As leasing becomes an ever more important source of finance for the global shipping industry, it is timely to draw attention to some structural and documentary issues which Lessees/Charterers should bear in mind.
Ship leases take many forms. They are often documented by using the BIMCO BARECON form of bareboat charter, extensively modified and supplemented by lengthy additional clauses. This has the effect of turning a document which is intended to be an industry-standard bareboat charter into a bespoke financial or quasi-financial instrument. Increasingly, however, leasing companies are moving away from the modified BARECON approach and producing self-standing forms of lease. The parties in a BARECON-based document are called “Owners” and “Charterers”, whereas in a self-standing form they are often called “Lessor” and “Lessee”. There is no significance to these names in the current context, however. For consistency in this note, the terms “Lessor” and “Lessee” are used throughout.