offshore solutions since 1988

Open Vs Closed Registry

The market has always been the determining factor with respect to which flag a ship fly. All decisions are taken in order to achieve the common goal of minimising costs and maximising revenue. Therefore, it is not possible for a shipowner to choose a flag without considering the fiscal advantages. It is believed that taking part in competition in the market has great importance for a shipowner when considering open registry or “Flag of Convenience” (FOC).

The following 27 countries have been declared FOCs by the ITF's Fair Practices Committee (a joint committee of ITF seafarers' and dockers' unions) which runs the ITF campaign against FOCs: Antigua and Barbuda, Aruba (Netherlands), Bahamas, Barbados, Belize, Bermuda (UK), Burma, Cambodia, Canary Islands (Spain), Cayman Islands (UK), Cook Islands (New Zealand), Cyprus, German International Ship Register (GIS), Gibraltar (UK), Honduras, Lebanon, Liberia, Luxembourg, Malta, Marshall Islands (USA), Mauritius, Netherlands Antilles, Panama, St. Vincent, Sri Lanka, Tuvalu, Vanuatu.

The history of flags of convenience dates back to the Roman Empire, but it was not until after World War II that the desire and the need to be competitive in the world shipping markets gave rise to the spectacular growth in the use of such flags.

The growth in open registry almost doubled over the past years and today accounts for more than 54% of world shipping. This growth has been to the dislike of countries with "closed registry" who have been unwilling to change.

After the transfer of American ships to the Panamanian and Honduras flags organised labour opposition to flags of convenience began in the 1930s. In 1957 it also became clear to the business leaders of the advanced maritime states that if no steps were taken to control the situation, the flags of convenience institution would cause serious problems. In 1948 the ITF adopted a resolution in which it threatened to boycott ships transferred to the Panamanian flag. In 1958 the ITF Congress decided to start a worldwide boycott of open registry ships. The aim of the campaign was to drive the ships back to their national flags. Shipowners who operate their vessels under the flags of convenience are supposed to employ their crews under the ITF Collective Agreement.

More than 50 years the ITF has co-ordinated an international campaign. It, has forced some owners to sign collective agreements but has not managed to drive the ships back to their national flags. Ships still have multinational crew, owned by a multinational company, registered in one country, mortgaged in another and managed from a third country. So it is possible to say that we have a globalised shipping sector.

On the basis of the history of flags of convenience and present practice, everybody involved in shipping practice knows that the flags of convenience system will continue to exist. It is time for the opponents of this system to find a different solution rather than trying to get rid of the system.

Today some of these nations with closed registries find that change is essential or else they will have only coastal ships to regulate their registries.




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