The cargo ship Stena Impero, seized by Iran last week, was sailing under a British flag, but owned by a Swedish company and had no British nationals on board, reports BBC.
Can ship’s flag differ from that of the owners?
It’s very common for ships to fly the flag of a country that differs from that of the owners.
But why is it done and who benefits?
Most common ships’ flags in 2018
(In thousand tonnes)
The leading flag states
Every merchant ship must register with a country, known as a flagged state.
Under the open-registry system, “flags of convenience” as they are sometimes known, can be flown by any vessel regardless of the nationality of the owners.
Other systems of flagging have tighter rules on who can own and operate these vessels.
Panama, the Marshall Islands and Liberia are the leading flag states.
Red Ensign Group
There are about 1,300 vessels listed on the UK Ship Register.
This Red Ensign Group, which includes:
the United Kingdom, the Crown dependencies (Isle of Man, Guernsey and Jersey) and UK overseas territories (Anguilla, Bermuda, the British Virgin Islands, the Cayman Islands, the Falkland Islands, Gibraltar, Montserrat, St Helena and the Turks and Caicos Islands) is the ninth largest fleet in the world.
Why choose a flag different from own?
Ship-owners choose a flag state for a range of commercial reasons. Maritime security expert Ioannis Chapsos says that the reasons are:
- regulations,
- taxes and
- the quality of the service provided.
He points to Greece, the world’s leading ship-owner. Many of its vessels do not fly the Greek flag, a big factor being they would have to pay more tax.
Ownership of the world fleet in 2018
(Thousand tonnes)
In return, the flag states, often poorer countries, earn money.
Ship registry contributes to the country’s economy
The Panamanian ship registry contributes tens of millions of dollars to the country’s economy.
The system allows for the hiring of crew from anywhere in the world, which can lower costs.
Why is “flags of convenience” criticised?
This system of “flags of convenience” has been criticised because of the potential for looser regulation and even the flouting of international maritime rules.
But shipping practices are generally seen as having improved significantly in the past three decades.
The term is not used by the International Maritime Organisation (IMO), the UN’s shipping agency.
Flag state chosen based on reputation
It’s “almost regarded as a swear word in the shipping industry,” says Simon Bennett of the International Chamber of Shipping (ICS).
He says owners tend to choose to register with a flag state based on reputation or because major shipping registries have a presence in every major port.
The safety record of large open registries, he adds, matches the so-called traditional flags. The system, however, still faces criticism.
What are the difficulties?
Registering under a different flag makes it more difficult to hold ship-owners to account over wage disputes or working conditions, according to the International Transport Workers’ Federation.
Who’s responsible for this?
After signing up to a flag, the laws of that country are conferred on the vessel and each country is responsible for ships flying their flag.
This includes:
- Ensuring that ships conform to relevant international standards – through survey and certification of ships, says the IMO.
- Flag countries sign up to international maritime treaties and are responsible for enforcing them, with rules set by the IMO in regards to the:
- construction,
- design,
- equipment and
- manning of ships
- Under the United Nations Convention for the Law of the Sea, flag states are required to take measures for ensuring safety at sea.
Who runs the registry?
It’s common for a flag registry to be managed in a different country. For example:
Liberia, it is administered by an American company with its headquarters in Washington DC.
The land-locked Mongolia Registry is based in Singapore.
The Comoros Registry is based in Bulgaria.
Far-flung Vanuatu has its base in New York.
Security challenges
The unusual geography of the registry system can pose security challenges.
It’s unrealistic for a flag state to provide security to all the vessels registered to it, says Mr Chapsos, even though vessels are essentially an extension of that state.
And it is even harder for a state with far fewer resources than, for example, the Royal Navy but significantly more commercial ships.
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Source: BBC
