Know the Ropes When Flagging Your Vessel: A C OMPARISON OF T HREE OF THE W ORLD ’ S D U J OUR V ESSEL R EGISTRIES Heather C. Devine and Stephanie S. Penninger* by not requiring the vessel owners, operators, and crew to have the same nationality as the country where the ship is registered or the disclosure of ownership information. 1 Today, “flag of convenience” refers to vessel registration in a country with an “open registry” for predominantly I. Introduction: Choosing a vessel registry in the world, reaching economic reasons, including: little to no 100 million gross tons in February Flag – More Than a Matter local taxes on vessel income, acceptance 2014. 3 Headquartered in Reston, Va., of Convenience of foreign owners and crew, increases the International Registries, Inc. and in vessel market value, easy currency Advising a client of the appropriate its affiliates (“IRI”), is the world’s conversion, allowing vessel repairs flag state for his or her vessel is a oldest and one of the most experienced abroad, lower operating costs due to challenging retainer, requiring privately administered Maritime and lower wages (due to the ability of hiring consideration of almost every Corporate Registry provider; it operates commercial issue from vessel ownership, non-union employees), and more lenient 26 full-service offices in major shipping labor and safety standards, obtaining labor and manning issues, and even the and financial centers around the world, reputation of the flag state. The only vessel tonnage more easily, and avoiding and provides worldwide, around-the- Coast Guard regulations. 2 certainty is that a vessel must sail under clock duty officer system and real time a flag: United Nations Convention on With the increased popularity in support to vessels flying its flag. 4 the Law of the Sea (UNCLOGS) Article open registries for vessel registry, it is 91 provides: 1. International Treatment important to understand the advantages Ships have the nationality of and disadvantages of the different The RMI maintains a permanent available registries and the factors to the State whose flag they are representative and active delegation entitled to fly. … [Moreover] consider when selecting a particular at the IMO. 5 It is included on the registry. Choosing where a vessel should ships shall sail under the flag White Lists of both the Paris and of one State only and … shall be “flagged” is a complex process that Tokyo Memorandums of Understanding be subject to its exclusive requires consideration of a multitude (“MoUs”), and has also maintained jurisdiction on the high seas. of factors. This article considers some Qualship 21 status with the U.S. of the key factors in the context of the Coast Guard for an unprecedented When considering which flag three of the most popular flag states: 10 consecutive years. 6 Qualship 21 is state to choose, one encounters the Republic of Marshall Islands (RMI), an initiative that was implemented several different registration regimes: Mongolia and Panama. traditional, open, and a hybrid of by the Coast Guard to identify high- quality ships, and provide incentives the two. While traditional registries A. Taking the Right Tack – Flying to encourage quality operations. 7 Only usually require the vessel’s owner or the Marshall Islands Flag approximately 10 percent of the foreign- operator and a certain percentage of the crew to be citizens of the registration The RMI Registry, governed by flagged vessels that call in the U.S. qualify state, open registries typically impose the RMI Maritime Act of 1990 (“RMI for this initiative and certification, more lenient registration requirements Maritime Act”), is the third largest which focuses predominantly on the vessel’s Port State Control (“PSC”) * Gowling Lafleur Henderson LLP (Hamilton, Ontario, Canada) and Benesch, Friedlander, records and history 8 ensuring the vessel Coplan & Aronoff LLP (Indianapolis, Indiana). We gratefully acknowledge Summer Associates, Sarah Wouters and Brittany Shaw, for their contributions to the drafting of this article. 44 TTL February 2015, Vol. 16, No. 4
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