Flag of convenience

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It is estimated that 1600 ships fly the Liberian flag as a flag of convenience.

The chemical carrier 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].

A ship is said to be flying a flag of convenience if one believes it was registered in a particular country to avoid taxes and ease the process of registration. The term comes from the fact that ships fly a flag showing their country of registration. Under conventions of international law, this flag determines the source of law to be applied in admiralty cases, regardless of which court has personal jurisdiction over the parties.

The International Transport Workers' Federation (ITF) maintains a list of countries that they consider "flag of convenience" countries.

1 Opposition
2 Support
3 List of flags of convenience
4 Trivia
5 See also
6 References
7 External links

[edit] Opposition

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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 safety/work 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."

[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.

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.

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.