Employment Orders: FAQs
A Charterer’s right to employ the vessel and provide orders to the Master or Owner is a key feature of a time charter. In this article, some of the key points to take into consideration when either giving or considering employment orders are discussed.
Laura Haddon and Heloise Campbell
Published: July 02, 2025
What is an “employment order”: general principles?
A time charter will typically expressly state that a Charterer is entitled to provide orders as to the employment of the vessel. Examples of this contractual entitlement include the following:
- Clause 8 of NYPE form provides that the Master shall “be under the orders and directions of the Charterers as regards employment...”
- Clause 9 of the BALTIME 1939 (Revised 2001) form provides “The Master shall be under the orders of the Charterers as regards employment…”
When a vessel is time chartered, the Master is put under the Charterer’s direction “as regards employment”. However, whilst the ability of a Charterer to provide an employment order is intrinsic to his use of the vessel, an order as regards employment is something that is easier to recognise than to define.
In The Hill Harmony1, the Court considered where to draw the line between an employment order, being the contractual entitlement of the Charterer, and matters concerning the navigation of the vessel, being the Owner’s responsibility. In doing so, helpful guidance was given as to what constitutes an employment order and it was noted that Clause 8 of the NYPE form “gives the charterer his key right under the contract: to decide where the vessel shall go and what she shall carry, how (in short) she shall be used, always subject to the terms of the charter-party.”
What would and would not be an employment order?
The distinction drawn is broadly between:
- the economic exploitation of the vessel’s earning potential, which would include how the vessel is to be employed, where to load and what cargo is to be carried; and
- matters of navigation and seamanship which fall within the expertise and remit of the Master.
Examples of some valid employment orders are:
- to load a particular cargo that is within the agreed limits of the charter.
- to proceed to or remain at a particular port, providing that it is safe and within the agreed limits of the charter.
- to proceed to an anchorage to lighten cargo (however precisely where the vessel should anchor within the anchorage would be a matter of navigation and for the Owner to determine2).
- to sail at a particular speed.
- to submit the vessel to a Right Ship inspection and vetting procedure .
- to allow shore inspectors to board the vessel to inspect the cleanliness of the vessel’s holds prior to loading or to test the cargo prior to discharge.
- the general route by which the vessel is to carry out a voyage (however, as was recognised in The Hill Harmony, exactly where in practice the line between ‘employment’ and ‘navigation’ is to be drawn in relation to routing orders is not always an easy question to determine).
These orders all relate to the economic utilisation of the vessel.
However, not every order given by a Charterer is an order as regards employment. An ‘order’ which is, in reality, an order that is directed at ascertaining the vessel’s condition or whether the Owner has complied with the maintenance obligations under the charter is not an order as regards employment.
Whilst a charter may provide a Charterer with an express right, examples of ‘orders’ which are typically not valid employment orders are:
- an order for the vessel to carry out an underwater inspection where the Charterer suspects hull fouling.
- an order for a surveyor to attend on board the vessel following an engine breakdown to investigate the cause of the breakdown.
- an order outside of the set trading limits in the charter. For example, the NYPE form expressly provides what cargo the Charterer can require the vessel to carry and from and to where they can require the vessel to carry that cargo. An order outside of these limits will not be one that the Master is obliged to follow . Similarly, the Master is not obliged to sign a bill of lading which names a port of discharge outside of the set trading limits6.
- an order to deliver cargo to a person not entitled to receive it7.
- an order to deliver the cargo without production of the bills of lading8.
These do not constitute valid employment orders because they are matters for which the Owner is responsible or are ‘orders’ for employment outside of the charter limits. There is an argument that the examples at (iv) and (v) are not even employment-style orders and are instead orders to whom an Owner must deliver cargo; such orders being unlawful as they seek to displace the Owner’s overriding legal obligation under the bill of lading.
Unsurprisingly, there is no clear-cut answer to the question of what is an ‘employment order’ but generally speaking it is an order that is targeted at the use of the ship by the Charterer and not an order that is concerned with the condition of the vessel itself or an order which is outside of the agreed terms of the charter. In any given case, the question of whether an order is an employment order will require consideration not only of the order itself, but also the rationale behind it.
When can an employment order be questioned or refused by Owners?
Whilst it is not for the Owner or the Master to unduly query or challenge the orders of the Charterer as regards the employment of the vessel, in some circumstances it is reasonable for the Owner or Master to raise queries in relation to an order in order to ascertain the full facts, and to delay complying with the order pending a response to those queries. Examples would be where:
- an order is given as to the routing of the vessel but the Master has concerns as to the safety of the route; or
- an order is given which could expose the vessel to potential peril or to a war situation.
Where the order will endanger the safety of the vessel or her crew or cargo, an Owner is not only entitled but also obliged to refuse the order. Considerations of safety, however, can often give rise to dispute, as was the case in The Hill Harmony where the Master cited safety concerns as the reason for disobeying the Charterer’s orders but the Court was unconvinced by this argument, finding that no sufficient navigational objection had been raised to the specific route ordered by the Charterer.
An Owner may also have a “negligent navigation” defence as provided for in Article IV (2)(a) of the Hague Rules. Whether or not such a defence is available, will be fact dependent. In Afra Oak the Court confirmed that the Master had failed to exhibit good seamanship and navigation and consequently the defence was available. The Charterer had ordered the vessel to proceed to Singapore EOPL for orders. However, the Master anchored in Indonesian territorial waters to wait for orders, resulting in an arrest of the Master and detention of the vessel by Indonesian authorities. In reaching its decision the Court noted that The Hill Harmony established no more than that if there is a choice not to comply with an employment order that choice cannot, without more, be described as negligent navigation.
There is no general rule as to when delay in complying with an order is justified, as the question to be determined in each case is how a person of reasonable prudence would have acted in the circumstances.
In other circumstances, an Owner will be entitled to refuse an order of the Charterer completely. Examples would be those orders set out above which do not constitute valid employment orders.
What are the consequences of an Owner complying or not complying with the Charterer’s orders?
If a Charterer gives an order which is not a valid employment order, the Owner is not obliged to follow it and the Owner’s refusal to do so will neither sound in damages nor result in the vessel being placed off-hire. In the extreme situation where the Charterer was to persist in an invalid order, then it is possible that his conduct could be sufficient to amount to a repudiatory breach of the charter, entitling the Owner to terminate.
Conversely, a refusal by an Owner to follow a valid employment order would normally put the Owner in breach of charter and entitle the Charterer to damages and/ or off-hire. Again, in the extreme situation, it is possible that the Owner may be in repudiatory breach, entitling the Charterer to terminate the charter.
Is an Owner protected for any losses he may suffer when following an employment order?
The origin of the general right of indemnity lies in nineteenth-century cases which recognised that an implied right of indemnity will generally arise in relation to liabilities or losses incurred in respect of acts done at the request or direction of another. As stated in Dugdale v Lovering:10
".. when an act has been done by the plaintiff under the express directions of the defendant which occasions an injury to the rights of third persons, yet if such an act is not apparently illegal in itself, but is done honestly and bona fide in compliance with the defendant's directions, he shall be bound to indemnify the plaintiff against the consequences thereof."
Some time charters such as the Baltime form expressly state that the Owner is to be indemnified against the consequences or liabilities arising from compliance with the Charterer’s orders. Where there is no express indemnity in the charter, an indemnity will normally be implied by law unless by the terms of the charter the Owner has consented to bear the loss, damage or liability in question. The indemnity, whether express or implied, will normally be engaged whether or not the Charterer’s order is a valid or invalid order, again provided the Owner has not by the terms of the charter agreed to bear the loss, damage or liability in question. In all cases, there must be an unbroken chain of causation between the loss suffered and the Charterer’s order.
In the case of liabilities to third parties, there will be no indemnity where the Master in complying with the order has acted in a manifestly wrongful or tortious way.
There is also no indemnity in respect of general navigational risks not peculiar to the Charterer’s orders. Put another way, an Owner cannot recover ordinary losses and expenses of trading, despite the fact that these may be said to have been incurred as a result of following the Charterer’s orders. An example of this would be heavy weather damage.
The precise scope of the indemnity against complying with the Charterer’s orders is not entirely clear and it will be necessary to consider the particular facts and events giving rise to the losses claimed in every case in order to establish whether they fall within either an express or implied indemnity.
What if the employment order conflicts with other contractual obligations?
An employment order may give rise to a concern that there is a conflict with another contract such as the contract of carriage as evidenced by the bill of lading.
Whilst there is authority that an Owner is not required to follow an order to take steps that are contrary to a bill of lading contract, the position is not always straightforward. An order by the Charterer that the vessel is to stop enroute to a port of loading or discharge is an order regarding employment; a Charterer controls the geographical direction and use of the vessel and that includes the power to request the vessel to stop or slow down. Whilst that order may conflict with the Owner’s obligations under the contract of carriage to proceed with reasonable or utmost despatch, this does not necessarily prevent the order itself from being a valid employment order.
A difficulty for an Owner when considering the potential conflict will be that, generally speaking, the Owner has no way of knowing who is or will be the holder of the bills of lading and therefore whether any harm will be caused by the delay. Conversely, the Charterer is likely to hold this information. This lack of knowledge for an Owner, combined with the existence of the general indemnity afforded to an Owner in respect of losses arising from complying with the Charterer’s orders, may result in an Owner taking the decision to comply with the order despite the apparent conflict but this will always require a clear assessment of the facts and the relevant contractual terms.
In this respect, it is arguable that the longer the delay in performing the contract of carriage as a consequence of an order to stop enroute, the greater the possibility that the order, while initially lawful, will become an unlawful order.
A refusal of an employment order carries with it a significant risk of being considered a breach, perhaps even a repudiatory breach. It is therefore not a decision to be taken lightly and requires careful consideration of both the facts and the particular wording of the charter and bill of lading contracts.
Conclusion
Whether or not an employment order is valid and therefore one which a Charterer is entitled to give, and an Owner is required to follow, is not necessarily a straightforward question. Where there is any doubt as to the validity of an employment order, it will be necessary to consider the nature and circumstances of the particular order and the reason why it has been given together with the terms of the charter and any bill(s) of lading. In circumstances where rejecting an invalid employment order may put an Owner in breach of charter, Members should consult their usual Club contact to ensure that the Members’ position is carefully considered and protected.
1 [2001] 1 Lloyd’s Rep. 147, at page 150
2 The Erechthion [1987] 2 Lloyd’s Rep. 180
3 The Silver Constellation [2008] 2 Lloyd’s Rep. 440
4 See lines 24-23 of the New York Produce Form
5 The Sussex Oak (1949) 83 Ll.L.Rep. 297, at page 307
6 Halcyon Steamship v. Continental Grain (1943) 75 Ll.L.Rep. 80
7 The Sagona [1984] 1 Lloyd’s Rep. 194
8 The Houda [1993] 1 Lloyd’s Rep. 333 and [1994] 2 Lloyd’s Rep. 541 (C.A.).
9 Mercuria Energy Trading Pte -v- Raphael Cotoner Investments Limited [2023] EWHC 2978 (Comm)
10 (1875) LR 10 CP 196
