Flag of convenience

From Wikipedia, the free encyclopedia

The chemical tanker Sichem Princess Marie-Chantal had Panama City as its port of registry when this 2005 picture was taken but as of 2007 it is registered in Valetta with Maltese flag. It was the property of Eitzen Chemical (Singapore) and has the ITF Special Agreement on board.
The chemical tanker Sichem Princess Marie-Chantal had Panama City as its port of registry when this 2005 picture was taken but as of 2007 it is registered in Valetta with Maltese flag. It was the property of Eitzen Chemical (Singapore) and has the ITF Special Agreement on board[1].
Countries listed as having a flag of convenience by the ITF
Countries listed as having a flag of convenience by the ITF

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.[3]

Contents

[edit] Background

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 3.5 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 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.[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.[citation needed]

[edit] History

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.[5] During this time, American rum runners carried illegal alcohol under the Panamanian flag.[5]

Failing to control the Panamanian registry at will, in 1948, the United States helped Liberia create its "open registry."[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.[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.[7]

[edit] Opposition

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. Fishing boat owners who use a flag of convenience can also ignore their home countries' conservation agreements. To quote William Langewiesche's The Outlaw Sea:

"No one pretends that a ship comes from the home port painted on its stern, or that it has ever been anywhere near. Panama is the largest maritime nation on earth, followed by bloody Liberia, which hardly exists. No coastline is required either. There are ships that hail from La Paz, in landlocked Bolivia. There are ships that hail from the Mongolian desert. Moreover, the registries themselves are rarely based in the countries whose names they carry: Panama is considered to be an old-fashioned "flag" because its consulates handle the paperwork and collect the registration fees, but "Liberia" is run by a company in Virginia, "Cambodia" by another in South Korea, and the proud and independent "Bahamas" by a group in the City of London.[8]"

[edit] Support

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. 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.

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.

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). 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.[citation needed]

[edit] List of flags of convenience

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):

Flag of convenience registries and statistics (of ships of 1,000 GRT and greater)
Registry Ships Registered Foreign-owned ships Percent Foreign Foreign-owned ship profile Remarks
Flag of Antigua and Barbuda Antigua and Barbuda International Shipping Register 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]
Flag of the Bahamas Bahamas Maritime Authority 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.
Flag of Barbados Barbados Maritime Ship Registry 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]
Flag of Belize International Merchant Marine Registry of Belize 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]
Flag of Bermuda Bermuda Department of Maritime Administration 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]
Flag of Bolivia Bolivia 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
Flag of Cambodia International Ship Registry of Cambodia 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]
Flag of Cayman Islands Cayman Islands Shipping Registry 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]
Flag of the Comoros Maritime Administration of the Union of Comoros 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]
Flag of Cyprus Republic of Cyprus Department of Merchant Shipping 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]
Flag of Equatorial Guinea Equatorial Guinea 1[20] 0[20] 0%
Flag of France French International Ship Register 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]
Flag of Germany German International Ship Register 382[22] 7[22] 2% China 2, Finland 4, Ireland 1[22]
Flag of Georgia (country) Georgia 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]
Flag of Gibraltar Gibraltar Registry of Shipping 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]
Flag of Honduras Honduras 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]
Flag of Jamaica Jamaica Ship Registry 13[26] 12[26] 92% Denmark 1, Germany 1, Greece 8, Latvia 2[26]
Flag of Lebanon Lebanon 35[27] 3[27] 9% Greece 2, Syria 1[27]
Flag of Liberia Liberian International Ship and Corporate Registry 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]
Flag of Malta Malta Maritime Authority 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]
Flag of the Marshall Islands International Registries, Inc (Marshall Islands) 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]
Flag of Mauritius Ministry of Public Infrastructure, Land Transport & Shipping 5[31] 2[31] 40% India 2[31]
Flag of Mongolia Mongolia Ship Registry 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
Flag of Burma Myanmar (Burma) 33[33] 8[33] 24% Germany 5, Japan 3[33]
Flag of the Netherlands Antilles Netherlands Antilles 138[34] 125[34] 91% Belgium 1, Cuba 1, Denmark 1, Germany 48, Netherlands 53, Norway 5, Sweden 3, Turkey 12, US 1[34]
Flag of North Korea North Korea 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]
Flag of Panama Autorídad Maritima de Panamá 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]
Flag of São Tomé and Príncipe São Tomé and Príncipe 7[37] 2[37] 29% Egypt 1, Greece 1[37]
Flag of Saint Vincent and the Grenadines SVG Maritime Administration 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]
Flag of Sri Lanka Merchant Shipping Division 24[39] 6[39] 25% Germany 6[39]
Flag of Tonga Tonga 14[40] 3[40] 21% Australia 1, Switzerland 1, UK 1[40] International registry suspended in 2002.[41]
Flag of Vanuatu Vanuatu Maritime Services Limited 51[42] 51[42] 100% Australia 2, Belgium 4, Canada 5, Estonia 1, Japan 28, Poland 7, Russia 1, Switzerland 2, US 1[42]

[edit] See also

Nautical Portal

[edit] Notes

  1. ^ Eitzen page
  2. ^ , Flag of convenience. The American Heritage Dictionary of the English Language, Fourth Edition. Houghton Mifflin Company (2004). Retrieved on 2007-05-04.
  3. ^ BA Hamzah (July 7, 2004). Ports and Sustainable Development: Initial Thoughts (PDF) 4. United Nations Institute for Training and Research. Retrieved on 2007-05-07.
  4. ^ The Economist, Bolivia Waves the Flag, May 27, 2000.
  5. ^ a b c d e f g h i j Working, Russell (May 22, 1999). "Flags of Inconvenience; Union Campaigns Against Some Foreign Ship Registry". New York Times. 
  6. ^ a b Dempsey and Helling, 1980.
  7. ^ a b c d e f g h i The Economist, Brassed Off: How the war on terrorism could change the shape of shipping, May 16, 2002.
  8. ^ Langweiesche's analysis of the Bahamas is not strictly accurate; the Bahamas Maritime Authority is based in Freeport, Bahamas, but the Authority has a representative office in London to enable searches of its registers to be conducted to facilitate the financing and insuring of Bahamian registered vessels, near the offices of Lloyd's of London. It also has offices in New York and Tokyo for the same reason.[citation needed].
  9. ^ a b c International Transport Workers' Federation. What are Flags of Convenience?. Retrieved on 2007-05-04.
  10. ^ a b c CIA World Factbook,Antigua and Barbuda, Transportation. Access date 2008-07-02.
  11. ^ a b c CIA World Factbook,Bahamas, The, Transportation. Access date 2008-07-02.
  12. ^ a b c CIA World Factbook,Barbados, Transportation. Access date 2008-07-02.
  13. ^ a b c CIA World Factbook,Belize, Transportation. Access date 2008-07-02.
  14. ^ a b c CIA World Factbook,Bermuda, Transportation. Access date 2008-07-02.
  15. ^ a b c CIA World Factbook,Bolivia, Transportation. Access date 2008-07-02.
  16. ^ a b c CIA World Factbook,Cambodia, Transportation. Access date 2008-07-02.
  17. ^ a b c CIA World Factbook,Cayman Islands, Transportation. Access date 2008-07-02.
  18. ^ a b c CIA World Factbook,Comoros, Transportation. Access date 2008-07-02.
  19. ^ a b c CIA World Factbook,Cyprus, Transportation. Access date 2008-07-02.
  20. ^ a b CIA World Factbook,Equatorial Guinea, Transportation. Access date 2008-07-02.
  21. ^ a b c CIA World Factbook,France, Transportation. Access date 2008-07-02.
  22. ^ a b c CIA World Factbook,Germany, Transportation. Access date 2008-07-02.
  23. ^ a b c CIA World Factbook,Georgia, Transportation. Access date 2008-07-02.
  24. ^ a b c CIA World Factbook,Gibraltar, Transportation. Access date 2008-07-02.
  25. ^ a b c CIA World Factbook,Honduras, Transportation. Access date 2008-07-02.
  26. ^ a b c CIA World Factbook,Jamaica, Transportation. Access date 2008-07-02.
  27. ^ a b c CIA World Factbook,Lebanon, Transportation. Access date 2008-07-02.
  28. ^ a b c CIA World Factbook,Liberia, Transportation. Access date 2008-07-02.
  29. ^ a b c CIA World Factbook,Malta, Transportation. Access date 2008-07-02.
  30. ^ a b c CIA World Factbook,Marshall Islands, Transportation. Access date 2008-07-02.
  31. ^ a b c CIA World Factbook,Mauritius, Transportation. Access date 2008-07-02.
  32. ^ a b c CIA World Factbook,Mongolia, Transportation. Access date 2008-07-02.
  33. ^ a b c CIA World Factbook,Myanmar, Transportation. Access date 2008-07-02.
  34. ^ a b c CIA World Factbook,Netherlands Antilles, Transportation. Access date 2008-07-02.
  35. ^ a b c CIA World Factbook,North Korea, Transportation. Access date 2008-07-02.
  36. ^ a b c CIA World Factbook,Panama, Transportation. Access date 2008-07-02.
  37. ^ a b c CIA World Factbook,São Tomé and Príncipe, Transportation. Access date 2008-07-02.
  38. ^ a b c CIA World Factbook,Saint Vincent and the Grenadines, Transportation. Access date 2008-07-02.
  39. ^ a b c CIA World Factbook,Sri Lanka, Transportation. Access date 2008-07-02.
  40. ^ a b c CIA World Factbook,Tonga, Transportation. Access date 2008-07-02.
  41. ^ Tonga suspends registry. Retrieved on 2007-05-05.
  42. ^ a b c CIA World Factbook,Vanuatu, Transportation. Access date 2008-07-02.

44. www.paed.uscourts.gov/documents/opinions/03D0335P.pdf

[edit] References

[edit] External links

Wikimedia Commons has media related to: