with the contract’s payment, notice and dispute resolution provisions.
Which type of charterparty are we dealing with?
The inquiry looks at the performances the parties have actually undertaken rather than the commercial title of the contract. In a time charter, the commercial management of a fully equipped vessel is allocated for a specified period; technical management remains with the party making the allocation. TTK Articles 1131–1137 regulate this relationship. In a voyage charter, by contrast, the carrier undertakes carriage of goods by allocating the whole vessel, part of it or a specified space in return for freight. [1]
In a bareboat charter or ship lease, the arrangement of possession and operation is different. It would therefore be wrong to apply the off-hire provision of a time charter unchanged to a separate ship lease. Head and sub-charters for the same vessel may also be of different types. A cost arising under a sub-charter cannot be passed up to the head party as is without examining the provisions of the head contract.
| Contractual relationship | Basic payment | Priority review after an accident |
|---|---|---|
| Time charter | Allocation charge, in practice hire | Off-hire conditions, deduction period and technical service. |
| Voyage charter | Freight; demurrage if the terms provide for it | Performance of the voyage, readiness, and loading and discharge times. |
| Ship lease | Rent | Allocation of maintenance, risk, redelivery and payment obligations. |
The document set may not consist only of a signed standard form. The recap, email understandings, additional clauses, amendments and rider provisions accepted by the parties are collected together. It is established whether there is a priority clause between the standard form and the additional clauses. Naming a form does not show that all of its provisions were accepted unamended.
For example, BIMCO’s presentation of NYPE 2015 describes that text as a time charter form used in the dry cargo sector. In a concrete file, however, neither a deduction condition nor the place of dispute resolution can be determined from the name of the form alone. It must be seen which version the parties used, which parts they changed and which additional clauses they accepted. The assessment is based on the contract set the parties accepted rather than on a blank sample found on the internet. [5]
How are Turkish law and foreign law distinguished?
The fact that a vessel is damaged in a Turkish port does not automatically subject the payment provisions of the charterparty to Turkish law. MÖHUK Article 24 governs general contractual relationships, while Article 29 governs contracts of carriage of goods and the charters within the scope of that provision. The choice of law, the nature of the dispute and the applicable mandatory rules are assessed together. The choice of court and the choice of law are also not the same thing. [2]
In a time charter governed by Turkish law, TTK Article 1133 regulates the obligation to keep the vessel fit for the sea, for the voyage and for the agreed purpose throughout the contract period. TTK Article 1136/2 provides that no hire is payable for the period in which the vessel is not commercially usable, on condition that the period of immobility has been at least twenty-four hours. The provisions of the specific contract and their relationship to this regulation must be examined separately. [1]
This statutory threshold does not mean that in every contract governed by foreign law the first twenty-four hours will necessarily be paid, or that the same calculation will be made for every damage. In a file where English law has been chosen, the off-hire assessment rests on the wording of the relevant clause and on the rules of interpretation applicable to that clause. The criterion in the Turkish statute and the deduction calculation of a foreign standard form should not be merged into a single formula.
Which questions must be answered for off-hire?
Off-hire generally refers to the contractual mechanism that governs the non-accrual of hire, or the deduction calculation, in a time charter because of certain events. Not every delay is off-hire. It is examined whether the accident constitutes an event listed in or covered by the clause, its effect on the vessel’s ability to perform the relevant service, and the exceptions.
An engine breakdown, hull damage or grounding may be assessed under a particular clause, but merely naming the event is not enough. The service the vessel was supposed to be performing at the time must be determined. For example, if the damage does not prevent loading and the vessel was already waiting for another reason, the scope of the hire deduction may be arguable depending on the structure of the contract. The technical report and the operating schedule are assessed together.
Net loss of time and period-based clauses
Some clauses focus on the net loss of time caused by a particular event, others on the period during which a defined situation continues. This distinction matters for other operations that continue at the same time during repairs and for a berth slot that is subsequently missed. In an assessment based on net loss of time, the period within which the relevant service would have been performed had the event not occurred is also investigated. Period-based wording is read with its own start and end conditions.
The charterer’s claim of a hire deduction must be documented as to both the event and the duration. The shipowner, if it relies on an exception in the clause or a condition under which hire continues, must likewise establish the relevant facts. Who is at fault and whether off-hire arises are separate questions: under some clauses a deduction may arise without fault, while a claim for separate compensation requires other conditions.
How is the accident and repair period documented?
The starting point may not be only the hour at which the accident occurred. The times at which the vessel went out of service, the repair was completed, the class or port requirement was satisfied and the vessel was notified as ready to resume service are recorded separately. It should not be assumed that all of these are the same moment. Stating whether the times in the records are UTC or local time matters in files where even a few hours of calculation are disputed.
- Accident, breakdown and first-response reports; deck and engine logbooks.
- Instructions and release documents from the classification society, the harbor master’s office and other competent authorities.
- Shipyard work orders, service reports, spare parts and repair completion records.
- Statement of Facts, notices of readiness, berth schedule and operating program.
- Off-hire and return-to-service readiness notices, together with their receipt records.
- Hire accounts, fuel consumption, additional port costs and alternative transport quotations.
Hypothetical example of the deduction calculation
Suppose the daily hire is US$24,000 and, under the specific clause, the parties have confirmed the deduction period as 36 hours. In this limited example, the hire deduction is US$36,000, calculated as 36/24 × 24,000. Fuel, port expenses, exchange rate differences, set-off and other loss items are not included in this calculation. The example does not produce an automatic 36-hour off-hire result for any contract.
Where the repair takes longer than planned, the reason for the delay must be shown separately. Adding previously scheduled routine maintenance to the accident repair, or waiting for an independent commercial job, may make it arguable to attribute the entire time to the accident. If work orders and labor records are not separated, it becomes difficult to explain afterwards the difference between technical necessity and an operating preference.
Are freight, demurrage and damage claims the same calculation?
Freight is the consideration for the act of carriage; it is not the same payment as hire in a time charter. In a voyage charter, whether freight is earned after an accident, the termination of the voyage, the transshipment of the cargo to another vessel or the continuation of the contract are examined under the relevant provisions. The fact that freight has been paid in advance does not by itself lead to the result that it will be refunded in every case or can never be recovered in any case.
Laytime and demurrage are dealt with in Turkish practice in the context of loading and discharge times and demurrage (sürastarya). The validity of the notice of readiness, the time exceptions in the contract and whether the vessel was in a condition to carry out the operation may be decisive. Not every hour lost because of the accident is deducted from demurrage in the same way as in the off-hire calculation of a time charter. The relevant contract clause and the sequence of events must be assessed separately.
If separate compensation is claimed under the heading of freight or loss of income, the breach, causation, the extent of the loss and the other conditions of the applicable law must be shown. Expected gross income and net loss are not the same. Expenses saved on the voyage not performed, income earned from alternative employment and the options available to mitigate the loss must appear in the calculation. Possibilities of future work that have not been signed may not carry the same evidentiary weight as the loss of a concluded contract.
An off-hire deduction and a compensation claim may be asserted together; however, the same economic loss must not be compensated twice. The period covered by the hire deduction, what the separately claimed loss item compensates for and any counterclaims must be shown clearly. The shipowner’s physical damage to the vessel and the charterer’s additional carriage costs must also not be combined under a single loss heading.
How should the Global Santosh decision be used?
The decision of the United Kingdom Supreme Court in NYK Bulkship (Atlantic) NV v Cargill International SA, [2016] UKSC 20, dated May 11, 2016, examined a special off-hire clause concerning the detention of a vessel. The discussion concerns whether acts of persons in the sub-contractual chain fell within the charterer’s “agents” wording, and whether the detention was connected with the performance of that task. The majority concluded that the exception in the specific clause did not apply and that the period of detention was off-hire. [3]
This decision does not say that every detention of a vessel or every accident will automatically count as off-hire. The case is not directly a collision action; it is an example of contractual interpretation that also matters after an accident. It shows that no automatic link can be drawn between the presence of a person in a sub-charter chain and the head charterer’s liability, to the same extent, for every act of that person. It should not be presented as binding Turkish case law for Turkish courts.
How are force majeure, insurance and payment deductions handled?
Invoking force majeure for an accident or a port closure does not by itself resolve all consequences for the payment obligation. Notice, whether the event was beyond control, preventability, mitigation of effects and the consequences set out in the contract are examined. BIMCO’s explanation of the Force Majeure Clause 2022 also recommends that the relationship between on-hire/off-hire and laytime/demurrage be regulated separately within the charterparty. This approach shows the drawback of the generalization that “there is force majeure, so all hire stops.” [4]
The existing policies must be checked separately for hull and machinery damage, loss of income and the legal costs of the dispute. That one policy responds to repair costs does not show that another policy will also cover a waiting period. Loss-of-income cover may contain contractual conditions such as the insured event, a waiting period, a daily amount and a maximum period. Charterparty notices should not be neglected while the insurance review is under way.
The charterer’s authority to make a unilateral deduction from hire is also examined separately. Even if the calculated off-hire amount is thought to be correct, there may be provisions on set-off or limiting deductions. The shipowner’s withdrawal of the vessel or termination of the contract in response to underpayment may also depend on notice and cure conditions. A decision to deduct or to terminate should therefore not rest solely on a table prepared by the operations team.
How is a dispute file prepared for foreign companies?
The first piece of work should begin with a party table showing the entire chain of contracts. The law of each contract, the arbitration or court clause, the notice address and the claim period are recorded separately. Notice given in time to the head contract may not satisfy the shorter notice requirement of the sub-contract. Even at the stage when the technical report is not ready, it is assessed whether a step is needed to protect the time limit.
The need for evidence or interim legal protection at a Turkish port and the principal claim proceeding in foreign arbitration can be coordinated together. The availability of interim protection does not mean that the principal dispute will be resolved in Türkiye or that the arbitration clause is invalid. Enforcement of a foreign award or judgment in Türkiye likewise requires separate assessment of the relevant recognition and enforcement conditions. [2]
A single “one year” period should not be applied to all charterparty claims. Whether the claim is characterized as cargo damage, allocation charge, freight, compensation or another receivable, the applicable law and the contractual notice requirements affect the outcome. In particular, where there are conditions for submitting a claim supported by documents, it is determined which documents must be sent and when. Amicable negotiations should not be assumed to take the place of the necessary court or arbitration step.
Conclusion
A charterparty dispute after an accident requires examining the type of contract together with the actual time lost. A separate legal basis and calculation must be built for off-hire, freight, demurrage and the separately claimed losses. The time charter provisions of Turkish law and clauses governed by foreign law must not be confused with one another; notice and application periods must be tracked contract by contract. Repair records and operating documents form the basis of this review.
Related articles: Cargo damage and short delivery; Claims and payment refusals in marine cargo insurance; General average and security; Governing law and arbitration in international disputes.
Frequently Asked Questions
Does hire stop automatically when a ship has an accident?
No. The type of contract, the relevant clause, the applicable law, the vessel’s ability to provide service and the exceptions are examined. The existence of an accident does not by itself determine the entire hire period.
Is shipowner fault required for off-hire?
No such generalization can be made for every clause. The conditions of off-hire are determined from the contract; liability for compensation, separately, may rest on different conditions.
Does the twenty-four hours in Turkish law apply in every contract?
No. The scope of application of TTK Article 1136/2 and its relationship to the contract are examined. This provision is not a universal waiting period applicable to all charters governed by foreign law.
Does off-hire necessarily end when the repair ends?
The completion of the technical repair, the class or port requirement and the moment the vessel is ready to resume service may differ. The end condition in the clause must be assessed together with the incident records.
Can loss of income be claimed in addition to off-hire?
If the conditions are met, a separate loss claim may be considered. However, breach, causation and loss must be proved, and the same loss must not be claimed twice.
If there is London arbitration, can nothing be done in Türkiye?
No. The need for evidence or interim protection in Türkiye may be assessed separately. Such a step does not automatically remove the arbitration clause or change the venue of the principal proceedings.
Sources
1 — Law No. 6102, Turkish Commercial Code, in particular the provisions on ship lease, Articles 1131–1138, and on the contract of freight. Ministry of Trade text.
2 — Law No. 5718 on Private International and Procedural Law (MÖHUK), Articles 24, 29, 47, 50–63. Ministry of Justice text.
3 — UK Supreme Court, NYK Bulkship (Atlantic) NV v Cargill International SA, [2016] UKSC 20, 11.05.2016; in particular the majority reasoning, paras. 18–33. Official judgment text.
4 — BIMCO, Force Majeure Clause 2022, explanations relating to charterparties and contracts of carriage. Clause and explanation.
5 — BIMCO, official presentation of NYPE 2015. Used for information on the type and version of the standard form; it is not claimed that explanations behind a membership wall were accessed. NYPE 2015.
Source check date: October 14, 2026. This is informational text; a concrete assessment requires review of the signed contract and additional clauses.