Charter Party Agreement (Kenya)

A Charter Party Agreement in Kenya sets out the rights, duties and consideration binding the parties to it.

The Kenya Maritime Authority (KMA), established under the Kenya Maritime Authority Act No. 5 of 2006, is the national maritime regulatory body responsible for the safety, security, and environmental protection of Kenyan waters, the registration of vessels, and the licensing of maritime professionals. The KMA regulates charter operations through the Merchant Shipping Act No. 12 of 2009 and its subsidiary regulations, including the Merchant Shipping (Registration of Ships) Regulations 2010. A vessel engaged in Kenyan coastal trade must be registered with the KMA — either as a Kenyan-flagged vessel or under a recognised foreign flag — to operate under a Charter Party Agreement in Kenyan jurisdictional waters.

Kenya's seaborne trade is primarily handled through the Kenya Ports Authority (KPA), which manages Mombasa Port, the principal gateway for landlocked East African countries including Uganda, Rwanda, Burundi, South Sudan, and the Democratic Republic of Congo. The Kenya Ports Authority Act (Cap. 391) and KPA Port Rules govern port operations, vessel berthing, cargo handling charges, and demurrage. Charter Party Agreements for vessels calling at Mombasa Port must be consistent with KPA regulations on port entry, manifest submission, and cargo declaration under the East African Community Customs Management Act 2004.

Three main types of Charter Party Agreements are recognised under Kenyan maritime law and international shipping practice applicable in Kenya. A Voyage Charter covers a specific voyage from one port to another, with freight payable on the cargo carried. A Time Charter places the vessel at the charterer's disposal for a fixed period, with the charterer directing the vessel's employment while the shipowner manages crew and maintenance. A Bareboat (or Demise) Charter transfers operational control and management of the vessel to the charterer, who provides the crew and manages the vessel as if they were the temporary owner — the most extensive form of charter. All three types are used in Kenya's export trade in agricultural commodities (tea, coffee, cut flowers, horticultural products) and import trade in petroleum, fertiliser, and manufactured goods.

The Nairobi Centre for International Arbitration (NCIA) is the preferred dispute resolution forum for maritime and charter party disputes in Kenya, operating under the Arbitration Act No. 4 of 1995 (revised 2022). Kenya is a signatory to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958, making NCIA awards enforceable against parties in over 170 countries. International charterparty standard forms — including GENCON (voyage charter), BALTIME (time charter), and BARECON (bareboat charter) published by BIMCO — are regularly adopted and adapted for Kenyan port operations, often with rider clauses addressing KMA and KPA requirements specific to Kenyan law.

A Charter Party Agreement in Kenya is required whenever a cargo owner, freight forwarder, or trader needs exclusive or part use of a vessel for maritime transport, and several distinct circumstances make a formal written charter essential.

A Charter Party Agreement is needed when a Kenyan exporter of bulk agricultural commodities — such as the Kenya Tea Development Agency (KTDA)-managed tea consignments from Mombasa, or fresh horticultural produce through the Kenya Horticulture Council — requires a dedicated vessel for a full-cargo voyage to a foreign port. Without a Voyage Charter, the exporter cannot fix freight rates in advance, and is exposed to last-minute freight market volatility.

A Charter Party Agreement is required when a shipping company or commodity trader needs a vessel available for multiple voyages over a fixed period — for example, to service Kenyan petroleum import contracts. A Time Charter fixes the daily hire rate and the period of the charter, allowing the charterer to deploy the vessel on multiple voyages as cargo arises, while the shipowner retains responsibility for crew and maintenance.

A Charter Party Agreement is needed when a company wishes to operate a vessel for its own account — for example, a Kenyan offshore oil and gas company under a licence from the National Oil Corporation of Kenya (NOCK) or Petroleum Regulatory Authority. A Bareboat Charter transfers full operational control to the charterer and is the commercially standard structure for this purpose under the Merchant Shipping Act No. 12 of 2009.

A Charter Party Agreement is required when cargo is being shipped under a Letter of Credit (LC) issued by a Kenyan commercial bank — such as Equity Bank Kenya Limited, KCB Group, or Co-operative Bank of Kenya — which requires documentary evidence of vessel chartering as part of the trade finance conditions. The Charter Party Agreement is presented alongside the Bill of Lading, commercial invoice, and packing list as part of the LC documentation set.

A Charter Party Agreement is needed whenever the shipper wishes to define laytime (the time allowed for loading and discharging), demurrage (the daily penalty for exceeding laytime), and despatch (the reward for early completion) — terms that cannot be implied and must be expressly agreed in writing to be enforceable before Kenyan courts or the NCIA.

Under the Companies Act No. 17 of 2015, the Registrar of Companies at the Office of the Attorney General maintains the register of Kenyan companies. Section 3 of the Law of Contract Act (Cap. 23) governs contractual obligations. The Competition Authority of Kenya (CAK) enforces the Competition Act No. 12 of 2010. The Kenya Revenue Authority (KRA) administers corporate tax under the Income Tax Act (Cap. 470). The High Court of Kenya has unlimited original jurisdiction under Article 165 of the Constitution of Kenya 2010.

A valid Charter Party Agreement in Kenya under the Merchant Shipping Act No. 12 of 2009 must contain the following essential elements to be enforceable and compliant with Kenyan maritime law and Kenya Maritime Authority regulations.

Parties and Vessel Description: Full legal names, addresses, and registration details of the shipowner and charterer. The vessel must be identified by name, IMO number (assigned by the International Maritime Organization), flag state, KMA registration number, gross tonnage, deadweight tonnage, and class. The vessel's classification society — such as Lloyd's Register, Bureau Veritas, or RINA — should be stated, as classification affects insurability and port entry rights under KPA Port Rules.

Charter Type and Period: Whether the agreement is a Voyage Charter, Time Charter, or Bareboat Charter must be expressly stated, as each type has fundamentally different legal consequences for crew liability, operational control, and port dues responsibility. For Time Charters, the commencement date, duration, and redelivery port must be specified. For Voyage Charters, the loading port, discharging port, and cargo description must be stated.

Freight or Hire: The freight rate (per tonne, per day, or lump sum in USD or KES), payment terms, advance freight provisions, and the currency of payment. Under the Merchant Shipping Act No. 12 of 2009, freight is earned on delivery of the cargo unless the charter provides otherwise. The agreement should address whether freight is payable on signing, on sailing, or on delivery.

Laytime and Demurrage: Allowed laytime for loading and discharging (expressed in running days, weather working days, or SHINC/SHEX terms), the demurrage rate per day or pro rata, and the despatch rate. Laytime commencement (Notice of Readiness acceptance) and counting rules must be clearly defined, as these generate the most frequent charter party disputes under NCIA arbitration practice.

Cargo Description and Dangerous Goods: Full description of the cargo, including commodity, quantity, packaging, and stowage instructions. Dangerous goods must be declared in accordance with the International Maritime Dangerous Goods (IMDG) Code and Section 181 of the Merchant Shipping Act No. 12 of 2009. The charterer warrants that cargo presented is as described and that all Kenya Revenue Authority (KRA) customs declarations have been filed.

Insurance: The shipowner must maintain hull and machinery insurance and protection and indemnity (P&I) club cover throughout the charter period. The charterer should maintain cargo insurance issued by a licensed Kenyan insurer under the Insurance Act (Cap. 487) or an international insurer approved by the Insurance Regulatory Authority (IRA) of Kenya.

Dispute Resolution: Disputes under Charter Party Agreements in Kenya are most commonly referred to the Nairobi Centre for International Arbitration (NCIA) under the Arbitration Act No. 4 of 1995, or to London arbitration under LMAA Terms where international parties are involved. Kenyan courts — specifically the Commercial Division of the High Court — also have jurisdiction over maritime disputes.

Forms-legal.com provides this Kenya Charter Party Agreement template as a starting framework for maritime chartering transactions. Given the technical complexity and high financial stakes of vessel chartering, parties should engage an Advocate of the High Court of Kenya with maritime law expertise, enrolled with the Law Society of Kenya (LSK), before executing the agreement.

Additional compliance elements for a Charter Party Agreement (Kenya) used in Kenya include: Under the Companies Act No. 17 of 2015, the Registrar of Companies at the Office of the Attorney General maintains the register of Kenyan companies. Section 3 of the Law of Contract Act (Cap. 23) governs contractual obligations. The Competition Authority of Kenya (CAK) enforces the Competition Act No. 12 of 2010. The Kenya Revenue Authority (KRA) administers corporate tax under the Income Tax Act (Cap. 470). The High Court of Kenya has unlimited original jurisdiction under Article 165 of the Constitution of Kenya 2010. Forms-legal.com provides this template as a starting point for Kenya-compliant documentation.