Contributed By: Glenn McAleer
To safely sail the high-seas, ships fly flags. Initially these flags represented gods and religious symbols, but by the Middle Ages ships began to hoist flags that symbolized their allegiance to a port, state, or kingdom. Such flags became necessary for a ship’s protection and identification when Merchant vessels and international trade developed. Alongside the development of trade by sea arose the principal of flag state jurisdiction (FSJ). Flags were utilized to signify a ship’s allegiance to the ruling order and the ruling order’s corresponding jurisdiction and control of the ship. A transgression against the ship was, in effect, a transgression against the nation, as the grant of nationality symbolized care and control. FSJ can be seen as a corollary to the principle of the freedom of the high seas, which espouses that each nation should have a right to the bounty of the ocean and freedom to navigate these international waters. The principle of freedom of the high seas arose in part from the writings of jurist Hugo Grotius, who published Mare Liberum (or “the freedom of the seas”).
For thousands of years, nations have documented their use of vessels for various purposes. Now, approximately half of the world’s dead weight tonnage (a measure of how much weight a ship can carry) is registered to Panama, Liberia, and the Marshall Islands. The total population of these three states is less than 10 million, but their combined registered dead weight tonnage is over 1 billion pounds. If all the tonnage registered in the Marshall Islands was attributable only to its residents, each resident would average nearly seven tons of dead-weight shipping capacity. This hypothetical is of course an impossibility; the GDP per capita in the Marshall Islands is only $6,727.8 USD. The obvious conclusion is that most corporations are registering ships in foreign states. There are various reasons commercial maritime organizations are operating under foreign registries, but the primary reasons are cost and convenience. Many states operate “open registries” with no nationality requirements for registration. Open registries often mandate fewer and lower standards for ships to meet regarding safety, training, and emissions. They boast various benefits for vessel-operators and organizations, including a favorable tax environment, low administration and registration fees, a lack of nationality requirements, quick and efficient registration, and more. The lack of benefits (and corresponding lack of sanctions) for registering in one’s home country, or the country in which a corporation primarily does business, has created an entrenched economic reality. While the economic reality might be pleasant for commercial operators, the lack of oversight and inability of small nations to effectively exercise jurisdiction over ships flying their flag is possibly the greatest threat to the efficacy of FSJ as it relates to prevention of disasters and criminal activity.
The flags of Panama (left) The Marshall Islands (middle) and Libera (right).
States that operate open registries enjoy the revenue stream while offering an efficient registration process that “satisfies” international legal requirements for a ship to operate at sea. These open registries exist in part due to the inaction of international bodies in combatting the situation. The current legislation that dominates the international body of law in this area, The United Nations Declaration on the Law of the Sea, (UNCLOS) has been interpreted in such a manner as to entirely erode the meaning of “genuine link” in Article 91 – the only requirement a ship must meet to register with any given registry. While no international body has officially stated that registration itself satisfies the genuine link requirement, the commercial reality speaks for itself. These troubles are exacerbated due to UNCLOS providing essentially no procedural rights to states wishing to challenge whether a sufficient link exists between a ship and its apparent flag state.
The importance of FSJ resides in the exclusive jurisdiction of the flag state over ships flying its flag. The right for ships to only be subject to the jurisdiction of their flag state, and the corresponding duty on the flag state to exercise “internal law … in respect of administrative, technical and social matters concerning the ship” are codified in UNCLOS articles 92 and 94. These provisions should, on a plain language reading, become a pivotal rule in the laws of the sea, but “the scope of the provision is nonetheless still unclear.” Furthermore, as will be demonstrated, regardless of the intended regulatory scope of this jurisdiction, no such enforcement or control can be deemed present.
This article will reference the importance of states’ individual interests as well as those of corporate bodies involved in maritime activity. While non-state actors were not always considered to be subject to international law, some international instruments do name non-government institutions such as multinational corporations. In addition, UNCLOS article 94(5) explicitly provides that “in taking the measures called for… each State is required to conform to generally accepted international regulations, procedures and practices and to take any steps which may be necessary to secure their observance.” This portion of the Article arguably creates a duty on the state to ensure that each ship registered to their flag observes international law.
FSJ is critical due to its role of enforcement territorially. The high seas are defined negatively in UNCLOS Article 86, which applies the title of the high seas to all parts of the sea that are not in the exclusive economic zone, territorial sea, or internal waters of a State. The principle of freedom of the high seas is codified in UNCLOS through Articles 89 and 87, which provide that the high seas are to remain free from claims of national sovereignty and that States are to have freedom of activities there. Article 91 of UNCLOS loosely sets parameters regarding a states’ grant of nationality to ships. Under Article 91, each State has the power and responsibility to establish the system through which it regulates granting nationality to ships. Article 94 codifies this right while establishing a “registry requirement” and various other duties of the flag state regarding oversight of suitable construction, manning, and communications of the ship. After the registration system is established, ships “have the nationality of the State whose flag they are entitled to fly.” Article 91 also requires the existence of a genuine link between the State and the ship,” but ambiguities as to what constitutes a “genuine link” create difficulties, especially with a lack of internationally-backed minimum standards.
While no international body has disclaimed the existence of anything “more” required of a genuine link, the commercial reality is that the registration requirement (and subsequent “grant of nationality”) constitutes a genuine connection. The vast majority of commercial ships are registered to nations with which they share no legitimate genuine link, be it through the nationality of the owner, flow of finances, country of origin of the ship, captain, or its crew, where the ship was built, or where it will likely be dismantled. When a ship earns registration, a genuine link sufficient to sail the ocean blue is born, perhaps to the chagrin of pedants. That is not to say that such pedants are wrong; section 3 of the Vienna Convention on the Law of Treaties contains interpretation provisions to be applied when reading international instruments. The first provides that “a treaty shall be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose.” An accurate interpretation of Article 91 of UNCLOS leads to the inescapable conclusion that the words “genuine link” are included in the provision for a purpose, and while prescribing exacting standards as to what that link should be may prove fruitless, it is obvious that “something more” must be required.
The importance of a state exercising its jurisdiction cannot be overstated, which makes a weak or non-existent link so harrowing. In a report by the Consultative Group on Flag State Implementation (formed by the UN Secretary General), the Group states that:
Flag States’ willingness to exercise effective control over ships flying their flag is one of the most fundamental concerns facing the law of the sea … today’s threats … are interconnected, the failure to address one … may exacerbate the risk of another. Many threats to collective security have the potential to undermine human security.
While the Consultative Group used the words “willingness” when discussing the exercise of effective control by flag states, it is entirely farcical to promulgate that the Marshall Islands, Panama, and Liberia can effectively exercise jurisdiction and control over 14,902 ships flying their flags globally. In their article detailing Port State Control, Dr. Z. Oya Özçayir claims that “port state control is not, and can never be, a substitute for the proper exercise of flag state responsibility. Flag states have the primary responsibility of safeguarding against substandard ships. When flag states fail to meet their commitments, port states must act as the last safety net in the control system.” While exclusivity of FSJ is not absolute, and the rights of port states have certainly encroached on Flag State Jurisdiction as the “only” preventative and enforcement mechanism at sea, the need for effective operation of FSJ with other modern solutions is vital. Even when port states can enforce control and jurisdiction over ships at port, nothing is stopping dangerous, highly pollutant, and non-seaworthy ships from reaching these ports or enforcing jurisdiction over them on the high seas. Between 1992 and 2002, it is estimated that global marine fish capture on the high seas rose from 5 to 11 percent. This shows how economic activity on the high seas is growing, with illegal or unregulated fishing making up a greater proportion of fish caught on the high seas.
Perhaps more frightening than the abuse of FSJ by corporate entities is the willingness for international bodies to pretend that these flag states can exercise control and jurisdiction over their ships. The UN’s Conference on Trade and Development (UNCTAD) published a Review of Maritime Transport 2023 wherein the organization calls for a “just and equitable transition” to a decarbonized shipping industry. The article pushes for full decarbonization by 2050, but admits that the sector’s greenhouse gas emissions have risen 20% in the last decade with an “ageing fleet that runs almost exclusively on fossil fuels.” The article claims that another layer of complexity is who will be responsible for the transition – “The major flag states, Liberia Panama, and the Marshall Islands … will be responsible for enforcing new green shipping standards.” Proposing a plan that depends on small states with large open registries to implement system-wide changes to fully decarbonize by 2050 strains credulity.
Scholars are understandably unimpressed with the interpretation of the genuine link requirement. “It would be difficult, however, to find any practical obligation accruing upon States as a result of this provision – and all attempts to infuse some substance on this dead letter have miserably failed.” Miserably failing is not to say that attempts were never made. In the 1986 UN Convention on Conditions for Registration of Ships, the UN sought to found nationality requirements on the level of participation in either the ownership or the manning of the ship, but the convention never entered into force.
Another strain on FSJ efficacy is the ability for other states to intervene and challenge the genuine link between a ship and its flag state. This would allow state actors to intercept ships flagrantly violating the genuine link requirement. Unfortunately, all rights regarding what actions states, or other ships, can take in relation to these apparent violations under UNCLOS are meagre. In Saiga, the International Tribunal on Laws of the Sea (ITLOS) reported that while a genuine link between a ship and its flag State is required, it is merely an obligation on the flag State. Whether or not another state believes that a genuine link exists is not a basis for it to recognize or repudiate the legitimacy of the flag state’s jurisdiction over the ship. The tribunal looked to Article 94 of UNCLOS which outlines measures that states may take when they have clear grounds to believe that suitable jurisdiction and control of a ship has not been exercised. Article 94 outlines that the state may report the facts to the flag state. Full stop. While this apparently creates a requirement on the flag state in question to investigate the matter and, “if appropriate, take any action necessary to remedy the situation,” Article 94 contains no procedural rights to the reporting state. The tribunal in Saiga thus determined there was no power that permits a State “which discovers evidence indicating the absence of proper jurisdiction and control … to refuse to recognize the right of the ship to fly the flag of the flag State.” Greater procedural rights for state actors to challenge the validity of the genuine link between a ship and its flag state under Article 94 could include a litany of procedural fairness doctrines often the discussion in administrative law.
