The Flag State plays a critical role with regard to the safety of life and property at sea and the protection of the marine environment, and has the overall responsibility of all ships flying its flag.
A Flag State’s responsibilities include:
- Ratifying and implementing international conventions
- Providing sufficient infrastructure
- Implementing the requirements of the ISM and ISPS Codes
- Complying with the STCW 1995 Convention
- Recognizing and endorsing certificates of competency of foreign officers
- Approving safe manning levels for ships
- Enforcing minimum seafarers’ rest hours
- Conducting casualty investigations
- Conducting self-assessment and submitting the findings to IMO
- Attending IMO committee meetings
- Reporting mandatory information to IMO and ILO
- Providing assistance to vessels during emergencies.
For a shipowner, choosing a Flag State for his ships is a complex process as an increasing number of flags are available. The choice of registration is dictated by factors such as cost, eligibility, political considerations, tax, confidentiality, manning and other requirements.
Factors to be considered while selecting a Flag State (PDF, 129 kb) explains these factors in detail.
Selecting a Second RegistryAs mentioned in the previous topic, a charterer who takes a ship on bareboat charter can opt for a dual or parallel registry if the primary registry allows it. This is done by the owner and charterer by a complex process.
The ship owner first registers the ship in a traditional register as it is easier to arrange the finance. Then the charterer leases the ship on bareboat charter. Now, the charterer bareboat registers the ship in a second state. The owner now recharters the vessel on time charter. This complex scheme allows the owner to both raise necessary funds and benefit from the lower costs of operation. The primary registration may be suspended during the period of charter but is revived at the end of the charter.
United Nations Convention on the Law of the Sea (UNCLOS) prohibits dual or parallel registration. But as the convention is not in force many ship owners use this scheme. In Parallel Registration of Ships, Bita Pourmotamed, discusses the legality of dual registry for ships using the Sweden as the primary state.
Top 20 Largest shipping Flags, from Marisec, provides the break up of registered shipping tonnage around the world. The site also shows the beneficial owners or true owners of these ships. These lists will show that commercial interests still guide the selection of the flag state.