INTER-GLOBAL COLLEGE FOUNDATION, INC.

Brgy. Bocohan, Lucena City

Registration No.16Q13029

COURSE MODULE
(Paper-Based)
STUDENT’S COPY
I. NAME OF PROGRAM Bachelor of Science in Marine Transportation (BSMT)

COURSE CODE
II. COURSE DESCRIPTIVE TITLE /
Maritime Law
CODE
Mar Law

COURSE CREDIT UNIT

III. PRE-REQUISITE / CO-
None
REQUISITE / CREDIT UNIT
4

IV. COURSE DESCRIPTION Maritime Law

High Seas MODULE NUMBER

V. MODULE TITLE/ NUMBER Change of Registry/Ownership
Flag of Registry 4

VI. INCLUSIVE WEEK Week Number 4

Discuss the significant provisions of the SOLAS Convention, Maritime Labor Convention
(MLC 2006), Load Line Convention, United Nations Convention on the Law of the Sea
VII. COURSE OUTCOME
(UNCLOS) and other International agreements and National Legislations, applicable in the
practice of Marine Profession.

A. Learning Outcome: At the end of the modules, the students should be able to:
1. State that a ship may not change its flag during a voyage in High Seas or while in a port of call, save in case of real transfer of ownership or
change of registry.
2. Give the duties of the flag State with respect to ships flying its flag.
3. State that in the event of a collision or of any other incident of navigation no penal or disciplinary proceedings may be instituted except
before the judicial authorities either of the flag State or of the State of which such a person is a national.
4. State that every State must require the master of a ship sailing under its flag, to render assistance to any person found at sea in danger of
being lost, and, after a collision, to render assistance to the other ship, her crew and her passengers and, where possible to inform the other
ship of port of registry and the nearest port at which she will call

B. STCW Competence Addressed by the Course Module:

A-II/1 F3.C6: Monitor compliance with the legislative requirements
A-II/2 F1.C2: Monitor and control compliance with the legislative requirements and measures to ensure safety of life at sea,
security and the protection of the marine environment

C. STCW KUP Addressed by the Course Module:

A-II/1 F3.C6. KUP1: Basic working knowledge of the relevant IMO conventions concerning safety of life at sea.
A-II/2. F3.C2. KUP1: Knowledge of international maritime law embodied in international agreements and conventions.

VIII. MODULE RESOURCES

MINIMUM READING MATERIAL/ONLINE RESOURCES TO BE PROVIDED BY THE FACULTY; IT CAN BE IN PDF /
WORD FILE / INTERNET LINKS / ETC. AND ITS MHEIs DISCRETION BASED ON THEIR RESOURCES / CAPABILITY

A. Flags of Convenience
[https://www.oceanfdn.org/sites/default/files/Gregory_georgetown.pdf]
B. United Nations Convention on Conditions for Registration of Ships 1986
[https://unctad.org/system/files/official-document/tdrsconf23_en.pdf]
 INTER-GLOBAL COLLEGE FOUNDATION, INC.
Brgy. Bocohan, Lucena City
Registration No.16Q13029

Flag of Convenience (FOC)

Flag of convenience (FOC) is a business practice whereby a ship's owners
register a merchant ship in a ship register of a country other than that of the ship's
owners, and the ship flies the civil ensign of that country, called the flag state. The term is
often used pejoratively, and although common, the practice is sometimes regarded as
contentious. Each merchant ship is required by international law to be registered in a
registry created by a country, and a ship is subject to the laws of that country, which are
used also if the ship is involved in a case under admiralty law. A ship's owners may elect
to register a ship in a foreign country which enables it to avoid the regulations of the
owners' country which may, for example, have stricter safety standards. They may also
select a jurisdiction to reduce operating costs, avoiding higher taxes in the owners'
country and bypassing laws that protect the wages and working conditions of mariners.
The term "flag of convenience" has been used since the 1950s. A registry which does not
have a nationality or residency requirement for ship registration is often described as an
open registry. Panama, for example, offers the advantages of easier registration (often
online) and the ability to employ cheaper foreign labour. Furthermore, the foreign
owners pay no income taxes.
The modern practice of ships being registered in a foreign country began in the
1920s in the United States when shipowners seeking to serve alcohol to passengers during
Prohibition registered their ships in Panama. Owners soon began to perceive advantages
in terms of avoiding increased regulations and rising labor costs and continued to register
their ships in Panama even after Prohibition ended. The use of open registries steadily
increased, and in 1968, Liberia grew to surpass the United Kingdom with the world's
largest ship register. As of 2009, more than half of the world's merchant ships were
registered with open registries, and almost 40% of the entire world fleet, in terms of
deadweight tonnage, were registered in Panama, Liberia, and the Marshall Islands. In
2006, up to 20% of high-seas fishing vessels were registered in states they were not
connected to. According to IHS Markit, in March 2017, Panama had 8,052 ships on its
registry, Singapore had 3,574 ships, Liberia had 3,277 ships, the Marshall Islands had 3,244
ships, and Hong Kong had 2,594 ships.

Background
Open registries have been criticised, mainly by trade union organisations based
in developed countries, especially those in the European Union, United States, Japan,
Canada, or the United Kingdom. One criticism is that shipowners who want to hide their
ownership may select a flag-of-convenience jurisdiction which enables them to be
legally anonymous. Some ships with flags of convenience have been found engaging in
crime, offering substandard working conditions, and negatively impacting the
environment, primarily through illegal, unreported and unregulated fishing. Prior to the
implementation of the International Convention on Tonnage Measurement of Ships,
1969, shipowners may have selected a jurisdiction with measurement rules that reduced
the certified gross register tonnage of a ship, to reduce subsequent port of call dock
dues. Such was a consideration when Carnival Cruise Line changed the flag of the RMS
 INTER-GLOBAL COLLEGE FOUNDATION, INC.
Brgy. Bocohan, Lucena City
Registration No.16Q13029

Empress of Canada in 1972 to that of Panama. In 2011, Cunard Line registered all its ships
in Bermuda, which, besides other considerations, enabled its ship captains to marry
couples at sea. Weddings at sea are described as a lucrative market.
As of 2009, thirteen flag states have been found by international shipping
organizations to have substandard regulations. On the other hand, maritime industry
practitioners and seafarers from other countries contend that this is a natural product of
globalization. Supporters of the practice, however, point to economic and regulatory
advantages, and increased freedom in choosing employees from an international
labour pool. Ship owners from developed countries use the practice to be competitive in
a global environment.

Legal context
International law requires that every merchant ship be registered in a country.
The country in which a ship is registered is its flag state, and the flag state gives the ship
the right to fly its civil ensign. A ship operates under the laws of its flag state, and these
laws are used if the ship is involved in an admiralty case. A ship's flag state exercises
regulatory control over the vessel and is required to inspect it regularly, certify the ship's
equipment and crew, and issue safety and pollution prevention documents. The
organization which actually registers the ship is known as its registry. Registries may be
governmental or private agencies.

Reasons for adopting a flag of convenience

The reasons for choosing an open register are varied and include tax
avoidance, the ability to avoid national labor and environmental regulations, and the
ability to hire crews from lower-wage countries. National or closed registries typically
require a ship be owned and constructed by national interests, and at least partially
crewed by its citizens. Conversely, open registries frequently offer on-line registration with
few questions asked. The use of flags of convenience lowers registration and
maintenance costs, which in turn reduces overall transportation costs. The accumulated
advantages can be significant, for example in 1999, 28 of the American company Sea
Land’s fleet of 63 ships were foreign-flagged, saving the company up to US$3.5 million
per ship every year.

Accidents and reform

(The sinking of Amoco Cadiz led to concerted ship inspections by port states)
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Brgy. Bocohan, Lucena City
Registration No.16Q13029

The environmental disaster caused by the 1978 sinking of the MV Amoco Cadiz,
which flew the Liberian flag, spurred the creation of a new type of maritime
enforcement. Resulting from strong political and public outcry over the Amoco Cadiz
sinking, fourteen European nations signed the 1982 Paris Memorandum of Understanding
on Port State Control or Paris MOU. Under port state control, ships in international trade
became subject to inspection by the states they visit. In addition to shipboard living and
working conditions, these inspections cover items concerning the safety of life at sea and
the prevention of pollution by ships. In cases when a port state inspection uncovers
problems with a ship, the port state may take actions including detaining the ship. In
2015, member states of the Paris MOU conducted 17,858 inspections with deficiencies,
which resulted in 595 detained vessels and 11 banned. Member states of the Tokyo
Memorandum of Understanding conducted 17,269 ship inspections in 2015, recording
83,606 deficiencies which resulted in 1,153 detentions.
The principle that there be a genuine link between a ship's owners and its flag
state dates back to 1958, when Article 5(1) of the Geneva Convention on the High Seas
also required that "the state must effectively exercise its jurisdiction and control in
administrative, technical and social matters over ships flying its flag." The principle was
repeated in Article 91 of the 1982 treaty called the United Nations Convention on the
Law of the Sea and often referred to as UNCLOS. In 1986, the United Nations Conference
on Trade and Development attempted to solidify the genuine link concept in the United
Nations Convention on Conditions for Registration of Ships. The Convention for
Registration of Ships would require that a flag state be linked to its ships either by having
an economic stake in the ownership of its ships or by providing mariners to crew the ships.
To come into force, the 1986 treaty requires 40 signatories whose combined tonnage
exceeds 25% of the world total. As of 2017, only 14 countries have signed the treaty.

History
Merchant ships have used false flags as a tactic to evade enemy warships
since antiquity, and examples can be found from as early as the Roman era through to
the Middle Ages. Following the American Revolutionary War, merchantmen flying the
flag of the fledgling United States quickly found it offered little protection against attack
by Barbary pirates – many responded by seeking to transfer their registry back to Great
Britain. The use of false flags was frequently used as a ruse de guerre by the British during
the Napoleonic Wars and the United States during the War of 1812. During the mid-19th
century, slave ships flew various flags to avoid being searched by British anti-slavery
fleets. The Belen Quezada, in August 1919, was the first foreign ship to be re-registered in
the Panamanian registry, and was employed in running illegal alcohol between Canada
and the United States during Prohibition. The modern practice of registering ships in
foreign countries to gain economic advantage originated in the United States in the era
of World War I, though the term "flag of convenience" did not come into use until the
1950s.
 INTER-GLOBAL COLLEGE FOUNDATION, INC.
Brgy. Bocohan, Lucena City
Registration No.16Q13029

(The engineers of the Seamen's Act, from left to right, maritime labor leader Andrew Furuseth, Senator Robert La Follette, and
muckraker Lincoln Steffens, circa 1915)

Between 1915 and 1922, several laws were passed in the United States to
strengthen the United States Merchant Marine and provide safeguards for its mariners.
During this period, U.S.-flagged ships became subject to regular inspections undertaken
by the American Bureau of Shipping. This was also the time of Robert LaFollette's
Seamen's Act of 1915, which has been described as the "Magna Carta of sailors' rights”.
The Seamen's Act regulated mariners' working hours, their payment, and established
baseline requirements for shipboard food. It also reduced penalties for disobedience and
abolished the practice of imprisoning sailors for the offense of desertion. Another aspect
of the Seamen's Act was enforcement of safety standards, with requirements on
lifeboats, the number of qualified able seamen on board, and that officers and seamen
be able to speak the same language. These laws put U.S.-flagged vessels at an
economic disadvantage against countries lacking such safeguards, and ships started to
be re-registered in Panama's open registry from 1919. In addition to sidestepping the
Seamen's Act, Panamanian-flagged ships in this early period paid sailors on the
Japanese wage scale, which was much lower than that of western merchant powers. In
the early phase of World War II, the transfer of American-owned ships to the Panama
registry was sanctioned by the United States government so that they could be used to
deliver materials to Britain without dragging the United States, as a neutral,
unintentionally into war.

TIMELINE
Date Event
1919 Belen Quezada flagged in Panama
1948 ITF FOC Campaign begins
1949 World Peace flagged in Liberia
1969 Liberia is largest registry
1988 Marshall Islands open registry
1999 Panama is largest registry
2009 Panama, Liberia & Marshall Islands account for 40% of world
tonnage
 INTER-GLOBAL COLLEGE FOUNDATION, INC.
Brgy. Bocohan, Lucena City
Registration No.16Q13029

The Liberian open registry, founded in 1948, was the brainchild of Edward
Stettinius, who had been Franklin D. Roosevelt's Secretary of State during World War II.
Stettinius created a corporate structure that included The Liberia Corporation, a joint-
venture with the government of Liberia. The corporation was structured so that 25% of its
revenue would go to the Liberian government, another 10% went to fund social
programs in Liberia, and the remainder returned to Stettinius' corporation. The Liberian
registry was created at a time when Panama's registry was becoming less attractive for
several reasons including its unpopularity with the U.S. labor movement and European
shipping concerns, political unrest in Panama, and increases in its fees and regulations.
On 11 March 1949, Greek shipping magnate Stavros Niarchos registered the first
ship under the Liberian flag, World Peace. When Stettinius died in 1949, ownership of the
registry passed to the International Bank of Washington, led by General George Olmsted.
Within 18 years, Liberia grew to surpass the United Kingdom as the world's largest register.
Due to Liberia's 1989 and 1999 civil wars, its registry eventually fell second to
Panama's flag of convenience, but maritime funds continued to supply 70% of its total
government revenue. After the civil war of 1990, Liberia joined with the Republic of the
Marshall Islands to develop a new maritime and corporate program. The resulting
company, International Registries, was formed as a parent company, and in 1993 was
bought out by its management. After taking over the Liberian government, Americo-
Liberian warlord Charles Taylor signed a new registry contract with the Liberian
International Ship and Corporate Registry, commonly known as LISCR. LISCR was one of
the few legal sources of income for Taylor's regime. Liberia's registry is operated from
Virginia, United States.
As of 2009, the open registries of Panama, Liberia, and Marshall Islands
accounted for almost 40% of the entire world fleet, in terms of deadweight tonnage. That
same year, the top ten flags of convenience registered 55% of the world's deadweight
tonnage, including 61% of bulk carriers and 56% of oil tankers.
To counteract class hopping, in 2009 the IACS established a Transfer of Class
Agreement (TOCA).

Extent of use

Countries listed as having a flag of convenience by the International Transport Workers' Federation
 INTER-GLOBAL COLLEGE FOUNDATION, INC.
Brgy. Bocohan, Lucena City
Registration No.16Q13029

The International Transport Workers' Federation (ITF) maintains a list of registries it

considers to be flags of convenience (FOC) registries. In developing the list, the ITF
considers "ability and willingness of the flag state to enforce international minimum social
standards on its vessels," the "degree of ratification and enforcement of ILO Conventions
and Recommendations," and "safety and environmental record". As of 2021, the list
includes 42 countries.

The top 11 flags of convenience in 2009, accounting for almost 55% of the entire world fleet

As of 2009, Panama, Liberia and the Marshall Islands are the world's three
largest registries in terms of deadweight tonnage (DWT). These three organizations
registered 11,636 ships of 1,000 DWT and above, for a total of 468,405,000 DWT: more
than 39% of the world's shipborne carrying capacity. Panama dominates the scene with
over 8,065 ships accounting for almost 23% of the world's DWT. Of the three, the Marshall
Islands (with 1,265 registered ships) had the greatest rate of DWT increase in 2009,
increasing its tonnage by almost 15%.
The Bahamian flag ranks sixth worldwide, behind the Hong Kong and Greek
registries, but is similar in size to the Marshallese flag of convenience, with about 200 more
ships but a carrying capacity about 6,000,000 DWT lower. Malta, at the ninth position
worldwide, had about 100 more ships than the Bahamas, with a capacity of 50,666,000
DWT, representing 4% of the world fleet with 12% growth that year.
At the eleventh position, Cyprus registered 1,016 ships in 2009, 2.6% of world
tonnage. The remaining top 11 flags of convenience are Antigua and Barbuda (#20),
Bermuda (#22), Saint Vincent and the Grenadines (#26), and the French International
Ship Register (FIS) at number No. 27. Bermuda and the FIS have fewer than 200 ships
apiece, but they are large: the average Bermudan ship is 67,310 DWT and the average
FIS ship is at 42,524 DWT. (By way of reference, the average capacity of ships in the U.S.
and U.K. registers is 1,851 DWT and 9,517 DWT respectively.) The registries of Antigua and
Barbuda and Saint Vincent and the Grenadines both have over 1,000 ships with average
capacity of 10,423 DWT and 7,334 DWT respectively.
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Brgy. Bocohan, Lucena City
Registration No.16Q13029

The remaining flags of convenience listed by the ITF each account for less than
1% of the world's DWT. As of 2008, more than half of the world's merchant ships
(measured by tonnage) are registered under flags of convenience.

Ship Registration
Ship registration is the process by which a ship is documented and given the
nationality of the country to which the ship has been documented. The nationality allows
a ship to travel internationally as it is proof of ownership of the vessel.
International law requires that every ship be registered in a country, called its
flag state. A ship is subject to the law of its flag state. It is usual to say that the ship sails
under the flag of the country of registration.
A ship's flag state exercises regulatory control over the vessel and is required to
inspect it regularly, certify the ship's equipment and crew, and issue safety and pollution
prevention documents. The organization which actually registers the ship is known as its
registry. Registries may be governmental or private agencies. In some cases, such as the
United States' Alternative Compliance Program, the registry can assign a third party to
administer inspections.
A register that is open only to ships of its own nation is known as a traditional or
national register. Registers that are open to foreign-owned ships are known as open
registries and are sometimes called flags of convenience.

History
Ship registration has been done since business on the seas has been important.
Originally meant to control ships carrying cargo in European seaborne countries, it was
used to make sure ships were being built in the local country, with crews predominantly
of the local country. Since then, ship registration has been used to document ships for
ownership. Documentation provides definite evidence of nationality for international
purposes and provides financing opportunities with the availability of preferred
mortgages on documented vessels.

Requirements for registration

Vessels that operate internationally or cross international borders are required
to be registered. Some jurisdictions also require vessels that only operate in territorial
waters to register on their national register, and some forbid foreign-flagged vessels from
trading between ports within the country (a practice known as cabotage). The country
of registration is a ship's flag state and determines its nationality as well as which country's
laws govern its operation and the behavior of its crew.
Each registry has its own rules as to the types of vessels that it will accept for
registration. The Liberian Registry, for example, registers seagoing vessels of more than
500 net tons that conduct foreign trade. Vessels over the age of 20 require a waiver as
well as the vessel's classification society being willing to issue statutory certificates to the
vessel. Vessels 15 years or older must have a Status Report of the vessel's Special Survey
to be reviewed by Marine Safety. Registries charge a registration fee.
 INTER-GLOBAL COLLEGE FOUNDATION, INC.
Brgy. Bocohan, Lucena City
Registration No.16Q13029

Link to flag state

There must be a "genuine link" between a vessel and its flag state. Article 5(1) of
the Geneva Convention on the High Seas of 1958, which came into effect in 1962,
requires that "the state must effectively exercise its jurisdiction and control in
administrative, technical and social matters over ships flying its flag." There are 63 states
party to that Convention. The principle was repeated in Article 91 of the United Nations
Convention on the Law of the Sea of 1982 (UNCLOS), which came into effect in
1994. That Convention has 167 parties.
In 1986, the United Nations Conference on Trade and Development attempted
to solidify the genuine link concept in the United Nations Convention on Conditions for
Registration of Ships. The Convention on Conditions for Registration of Ships would require
that a flag state be linked to its ships either by having an economic stake in the
ownership of its ships or by providing mariners to crew the ships. To come into force, the
1986 treaty requires 40 signatories whose combined tonnage exceeds 25% of the world
total. To date, only 14 countries have signed the treaty.
National or closed registries typically require that a ship be owned by national
interests, and at least partially crewed by its citizens. Open registries do not have such
requirements; some offer on-line registration, and one guaranteed completion in less
than a day.

Unflagged vessels
Ships operated illegally, such as by pirates, or narco-submarines, are not
normally registered by the operators (although a registered ship may be captured or
used covertly for illegal purposes).

Legal framework
A core principle in public international law is the freedom of the high seas, as
laid out in article 87 of UNCLOS. To balance this freedom with the need to avoid disorder
and misuse, international law has provided a framework for the regulation of shipping.
This framework rests upon two core rules:
1. each State shall fix the conditions for the grant of its nationality to ships,
for the registration of ships in its territory, and for the right to fly its flag (article 91 of
UNCLOS); and
2. the State must effectively exercise its jurisdiction and control in
administrative, technical and social matters over ships flying its flag (article 94 of
UNCLOS).
Article 91(1) of UNCLOS acknowledges the right of every State to "fix the
conditions for the grant of nationality and for the right to fly its flag." The same article
provides that there "must exist a genuine link between the State and the ship." The
purpose of the "genuine link" requirement in UNCLOS is to secure more effective
implementation of the duties of the flag State under article 94 of UNCLOS.
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Brgy. Bocohan, Lucena City
Registration No.16Q13029

There is currently no binding international framework to regulate the registration

process itself. The 1986 UN Convention on Conditions for Registration of Ships establishes
international standards for the registration of vessels in a national registry, including
references to the genuine link, ownership, management, registration, accountability and
the role of the flag State. However, the Convention has not entered into force.

Ship registration
Registration of a ship plays an imperative function towards safety and security
of the maritime transport and significantly contributes towards the protection and
preservation of the marine environment.
The general mechanism for establishing a ship's nationality and for regulating
shipping is registration of the ship in a particular State. By linking a ship to a State, the
system of ship registration indicates that that State has the right to protect that ship in
international law.

Open registry/closed registry

Each country sets its own laws and regulations on the registration of ships. Some
countries only register vessels with ties to the country through ownership or crewing
("closed registries"). Other countries allow foreign-owned or controlled vessels to use their
flag through an "open registry." Others just choose not to allow the use of their flag for
international trade at all.
Since open registries are now widely used around the world, IMO has focused
on a strategic approach to ensuring that flag States adequately assume jurisdiction and
control over shipowners and ships that are flying their flags in accordance with article 94
of UNCLOS.

Fraudulent registration and fraudulent registries of ships

Fraudulent registration and related unlawful practices include the registration
of vessels without the knowledge or approval of the relevant national maritime
administration. Such fraudulent registrations are accomplished through a combination of
tactics that may include the following:
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Registration No.16Q13029

where a vessel, formerly entitled to fly the

flag of a given State, continues to fly that
Terminated registry flag after the vessel's registration with the
flag State has expired or has otherwise been
terminated.
the submission of fraudulent documentation
to IMO, without the knowledge of the
cognizant flag State authority, in order to
obtain IMO documentation and ship
Fraudulent representations to identification numbers. Fraudulent
IMO registration companies may operate with
authentic looking websites and claim to be
the official registration offices authorized to
grant to ships the nationality of the State
concerned.
this tactic involves the intentional
Broadcasting falsified
manipulation of AIS data to materially alter
Automatic Identification
the ship's identifying information or to reflect
System (AIS) data
the AIS data of an entirely different vessel.

Legal Committee work on fraudulent registration of ships and fraudulent operation of

registries
The problem of fraudulent registration of ships and fraudulent operation of registries
was first raised at IMO by the Democratic Republic of the Congo (DRC) in 2017 during the
104th session of the Legal Committee. The DRC reported that approximately 73 vessels had
been fraudulently using its flag and that illegal fishing was being carried out in its waters to its
economic detriment.
Fraudulent registration of ships prevents lawful registries from exercising effective
jurisdiction and control over vessels at sea, deprives lawful registries from obtaining legitimate
revenue while unjustly enriching fraudulent actors and exacts unjustified reputational harms
on States when vessels engage in illicit activities under the cloak of a fraudulent registration.
Furthermore, fraudulently registered ships may not be in compliance with safety and
environmental protection standards, endangering the vessels' crew and posing an increased
threat of damage to the marine environment.
In 2018, the Legal Committee recognized the need for a multi-pronged approach
and that the solution would involve making accurate information about the status of a
nation's registry widely, quickly and accurately available to shipowners and insurers, as well as
public officials. Following that, the Secretariat reported on several cases related to the
fraudulent use of a country's flag, and/or to the fraudulent operation of a registry without the
purported flag country's permission or knowledge. These cases concerned, in addition to
DRC, the Federated States of Micronesia, Fiji, the Maldives, Nauru, Samoa, the United
Republic of Tanzania and Vanuatu.
The Secretariat has been studying the cases received reporting on fraudulent use
of a flag or of a registry and collaborating with IHS Markit to improve the display in GISIS of
information on a ship which was confirmed by an Administration as not legally registered
under that Administration's flag.