Flag of Convenience

Flag of convenience — also termed an open registry — describes the practice of registering a vessel in a state whose nationality the shipowner does not share, principally to benefit from lower taxation, reduced crewing requirements, or less stringent regulatory enforcement. Liberia, Panama, the Marshall Islands, and the Bahamas account for a large share of the world's open-registry tonnage. The practice is legal under international law; UNCLOS Article 91 grants states the right to fix the conditions for the grant of their nationality to ships. For a seafarer, the flag state is the authority responsible for ensuring the vessel complies with SOLAS, MARPOL, and STCW. An open-registry flag that lacks the administrative capacity to conduct rigorous surveys may result in a vessel with outdated equipment, falsified certificates, or crew who lack genuine qualifications. Several open registries have been placed on the Paris MoU black list for consistently poor performance. Flag of convenience vessels are subject to the same port state control inspections as any other foreign-flagged ship. The practice has been criticised by the ITF (International Transport Workers' Federation) and other labour organisations for enabling suppression of crew wages and welfare standards. MLC 2006 was partly designed to extend minimum labour protections regardless of flag, making the welfare consequences of open registration more difficult to avoid.