AN ASSESSMENT OF THE PRACTICE OF FLAG OF CONVENIENCE IN INTERNATIONAL MARITIME LAW: CASE OF AFRICA

ABSTRACT

Every state has national symbols that, when viewed, may be identified as belonging to that state. The Flag is one of these state emblems. The shipping sector is one of the most competitive and international, but it is also one of the most regulated. As a result, ship owners can select where to register their vessel based on cost, convenience, and international and domestic restrictions. This independence is occasionally exploited, and ship owners end up in the hands of flag nations incapable of enforcing international and domestic legislation. This study therefore seeks to determine the extent to which the rises in the practice of flag of convenience under international maritime law is a threat to Africa’s Maritime safety and security. This research is underpinned by the Human Security theory, Social contract theory and Natural law theory. In this light, we adopted a methodology which was doctrinal. Primary sources of information were explored as well as secondary source. The findings revealed that Profit maximization is more often than not, the guiding rule for most firms opting for flags of convenience. Under international law, ships are regarded as part of the territory of the flag state. Coordination and goodwill amongst the various actors in the maritime sector be it ship owners, cargo owners, classification societies, insurers, flag States etc is necessary.

CHAPTER ONE

GENERAL INTRODUCTION

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. Obviously the reasons for registering a ship in a flag of convenience country vary from one owner to another. Today the primary reason for flags of convenience is to obtain cost economies and stay competitive in the industry. In a maritime company all decisions are taken in order to achieve the common goal of minimising private costs and maximising private revenue. Therefore, it is not possible for a ship-owner to choose a flag without considering the fiscal advantages

This chapter is the introductory chapter. It treats the background to the study, research problems, research questions, objectives and methodology. It equally attempts an exploration of literature on impact of covid-19 on international trade, treats the theoretical framework and goes ahead to justify the importance of the subject as well as the significance. The scope of the study, limitation, definition of key terms and synopsis of chapter are also treated

1.1 Background to the Study

Every state has national symbols^[1] which once seen can be attributed to that particular state. One of such state symbols   is the Flag. Just like Cars, trains and aircraft which are required to be registered by the owner in a local jurisdiction, so too is a ship required to be registered. Ship registration is thus synonymous to vehicle registration. Under maritime law, flags are a symbol of nationality and thus they are usually important and serve as a deceive factor to determine the relationship between a ship and a state^[2].Thus the flag on a vessel has principally two main functions: Firstly as a symbol of nationality of the ship which consequently would design the domestic laws governing that vessel and the Flag also identifies the location of those responsible for the vessel^[3].Shipping is an essential facilitator of world trade, however, its unique history and characteristics have enabled the industry to avoid close scrutiny and regulation. Economic interest in shipping has at times been able to override attempts to strengthen the regulatory regime, with the result that in some areas the industry is self-regulatory and inclined to resist mandatory measures.

It is believed that taking part in competition in the market has great importance for a ship-owner when considering open registry. 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.

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. It is well known that this agreement covers minimum wages, holidays, hours and special conditions and also contributions by the owner to the ITF’s Seafarers’ International Assistance, Welfare and Protection Fund. But the question, which needs to be answered, is that when this agreement is signed does it drive back the ship back to its national flag? The answer is no, it merely allows, in other words licenses, the owner to carry on without any union action. Within more than 50 years the ITF campaign has co-ordinated an international campaign 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 globalized shipping sector which is based on private enterprise and that within this sector there are not many who are really dedicated to the safety of the ship, crew or the protection of the marine environment

Maritime law also called admiralty law is a body of legal rules that governs ships and shipping .Maritime law is sometimes referred to as “law of the sea” there however exist a sharp divergence as the former involves private shipping law while the latter is the maritime segment of public international law^[4].Maritime laws developed from ancient practices of maritime commerce and from the decisions of maritime traditional courts.

The phrase “flag of convenience” is a business practice used to describe the process of registering a commercial ship in a county other that of the ship’s owner and the ship flies the civil ensign of that county. A country that allows a state to fly its flag is known as the flag state as a result of the fact that it indicates the nationality of the ship^[5].Thus once a ship is documented and registered, it takes the nationality of that flag, regardless of its owner or where it originated. A ship with no particular nationality is regarded as a stateless ship. It enjoys no protection at the high sea and is usually denied access to foreign ports. In today’s world, a stateless ship suffers more divesting consequences as it is often regarded as a criminal’s ship as a result of the fact that the high sea is for all of mankind^[6].The ever increasing number of flag of convenience practices in recent times can be attributed to loopholes in maritime jurisdictions which are in favor of flag of convenience and unethical ship owners.

In line with the fact that each merchant ship under international maritime law is expected to be registered in a particular jurisdiction, merchants have often relied on the doctrine of flag of convenience by using false flags as a technique to evade enemy warship. The notion of flag of convenience has undergone evolution over time. It can also be referred to as open registry or international registry which is the process of allowing a foreign owned ship to fly a national flag for genuine reasons, amongst which may include: to obtain business and economic opportunities in shipping operations. Opponents to the flag of convenience doctrine have commonly referred to it as a refuge center for maritime criminals^[7].

As earlier stated, flying of a flag is visual evidence of a ships nationality. In line with the 1958 Geneva Convention on High Sea, a ship would have the nationality of a state whose flag they are entitled to fly. The use of flag of convenience is generally traced back to the use of Spanish flag by English merchants, in order to avoid Spanish monopoly restrictions on trade with West Indies. In the 17^thcentury, English fishermen off the coast of the newfound land adopted the French flag in order to avoid fishing restrictions. A similar use of Norwegian flags where adopted by British fisher men in the 19^th century^[8].

Wide spread use of flag of convenience was prominent in the 1920sas a result of the decision of certain state to create open entries wherein ships were not required to have onerous ties to a state in order to register. Open entries are generally characterized as those that do not require citizenship of ship owners, minimal taxes, allow ships to be worked by non-nationals, and have neither the will nor capability to impose domestic or international regulations on registered ships. The first state to create such an entry was panama followed shortly by Honduras and later Libya. The worsening political situation in Europe in the 1930s provided considerable impetus to the flag of convenience. The principle of flag of convenience continued to gain stem after the Second World War and its waves and tentacles have continuously evolved till present date.^[9]

Modern practice of flag of convenience began in the 1920s in the United States of America, when ship owners who intended to serve alcohol to passengers seeking to serve alcohol to passengers during period of prohibitions registered their ship in panama. The use of open registries steadily increased and in 1968 Liberia an African state grow to surpass the united Kingdom with the world’s largest ship register^[10].The practice of the concept of flag of convenience has often been termed to be directly linked to maritime safety and security.

The term maritime safety and security are closely related and are sometimes used interchangeably although Maritime security is of the largest differences exist between the two buzzwords of international relations. It is a term that draws attention to new challenges and rallies support for tackling these challenges. It is usually centered on threats that prevail in the maritime domain. They refer to threats such as maritime interstate disputes, maritime terrorism, piracy, trafficking of narcotics, people and illicit goods, arms, illegal fishing just to name a few. Thus maritime security is seen as the absence of the above threats^[11].This approach in defining maritime security has been criticized since it neither priorities issues nor provide a clue of how this issues are interlinked and more or less creates a puzzle of which threat should be included.

The concept of maritime safety addresses the safety of ships and maritime installations, with the primary propose of protecting maritime professionals and the maritime environment as a whole. Maritime safety in the first place implies the regulation of the construction of vessels and maritime installations, the regular control of their safety procedures, as well as the education of maritime professionals in complying with regulations. The assurance of maritime safety is closely linked to the work of the international maritime organization and its maritime safety committee^[12] which as the core international body for developing rules and regulations.

1.2 Statement of the Problem

The shipping industry remains one of the most competitive and globalized industries, yet an undeniable fact is that it remains one of the most regulated industries too. For this reason, ship owners have the latitude to choose where to register their vessel, based on cost, convenience, international and domestic regulations that would govern their operations^[13].This freedom is however sometimes abused and somehow ship owners end up in the hands of flag states that are not capable to enforce international and domestic legislation that would govern their activity.

The rise in flag of convenience practice in recent years has been underpinned partly to the loopholes in Maritimes jurisdictions which are in favor of the practice of flag of convenience. Through these loopholes under flag of convenience, owners of ships can purposely sail substandard and ungoverned ships, especially on the high sea where an individual state jurisdiction is limited. Maritime safety and security does remains problematic as a result of the escalation of flag of convenience practice particularly in Africa. It is therefore a preoccupation of the researcher to examine the concept of the practice of flag of convenience in Africa and its legal implications on maritime safety and Security.

1.3 Research Questions

1.3.1 Main Research Question

In view of these problems, some critical questions readily come to mind.

• To what extent is the rise in the practice of flag of convenience under international maritime law a threat to Africa’s Maritime safety and security?

1.3.2 Specific Research Questions

• What is the Nature of Flag of convenience, its evolution and current trend in Africa?

• How does the international community appraise the phenomenon?

• To what extent is the rise in practice of flag of convenience in Africa a threat to maritime safety and security and what has been Africa’s response to the practice?

• What policy recommendations can be made to problems identified?

1.4 Research Objectives

1.4.1 General Research Objective

• The main goal of this research is to determine the extent to which the rises in the practice of flag of convenience under international maritime law is a threat to Africa’s Maritime safety and security.

1.4.2 Specific Research Objectives

• To assess the Nature of Flag of convenience, its evolution and current trend in Africa.
• To assess how the international community has appraised the phenomenon of flag of convenience.
• To assess the extent to which the rise in practice of flag of convenience in international maritime law is a threat to Maritime safety and security in Africa and Africa’s response to the practice.
• To provide policy recommendations to problems identified.

LAW  PROJECT TOPICS WITH MATERIALS