 various bodies follow separate initiatives

which result in a fragmented process.

 carry out shipboard and/or office inspections
and that the bodies can be divided into those
which play a
◦ primary role (flag state and classification societies
acting on their behalf) and
◦ those which play a secondary one (port state,
charterer, insurer and maritime unions)
 follow different approaches, while
sharing a common objective, i.e. to
weed out substandard vessels,
owners/operators and practices
 increased efforts to examine the
human elements of vessel operation
as opposed to merely technical
aspects as was the case in the past.
 The flag of a ship has, from earliest days, provided
an indication of that vessel‟s nationality – the
country under which it derived its legal status and
whose laws applied to its operations.
 It was, necessary to fly a flag which was a visible
indication of the state under whose protection that
ship operated, backed up with the papers which
would be carried by the Master.
 As international trade developed in the Middle
Ages, protection was important as warring nations
and city states built naval forces to establish their
writ at sea and control seas they claimed as their
own.
The terms ‘open register’ and ‘flag of convenience’ are often used interchangeably, causing
confusion, however they are not the same thing.
The ITF defined a flag of convenience (FOC) as, ‘Where beneficial ownership and control of
a vessel is found to lie elsewhere than in the country of the flag the vessel is flying, the
vessel is considered as sailing under a flag of convenience’ (ITF, 1974).
Shipping registers can be either, national registers, second registers or registers.
National registers, sometimes called ‘closed’ or ‘traditional’ registers, are operated by flag
States for use by their nations ships only.
Open registers are open to foreign-owned vessels. Second registers, or ‘international’
registers as they are often called, were created by traditional shipping nations as a
response to the significant losses their national registers suffered as ships were moved out
to open registers.
Second registers offer more operational freedom and exemption from some taxes.
Countries such as Denmark, Norway, France and the UK operate two registers, one National
and one International.
Flag of convenience is a derogatory label, used by the ITF, given to those flag States
against whom the allegation that they care little for safe shipping standards or seafarer
welfare is frequently made.
The International Maritime Organisation (IMO) does not refer to flags of Convenience nor
do they use the terms white, black or grey lists which are used by port State MOUs. The
International Transport Workers Federation (ITF) has maintained a running campaign
against those registers that they categorise as a FOC.
The following countries have been declared FOCs by the ITF's fair practices
committee (a joint committee of ITF seafarers' and dockers' unions), which runs
the ITF campaign against FOCs:

 Antigua and Barbuda, Bahamas, Barbados, Belize,

Bermuda (UK), Bolivia, Burma, Cambodia, Cayman
Islands, Comoros, Cyprus, Equatorial Guinea,
Faroe Islands (FAS), French International Ship
Register (FIS), German International Ship Register
(GIS), Georgia, Gibraltar (UK), Honduras, Jamaica,
Lebanon, Liberia, Malta, Madeira, Marshall Islands
(USA), Mauritius, Moldova, Mongolia, Myanmar,
Netherlands Antilles, North Korea, Panama, Sao
Tome and Príncipe, St Vincent, Sri Lanka, Tonga,
Vanuatu
There have always been fundamental economic factors
determining the flag a ship will fly; the aim of maximizing
revenue and minimizing costs is at the heart of ship operations.
The benefits of open registers to ship owners as the following:
 low or no vessel restrictions;

 favourable tax environment;

 low administration and registration fees;

 no or easy to meet nationality requirements;

 quick and efficient registration process;

 flexible manning requirements;

 lower operational costs of the vessel.’

Clearly having the choice of flag and nationality provides ship

operators with a method of controlling the costs of operation.
For the flag States it identifies the economic benefits associated
with operating an open register as the following: ‘tonnage tax
and registration fees, franchise and or royalty fees.
 The earliest examples of “open registers” or
“flags of convenience” stem from the Classical
period when Roman and Greek ships used the
flag of another country to secure trading
advantages.
 In the Middle Ages, ships trading in areas far
from their homes arranged to fly the flag of the
“controlling” state to gain its protection & cargo
rights.
 There are examples of British-owned merchant
ships trading in the Mediterranean flying the flag
of Venice or Genoa & ships with papers of more
than one state to prevent capture.
 The modern concept of flags of convenience
emerged in the 1920s when a number of US
passenger ships were re-registered under the
Panamanian flag to avoid prohibition
restrictions.
 Also during WWII, many US-owned ships
traded under the Panamanian flag to facilitate
their operation in the war zone and avoid
attack.
By the 1950‟s the US flag had become expensive
for owners and the attractions of an FOC –
 Freedoms from tax and fiscal control,
 Minimum regulatory oversight,
 No restrictions on crew nationality,
 Restricted financial liabilities facilitating “single-
ship companies”,
 Minimum legal formalities,
 Simple mortgage arrangements and
 No political interference – were overwhelming.
 All added up to substantial cost reductions
and both US and Greek owners, and
increasingly those from Norway, sought to
take advantage of these freedoms.
 In a relatively short time, the Panamanian and
Liberian flags were dominating the world's
sea lanes at the expense of the traditional
maritime nations whose owners increasingly
found themselves disadvantaged by the costs
and freedoms enjoyed by FOC operators.
 Seafarers, especially from the traditional maritime
nations, have been the big losers in this flight to the
FOCs in which there was brisk competition between
registers to offer the cheapest registry fees and
greatest freedoms.
 Shipping standards under many of these flags were
lax, notably on the manpower front, with poor
standards of oversight.
 Some of these flag states, while they might have been
nominally members of the International Maritime
Consultative Organisation (then and later IMO) took
little part in its affairs, being focused entirely on the
need to raise revenue from registration fees and
building their market share.
 Scrutiny by IMO Auditors has of late forced
FOC‟s to rid themselves of the less
scrupulous owners and their “rustbucket”
tonnage.
 The division of ship registers into classes
graded by quality has been a positive move
that has encouraged better standards.
 There has, however, been no shortage of
alternative registers to which shipowners can
relocate their ships expelled from the more
reputable flags.
Article 91 - Nationality of ships
 1. Every 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. There must exist a genuine
link between the State and the ship.
 2. Every State shall issue to ships to which it
has granted the right to fly its flag documents
to that effect.
Article 92 - Status of ships
 1. Ships shall sail under the flag of one State only
and, save in exceptional cases expressly provided
for in international treaties or in this Convention,
shall be subject to its exclusive jurisdiction on
the high seas.
 2. A ship which sails under the flags of two or
more States, using them according to
convenience, may not claim any of the
nationalities in question with respect to any other
State, and may be assimilated to a ship without
nationality.
1. Every State shall effectively exercise its
jurisdiction and control in administrative, technical
and social matters over ships flying its flag.
2. In particular every State shall:
(a) maintain a register of ships containing the
names and particulars of ships flying its flag,
except those which are excluded from generally
accepted international regulations on account of
their small size; and
(b) assume jurisdiction under its internal law over
each ship flying its flag and its master, officers and
crew in respect of administrative, technical and
social matters concerning the ship.
3. Every State shall take such measures for
ships flying its flag as are necessary to ensure
safety at sea with regard, inter alia, to:
 (a) the construction, equipment and
seaworthiness of ships;
 (b) the manning of ships, labour conditions
and the training of crews, taking into account
the applicable international instruments;
 (c) the use of signals, the maintenance of
communications and the prevention of
collisions.
4. Such measures shall include those necessary to ensure:
(a) that each ship, before registration and thereafter at appropriate
intervals, is surveyed by a qualified surveyor of ships, and has on
board such charts, nautical publications and navigational
equipment and instruments as are appropriate for the safe
navigation of the ship;
(b) that each ship is in the charge of a master and officers who
possess appropriate qualifications, in particular in seamanship,
navigation, communications and marine engineering, and that the
crew is appropriate in qualification and numbers for the type, size,
machinery and equipment of the ship;
(c) that the master, officers and, to the extent appropriate, the
crew are fully conversant with and required to observe the
applicable international regulations concerning the safety of life at
sea, the prevention of collisions, the prevention, reduction and
control of marine pollution, and the maintenance of
communications by radio.
5. In taking the measures called for in paragraphs
3 and 4 each State is required to conform to
generally accepted international regulations,
procedures and practices and to take any steps
which may be necessary to secure their
observance.

6. A State which has clear grounds to believe that

proper jurisdiction and control with respect to a
ship have not been exercised may report the facts
to the flag State. Upon receiving such a report, the
flag State shall investigate the matter and, if
appropriate, take any action necessary to remedy
the situation.
7. Each State shall cause an inquiry to be held by
or before a suitably qualified person or persons
into every marine casualty or incident of navigation
on the high seas involving a ship flying its flag and
causing loss of life or serious injury to nationals of
another State or serious damage to ships or
installations of another State or to the marine
environment. The flag State and the other State
shall cooperate in the conduct of any inquiry held
by that other State into any such marine casualty
or incident of navigation.
1. States shall ensure compliance by vessels flying their
flag or of their registry with applicable international
rules and standards, established through the
competent international organization or general
diplomatic conference, and with their laws and
regulations adopted in accordance with this Convention
for the prevention, reduction and control of pollution of
the marine environment from vessels and shall
accordingly adopt laws and regulations and take other
measures necessary for their implementation. Flag
States shall provide for the effective enforcement of
such rules, standards, laws and regulations,
irrespective of where a violation occurs.
2. States shall, in particular, take appropriate
measures in order to ensure that vessels flying
their flag or of their registry are prohibited
from sailing, until they can proceed to sea in
compliance with the requirements of the
international rules and standards referred to in
paragraph 1, including requirements in respect
of design, construction, equipment and
manning of vessels.
3. States shall ensure that vessels flying their flag or of
their registry carry on board certificates required by
and issued pursuant to international rules and
standards referred to in paragraph 1. States shall
ensure that vessels flying their flag are periodically
inspected in order to verify that such certificates are in
conformity with the actual condition of the vessels.
These certificates shall be accepted by other States as
evidence of the condition of the vessels and shall be
regarded as having the same force as certificates
issued by them, unless there are clear grounds for
believing that the condition of the vessel does not
correspond substantially with the particulars of the
certificates.
4. If a vessel commits a violation of rules and
standards established through the competent
international organization or general
diplomatic conference, the flag State, without
prejudice to articles 218, 220 and 228, shall
provide for immediate investigation and where
appropriate institute proceedings in respect of
the alleged violation irrespective of where the
violation occurred or where the pollution
caused by such violation has occurred or has
been spotted.
5. Flag States conducting an investigation of
the violation may request the assistance of any
other State whose cooperation could be useful
in clarifying the circumstances of the case.
States shall endeavour to meet appropriate
requests of flag States.
6. States shall, at the written request of any
State, investigate any violation alleged to have
been committed by vessels flying their flag. If
satisfied that sufficient evidence is available to
enable proceedings to be brought in respect of
the alleged violation, flag States shall without
delay institute such proceedings in accordance
with their laws.
7. Flag States shall promptly inform the
requesting State and the competent
international organization of the action taken
and its outcome. Such information shall be
available to all States.

8. Penalties provided for by the laws and

regulations of States for vessels flying their
flag shall be adequate in severity to discourage
violations wherever they occur.
 Defined standards for vessels entering its registry,
and willingness to reject those that do not meet
them.
 An adequate budget for maritime safety, inspection
and documentation, & charges, fees and tonnage
taxes, appropriate to sustain that budget.
 Procedures in place to monitor, in accordance with
specified rules and regulations, the safety record of
all vessels in its registry, including detention,
personal injury/death reports, and other occurrences.
 Procedures to identify the ownership of all vessels in
its registry.
 Formal and active procedures to investigate major
incidents and casualties, maintaining a department
within the registry infrastructure for that purpose.
 Procedures and personnel in place to prepare written
reports of such casualties, which it makes publicly
available.
 Policy to screen and reject applications from prospective
vessel registrants that do not meet applicable rules and
standards.
 Formal policing mechanisms and procedures to remove
substandard vessels, when deemed necessary, from its
registry, as well as impose other sanctions, penalties
and disciplinary measures.
 Procedures, and personnel, for screening and oversight
of seafarers‟ licensing, documentation and
identification.
 Maintenance of an organization outside of its
secretariat, such as a quality council, to furnish external
reviews, and if necessary criticism, of its administrative
standards and practices.
 Coordination of its work with that of classification societies
and other entities (RO) recognized by it.
 Grading, rating and limiting of the number of those
organizations, i.e., classification societies, to those of
proven professional competence and integrity, i.e., IACS
members.
 Non-employment of free-lance honorary consuls or other
agents, who charge a separate fee or fees for their services,
when registering vessels and their mortgages.
 Publication of all fees charged by the administration such as
tonnage taxes and the like, in accordance with an official
schedule, i.e., no “hidden charges”. No brown envelopes.
 Implementation of conventions and other international
maritime agreements to which the flag state is a party in its
laws and regulations, and which are enforced by the flag
state administration.
 Enforcement (really) of nationally agreed principles, rules
and standards governing the rights of seafarers, including
but not limited to their right to repatriation, in cases of
bankruptcy or vessel abandonment.
 Employment of a professionally trained and competent
staff, assigned to specific functions, including:
◦ Safety at sea / Environmental protection;
◦ Telecommunications/radio;
◦ Investigation / Inspection of vessels and vessel casualties;
◦ Registration and documentation of vessels;
◦ Licensing / documentation of seafarers; and
◦ Implementation of International Conventions and Enforcement of
National laws.
 Active participation at IMO and other relevant
organizations.
 Organization and enforcement of an active vessel
inspection programme.
 Participation in the IMO‟s voluntary audit scheme.
There should be a 'genuine link' between the
real owner of a vessel and the flag the vessel
flies, in accordance with the United Nations
Convention on the Law of the Sea (UNCLOS).
There is no "genuine link" in the case of FOC
registries.
The UN Convention on the Conditions for
Registration of Ships requires identifiability
and accountability from shipowners/managers
which is impossible in today's world of one-
ship owning companies.
The hard reality is that there is little
identifiability and almost no accountability
where it is needed most - in relation to the
owners of sub-standard ships.
Many flag states are not doing their duty to regulate and
police their own tonnage. It is accepted that they cannot be
expected to have an inspectorate spread across the globe,
but flag states generally contract their surveying out to
local classification or non-exclusive marine surveyors.

This then brings up the potentially unhealthy relationship

between the classification societies, the registers for which
they survey and the shipowner: it is usually the shipowner
who indirectly at least pays the bill of the surveyor who is
to decree if a ship is seaworthy or not.

Add to this the practical difficulty: can one surveyor,

however competent, thoroughly inspect the vast hidden
reaches of , lets say, an aging VLOC, under pressure from
owners and charterers and often at the risk of being buried
under a relentless rising tide of bulk cargo being disgorged
into the very spaces he is trying to inspect?
It is the system that needs change, for the system
often does not give the surveyor a fair chance.
There are clearly good and bad register states; and
bad registers attract the worst shipowners with the
worst ships.
The more unscrupulous registers take on tonnage
which should not put to sea; they issue certificates
riding on the back of previous certificates without
adequate or at times any inspection; and, perhaps
more seriously, most registers are too quick to
issue conditional reservations against class with
extensions to manifestly defective vessels, thereby
allowing them to put to sea again without repairs.
The industry continues to hide its head in the
sand about ships long past the end of their safe
natural working lives. One reads frequent
protestations from shipowners and surveyors
that old is not necessarily substandard.
In 1994, the MD of Shell tankers had difficulty
explaining Shell's policy when trying (totally
unconvincingly) to justify on British TV the
company fixing the "KIRKI" which
unceremoniously lost her bow off the coast of
Australia - immediately after being cleared by
the company's surveyors.
 Part 1: Basic details of the vessel in question.
 Part 2: Certifications maintained on board (load line, radio, safety
construction, oil pollution prevention, class, etc.).
 Part 3: Availability and use made of documentation maintained on board
(charts, nautical publications, oil record book, medical log, compass
error book, etc.).
 Part 4: Condition of navigation equipment [radar, automatic radar
plotting aids (ARPA), magnetic compass, RFD (radio frequency devices),
echo sounder, course recorder, rudder indicator, etc.].
 Part 5: Validity of master and senior officer licenses (flag state and
national certificates of competency).
 Part 6: Compliance with minimum Safe Manning Requirement (number
and rank of crew onboard compared with flag state requirement).
 Part 7: Availability and condition of firefighting equipment (fire hoses,
deck lines and hydrants, fire extinguishers, fire dampers, fire doors, fire
alarms, etc.).
 Part 8: Availability and condition of life-saving equipment (miscellaneous
life saving appliances).
 Part 9: Availability and condition of pollution prevention equipment.
 Part 10: General safety matters, crew welfare living conditions (condition
and cleanliness of accommodation, messrooms and galley).
While the format of the report is similar amongst the
different flag states, the effectiveness of the inspections
is variable dependent on a number of factors including:
 the frequency at which the inspections are conducted;

 the qualifications and experience of the inspectors;

 the thoroughness of the inspection itself; (Is it carried

out in the Masters Cabin or office?)
 whether any non-compliances are reported and, more
importantly, followed up by the flag state
administration by insisting that corrective action is
implemented by the shipowner within a meaningful time
scale.
 It is the responsibility of the flag state to identify
instances of substandard operation which pose a
serious risk to safety of life at sea and the
protection of the marine environment.
 However, frequently, flag state administrations
are not in a position to fulfil their responsibilities
in implementing international rules and
standards either directly or indirectly through
classification societies.
 No attempt has yet been made to standardise the
way in which flag state inspections should be
conducted, although the examination of different
ship registers reveals similarities in their
approaches.
In the absence of flag state inspections, classification
societies, acting on behalf of flag states, have an
important role in monitoring maintenance of minimum
standards of safety at sea.
The societies can have the state‟s enforcement powers
behind them, which could effectively mean much
swifter penalties for non-compliance, for example the
inability of ships to leave port when their certificates
are not in order.
They normally aim to achieve "optimum" standards;
i.e., standards that are cost-effective in ensuring
safety, to meet the demands of the owners, be they in
basic design (for example, the steel thickness criteria
for the hull) or in the operation of ships such as
frequency and extent of surveys.
They are contractually bound to the shipowner
only in the implementation of their rules and
regulations and are only required to survey
those parts of the vessel that they are
requested to look at.
Classification societies cannot board a vessel
without the owner's permission. The ultimate
sanction for non-compliance with the
classification rules is the loss of class, which is
the basis for charter parties and insurance.
The formation of IACS (International Association of
Classification Societies) by the leading societies
can be seen as a major effort to raise standards
and improve co-operation.
For example in order to avoid shopping around by
owners to keep their vessels in class despite the
inability to meet the rules requirements of the
“holding” classification society, efforts are also
made by the individual IACS members, as well as
certain classification societies not members of the
IACS, to improve their image through such
initiatives as the investigation of deficiencies
detected by port state inspections which could be
attributable to class.
Following IACS‟ recently concluded Transfer of
Class Agreement, it has been agreed that the
gaining society accepts the vessels for its
classification only after all overdue surveys,
recommendations or conditions of class
previously issued against the vessel have been
completed as specified by the losing society.

This is a neat solution to the “Lets jump class

and get rid of the issue problem”.
The common perception at present is that a
two-tier market in classification society
services has been created and that the world‟s
leading societies will strengthen their standing
in the industry in the future to the detriment of
their competitors who do not always have the
technical expertise or regulations necessary to
do traditional classification society work.

The role of the classification societies as

external auditors of the ISM Code plays an
important role in this process.