Every ship is registered by a country known as the Flag State. Ships are regulated both by that Registered Country (Flag State) and Maritime Countries’ Ports ships call or the waters they traverse.
Some Flag States, such as the United States, require some national connection between the ship’s owner and the Country of Registration (Flag State).
Flag States such as Panama, Liberia and the Marshall Islands register most of the world’s commercial ship. Panama, Liberia and the Marshall Islands have few requirements for a national connection and so are referred to as Open Registries or sometimes as Flags of convenience (FOC).
Ship Classification Societies are private organizations that regulate and inspect ships of Flag States. Ship Classification Societies grew up out of a need identified by ship insurers to understand ship condition. Country where a ship is registered (Flag State) provides a legal framework for ship ownership and operation.
Flag State’s law governs all basic aspects of ship regulation such as manning requirements, equipment requirements, safety and environmental standards, mortgage recordation and enforcement of ship liens.
Many Flag State mortgage requirements are intrinsic to the operation of a ship registry and are designed to provide a fulsome and predictable set of requirements that are friendly to ship owners and lenders to encourage ship owners to register in that country.
Ship Registry Fees are a significant source of government income for some maritime nations.
Other Flag State Requirements stem from international conventions published by the International Maritime Organization (IMO). International conventions are designed to promote safety at sea, the protection of crew members, limiting environmental harm. International conventions are adopted by Flag States and then govern ship registered by those countries.
For national security concerns, United States is looking for national connection and impose requirement that some or all of the ship’s seafarers must be citizens of Registered Country (Flag State).
Ship safety, environment and ship security, stem from the laws of countries with which ships trade, commonly known as Port State Control (PSC). Port State Control (PSC) in the United States often impose requirements above those required by applicable international conventions. Ship owners must be familiar with the laws of Registered Country (Flag State) and also the laws of port states that are called.