Flag of convenience and abuse of international maritime law

Maritime Articles

The International Law of the Sea is, although vast, incomplete, having significant gaps. Its application is uneven and patchy, largely determined by the non-binding nature of certain agreements or the wide margins of discretion that much of this legislation grants to governments.

In April 29, 1958, the first United Nations Convention on the Law of the Sea (UNCLOS) signed the Geneva Convention on the High Seas (CHS). This convention establishes in article five that “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. Ships have the nationality of the State whose flag they are entitled to fly. There must exist a genuine link between the State and the ship; in particular, the State must effectively exercise its jurisdiction and control in administrative, technical and social matters over ships flying its flag”.

Protected by this Convention, large shipping companies and cruise lines choose to register their vessels in certain countries, taking advantage of their lax laws of convenience, avoiding high international standards – this practice is known by the term "flag of convenience".

Understanding the importance of international maritime trade, it would be easy to assume that there should be a relationship between the most developed countries and the number of vessels that carry their flag. This leads us to assert that countries with more vessels would have to correspond with the major economic powers: USA, England, Germany… but we would be mistaken.

In 2007, 22.2% of the world tonnage was registered in Panama, followed by Liberia, with 9.8% of the world fleets. Bahamas was third with 5.6% of the world fleet. It should be noted that 51.9% of the merchant fleet of bulk carriers are registered in Panama, while 50.6% are oil tankers are registered in Liberia. 50% of the world fleet of cruise ships is registered in the Bahamas.

Maritime accidents due to the use of a flag of convenience from countries with low requirements

The data presented reveal that the vast majority of shipping companies choose to flag their ships by the tax breaks they could gain from the flag State or, worse, by the weakness or lack of rigor in compliance with the flag states’ international requirements. This will have increased the so-called "flags of convenience" phenomenon characterized by the registration of ships that do not meet minimum safety conditions for transporting dangerous goods and cause several preventable accidents.

This situation constitutes a major safety breach and requires a solution. States should be required to comply with the rules of international maritime law on the supervision and control of ships registered in their territory. Shipping companies and cruise liners should be restricted in their choice of their flag, requiring a clear link between the ship and the flag State.

Maritime law and maritime jurisdiction in Southeast Asia

Maritime Articles

Territorial concerns in the South China Sea have increased in recent times affecting an area considered crucial to world maritime trade. Coastal nations are claiming increasingly firmer jurisdictional rights.

The South China Sea washes the shores of Brunei, China, Indonesia, Malaysia, Taiwan and Vietnam. Over 50% of world’s merchant traffic sails through their waters. Oil flowing through the region is more than six times the volume transported through the Suez Canal in the same period of time.

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The economic importance of the geographical environment has traditionally been a source of conflict among the costal countries who argue about territorial sovereignty of two groups of islands: Paracelsus and Spratley. These are groups of islets of low productivity, most of them deserted and uncultivable, some just a few meters above sea level.

The islands and Exclusive Economic Zones

In the case of the South China Sea, a major cause for dispute are overlapping Exclusive Economic Zones (EEZ). The Paracel and Spratley island groups are essential for establishing international boundaries between states and the respective EEZ.

China and Vietnam have historically confronted the sovereignty of the 130 islands of the Paracel archipelago located about 200 nautical miles from the coasts of both countries. In 1974, China militarily occupied the islands.

The Spratly Islands are disputed and claimed, in part or in whole by China, Vietnam, Philippines, Malaysia, Brunei and Taiwan. Although composed of more than 750 small islands, islets, reefs and cays, it is estimated that only 40 of the Spratlys could be considered as "islands" according to the United Nations Convention on the Law of the Sea of 1982. This factor is decisive and that under international maritime law, only the "islands" may be subject to a claim of sovereignty. In January 1988, the Republic of China began to militarily occupy some islands.

Although incidents in these waters have persisted over the years, lately, increasingly firm position by litigants countries have intensified the tension in the region. In 2012 the Chinese navy conducted live-fire exercises in waters around the Paracel Islands and days later announced a competitive tender for nineteen sites located in the same sea region. The Vietnamese Ministry of Foreign Affairs issued a statement saying that contest "is a serious violation of Vietnam’s sovereignty". In May, warships from the Philippines and China were involved in an incident near the Scarborough atoll.

Why so aggressive?

The regions of the Spratly and Paracel islands may have large reserves of natural resources. Chinese officials have the most optimistic estimates of the wealth of resources in the area. According to figures cited by the US Energy Information Administration, Chinese estimates put the potential oil reserves to 213 billion barrels – 10 times the U.S. reserves. But scientists have estimated the amount to 28 billion barrels.
According to the Energy Information Administration, the real wealth of the area could be natural gas reserves. Estimates appraise the area to have reserves similar in quantity to Qatar’s.
The area is also one of the major shipping routes in the region, and home to a fishing sector that provides the livelihoods of thousands of people.

Maritime law problems between China and Japan

Then there is the issue between China and Japan. The foreign ministers of China and Japan met in September 2012 in New York (USA), on the sidelines of the General Assembly of the United Nations, to discuss the issue of the Senkaku Islands (In Japanese) or Diaoyu (Chinese), but made no progress in resolving the conflict.

The dispute over the islands intensified when the Japanese government bought a portion of the archipelago from a private owner, a situation that upset the Chinese authorities and Chinese people, who responded by sending two fleets of ships to monitor the area.

The archipelago’s importance derives from its potential waterways for fishing. According to Japanese sources, China began claiming the islands in the 1970s, when studies suggested that oil and gas deposits might be found near the islands.

A Japanese diplomat asked China to show restraint granted in the conflict that is causing millions in economic impact for the companies in the country, while the Chinese side reaffirmed that Tokyo’s decision to nationalize three of the eight islands "is a flagrant violation of the territorial integrity of China.”

The United States argues that an EEZ is a resource area and not a security zone and therefore, provided that legitimate economic interests of a country are respected, nations have the right to conduct military activities in the South China Sea.

China seems to regard the ocean-from its territorial waters, beyond its exclusive economic zone, reaching into the continental-plate, the same way that considers land.  It implements its "anti-access / denial of stay in an area" doctrine intended to challenge the U.S. naval superiority in the region. In this sense China has been repeating that the South China Sea is not a matter of concern for Washington, and U.S. military activities may jeopardize China’s interests. However, the U.S. has said that what is really at stake is freedom of navigation, as it believes that China policy is a challenge to generally accepted international maritime law standards.

All issues raised makes it essential to safeguard maritime safety, that the nations of the region, aware of the different interpretations of maritime laws among them, work together to achieve a mutual understanding of the legal interpretations of the rules described in the United Nations Convention on the Law of the Sea, which should be the central framework for regional legislation in maritime issues and the solution to the problem. But when there are so many political and economic interests international maritime law runs adrift.