Time Charter vs Voyage Charter: Key Differences and the Disputes That Most Often End Up in Arbitration 2026

In shipping practice, the choice between a time charter and a voyage charter is not merely a commercial preference. It determines who controls the vessel, how costs and risks are allocated, how performance is measured, and—most importantly—where disputes are likely to arise. Many charterparty disputes are not caused by a single “breach,” but by a chain reaction: a late arrival triggers an off-hire argument; an unsafe berth claim escalates into deviation and cargo damage; a bunkers dispute turns into a lien and withdrawal battle.

This article explains the core differences between time charters and voyage charters, then maps the most common dispute points, the evidence that typically decides them, and drafting choices that prevent avoidable litigation.

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1) What a Time Charter Really Is (and Isn’t)

A time charter is essentially a contract for the use of the vessel’s carrying capacity for a period of time, where the owner provides the ship and crew and the charterer directs the commercial employment of the vessel (within contractual limits).

Typical features:

• Hire is paid per day (or pro rata), often semi-monthly in advance.

• The charterer issues employment orders: where to trade, which ports, what cargoes (subject to the charter terms).

• Operating costs are split: owner pays crew, maintenance, insurance; charterer commonly pays bunkers, port costs, canal dues (depending on form and riders).

• The charterer is paying for time and availability of the vessel for employment.

Common standard forms: NYPE (dry), Shelltime (tankers), with tailored riders.

Practical consequence: In time charters, disputes cluster around time lost, performance, and allocation of running costs.

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2) What a Voyage Charter Really Is (and Isn’t)

A voyage charter is a contract for the carriage of cargo on a specific voyage (or a set of voyages), with freight typically paid per ton/lump sum.

Typical features:

• The owner controls navigation and operation, and undertakes to carry cargo from load port(s) to discharge port(s).

• The charterer’s main obligation is to provide cargo and pay freight.

• A central concept is laytime: allowed time for loading/discharging, with demurrage for exceeding laytime and sometimes despatch for saving time.

• Cost allocations differ: many voyage charters place more voyage costs on the owner, but the contract can shift port costs or terminal charges depending on bargaining power and trade.

Common standard forms: GENCON, ASBATANKVOY, plus commodity-specific templates.

Practical consequence: In voyage charters, disputes cluster around laytime/demurrage, freight, and exceptions/safe port issues.

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3) Quick Comparison: Time Charter vs Voyage Charter (The Legal DNA)

Control and Risk

• Time charter: charterer controls employment; owner controls navigation and crew.

• Voyage charter: owner controls the voyage; charterer supplies cargo and loading/discharge arrangements (to the extent agreed).

Payment Logic

• Time charter: pay for time (hire).

• Voyage charter: pay for voyage (freight), but time matters through laytime/demurrage.

Performance Metrics

• Time charter: speed/consumption, off-hire, hire deductions, compliance with orders.

• Voyage charter: readiness, NOR validity, laytime counting, port efficiency, exceptions, demurrage computation.

Security Levers

• Time charter: owner’s right to withdraw for non-payment; liens on cargo/sub-freights (depending on clauses).

• Voyage charter: liens for freight/demurrage; retention of bills of lading; “freight prepaid/collect” dynamics.

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4) The Dispute Map: Where Time Charter Arguments Usually Start

A) Hire Payment, Deductions, and Withdrawal

The classic fight: charterer deducts hire for alleged off-hire or performance; owner treats it as wrongful deduction and threatens withdrawal.

Key issues:

• Is the deduction permitted by the charter wording?

• Was notice required before deduction?

• Does the dispute involve a genuine off-hire event or a performance claim that must be resolved later?

Evidence that matters:

• hire statements, bank records, deduction notices

• contemporaneous logs and port records

• email trail around the event and any agreed stoppage periods

B) Off-Hire: What Counts as “Loss of Time” and Why It’s Never Simple

Off-hire clauses vary dramatically. Disputes often turn on:

• the trigger event (deficiency, breakdown, crew issue, detention, strike, quarantine)

• causation (was time lost “by reason of” the relevant event?)

• net vs gross loss of time (did the vessel lose time overall or just at a specific stage?)

• intervening causes (weather, congestion, charterer’s own delays)

Evidence that matters:

• engine logs, noon reports, defect reports

• statements of facts (SOF), port logs

• weather routing data and notices of readiness where relevant

C) Speed and Consumption Claims (Performance Claims)

Charterers commonly claim that the vessel underperformed on:

• speed warranties (good weather performance)

• bunker consumption guarantees

• hull fouling and maintenance (clean hull obligations, underwater cleaning clauses)

These disputes are heavily technical:

• What is “good weather” under the clause?

• How do you exclude adverse currents and routing decisions?

• Was performance affected by charterer’s orders (speed up/slow down), weather avoidance, or port congestion?

Evidence that matters:

• noon reports, voyage data, weather data sets, routing advice

• bunker delivery notes (BDNs), ROB records, sampling results

• hull condition reports, underwater inspection footage

D) Bunkers: Quantity, Quality, and Redelivery Battles

Bunker disputes can involve:

• short delivery / ROB discrepancies at delivery/redelivery

• off-spec fuel (ISO parameters), contamination, stability issues

• who bears the cost of de-bunkering, delays, engine damage

• pricing clauses and invoicing disputes

Evidence that matters:

• BDNs, sealed samples, lab reports

• custody chain and sampling protocol compliance

• engineer statements and engine damage reports

E) Employment Orders: “Lawful Orders,” “Safe Port,” and Illegality

Time charterers can order the vessel, but orders must be lawful and within charter limits. Disputes arise when:

• a port/berth is unsafe (political risk, war risk, physical hazards, draft restrictions)

• sanctions/export controls create illegality risk

• the voyage exposes the vessel to unacceptable security threats

Evidence that matters:

• port agent warnings, notices from authorities, security advisories

• draft surveys, pilotage reports, casualty history for the berth/port

• sanction screening documentation and compliance memos

F) Cargo Claims in a Time Charter Context

Even under time charter, cargo claims often rebound between owner and charterer:

• bills of lading issuance instructions

• letter of indemnity (LOI) use

• misdelivery or clean B/L requests against apparent cargo condition

• cargo stowage and seaworthiness issues

Evidence that matters:

• mate’s receipts, tally sheets, survey reports

• B/L issuance instructions and LOI wording

• P&I correspondence and notifications

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5) The Dispute Map: Where Voyage Charter Arguments Usually Start

A) Notice of Readiness (NOR): Validity, Timing, and “Arrived Ship”

Many demurrage battles are won or lost on NOR:

• was the vessel an “arrived ship” (depends on port/berth charter and local practice)?

• were holds ready? were required certificates in place?

• can NOR be tendered in roads/anchorage?

• is there a “WIPON/WIBON/WIFPON” clause?

Evidence that matters:

• port logs and anchorage/berth timestamps

• readiness certificates, class/health documents

• SOF from terminal/agent, emails confirming readiness

B) Laytime Counting: The Hidden Complexity

Laytime disputes revolve around:

• calculation method (running hours, working days, weather working days, SHEX/SHEXUU)

• interruptions (rain, breakdowns, shift changes, strikes)

• whether time counts during weekends/holidays (SHINC, SHEX)

• “once on demurrage, always on demurrage” arguments (depends on clause and law)

Evidence that matters:

• SOF, terminal logs, weather reports, hatch opening/closing records

• cargo docs showing readiness of charterer’s cargo supply

• correspondence on stoppages and responsibility

C) Demurrage and Despatch: Computation and Proof

Common pain points:

• rate and currency, rounding, time zones

• double counting time or misapplying exceptions

• split demurrage responsibility across receivers/shippers in sales chains

Evidence that matters:

• demurrage invoice calculations with traceable timestamps

• contract clause matrix showing which exceptions apply

• contemporaneous agreement on time sheets (if any)

D) Freight: When It Becomes Due and When Refunds Are Triggered

Voyage charter freight disputes arise from:

• freight due on shipment vs on delivery

• partial loss, short delivery, or casualty scenarios

• freight prepaid vs freight collect alignment with B/L and sales contracts

• set-off attempts (charterer sets off cargo claims against freight)

Evidence that matters:

• freight clause, payment timeline, banking proof

• B/L markings (prepaid/collect), charter invoice chain

• survey reports for quantity delivered and loss cause

E) Safe Port / Safe Berth (Voyage Context)

Voyage charters also face safe port disputes, often mixed with:

• delay due to berth congestion

• port authority restrictions

• grounding and berth damage claims

Evidence that matters:

• pilots’ reports, bathymetric data, draft readings

• port circulars, restriction notices

• casualty investigation reports and timelines

F) Exceptions and Force Majeure-Style Defences

Voyage charters rely on exceptions clauses (weather, strikes, war, quarantine). Disputes focus on:

• whether the event fits the exception wording

• whether the party claiming the exception took reasonable steps to mitigate

• causation: would the delay have occurred anyway?

Evidence that matters:

• contemporaneous notices, mitigation steps, alternative berth/route attempts

• weather and operational logs

• terminal/authority communications

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6) Overlapping Hotspots: Issues That Hit Both Charter Types

A) Seaworthiness and Due Diligence

Even where charterers control employment (time charter), owners remain exposed to seaworthiness-related claims. In voyage charters, seaworthiness is central to cargo liability. Disputes often arise after:

• engine failure, fire, cargo contamination

• crew competence failures

• defective hatch covers leading to water ingress

B) Bills of Lading and Charterparty Incorporation

A charterparty dispute can become far more complex when a bill of lading is in the hands of third parties. Key fights:

• does the B/L incorporate the charterparty arbitration clause?

• is the charterparty law and forum clause binding on the B/L holder?

• is the B/L “clean” and what does it represent?

C) Set-Off and Counterclaims

One side tries to set off:

• cargo claims against freight or hire

• performance claims against hire

• demurrage against other sums

Whether set-off is permitted depends on:

• contract wording

• governing law (and whether the claim is “liquidated”)

• procedural strategy in arbitration

D) Interim Remedies and Security

Shipping disputes frequently require urgent measures:

• vessel arrest, cargo retention, bank guarantees

• anti-suit or anti-arbitration injunction strategies (venue dependent)

• security for claims (P&I, hull, cargo insurers)

The effectiveness of these tools depends heavily on jurisdiction, arbitration seat, and how the dispute clause is drafted.

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7) Drafting Tips: How to Reduce Time Charter and Voyage Charter Disputes

For Time Charters (NYPE/Shelltime style)

1. Define off-hire triggers precisely and address causation (“by reason of”) clearly.

2. Include a hire deduction protocol: notice, supporting documents, and a dispute path (pay now, argue later vs deduction allowed).

3. Spell out speed/consumption methodology: good weather definition, data sources, acceptable margins, and hull cleaning rules.

4. Clarify bunkers quality and sampling: ISO standard reference, sampling procedure, custody chain, and liability for off-spec consequences.

5. Set out orders and illegality: sanctions clause, refusal rights, safe port wording, deviation allocation.

For Voyage Charters (GENCON/ASBATANKVOY style)

1. Treat NOR as a litigation-grade clause: where tendered, when valid, and pre-conditions.

2. Build a laytime clause matrix (SHINC/SHEX, WWD, exceptions) with clear definitions.

3. Agree the SOF source hierarchy (terminal vs agent vs master) and who signs it.

4. Clarify demurrage computation rules and supporting documentation.

5. Align freight terms with B/L marking and sales contract expectations (prepaid/collect consistency).

For Both

• Use a clean, enforceable arbitration clause (seat, rules, tribunal size, notices).

• Specify governing law and avoid competing forum clauses across documents.

• Add a practical notice by email mechanism with designated addresses.

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8) Evidence Strategy: What Wins in Maritime Arbitrations

Across both charter types, tribunals tend to favor:

• contemporaneous ship records (logs, noon reports)

• independent port/terminal records (SOF, agent reports)

• objective data sources (weather and routing data)

• coherent calculations with transparent timestamps

• prompt notices and mitigation evidence

If a claim depends on time, you need time-stamped documents. If it depends on performance, you need consistent performance datasets. If it depends on causation, you need a timeline that survives cross-examination.

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9) Practical Examples of Dispute Chains

Example 1: Time Charter → Off-Hire → Hire Deduction → Withdrawal Threat

A minor engine defect reduces speed. Charterer alleges underperformance and off-hire, deducts hire. Owner says the vessel was still capable of service, calls deduction wrongful, threatens withdrawal. The case then splits into:

• technical causation (defect vs weather vs routing)

• contractual right to deduct vs pay now, argue later

• whether owner can withdraw immediately

Example 2: Voyage Charter → NOR Validity → Laytime → Demurrage Explosion

Vessel tenders NOR at anchorage; charterer argues “not arrived ship.” Time counting shifts by days. Demurrage claim triples. The tribunal decision often turns on:

• whether it’s a port or berth charter

• local port practice and contract wording

• SOF accuracy and the exact time the vessel became “at charterer’s disposal”

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Conclusion

Time charters and voyage charters allocate risk differently, and they generate different dispute “ecosystems.”

• Time charters most often produce disputes about hire, off-hire, speed/consumption, bunkers, and the legality/safety of employment orders.

• Voyage charters most often produce disputes about NOR, laytime counting, demurrage/despatch, freight, and port/berth safety and exceptions.