Charterer refusing to pay vessel hire in Turkey? Learn how foreign shipowners can recover unpaid charter hire through demands, withdrawal rights, liens, Turkish enforcement proceedings, precautionary attachment, ship arrest and arbitration.

A charterer’s failure to pay hire can rapidly create a major cash-flow problem for a foreign shipowner. The vessel continues operating, bunker and crew costs continue, insurance premiums remain payable and port expenses accumulate while the owner receives no contractual hire.

The situation becomes particularly urgent when the charterer is based in Turkey, has assets in Turkey or appears to be experiencing financial difficulty.

For the shipowner, the central questions are usually straightforward:

Can the vessel be withdrawn? Can cargo or subfreights be used as security? Can the charterer’s Turkish bank accounts be attached? Can a vessel be arrested? Must the dispute go to London arbitration? Can assets in Turkey be secured while foreign arbitration continues?

The answers depend heavily on the charterparty.

Before taking aggressive action, the owner should review the payment clause, grace or anti-technicality provisions, withdrawal rights, lien clauses, governing law, arbitration agreement and the identity of the contractual charterer.

What Is Charter Hire?

Hire is generally the amount periodically payable by a charterer for the use of a vessel under a time charter or similar contractual arrangement.

It should be distinguished from freight payable for carriage of particular cargo.

Under a time charter, hire commonly becomes payable in advance at agreed intervals.

The charterparty may specify payment every 15 days, every month or according to another schedule.

Failure to pay the full amount when due can potentially constitute a contractual default.

First Question: Is Hire Actually Overdue?

Before declaring default, the owner should confirm the exact contractual due date.

Check the charterparty, payment instructions, banking records and any subsequent amendments.

Issues can arise because of banking delays, value dates, currency conversion, deductions or disputes concerning off-hire.

An owner should avoid exercising drastic contractual remedies based on a minor accounting misunderstanding.

Partial Payment of Hire

A charterer may pay only part of the invoice.

For example, USD 400,000 becomes due but the charterer transfers USD 280,000, claiming that USD 120,000 should be deducted because the vessel was off-hire.

The owner should determine whether the deduction is contractually justified.

An unauthorized deduction can constitute underpayment.

The response should preserve the owner’s rights while avoiding conduct that could be interpreted as accepting the deduction.

Off-Hire Disputes

Many hire disputes are actually off-hire disputes.

The charterer may argue that the vessel was unavailable because of machinery breakdown, crew deficiency, detention, speed deficiency or another event covered by the charterparty’s off-hire clause.

The owner may argue that the vessel remained fully operational.

Evidence becomes critical.

Deck and engine logs, repair records, noon reports, port documents and correspondence should be preserved immediately.

Can the Shipowner Withdraw the Vessel?

Potentially, depending on the charterparty and applicable law.

Many standard time-charter forms contain withdrawal provisions allowing the owner to withdraw the vessel following non-payment of hire.

However, withdrawal is a serious remedy.

The contractual requirements must be followed precisely.

A wrongful withdrawal can expose the owner to a substantial damages claim.

Check the Anti-Technicality Clause

Modern charterparties frequently contain provisions requiring the owner to give the charterer a short opportunity to correct a payment default before withdrawal.

These are often referred to as anti-technicality or grace-period provisions.

If such a clause applies, immediate withdrawal without giving the required notice may be invalid.

The exact wording of the charterparty should therefore be reviewed before any withdrawal notice is issued.

Draft the Notice Carefully

A hire-default notice should clearly identify the amount outstanding, contractual payment obligation, deadline for curing the default and consequences if payment is not received.

Ambiguous wording can create later disputes about whether a valid contractual notice was served.

The owner should also comply with the charterparty’s notice provisions.

An otherwise correct notice sent to the wrong email address can create unnecessary problems.

Do Not Waive the Right to Withdraw

Repeatedly accepting late payments without reserving rights can complicate enforcement.

If the owner intends to preserve contractual remedies, communications should be drafted accordingly.

At the same time, owners should avoid making threats they are not prepared or legally entitled to carry out.

Consistency is important.

Withdrawal Does Not Automatically Recover the Debt

Even where the owner validly withdraws the vessel, unpaid hire remains a separate financial claim.

Withdrawal stops or changes the ongoing contractual relationship.

It does not put the outstanding USD or EUR balance into the owner’s bank account.

The owner must therefore consider contract termination and debt recovery simultaneously.

Damages After Withdrawal

Depending on the applicable law and contractual circumstances, the owner may potentially have claims beyond accrued hire.

If the charterer’s breach results in termination and market conditions are unfavorable, substantial damages may arise.

The calculation will depend on the governing law, charterparty wording, remaining charter period and mitigation.

For a high-value long-term charter, this can be considerably larger than the immediate unpaid hire.

Duty to Mitigate Loss

After termination or withdrawal, the owner should consider reasonable steps to mitigate continuing losses.

This may involve seeking substitute employment for the vessel.

Records of broker communications, market rates and alternative fixtures should be preserved.

Mitigation evidence can become important in later arbitration or litigation.

Lien on Subfreights

Time charterparties commonly provide owners with contractual liens over subfreights.

This can be a powerful remedy where the charterer is earning freight from cargo interests while failing to pay the owner.

Instead of pursuing only the insolvent charterer, the owner may seek to intercept amounts that would otherwise be paid to the charterer.

However, the precise wording and governing law of the lien clause must be examined.

Lien on Sub-Hire

Some charterparties also extend lien rights to sub-hire.

Suppose the owner’s vessel is time-chartered to Company A.

Company A sub-charters the vessel to Company B.

Company A stops paying hire to the owner, while Company B continues paying substantial hire to Company A.

A valid contractual lien may potentially provide a route to those funds.

The owner should act before the sub-charterer pays the defaulting charterer.

Timing Is Critical for Subfreight Liens

Once the third party has already paid the charterer, the money may be substantially more difficult to recover through a contractual lien mechanism.

Therefore, when hire default occurs, owners should immediately investigate:

Is the vessel sub-chartered?

Who owes freight or hire to the charterer?

When is the next payment due?

Waiting several weeks can eliminate a valuable source of security.

Cargo Lien

Charterparties may contain contractual lien provisions concerning cargo.

But owners should be cautious.

Cargo may belong to an innocent third party rather than the charterer.

The owner’s contractual rights against the charterer do not automatically create unlimited rights over someone else’s cargo.

Bills of lading, charterparty clauses, cargo ownership and governing law must be examined before cargo is withheld.

Do Not Hold Third-Party Cargo Without Legal Analysis

This is particularly important for foreign shipowners calling at Turkish ports.

Wrongfully refusing to deliver valuable cargo can create claims from cargo interests and interfere with port operations.

The fact that the charterer owes USD 500,000 does not automatically mean the owner can hold USD 5 million of third-party cargo indefinitely.

Obtain legal advice before exercising a purported lien.

Turkish Enforcement Proceedings

Where the charterer is a Turkish company, the shipowner may consider Turkish debt-enforcement mechanisms.

Depending on jurisdiction, contractual dispute-resolution provisions and available documentation, enforcement proceedings may potentially be used against Turkish debtor assets.

The debtor may object.

If so, further legal action may be required to overcome the objection.

Bank Account Attachment

Turkish bank accounts can be particularly important.

A charterer may own no vessels or significant real estate but may process substantial commercial payments through Turkish banks.

Where the procedural requirements are satisfied, enforcement against bank accounts can become an effective recovery method.

For foreign shipowners, locating liquid assets is often more useful than pursuing symbolic litigation.

Precautionary Attachment

Where there is a substantial monetary claim and a real concern that assets may disappear, precautionary attachment (ihtiyati haciz) should be considered under Turkish law if its statutory requirements are satisfied.

This can be particularly important when the charterer is clearly distressed.

The owner may need to provide security and establish the claim to the degree required for the provisional measure.

Precautionary attachment is not automatically available merely because an invoice remains unpaid.

Charterer’s Receivables

A charterer may have significant receivables from cargo interests, sub-charterers, agents or other commercial counterparties.

These receivables can potentially become relevant under Turkish enforcement mechanisms where the legal requirements are satisfied.

The creditor should therefore investigate not only physical assets but also who owes money to the charterer.

Can the Owner Arrest a Ship for Unpaid Hire?

This question requires particular caution.

Claims arising from charterparties fall within the maritime-claim framework relevant to ship arrest under Turkish maritime law.

However, that does not mean the shipowner can arrest any vessel connected with the charterer.

The statutory relationship between the maritime claim, liable person and targeted vessel must be established.

Can the Owner Arrest Its Own Vessel?

Normally, the owner’s own ship is obviously not useful as security against a charterer’s personal debt.

This illustrates why unpaid charter hire requires careful asset analysis.

The vessel generating the unpaid hire may belong to the creditor, not the debtor.

Therefore, ordinary enforcement against the charterer’s assets, subfreights or other available security may be more relevant than arresting the chartered vessel itself.

Charterer-Owned Vessel in Turkey

The position can be different if the defaulting charterer separately owns vessels.

Where a qualifying vessel belonging to the liable party enters Turkish jurisdiction, the availability of maritime arrest should be examined under the Turkish Commercial Code.

Ownership must be verified precisely.

A vessel merely operated, managed or chartered by the debtor is not necessarily legally arrestable for the debt.

Sister Ships

Where Turkish statutory requirements are satisfied, another vessel owned by the person liable for the maritime claim may potentially become relevant.

Shipping groups often use single-purpose companies, however.

A vessel displaying the same funnel markings or operating under the same commercial brand may legally belong to another company.

Registered ownership should therefore be checked before any arrest application.

Counter-Security

A creditor applying for precautionary maritime arrest in Turkey should anticipate a counter-security requirement.

The court can require security to protect against losses resulting from an unjustified provisional measure.

This should be considered as part of the financial strategy before emergency proceedings are initiated.

Wrongful Arrest Risk

Ship arrest is a powerful remedy and must be used carefully.

An owner that targets the wrong vessel or relies on a claim that does not satisfy the statutory requirements may face a challenge and potential damages exposure.

Before filing, counsel should verify:

the debt,

the liable company,

the vessel owner,

the maritime-claim category,

and the statutory arrest relationship.

London Arbitration Clause

Many time charterparties provide for London arbitration and English law.

If so, the merits of the unpaid-hire dispute may need to be resolved through the agreed arbitration procedure.

The existence of foreign arbitration does not necessarily mean Turkish assets should be ignored.

Where the charterer has assets in Turkey, Turkish provisional measures may potentially need to be considered while arbitration proceeds, subject to applicable procedural rules.

Arbitration Should Be Started Promptly

Where the charterparty requires arbitration, the owner should not allow prolonged settlement negotiations to cause procedural problems.

The arbitration should be commenced within applicable limitation periods and contractual requirements.

Meanwhile, asset-preservation measures should be evaluated separately.

Foreign Arbitral Award

If the shipowner obtains a foreign arbitral award against the charterer, the award may potentially be recognized and enforced in Turkey under the applicable international and Turkish legal framework.

This becomes particularly important when the charterer’s main assets are located in Turkey.

The creditor should prepare the award, arbitration agreement, finality/enforceability documentation where required and proper Turkish translations.

New York Convention

Turkey is a contracting state to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.

Accordingly, qualifying foreign maritime arbitration awards can potentially be recognized and enforced in Turkey subject to the Convention and applicable Turkish procedural rules.

This makes Turkish asset identification important even where the substantive charterparty dispute is decided abroad.

Foreign Court Judgment

Some charterparties provide for foreign courts rather than arbitration.

A judgment obtained abroad may require Turkish recognition and enforcement proceedings before compulsory execution against Turkish assets.

The creditor should not wait until the foreign litigation ends before investigating whether the debtor actually owns assets in Turkey.

Commercial Mediation in Turkey

Where a substantive monetary commercial action is pursued before Turkish courts, mandatory mediation requirements may apply depending on the nature of the proceedings.

This should be considered when planning litigation.

Urgent provisional measures should be assessed separately because delaying asset protection can defeat the purpose of later recovery.

Interest on Unpaid Hire

Hire-default claims may also include interest.

The applicable rate depends on the charterparty, governing law, currency and circumstances.

The claim should distinguish clearly between:

principal unpaid hire,

contractual or statutory interest,

and additional damages.

For long-running disputes, interest can become significant.

Hire Paid in USD

Most international charter hire is denominated in USD.

The owner should preserve the contractual currency and payment provisions.

A Turkish enforcement strategy should consider how the foreign-currency receivable will be asserted and ultimately collected under the applicable procedural framework.

Currency movements can materially affect large claims.

Charterer Claims Set-Off

A charterer may refuse hire by alleging a counterclaim.

Typical allegations include underperformance, excessive bunker consumption, delay, cargo claims or vessel deficiencies.

Whether the charterer is legally entitled to deduct these amounts depends on the charterparty and governing law.

The owner should not automatically accept unilateral deductions.

Speed and Performance Claims

Suppose the charterer deducts USD 300,000 for alleged speed and consumption deficiencies.

The owner should preserve weather-routing reports, noon reports, bunker records, logbooks and performance data.

The dispute may require maritime expert evidence.

These claims frequently become central issues in charterparty arbitration.

Bunker Disputes

Withdrawal can also create questions concerning bunkers remaining onboard.

The charterparty may regulate bunker quantities and prices on delivery and redelivery.

The parties should document quantities carefully when the vessel is withdrawn or redelivered.

A bunker disagreement should not be allowed to obscure the larger unpaid-hire claim.

Charterer Refuses Redelivery

A distressed charterer may simultaneously stop paying hire and create operational uncertainty about redelivery.

The owner should document instructions and vessel position carefully.

If withdrawal occurs, the master and commercial operators need clear instructions concerning employment of the vessel and cargo already onboard.

Legal and operational teams should coordinate closely.

Cargo Already Onboard When Vessel Is Withdrawn

Withdrawal does not make existing cargo disappear.

Bills of lading may create separate obligations toward cargo interests.

The owner must therefore assess how cargo already onboard will be carried or delivered following termination of the charter.

A dispute with the charterer should not unnecessarily create liability toward innocent bill-of-lading holders.

Charterer’s Financial Distress

Warning signs should be taken seriously.

These can include:

repeated late hire,

partial payments,

requests for increasingly long extensions,

unpaid bunker suppliers,

crew or agent complaints,

multiple enforcement proceedings,

and sudden restructuring discussions.

An owner seeing several of these indicators should investigate security before the charterer’s position deteriorates further.

Concordat in Turkey

A Turkish charterer experiencing financial distress may apply for concordat protection.

This can materially affect individual enforcement actions.

The shipowner should identify any concordat proceeding quickly and protect its claim through the appropriate procedures.

Continuing private negotiations with management is not a substitute for participating in the formal process.

Bankruptcy Risk

If the charterer enters insolvency proceedings, unsecured creditors may recover only part of their claims.

This demonstrates the importance of obtaining security early.

A valid lien, attachment or other enforceable security position can materially affect recovery compared with remaining a purely unsecured creditor.

Do Not Wait for the Debt to Become Huge

Owners sometimes continue the charter because they hope the next hire payment will cover the previous default.

The debt then grows:

USD 200,000 becomes USD 400,000.

USD 400,000 becomes USD 800,000.

Eventually the charterer collapses.

A clear escalation policy should therefore be established when the first significant payment default occurs.

Practical Example: Charterer Misses Two Hire Payments

Assume a Turkish charterer owes USD 600,000 after missing two payment periods.

The charterparty provides for English law and London arbitration.

The owner should immediately review the withdrawal and anti-technicality clauses and issue any required contractual notice correctly.

At the same time, the owner should investigate Turkish bank accounts, receivables and other assets and consider whether provisional measures are available.

The arbitration and Turkish asset-security strategy can proceed in coordination.

Practical Example: Charterer Deducts Off-Hire

Assume monthly hire is USD 450,000.

The charterer pays only USD 250,000, claiming a 12-day off-hire period because of engine problems.

The owner disputes that calculation.

Before withdrawing the vessel, the contractual default mechanism should be reviewed carefully.

Engine logs, repair records and operational evidence should be secured.

If the dispute proceeds to arbitration, this technical evidence may determine whether the deduction was legitimate.

Practical Example: Charterer Has a Sub-Charter

Assume the charterer owes the owner USD 900,000 but continues receiving USD 500,000 monthly from a sub-charterer.

The owner should immediately review any contractual lien over sub-hire or subfreights.

If a valid mechanism exists, timing may be crucial because payment to the defaulting charterer could eliminate the immediate opportunity to intercept those funds.

Practical Example: Turkish Charterer Is Moving Assets

Assume a charterer owes EUR 1.2 million and has stopped answering payment demands.

The owner learns that the company is selling property and transferring commercial assets.

Rather than waiting for a final arbitral award, Turkish counsel should assess whether the requirements for precautionary attachment or other asset-preservation measures are satisfied.

Obtaining an award against an empty company is not effective debt recovery.

First 24 Hours After Hire Default

The shipowner should immediately obtain the signed charterparty and all riders, payment schedule, bank records, invoices and correspondence.

The exact outstanding balance should be calculated.

Any off-hire deductions should be identified separately.

The withdrawal clause, anti-technicality provisions, lien clauses and dispute-resolution agreement should then be reviewed.

At the same time, the owner should identify:

the charterer’s Turkish bank accounts and assets, potential subfreights or sub-hire, charterer-owned vessels and signs of financial distress.

If contractual notice is required, it should be prepared precisely.

The objective is to preserve every available remedy before commercial leverage disappears.

Frequently Asked Questions

Can a foreign shipowner recover unpaid charter hire from a Turkish charterer?

Yes. Depending on the charterparty and circumstances, remedies can include contractual claims, arbitration or litigation and enforcement against assets located in Turkey.

Can the owner immediately withdraw the vessel?

Not necessarily. The charterparty’s withdrawal, grace-period and anti-technicality provisions must be examined carefully. Wrongful withdrawal can create substantial liability.

What if the charterer pays only part of the hire?

The owner should determine whether any deduction is contractually justified. An unauthorized deduction may constitute a payment default.

Can the owner attach the charterer’s Turkish bank accounts?

Potentially, where the requirements of the applicable Turkish enforcement or provisional-attachment procedures are satisfied.

Can the owner intercept subfreights?

Potentially, where the charterparty contains an effective lien over subfreights and the applicable legal requirements are satisfied. Timing is critical.

Can the owner retain cargo?

Potentially in certain circumstances, but third-party cargo interests must be considered carefully. A charterer’s debt does not automatically create an unlimited right over cargo belonging to others.

Can a vessel be arrested for unpaid charter hire?

Charterparty claims can fall within the maritime-claim framework, but arrest of a particular vessel requires satisfaction of Turkey’s specific statutory requirements concerning the claim, liable party and vessel.

What if the charterparty requires London arbitration?

The merits may be determined in London, but potential Turkish provisional measures against assets located in Turkey should be considered separately.

Can a London arbitration award be enforced in Turkey?

Potentially yes. Turkey is a party to the New York Convention, and qualifying foreign arbitral awards may be recognized and enforced subject to the Convention and Turkish law.

What should the owner do when the charterer first misses payment?

Review the charterparty immediately, preserve contractual notices, calculate the debt, investigate liens and identify assets before the charterer’s financial position deteriorates.

Legal Assistance for Unpaid Charter Hire in Turkey

A charterer’s refusal to pay hire should be treated as both a contractual dispute and an asset-recovery problem.

Winning an arbitration three years later is of limited value if the charterer has no assets remaining.

Foreign shipowners should therefore develop two strategies simultaneously.

The first concerns the charterparty: payment notices, anti-technicality requirements, withdrawal, termination, liens, off-hire disputes, damages and arbitration.

The second concerns security: subfreights, sub-hire, Turkish bank accounts, receivables, precautionary attachment, charterer-owned vessels and other assets.

Where the charterparty provides for foreign arbitration, Turkish asset-preservation measures should be evaluated without waiting for the final award where legally available. Where the charterer shows signs of insolvency, speed becomes even more important.

Fırat Fesih Kaya Law Office assists foreign shipowners, vessel operators and international shipping companies with unpaid charter hire in Turkey, time charter disputes, vessel withdrawal, off-hire claims, liens over subfreights and sub-hire, precautionary attachment, maritime debt recovery, ship arrest, Turkish enforcement proceedings, foreign arbitration and enforcement of maritime arbitral awards in Turkey.

Phone: +90 312 434 22 22
Mobile: +90 532 769 22 22
Email: info@firatfesihkaya.av.tr
Address: Mevlana Boulevard No: 221, Yıldırım Tower, Balgat, Çankaya, Ankara, Turkey