Tackle 'Flags of Convenience' and protect domestic shipping

Morning Star Article by Mark Dickinson

Flags of Convenience (FOCs) are a legal aberration and a stain on the shipping industry. They provide shipowners with the means of avoiding effective control by the countries of ownership, mostly from the global north, and the enforcement of strict rules and regulations that protect seafarers. They have become a powerful vehicle for social dumping by allowing shipowners to exploit weaker legislation and lack of enforcement meaning lower wages, longer tours of duty and hours of work, and unsafe working conditions for seafarers. Low or no taxes are also a key motivating factor behind a shipowner's decision to use FOC's many of whom are considered tax havens.

Seventy-five years ago, the term 'Flags of Convenience' came into existence when the International Transport Workers' Federation (ITF) began its campaign against shipowners registering their vessels in countries other than the country of ownership. This practice was particularly prevalent in the post second world war period when US shipowners began registering their vessels in Panama, avoiding US labour and tax laws. By 1967 the West African country of Liberia had surpassed the UK with the largest registered fleet in the World. Since then, FOCs have been on a steady upward trajectory becoming commonplace within the global maritime industry.

Liberia, Panama and the Marshall Islands, three countries with a combined population of less than ten million people 'represent' nearly half of the world's fleet of merchant ships. Other FOC countries include the Bahamas, Bermuda, and Cyprus – the flags favoured by P&O Ferries. FOCs now represent the dominant form of ship registration.

The COVID-19 pandemic exposed significant frailties across many areas of our economy and shipping was no different. As countries entered lockdowns to stop the spread of the virus, hundreds of thousands of seafarers were left stranded at sea. They were denied repatriation to their homes, many were denied access to shoreside medical support, while deceased seafarers were kept in ships’ fridges alongside the crews’ food as authorities denied repatriation for burial.

International Conventions proscribing fundamental rights of seafarers, such as the Maritime Labour Convention, were simply ignored. FOC states with ultimate responsibility for enforcing and guaranteeing these fundamental rights were nowhere to be found – powerless to do anything. Lacking the means to exercise effective control over vessels on their ship registers, ignored by the major port states who locked out shipping.

Seafarers, key workers - critical to securing global supply chains, were left behind. The global regulatory system was shown to be built upon foundations of quicksand and undermined by the existence of the flag of convenience system.

Nautilus believes there must be a review of global ship registration practices. This review should consider how to enforce Article 91 (Nationality of Ships) of the United Nations Convention on the Law of the Sea (UNCLOS) that states there shall be a 'genuine link' between the state of registration and vessels on the ship register. 

Enforcing Article 91 of UNCLOS is not enough. Domestically the UK should enact cabotage laws to build upon existing laws extending the National Minimum Wage legislation to vessels trading wholly or mainly in UK waters.

Cabotage has been defined as 'the system of reserving a nation's domestic maritime commerce for its own citizens to ensure the retention of skilled workers and decent jobs for the future of the industry'. An estimated 80% of the world's maritime states have some form of cabotage, the UK being an outlier. In Norway, the government has introduced a bill to ensure 'Norwegian wages and working conditions in Norwegian waters' meaning seafarers, irrespective of their country of origin or the flag of the vessel they work on, will benefit from the same safety regulations, and be paid the same as Norwegian seafarers when in Norwegian waters.   

To grow the domestic shipping industry, grow the UK flag and ensure good employment for UK maritime professionals, underpinned by collective bargaining agreements and fair pay agreements for all who work here, the UK government should follow the lead of other countries who have understood the strategic importance of supporting their domestic maritime industries.

Without robust legislative efforts in support of domestic shipping, opportunities for training and employment of UK resident seafarers will continue to be undermined by shipowners based in the UK continuing to utilise Flags of Convenience. These efforts must also extend to visa and immigration policies that support and seek to grow the domestic workforce, especially when working in territorial waters.

The continued proliferation of FOCs has heralded the rise of 'social dumping' and fuelled a race to the bottom in terms and conditions for seafarers. The most blatant example of this was P&O Ferries sacking of 786 maritime professionals in March 2022 on vessels flying flags of convenience with replacement crews being exploited.

It is often said that those who do not learn the lessons of history are doomed to repeat it, and the lesson from the pandemic is clear: the global maritime industry must be regulated; never again can the rights of seafarers be collateral damage in the fight against a global pandemic. We must end the Flag of Convenience system and enact laws protecting our domestic maritime industry and our maritime professionals.

We congratulate the ITF for its 75-year war on FOCs and pledge our continued support to them in the fight for justice for all seafarers!