Most would presume that the nation with the largest fleet of ships has to be one of the global big boys of course; The USA… China… The UK… France, or even India? Nah. Panama. Yup, you read right. The Republic of Panama, a small modest nation located in Central America owns the world’s largest fleet of ships, with over 8,000 ships in her registry. A number greater than those of the United States and China combined.

So how did a small Central American nation come to be the Poseidon of our seas? Well, the answer to this is the practice of Flags of Convenience. On the 29th of April 1958, the United Nations Conference on the Law of the Sea signed and adopted the Geneva Convention on the High Seas. Article Five of this convention provides that;

“Each State shall fix the conditions for the grant of its nationality to ships, for the registration of ships in its territory, and for the right to fly its flag. Ships have the nationality of the State whose flag they are entitled to fly…”

The above is the relevant international law that provides for flags of convenience. Flags of convenience is simply an international practice where a ship owner registers a ship in the register of another country than that of the ship owner. The ship then flies the flag of the registered nation and is under the jurisdiction and subject to the maritime laws of the registered nation known as the ‘flag state’. The flag state is responsible for the inspection of vessels, it’s seaworthiness and also ensuring safety of the crew on board.

Advocates for the flags of convenience practice mainly point to the economic benefits it provides. For the ship owners; it is a great way to operate without paying the hefty amount of money needed to operate in their own nations and this is a great incentive for shipping companies that might be new and not so financially buoyant. For the flag states; it is a valuable source of income to the nation’s revenue. Developing countries such as Panama, Liberia, Marshall Islands, Malta, Cyprus, etc, have utilized this to create sustainable revenue. According to John Pike in his book “History of Liberian Ship Registry”, maritime funds supplies 70% of the total Liberian government revenue. This highlights how lucrative this practice has become for these nations.

However, despite these positives, the practice of flags of convenience is one which has brought enormous negatives and has been a prolonged threat since the 1950’s to the objectives of International Maritime Law. The flags of convenience practice is one that has brought huge competition between flag states to register ships. This competition is one which has brought about repercussions and this is a major flaw of the practice. These flag states seek to give ship owners an incentive to partner with them by relaxing key regulations and proper maritime international standards. This has brought about a major safety breach in our waters. Ship Owners easily avert supervision and carry out nefarious activities on our seas such as illegal fishing, arms smuggling, illegal trafficking, and so on.

It is also worthy of note that this lack of supervision has also had a big blow on our environment. Flags of convenience ships have been involved in some of the highest profile oil spills in history. A classic example is the Maltese flagged ‘MV-Erika’ that sank off the coast of France in 1999 causing a major disaster to both humans and the wildlife in the sea. This lack of supervision by flag states is becoming increasingly detrimental.

Another major flaw of the flags of convenience practice is the issue of jurisdiction. The registered ship is under the power of the flag states and this poses a problem. Most of these states don’t have solid maritime laws to regulate activities on the sea and even where there exists such laws they are not properly enforced. These states lack the resources or the will to enforce such international law effectively thus giving a leeway to ship owners to breach safety conditions.

Ship owners also make the most of this practice by employing citizens of the flag states. However, it is not as rosy as it seems. These workers are exposed to cheap labor. They are paid less than they should and are also exposed to terrible, hazardous, unacceptable working conditions.

These problems play down the benefits which could be derived from this practice. However, I believe the international community can come together to solve these issues with the following proposed solutions;

1. Establishment of a clear link better ship owner’s state and flag state

Article 5 of the GHS Convention provides that “…There must exist a genuine link between the State and Ship…”
Unfortunately, this has been taken advantage of because it is rather too ambiguous and does not give clear conditions. The United Nations Convention on Conditions for Registration of Ships, 1986 aimed to relax this ambiguity by stating that a flag state would be said to be linked to the ships either by having an economic stake in the ownership of the ships or by providing mariners to crew the ship.

This Convention requires 40 signatories to come into force. However, it has been signed thus far by just 14 states. An establishment of a clear link won’t wipe out all problems but it’s sure to bring about some level of restriction to the ship owners.

2. Ratification of existing International Maritime Conventions

International regulations for the maritime industry are promulgated by the United Nations (through the International Maritime Organization and the International Labour Organization). There are six major international conventions regarding maritime regulation. However, despite these regulations, one common problem of these flag states is the fact that they refuse to ratify important treaties and conventions. Over 60 flag states have not ratified all six of these conventions and this goes to show a major problem.

I believe that it is high time the global community prioritizes these maritime conventions due to the wide impact repercussions from nefarious activities on the seas can be brought to every state. It is high time that global powerhouses such as the United States begin to influence other nations to ratify these international treaties.

3. The International Maritime Organization and the International Transport Workers’ Federation

The International Maritime Organization (IMO) is an agency of the United Nations tasked with improving the security and safety of International shipping. However, the IMO does not enforce their policies. It is the responsibility of Nations under the Organization to enforce adopted policies. I am of the opinion that one of the best ways to curb the disadvantages of the flags of convenience practice is the International Maritime Organization enforcement of policies. The International Maritime Organization supervising safety measures and enforcing policies will bring about restraint on a compromise by flag states.

There is also the International Transport Workers Federation (ITF). I believe there should be more awareness and clamor for affiliate partnerships of national trade unions and the International Transport Workers Federation. With more registered trade unions as affiliates, it will be easier to protect seafarers from exploitation by ship owners, enforcement of wages and decent working conditions on board.

4. Port State Control

Port state control is also a viable solution to the abuse of the flags of convenience practice. It is an inspection system whereby states have the right to inspect ships that sail to her port. These states can take action against ships that breach international standards. Port state control comes to life by way of an agreement between states.

However, it is important to note that these agreements to port state control are regional and are not employed on a global scale. It will be advantageous and a great tool to combat the abuse of the flags of convenience if states come together to be signatories to a global Memorandum of Agreement that establishes Port State Control.

The problems arising from the abuse of the flags of convenience practice have sadly existed for too long. It is high time the global community comes together to make sure this ‘Modern Kraken’ goes extinct and our seas become a safe haven.