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John W. Chitty

Document Type

Article

Abstract

A bareboat charter is a contractual agreement akin to the lease of a vessel whereby most of the “customary liabilities” of the owner are shifted to the charterer. Some courts have raised concerns over bareboat charters—also referred to as a demise charter—regarding the ability of owners to use the bareboat device as a means to limit liability to injured third parties.

In Baker v. Raymond International, Inc. the Fifth Circuit brought force to this concern; the court held a bareboat charter would no longer shield owners from personal liability for third party injuries caused by the unseaworthiness of a vessel, even though the owner had no control over the vessel, and regardless of whether it was the owner or charterer who created the unseaworthy condition. The Baker decision created a split among federal circuits on the issue of liability to third parties.

The Supreme Court declined to determine whether or not a bareboat charter would allow a shipowner to shield himself from third party liability for injuries resulting from an unseaworthy condition of his vessel. While the vast majority of circuits clearly support limited liability under a bareboat charter, the Eleventh Circuit has yet to indicate its position on this issue.

Part I of this Note provides background about bareboat charters, their uses, and how they are created. Part II addresses the duties owed to third parties by owners and charterers, the doctrine of seaworthiness, and the role of seaworthiness in a bareboat charter agreement. Part III outlines federal precedent prior to the Fifth Circuit’s decision in Baker, the position of the Supreme Court, and the Fifth Circuit's decision in Baker, are addressed in Part IV.

Part V evaluates the state of the law following the Supreme Court’s reluctance to address the issue and the split created by the Fifth Circuit Court. Part VI reviews current Eleventh Circuit cases concerning bareboat charter agreements and its reasoning for not addressing the issue. Part VII offers solutions for owners and charterers seeking to clarify and protect their interests when entering a bareboat charter agreement, regardless of the jurisdiction; parties to a bareboat agreement should utilize comprehensive contractual provisions and indemnity clauses to protect themselves and ensure their expectations are met.

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