While there is no generally agreed definition, ‘flag of convenience' or ‘open registry' States refer, in essence, to States that permit foreign shipowners, having very little or virtually no real connection with those States, to register their ships under the flags of those States. The flag of convenience States allow shipowners to evade national taxation and to avoid the qualifications required of the crews of their ships. In so doing, flag of convenience States give shipowners an opportunity to reduce crew costs by employing inexpensive labour, while these States receive a registry fee and an annual fee. As one of the few variables in shipping costs is crew costs, a highly competitive market within the international shipping industry prompts shipowners to resort to open registry States.In relation to this, attention must also be drawn to a mechanism of ‘second' or ‘international' registries that allow for the use of the national flag, albeit under conditions which are different from those applicable for the first national registry. Examples include the Norwegian International Ship Register (NIS), the Danish International Register of Shipping (DIS) and the French International Register (RIF). The NIS and the RIF cater to some foreign controlled tonnage, while the DIS is almost only used by Danish-controlled ships. The ten largest open and international registry States that cater almost exclusively to foreign controlled ships are: Panama, Liberia, Bahamas, Marshall Islands, Malta, Cyprus, Isle of Man, Antigua and Barbuda, Bermuda, and Saint Vincent and the Grenadines. Even though non-compliance with relevant rules is by no means peculiar to flags of convenience, there is rightly the concern that open registry States do not commit themselves to effectively enforce the observance of relevant rules and standards by vessels flying their flag with regard to, inter alia, safety of navigation, labour conditions of the crew, the regulation of fisheries and marine pollution, since strict law enforcement will have a negative effect on the economic policy of attracting ships to register. Illegal fishing by the flags of convenience is also a matter of pressing concern. In 1986, the UN Registration Convention was adopted under the auspices of the UN Conference on Trade and Development (UNCTAD) with a view to tightening a genuine link between the flag State and the ships flying its flag. The UN Registration Convention elaborates several conditions with which the flag State shall comply. In particular, ownership of ships, manning of ships, and the management of ships and ship-owning companies constitute key elements of the tightening of a genuine link between the flag State and the ships flying its flag. However, this Convention has not entered into force. Furthermore, it appears to be questionable whether the flag of convenience States will ratify this Convention.The problem of flags of convenience seems, broadly, to derive from international competition in the shipping and fishing industry, in which case, it is debatable whether the tightening of the requirement of a genuine link would provide an effective solution. A further issue involves legal consequences arising from the absence…
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