A ship is said to be flying a flag of convenience if it is registered in a foreign country "for purposes of reducing operating costs or avoiding government regulations". [2]
The term comes from the flag that ships fly to show their country of registration. Under conventions of international law, the country of registration determines the source of law to be applied in admiralty cases, regardless of which court has personal jurisdiction over the parties. International law is the term commonly used for referring to the system of implicit and explicit agreements that bind together nation-states in adherence to recognized values and standards Admiralty law (also referred to as maritime law) is a distinct body of Law which governs maritime questions and offenses A court is a forum used by a power base to adjudicate disputes and dispense civil, labour administrative and criminal Justice under its Personal jurisdiction in United States law refers to a court's power over a particular defendant ( In personam jurisdiction or an item of property [3]
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As of 2000, half the world's tonnage of merchant ships were registered under flags of convenience. [4] Some reasons for this include the avoidance of heavy taxes,[5] the ability to hire crews from lower-wage countries,[5] avoidance of environmental regulations,[6] and an overall reduction in the cost of transportation. [5]
A specific example of the type of advantage flying a flag of convenience offers is bypassing the 50% duty the United States government charges on repairs performed on American-flagged ships in foreign ports. [5] The accumulated advantages can be significant, for example in 1999, 28 of Sea-Land's fleet of 63 ships were foreign flagged, saving the company up to 3. The A P Moller-Maersk Group ( AP Møller-Mærsk Gruppen) is an international Business conglomerate more commonly known simply as Maersk. Flag State refers to the Authority under which a country exercises Regulatory control over the Commercial vessel which is registered under its flag 5 million dollars per ship per year. [5]
On the other hand, some flag of convenience ships are characterized by "poor conditions, inadequately trained crews, and frequent collisions. "[6] An illustrative example was the Prestige oil spill in 2002 off the Spanish Northwest coast. The Prestige was an Oil tanker whose sinking in 2002 off the Galician coast caused a large Oil spill. The International Transport Workers' Federation (ITF) points out that flag of convenience (FOC) vessels frequently fail to pay their crews,[5] have poor safety records,[5] and engage in practices such as abandoning crewmen in distant ports. Template talkInfobox Union for usage --> The International Transport Workers' Federation (ITF is a Global union [5]. It might be argued that these practices occur more in cases such as Liberia and Belize, rather than well developed open registries such as Panama, Cyprus, Marshall Islands and The Bahamas. Liberia, officially the Republic of Liberia, is a country on the west coast of Africa, bordered by Sierra Leone, Guinea, Côte d'Ivoire Belize (bəˈliːz formerly British Honduras, is a country in Central America. Panama, officially the Republic of Panama (República de Panamá) is the southernmost country of Central America. Cyprus (Κύπρος transliterated: Kýpros,; Kıbrıs officially the Republic of Cyprus (Κυπριακή Δημοκρατία Kypriakī́ Dīmokratía The Marshall Islands, officially the Republic of the Marshall Islands (RMI is a Micronesian nation of islands in the middle of the Pacific Ocean The Bahamas, officially the Commonwealth of The Bahamas, is an independent sovereign English -speaking country consisting of two thousand Cays and
The first flag of convenience was that of Panama[7] and the practice of re-flagging ships grew in popularity during the period from 1920-1933 of Prohibition in the United States. In the United States, the term Prohibition refers to the period from 1920 to 1933 during which the sale manufacture and transportation of alcohol for consumption [5] During this time, American rum runners carried illegal alcohol under the Panamanian flag. Rum-running is the business of Smuggling or transporting of Alcoholic beverages illegally usually to circumvent Taxation or Prohibition. [5]
Failing to control the Panamanian registry at will, in 1948, the United States helped Liberia create its "open registry. Liberia, officially the Republic of Liberia, is a country on the west coast of Africa, bordered by Sierra Leone, Guinea, Côte d'Ivoire "[7] The Liberian registry attracted American oil companies[7] and Greek shipowners[7] who sought to avoid high labor costs. [7] The success of Liberia's registry encouraged the opening of other competing registries. [7]
In the 1970s the United Nations attempted to adopt regulations that would have stopped the practice. The United Nations ( UN) is an International organization whose stated aims are to facilitate cooperation in International law, International security [7] However, Organisation for Economic Co-operation and Development countries defeated these measures. [7]
In 2002 in the United States, Democratic senator John Breaux of Louisiana proposed a bill intending to curtail the use of foreign flags as a counter-terrorism measure. The Democratic Party is one of two major Political parties in the United States, the other being the Republican Party. The United States Senate is the Upper house of the bicameral United States Congress, the Lower house being the House of Representatives John Berlinger Breaux (bɹo (born March 1, 1944) is a former United States senator from Louisiana who served from 1987 until 2005 The State of Louisiana ( or, État de Louisiane, pronounced) is a state located in the southern region of the United States of America [7]
The use of a flag of convenience in order to take advantage of another nation's laxer registration standards is frowned upon for two reasons: The practice causes nations with stricter requirements to lose income and the safety and working conditions of shipboard employees may suffer. However, many nations under the International Ship and Port Facility Security Code (ISPS) require minimum standards for vessels entering their national waters. In the case of the United States, the Coast Guard requires inspections on at least an annual basis and may deny entry to American waters based on defects not corrected.
Cheap registration fees, low taxes, and freedom from labor laws or safety standards are motivating factors for many flags of convenience. Labour law (also known as employment or labor law is the body of Laws administrative rulings and precedents which address the legal rights of and restrictions Fishing boat owners who use a flag of convenience can also ignore their home countries' conservation agreements. "Conservation Biology" redirects here For the Scientific journal, see Conservation Biology (journal. To quote William Langewiesche's The Outlaw Sea:
Supporters of flags of convenience argue that where a vessel is engaged in international trade it should be free to register in the jurisdiction which best suits its commercial model. International trade is exchange of Capital, Goods, and Services across International borders or Territories. Proponents argue that the choice of flags allows companies to take advantage of another country's infrastructure .
Jurisdictions which are criticised as offering flags of convenience also often have relatively sophisticated maritime codes, and courts which are versed in maritime law and admiralty matters. Admiralty law (also referred to as maritime law) is a distinct body of Law which governs maritime questions and offenses Admiralty law (also referred to as maritime law) is a distinct body of Law which governs maritime questions and offenses
Registering vessels in such jurisdictions where they can be mortgaged effectively and the mortgagee's property rights respected facilitates the financing of such vessels. Forcing vessels to register in jurisdictions with unsophisticated maritime laws or where mortgaging the vessel is difficult to do effectively, or worse yet, where the vessel becomes vulnerable to compulsory acquisition causes unnecessary disruption and increased expense in an already volatile international shipping market. Eminent domain ( United States) compulsory purchase ( United Kingdom, New Zealand, Ireland) resumption/compulsory acquisition
Ultimately, the higher costs of registering ships in traditional registries is passed on to individual consumers every time that they pay for goods or services which require maritime transport. Restrictive, bureaucratic and expensive registries such as the U. S. flag add hugely to the expense of shipping and have arguably resulted in a small, old and inefficient merchant fleet (see The Jones Act). The Merchant Marine Act of 1920, one of three federal laws commonly referred to as the Jones Act, is a United States Federal statute that regulates maritime Tax-efficient flags of convenience enable both lower costs of registration and the maintenance of proper technical, safety and environmental standards, which are influenced not just by the flag that the vessel flies but also by its classification society, insurers, managers and the port state authorities of the countries where it calls to trade.
Supporters note that similar criticisms are rarely raised with regard to aircraft registrations, to which similar considerations apply, but which employ fewer people, and form part of a less unionised industry. A trade union or labour union is an organization of workers who have banded together to achieve common goals in key areas such as wages hours and working conditions forming
The International Transport Workers' Federation maintains a list of 32 registries it considers to be FOC registries. In developing the list, the ITF considers "ability and willingness of the flag state to enforce international minimum social standards on its vessels,"[9] the "degree of ratification and enforcement of ILO Conventions and Recommendations,"[9] and "safety and environmental record. "[9] The following registries are on the ITF list (with figures sourced from the CIA World Factbook):
| Registry | Ships Registered | Foreign-owned ships | Percent Foreign | Foreign-owned ship profile | Remarks |
|---|---|---|---|---|---|
| 1,059[10] | 1,021[10] | 96% | Australia 1, Colombia 1, Cyprus 2, Denmark 15, Estonia 15, France 1, Germany 891, Greece 3, Iceland 9, Latvia 9, Lebanon 1, Lithuania 6, Netherlands 19, Norway 7, NZ 2, Poland 2, Russia 5, Slovenia 6, Sweden 1, Switzerland 5, Turkey 7, UK 4, US 8, Vietnam 1[10] | ||
| 1,213[11] | 1,134[11] | 93% | Angola 6, Australia 3, Belgium 15, Bermuda 12, Brazil 1, Canada 13, China 9, Croatia 1, Cuba 1, Cyprus 20, Denmark 66, Finland 8, France 43, Germany 40, Greece 214, Hong Kong 3, Iceland 1, Indonesia 3, Ireland 2, Italy 1, Japan 62, Jordan 2, Kenya 1, Malaysia 11, Monaco 11, Montenegro 2, Netherlands 24, Nigeria 2, Norway 232, Philippines 1, Poland 15, Russia 5, Saudi Arabia 15, Singapore 9, Slovenia 1, South Africa 1, Spain 11, Sweden 5, Switzerland 2, Taiwan 1, Thailand 1, Trinidad and Tobago 1, Turkey 5, UAE 20, UK 68, US 162, Uruguay 1, Venezuela 1[11] Flag-state self assessment. The World Factbook ( ISSN; also known as the CIA World Factbook) is an annual publication of the Central Intelligence Agency of the | ||
| 71[12] | 67[12] | 94% | Bahamas, The 1, Canada 9, Greece 11, India 1, Lebanon 1, Monaco 1, Norway 35, Sweden 5, UK 3[12] | ||
| 261[13] | 217[13] | 83% | China 107, Croatia 1, Cyprus 1, Estonia 1, Hong Kong 5, Iceland 1, Italy 4, Japan 2, South Korea 4, Latvia 14, Norway 3, Peru 1, Philippines 1, Russia 39, Singapore 3, Spain 2, Turkey 11, Ukraine 10, UAE 4, US 3[13] | ||
| 133[14] | 126[14] | 95% | Australia 4, Belgium 3, China 10, France 1, Germany 21, Greece 3, Hong Kong 4, Ireland 1, Israel 3, Japan 1, Nigeria 11, Norway 5, Singapore 1, Sweden 15, UK 20, US 23[14] | ||
| 25[15] | 9[15] | 36% | Argentina 1, China 1, Egypt 1, Iran 1, Italy 1, Singapore 1, Syria 1, Taiwan 1, Yemen 1[15] | Bolivia is a landlocked nation | |
| 586[16] | 463[16] | 79% | Canada 6, China 166, Cyprus 9, Egypt 14, Estonia 1, Gabon 1, Greece 5, Hong Kong 11, Indonesia 1, Japan 3, South Korea 29, Latvia 2, Lebanon 7, Nigeria 2, Romania 1, Russia 112, Singapore 2, Syria 32, Taiwan 1, Turkey 20, Ukraine 27, UAE 2, US 6, Yemen 3[16] | ||
| 124[17] | 122[17] | 98% | Denmark 3, Germany 17, Greece 23, Italy 10, Japan 6, Norway 2, Singapore 10, Sweden 1, UK 9, US 41[17] | ||
| 144[18] | 70[18] | 49% | Bangladesh 1, Bulgaria 1, Cyprus 1, Greece 8, India 2, Kenya 1, Kuwait 1, Lebanon 5, Norway 1, Pakistan 2, Philippines 1, Russia 9, Saudi Arabia 1, Syria 8, Turkey 8, Ukraine 13, UAE 5, US 2[18] | ||
| 868[19] | 724[19] | 83% | Austria 1, Belgium 1, Canada 2, China 10, Cuba 2, Denmark 1, Estonia 5, Germany 197, Greece 292, Hong Kong 2, India 1, Iran 2, Ireland 1, Israel 4, Italy 5, Japan 19, South Korea 2, Latvia 1, Lebanon 1, Netherlands 23, Norway 17, Philippines 1, Poland 18, Portugal 1, Russia 50, Singapore 1, Slovenia 4, Spain 7, Sweden 2, Switzerland 3, Syria 2, Turkey 1, Ukraine 6, UAE 10, UK 21, US 8)
registered in other countries: 133 (Antigua and Barbuda 2, Bahamas 20, Belize 1, Cambodia 9, Comoros 1, Georgia 1, Gibraltar 5, Greece 5, Isle of Man 4, Liberia 5, Malta 15, Marshall Islands 39, Norway 2, Panama 15, Russia 2, Samoa 1, St Vincent and The Grenadines 3, Turkey 2, UK 1, unknown 1[19] |
||
| 1[20] | 0[20] | 0% | |||
| 141[21] | 56[21] | 40% | Belgium 6, China 5, Denmark 3, Germany 1, Italy 2, Japan 5, Norway 17, NZ 1, Saudi Arabia 1, Singapore 2, Sweden 10, Switzerland 3)
registered in other countries: 145 (Antigua and Barbuda 1, Australia 1, Bahamas 43, Belgium 1, Bermuda 1, Cameroon 1, Gibraltar 1, Hong Kong 1, Indonesia 1, Isle of Man 2, Italy 5, South Korea 8, Liberia 5, Luxembourg 14, Malta 4, Morocco 13, Netherlands 1, Norway 3, Panama 15, Singapore 1, St Vincent and The Grenadines 7, Taiwan 1, UK 9, Wallis and Futuna 6[21] |
||
| 382[22] | 7[22] | 2% | China 2, Finland 4, Ireland 1[22] | ||
| 209[23] | 180[23] | 86% | Albania 2, Azerbaijan 1, China 4, Cyprus 1, Egypt 14, Germany 2, Greece 7, Lebanon 3, Monaco 10, Romania 15, Russia 17, Slovenia 2, Syria 54, Turkey 23, Ukraine 24, UAE 1[23] | ||
| 216[24] | 201[24] | 93% | Belgium 3, Cyprus 5, Denmark 9, Finland 3, France 1, Germany 117, Greece 8, Iceland 1, Italy 1, Netherlands 11, Norway 27, Sweden 10, UAE 2, UK 3[24] | ||
| 126[25] | 40[25] | 32% | Bangladesh 1, Canada 1, China 3, Egypt 4, Greece 1, Hong Kong 1, Israel 1, Japan 4, South Korea 6, Lebanon 2, Mexico 1, Singapore 10, Taiwan 2, Tanzania 1, US 1, Vietnam 1[25] | ||
| 13[26] | 12[26] | 92% | Denmark 1, Germany 1, Greece 8, Latvia 2[26] | ||
| 35[27] | 3[27] | 9% | Greece 2, Syria 1[27] | ||
| 1,948[28] | 1,904[28] | 98% | Argentina 3, Australia 2, Belgium 1, Brazil 3, Canada 3, China 32, Croatia 5, Cyprus 5, Denmark 12, Estonia 1, France 5, Germany 728, Gibraltar 7, Greece 311, Hong Kong 21, India 2, Indonesia 1, Israel 9, Italy 31, Japan 111, South Korea 4, Kuwait 1, Latvia 15, Lebanon 2, Mexico 1, Monaco 8, Netherlands 28, Norway 42, Poland 14, Qatar 2, Russia 87, Saudi Arabia 24, Singapore 42, Slovenia 1, Sweden 11, Switzerland 11, Taiwan 82, Turkey 7, Ukraine 24, UAE 22, UK 74, US 103, Uruguay 3, Vietnam 3[28] | ||
| 1,281[29] | 1,197[29] | 93% | Austria 1, Azerbaijan 3, Bangladesh 3, Belgium 10, Bulgaria 15, Canada 15, China 13, Croatia 12, Cyprus 15, Denmark 10, Estonia 7, France 4, Germany 67, Greece 448, Hong Kong 1, Iceland 7, India 3, Iran 24, Israel 21, Italy 45, Japan 3, South Korea 3, Latvia 36, Lebanon 12, Libya 3, Monaco 1, Netherlands 3, Norway 71, Pakistan 2, Poland 25, Portugal 3, Romania 10, Russia 66, Slovenia 3, Spain 1, Sweden 1, Switzerland 22, Syria 4, Turkey 143, Ukraine 28, UAE 10, UK 12, US 11[29] | ||
| 902[30] | 857[30] | 95% | Australia 1, Belgium 1, Bermuda 5, Canada 4, Chile 4, China 3, Croatia 4, Cyprus 39, Denmark 9, Finland 2, Germany 214, Greece 226, Hong Kong 4, Italy 3, Japan 5, South Korea 3, Latvia 10, Malaysia 3, Monaco 7, Netherlands 5, Norway 62, Romania 1, Russia 4, Saudi Arabia 4, Singapore 12, Slovenia 3, Spain 3, Sweden 1, Switzerland 14, Turkey 41, UAE 14, UK 17, US 129[30] | ||
| 5[31] | 2[31] | 40% | India 2[31] | ||
| 73[32] | 62[32] | 85% | Bulgaria 2, China 3, Hong Kong 1, Japan 1, Lebanon 1, Malaysia 1, Russia 17, Singapore 12, Syria 1, Thailand 1, Ukraine 3, UAE 5, Vietnam 14[32] | Mongolia is a landlocked nation | |
| 33[33] | 8[33] | 24% | Germany 5, Japan 3[33] | ||
| 138[34] | 125[34] | 91% | Belgium 1, Cuba 1, Denmark 1, Germany 48, Netherlands 53, Norway 5, Sweden 3, Turkey 12, US 1[34] | ||
| 171[35] | 29[35] | 17% | Egypt 1, India 1, Israel 1, Lebanon 3, Lithuania 1, Pakistan 1, Romania 6, Russia 1, Syria 7, Turkey 1, UAE 4, Yemen 2[35] | ||
| 5,764[36] | 4,949[36] | 86% | Albania 1, Argentina 8, Australia 4, Bahamas 2, Bangladesh 1, Belgium 11, Bulgaria 1, Canada 17, Chile 8, China 473, Colombia 4, Croatia 6, Cuba 11, Cyprus 15, Denmark 32, Dominican Republic 1, Ecuador 2, Egypt 13, Estonia 3, France 15, Gabon 1, Germany 38, Greece 505, Hong Kong 137, India 25, Indonesia 37, Iran 4, Ireland 1, Israel 2, Italy 10, Jamaica 1, Japan 2,151, Jordan 11, South Korea 316, Kuwait 1, Latvia 5, Lebanon 3, Lithuania 5, Malaysia 14, Maldives 1, Malta 2, Mexico 4, Monaco 11, Netherlands 14, Nigeria 6, Norway 60, Oman 1, Pakistan 5, Peru 15, Philippines 12, Poland 15, Portugal 9, Qatar 1, Romania 8, Russia 9, Saudi Arabia 14, Singapore 83, Spain 61, Sri Lanka 3, Sweden 9, Switzerland 26, Syria 24, Taiwan 306, Thailand 10, Turkey 53, Turks and Caicos Islands 1, Ukraine 8, UAE 108, UK 35, US 115, Venezuela 10, Vietnam 10, Yemen 5[36] | ||
| 7[37] | 2[37] | 29% | Egypt 1, Greece 1[37] | ||
| 582[38] | 536[38] | 92% | Austria 2, Bangladesh 1, Barbados 1, Belgium 9, Bulgaria 13, Canada 6, China 106, Croatia 7, Cyprus 3, Czech Republic 1, Denmark 16, Egypt 4, Estonia 20, France 7, Germany 3, Greece 81, Guyana 2, Hong Kong 7, Iceland 15, India 5, Iran 1, Israel 4, Italy 19, Kenya 2, Latvia 20, Lebanon 7, Lithuania 7, Malta 1, Monaco 6, Montenegro 1, Netherlands 5, Norway 19, Pakistan 1, Philippines 1, Poland 1, Portugal 1, Puerto Rico 1, Romania 1, Russia 19, Singapore 6, Slovenia 5, Sweden 2, Switzerland 12, Syria 11, Turkey 20, Ukraine 12, UAE 12, UK 9, US 21[38] | ||
| 24[39] | 6[39] | 25% | Germany 6[39] | ||
| 14[40] | 3[40] | 21% | Australia 1, Switzerland 1, UK 1[40] | International registry suspended in 2002. [41] | |
| 51[42] | 51[42] | 100% | Australia 2, Belgium 4, Canada 5, Estonia 1, Japan 28, Poland 7, Russia 1, Switzerland 2, US 1[42] |
44. www. paed. uscourts. gov/documents/opinions/03D0335P. pdf