For more than 60 years now, a time charterer has occupied a rather peculiar position under Japanese law. In the event of a claim for damages, the time charterer could possibly be held responsible, particularly in tort; i.e. the time charterer rather than the shipowner might be held liable in respect of a third party claim. In other parts of the world, e.g. the United States, Britain and Germany, this is not likely to be the case, particularly in tort claims resulting from crew’s negligence. This situation in Japan has come about partly because there are no acts or regulations defining the exact legal position of the time charterer. This article draws attention to some of the cases which have arisen in the past, and which have given the time charterer such a peculiar position in the eyes of Japanese law.

The “Shoei Maru” v. The “Shinko Maru”

In 1983 the Osaka District Court gave a decision relevant to the time charterer’s liability to a third party based purely on tort. The case was Matsushima v. Kaiyo Sangyo and others (The Shoei Maru and The Shinko Maru).1

In this case, a fishing boat called the Shoei Maru collided with a cargo vessel, the Shinko Maru, and the court considered that both the vessels were equally to blame. The court then discussed who, on the side of the cargo vessel, which was on time charter at the material time, should be liable in respect of the losses and/or damage sustained by the other ship, the fishing boat. In other words, whether it was the owner or the time charterer of the Shinko Maru who was liable to the other ship. The Osaka District Court decided that it was the time charterer of the Shinko Maru, and not her owner, who should be liable. The case was appealed to the Osaka High Court, but before the court concluded the case, a settlement was concluded.

The reason why the court considered the time charterer, and not the owner, of the Shinko Maru to be liable towards the third party was that time charter-parties have traditionally been considered to be a kind of lease contract containing a supply of labour clause. Therefore the time charterer was found liable under the Japanese Commercial Code, s. 704(1).