All about The Flag of the Ship..

All about The Flag of the Ship

Like people, a ship also has a nationality assigned to it.. This is represented by a flag that the ship flies at all times.. A ship is assigned a flag through registration with a Ship Register or Ship Registry and the ship is expected to follow the rules and regulations enforced by this register at all times.

The nationality or port of registration is shown on the stern of a ship.. In the above example, the marking on the stern tells the world that the ship called MOL PRIDE has been registered in Monrovia in Liberia (flying the Liberian flag)..

Any ship over 100 GT (Gross Ton) irrespective of whether it is a cargo vessel, fishing vessel, passenger vessel etc, has to be registered.. This registration grants the ship physical and legal protection of that flag/flag state which may be applied to vital areas such as safety of cargo and life of those on board the ship..

Ships need not necessarily be registered under a country’s own flag.. For example a ship owned by British nationals need not be registered mandatorily under the British Flag or UK Ships register.. It may be registered with registries other than the British Registry..

Types of ship registers

What is a ship register - shipping and freight resourceSome ships fly the flag of their own country, meaning it is owned, operated, and manned by nationals of that country..

This form of registration is called “Traditional Register” wherein the owner of the ship should necessarily be from the country of registration and the place of business should be in the country of registration..

Some ships fly the flags of other countries, like a ship owned by a Japanese firm flying a Maltese flag.. This form of registration is called an “Open Register“..

Many ship owners also opt for what is known as a “Flag of Convenience” (FOC).. An FOC is a type of open registry that offers (among other things) an attractive fiscal regime, substantially lower administrative fees, flexible to loose maritime safety policies, and lower costs for the ship owners..

FOC is a pejorative term used for an open registry and a FOC usually has no genuine link between the state and the ships that are flagged under that state..

For example, the ship is not owned by anyone from that country of registration, the ship is not operated by anyone from that country and the country of registration has no crew members or any other kind of administrative, technical, or social connection with that ship..

Because of this, organizations like the ITF (International Transport Workers Federation) find it difficult for unions, industry stakeholders and the public to hold ship owners to account as they may not follow the various regulations set..

The list of countries that have been declared as FOCs by the ITF’s fair practices committee can be viewed here..

Why is a flag important in shipping ?

A flag provides an identity to a ship which means the ship’s national state has exclusive dominion over the ship and no other nation can exercise dominion over that ship although a ship of any nation can navigate the oceans freely under the “guiding principle of the sea” which is freedom..

Of course, there are caveats here in the form of sanctions against certain countries which are enforced in shipping based on the flag/nationality of the ship..

As an example, the International Association of Classification Societies has withdrawn the Russian ship register’s membership after Russia’s attack on Ukraine..

This means ships flying the Russian flag are under sanction and any country doing trade with Russian flagged ships do so under risk of such sanctions.. There are political caveats to this as well which you can read about here..

The registration of a ship plays an important role in ensuring safety and security of the ship and significantly contributes to the protection and preservation of the marine environment..

As per IMO regulations, all ships must be surveyed in order to ensure that the ships under their register/flag are structurally sound and subscribes to design and safety standards and issue certificates that establish a ship’s seaworthiness..

The registration and linking to a national registry in a traditional register means that these ships may be requisitioned at time of war for the transportation of goods and people in the service of the nation..

The ship’s flag is also of importance in identifying specific registries or flag states that do not take action or turn a blind eye against shipowners who violate the rights of seafarers and in 2022 we are seeing a shameful record of seafarer abandonment.

What factors may play a role in a Shipowner choosing to register their vessel in a particular flag state for their ship registration

1. Restricted cabotage on ship registration

– Cabotage is the transport of goods or passengers between two places in the same country by a transport operator from another country (e.g. a bahamian ship transporting something from Liverpool to Edinburgh). Cabotage rights are the right of a company from one country to trade in another.

Exclusions:

– A small number of countries have what is known as restricted cabotage. The three most significant of these are Brazil, Japan and the USA. If a ship owner wants to carry goods from one port in the USA to another in the USA then they would need a US flag flying from their vessel.

2.Flag administration.

– Ship owners want to choose a flag where the flag administration is helpful, is commercially aware, responds to their needs swiftly, and is competitive in terms of price.

3. Flag reputation

– If the flag a ship owner chooses has a poor reputation they will find that their ships are inspected more frequently than ships that fly under the flag of a state with a better reputation.

4 Cost of operation.

– As above, ship owners will consider the cost of ‘flagging’, the cost of registering, and the cost of getting the necessary certificates can be a big factor. There is often a big disparity in terms of cost between different flag states.

5 Insurance

– Some underwriters will demand that a ship owner chooses a flag from certain states as the insurer can then be assured that the standard of flag meets their own requirements.

6 Naval protection.

– The diplomatic and naval protect ion of the flag state may be important to some ship owners and may be particularly important at times of political crisis.

7 Other factors on ship registration

– Finally many other owner specific requirements like sponsorship to their employees, owners interests, and especially s vessel type. If a flag state has significant experience of registering cruise ships, and the ship owner owns cruise ships, then they may wish to choose that state. Ex: Bahamas which has a very good track record of registering cruise ships.

Flag of convenience?

– Effective jurisdiction, control, and enforcement of Flag State regulations upon vessels is frequently impossible because operations often take place vast distances away from the ship’s country of registration and shielded from the eyes of observers. Open registries have absorbed the M/V SAIGA ruling and evolved into ‘flag of convenience’ states, allowing any owner an opportunity to register their vessel while maintaining little tangible oversight over their vessels.

– This flag of convenience and open registry system exponentially complicates jurisdiction,  accountability, and oversight. Shipowners can simply change vessel registration from one open registry to another, which converts the nationality (and therefore Flag State Jurisdiction) of the vessel in order to place it under a jurisdiction with greater or lesser leniency in accountability and oversight depending on t heir wishes. Shipowners trying to avoid stringent compliance with Flag State

requirements will simply register their vessels in a state that is not willing or able to exercise jurisdiction and control, especially in matters often relating to fishing, pollution control, and labour practices.

– For example, a shipowner with a tanker flagged in a country with stringent environmental and security legislation, who desires more flexibility, can simply reflag to a state that is not willing or able to exercise jurisdiction and control, in order to ease regulations aboard his/ her vessel. This is similarly done to dodge taxes, fees, and proper treatment of the crew, as well as to avoid Flag State-imposed pollution control measures.