Flags of Convenience

Flags of Convenience are subjected to a great deal of criticism from many organisations inside and outside the shipping industry. In some cases the criticism is justified but for every sub-standard vessel trading under a flag of convenience there is another just as bad flying a national flag. One of the most common accusations levied against FOC countries is that they allow their ships to flout international regulations. Perhaps it is worth reflecting upon the fact that every IMO resolution and convention requires the support of a certain number of nations representing a certain percentage of the world fleet for that convention to become internationally binding. Without the support of Panama, Liberia, Cyprus and Malta – all FOC countries – none of those conventions would ever become law, such is the percentage of the world fleet that is flagged out. A number of traditional maritime nations have created second registers as a means of ‘competing’ with FOC countries, e.g. Norway, while in other cases the owners have found a national route that offers similar advantages, e.g. Isle of Man. In such cases the advantage to the owner is related to taxation or crew nationality, wages and social security costs and not to any relaxation of safety standards or crew size. Many shipowners operate from one or more of the traditional or regional centres that maintain an important presence in the international dry-cargo market. Others operate their enterprises from these or from locations in their own country, although (in order to avoid taxes levied against ship-earnings) often under an ‘agency agreement‘ with the ‘off-shore’ owning corporation officially located, perhaps, in a more exotic and ‘convenient’ part of the world.