Voyage charter parties play a major role in international shipping, as much of the cargo carried in ocean trade moves under this type of transportation contract.

In the typical voyage charter, the vessel owner places its ship at the charterer's disposal for carrying cargo on a single voyage from one or more ports of loading to one or more discharge ports. However, the shipowner retains full control of the vessel throughout the charter period.

The charterer is responsible for furnishing a specified amount of cargo and pays freight based on the ship's cargo-carrying capacity per ton for dry cargo, or at world rates for tanker cargoes. If the charterer fails to load the full cargo, he pays "deadfreight" on the shortage.

In most voyage charters, the charterer wants the cargo loaded as soon as it becomes available, in order to meet its commercial commitments. The shipowner also prefers to complete the voyage quickly in order to collect freight and to place the vessel on the market for new business.

Once the charter is formed, the vessel owner has an absolute duty to send the ship to the load port. The vessel usually arrives ready to load and the master tenders a notice of readiness.

The charterer is entitled to stipulate the period for loading and discharging the vessel, known as "laytime." If laytime is exceeded, the charterer pays demurrage. Should loading or discharging be completed before laytime expires, the shipowner may be required to pay "dispatch," usually at half the demurrage rate.

If demurrage is limited by agreement and delays exceed the agreed-upon period, the vessel owner will receive greater compensation called "detention." Should the vessel be unreasonably detained after loading by the charterer, the shipowner also will be awarded detention. Likewise, when the charterer fails to have cargo ready to load or discharge at the appointed time, he will be liable for detention, not demurrage. For example, the charterer cannot use a ship as a warehouse by refusing to discharge.

What happens if a charterer, for commercial reasons, orders a ship not to load cargo after laytime commences? Under English law, the charterer is free to use the whole of laytime, even though he could have loaded the vessel in less time. American law is unclear on this point. The recent New York M/V BALSA 21 arbitration (SMA 2899) addresses this important issue.

The BALSA 21 was voyage chartered to carry sugar from the Dominican Republic to Baltimore. During charter negotiations, the shipowner denied the charterer's request to delay the vessel's U.S. arrival. The ship was ready to load on May 11rh, but its berth was occupied until May 13th. Cargo was available, but the charterer gave instructions not to berth until May 20. Loading was completed on May 21. The shipowner protested and claimed detention for lost laytime.

The shipowner argued that the charterer had an absolute duty to have cargo available when the ship was ready to load. The charterer, citing English law, argued that the cargo was always available. Furthermore, it had a right to use laytime as it saw fit, as long as loading was completed during the laytime period.

Two of the three arbitrators deciding the case found that the charterer's delay was reasonable, as laytime had not expired when the ship completed loading. Thus, the detention claim was denied.

The dissenting arbitrator maintained the issue was complex and the background of the charter negotiations had to be thoroughly explored.

The split decision in the BALSA 21 case indicates that right of a charterer to use laytime for non-loading purposes remains unsettled under American law.