Flags of Convenience

To avoid responsibility and exploit loopholes in international legislation, the shipping industry has recourse to “flag states”, countries where registering ships is easier than elsewhere. The FOC phenomenon has created a system whereby states compete for ship registrations with policies that promise lower costs, by keeping taxes, fees, and regulatory burdens light. The entire marketplace for FOC open-registries, is in effect a bidding game for least accountability, least responsibility.

Even if the states responsible for the registries have ratified international conventions, they often lack the resources or the will to enforce them effectively. It is well known that many flag state administrations are unwilling or unable to fulfil their responsibilities. According to the International Transport Workers’ Federation (ITF), which has had a campaign against the flags of convenience (FOCs) since 1948, a vessel is considered as sailing under a flag of convenience when “beneficial ownership and control of a vessel is found to lie elsewhere than in the country of the flag the vessel is flying”.

Flags of convenience lists are used by port authorities to control what ships are allowed to enter and leave their territorial waters. The Paris Memorandum of Understanding establishes a black, a grey and a white list of flags.

While registering a ship in a flag state such as Panama or St Kitts-Nevis is legal, it is a blatant attempt by ship owners to avoid responsibility for their ships, including end-of-life ships. Each year, about 800 ocean ships are sent for breaking to the infamous shipbreaking beaches of South Asia. In the European Union’s end-of-life fleet alone, flags of convenience are used for almost two ships out of three. This creates a worrying situation where more and more ships follow the path of least regulatory resistance to end their life in South Asia, where they create a heavy pollution and may cause severe injuries among shipbreaking workers, even deaths.

This situation could worsen if the IMO’s 2009 Hong Kong Convention, which has not been ratified by any country, enters into force. Instead of putting the responsibility on the exporting state, as the Basel Convention does, to prove the ship has been pre-cleaned of its toxic waste, the Hong Kong Convention puts this responsibility onto the flag state. The country where the ship is registered will need to produce a certificate, an administrative process already in place today and which has already proven its uselessness as ships carrying asbestos in their structure were, however, allowed to enter Bangladeshi and Indian waters to be broken.

By externalising what is deemed to be a very complex operation and simplifying the procedure to a minimum, the shipping industry is running away from its responsibilities and dumping the burden of toxic waste heritage onto the poorest communities of South Asia and the environment.

Platform’s Report “What a difference a flag makes” April 2015
2014 list of European ships sent to South Asia
2013 list of European ships sent to South Asia
2012 list of European ships sent to South Asia
2011 list of European ships sent to South Asia
2010 list of European ships sent to South Asia
List of flags of convenience of the International Transport Workers’ Federation (ITF)
Paris MoU list