Critical analysis of the role and the responsibility of flag States under UNCLOS III

Momchil Zhelev/Q10125043/IMS 115

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Student Name: Momchil Zhelev

Student Number : Q10125043

Faculty: Faculty of Maritime and TechnologyLevel of study: Masters

Course title: MSc International Maritime Studies – Ship and Shipping

Management

Unit title: International Maritime Law (IMS 115)

Assignment title: The role and responsibility of flag States under

UNCLOS III

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Southampton Solent University

Faculty of Maritime and Technology

MSc International Maritime Law

(IMS 115)

Assessment 1:

The role and responsibility of flag States under UNCLOS III

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Name: Momchil Zhelev Date: 27th November 2013

Table of Contents

Introduction:.......................................2

Ship nationality and the „genuine link” concept:....3

Flag State role and responsibilities under UNCLOS

III:................................................5

Flags of Convenience:...............................7

Recommendations:....................................9

Conclusion:........................................10

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Introduction:The concept of ship nationality is crucial when the

regulation in legal terms of the sea is concerned. Vessel

nationality not only indicates the rights and the obligations to

which the ship is subject, but also provides information about

which State is responsible for the exercise of the Flag State

jurisdiction over the vessel and for the diplomatic protection

on behalf of the vessel (Churchill, Lowe 1999).

The purpose of this report is to provide critical analysis

of the role and the responsibility of the Flag States under the

United Nations Convention on the Law of the Sea (UNCLOS III).

The report examines the relevant Articles in UNCLOS III

related to the nationality of the ships and the duties and

responsibilities of the flag state. Furthermore, it investigates

the main issues and challenges arising from misinterpretation of

these articles and how these issues affect shipping. The article

concerning the duties of the flag in relation to the activities

by warships and other governmental vessels operated for non-

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commercial purposes (UN, 1982 p.8) is not covered by this

report.

This report focuses on the „genuine link” concept and the

issues arising from the incomplete definition of this term.

In addition to that, it discusses the inability of the

flags of convenience to implement and enforce the legislations

of the International Maritime Organisation (IMO), which results

in negative impact on shipping in terms of environmental

protection and safety.

The issues related to the grant of nationality, the survey

and registration of ships and implementation of the IMO

instruments are also examined.

Ship nationality and the „genuine link” concept:One of the most important subjects regarding the analysis

of the role and the responsibility of the Flag States under

UNCLOS III is the concept of the vessel nationality. According

to Article 91 of the UNCLOS III “Every 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”, (UN, 1982, p.58). Furthermore, the article

states that: “Ships have the nationality of the State whose flag they are entitled

to fly”. The concept of ship nationality is further expanded in

Article 91 with the condition that: “There must exist a genuine link

between the State and the ship”, (UN, 1982 p.58).

Although the term „genuine link” is used not only in the

UNCLOS III but also in the 1958 Geneva Convention on the High

Seas, its exact definition is not provided in neither of these

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conventions. In addition, there is no clear description of the

legal effects and consequences following from the absence of

such „genuine link” (Churchill, 2000), (Oxman, 1999).

There are a large number of researches attempting to

define the meaning of the term „genuine link”. Perhaps, one of

the most complete interpretations of the term is achieved in a

study prepared for the International Transport Workers’

Federation by R.R. Churchill. In this study Churchill attempts

to define the „genuine link” by applying the relevant article

from the Vienna Convention, namely Article 31. According to

this article, three things should be considered when

interpreting a particular provision of a treaty: “…the ordinary

meaning of the provision, the context, and the object and purpose of the treaty”

(Churchill, 2000 p.12). As a result of his research Churchill,

assuming the fact that there is no universal agreement between

the States about the meaning of the term draws several

conclusions. These are briefly summarized herein.

The first conclusion states that, although „genuine link”

is created through the registration of the ship, between that

ship and the registering State, the act of registration by

itself does not make that link genuine. Moreover, there must

be evidence present that proves that the link is real one, not

artificial.

Second conclusion drawn by Churchill, is that there is no

criterion for establishing the genuineness of the link and it

is the State who has the responsibility to determine the

conditions under which the link can be considered as genuine.

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Third, according to Churchill’s study, the effective

exercise of jurisdiction and control over its ships enables

the State to certify that the link with its ships is genuine

despite the absence of mandatory criterion. However the State

has to prove its ability to exercise jurisdiction over its

ships in terms of suitable practices and human resources

(Churchill, 2000).

It can be seen from the written above, that the concept

of „genuine link” and its interpretation in Article 91 of

UNCLOS III needs to be developed further and presented in more

straightforward and clear manner.

One way to fill the gap left by UNCLOS III regarding the

term „genuine link” and to improve the performance of the Flag

States is suggested in a research prepared by Nivedita M.

Hosanee for the United Nations-Nippon Foundation Fellowship

Programme 2009-2010. This research provides several

recommendations including lifting of the corporate veil,

monitoring of transactions and ownership change, and providing

legal framework to enforce the Flag States to establish a

visible connection between the ship and the owner (Hosanee,

2009).

In order to expand further on the ideas presented by

Hosanee concerning the legal framework provision, this report

refers to the 1986 Convention on Conditions for Registration

of Ships. The main provisions of this convention focus on the

capability of the Flag States to implement the international

rules and standards, and the recognisability of the ship

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owners and operators, in order to ensure their full

accountability. Furthermore, the 1986 Convention on Conditions

for Registration of Ships provides interpretation of the term

„genuine link” by imposing requirements on the Flag State

concerning the availability of Ownership and Manning

provisions in its law. In addition, according to the

convention, the state of registration must ensure that the

company owning the ship or its subsidiaries are registered

within its territory (ICS, 2012). However, the 1986 Convention

on Conditions for Registration of Ships has not yet come into

force and the term “genuine link” remains undefined. In his

article for the Journal of Maritime Law and Commerce Moira L.

McConnell suggests that the main reason for this is that the

unclear definition of the term „genuine link” is economically

convenient for a number of states (McConnell, 1987).

Although the term “genuine link” is perceived as unclear

by Churchill (2000) and Hosanee (2009), some authors argue

that further efforts in attempt to clarify its definition are

unnecessary. A research prepared for the Netherlands Institute

for the Law of the Sea by Elferink supports the idea that,

instead of defining the „genuine link” concept, an alternative

approach should be developed, focusing on the elaboration of

more effective jurisdiction and control mechanisms. According

to Elferink, the main advantage of this approach is that it

allows flexibility and provides possibilities for the creation

of wide range of policy instruments (Elferink, 1999).

Furthermore, Elferink challenges the provision that

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requirements concerning the ownership and the crew of the ship

should be established by the Flag States with the argument

that the detention rates of some of the open registers are not

significantly different from those of the traditional maritime

states (Elferink, 1999).

Although the conclusions made by Elferink in his research

are feasible, the ideas expressed in the research made by

Nivedita M. Hosanee that the „genuine link” concept should be

revived and the term „genuine link” properly defined, are more

reasonable. To support this statement this report puts forward

several statements.

First, without clear definition of the term „genuine

link” and correct interpretation of Article 91 of UNCLOS III

concerning the nationality of ships, the implementation of the

articles might be difficult and ineffective, as the

nationality of ships concept is the foundation on which the

whole legal framework concerning the Flag States is built.

Second, the detention rate comparison between the open

registers and the traditional maritime states used by Elferink

in order to challenge the necessity for Ownership and Manning

provisions is perhaps not the most accurate criterion because

most of the Port States have limited capacity and are unable

to inspect all vessels. As Knudsen shows Port States, based on

previous records, target ships with greater probability of

deficiency and as a result many substandard ships are able to

avoid detention (Knudsen, Hassler 2010).

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Another reason why the ideas expressed in Hosanee’s

research are more viable is that by imposing Ownership

requirements, the process of determining liabilities might be

facilitated.

Last but not least, by defining, the term „genuine link”

and by resolving the ambiguities in Article 91 of UNCLOS III,

the popularity of the flags of convenience might be decreased.

The impact of these flags of convenience on shipping will be

discussed in the next sections of this report.

Flag State role and responsibilities under UNCLOS

III:In order to achieve an accurate analysis of the role and

the responsibility of the Flag States under UNCLOS, further

examination of the relevant articles in UNCLOS III is

required. The most relevant to this report are Article 94,

concerning the duties of the Flag State; Article 217, related

to the enforcement of the international rules and regulations

by the Flag State; Article 212 and 222, covering the duties of

the Flag State in order to reduce air pollution; and Article

231, concerning the notification between the concerned States

(UN, 1982 p.5, 11). In order to assess the role and the

responsibility of the Flag State under UNCLOS III these

articles are summarized and analysed below.

First, according to Article 94 in UNCLOS III: “Every State

shall effectively exercise its jurisdiction and control in administrative, technical and

social matters over ships flying its flag” (UN, 1982, p.58). This provision

is expanded further and states that every State must ensure

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that a register of ships flying under its flag is maintained

and that measures concerning the seaworthiness of ships, the

manning of ships, the labour conditions on board, the safety

at sea and the reduction and control of marine pollution are

available (UN, 1982). Issues related to the interpretation

still exist within the text of this article, despite its

accessible language.

A research prepared by Yoshinobu Takei presents the

interpretation issues arising from the phrase “jurisdiction and

control”. According to Takei, the use of the connector “and”

implies that the words jurisdiction and control refer to

different things (Takei 2013). As a result of this ambiguity,

Takei points out the term jurisdiction might be interpreted as

related only to the ability to prescribe rules without

involvement in their actual enforcement (Takei, 2013). As an

example of different interpretation of the phrase “jurisdiction and

control” Takei provides the statement of Professor Lagoni,

Counsel for Guinea in the M/V ‘Saiga’ case: “The provision [of Art.217

of the LOSC] speaks of ‘enforcement’ not merely of ‘control’. If the ship is

abroad….control is normally exercised on behalf of the flag State by classification

societies” (cited in Takei Y. 2013, p.5). However, in his

research Takei rejects this form of interpretation and assumes

that the phrase “jurisdiction and control” refers to the ability of

Flag States to both create and enforce rules and regulations.

To support his statement Takei refers to the fact that during

the draft process of the High Seas Convention (HSC) the

Italian delegation considered the phrase “jurisdiction and control” as

“the twin components of the exercise of sovereignty” (Takei Y. 2013, p.6).

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Another drawback identified in Article 94 of UNCLOS III is

related to the duty of the Flag States to maintain register of

ships flying under their flag. The exact text of the provision

states that:”every State shall maintain a register of ships containing the names

and particulars of ships flying its flag, except those which are excluded from

generally accepted international regulations on account of their small size;” (UN,

1982, p.58). However, this statement is not expanded further

and according to Takei, it is not clear what exact “particulars”

should be included in the register of the ships (Takei Y.

2013). Moreover, in his research Takei puts forward the note

made by Nandan and Rosenne that: “each State is free to establish laws and

regulations concerning registration of ships, and the manner of registration”

(cited in Takei Y. 2013, p.6).

To expand on this matter further and to illustrate some

of the consequences arising from this ambiguity in Article 94,

this report refers to the book named “Flag state responsibility:

historical development and contemporary issues” by Mansell (2009).

According to Mansell, there are consequences arising from the

fact that there is no international standard and regulations

regarding the conditions for ship registration. One such

consequence is that each state decides autonomously whether or

not to require survey and inspection before an existing ship

transfers to their register. Mansell explains, that many

States consider this requirement “as an unnecessary impediment,

expense, and obstacle to their ability to register ships” without taking into

account the fact that the existing ship certificates may have

been issued by a State with ineffective regulatory framework

(Mansell, 2009). As a result substandard ships are able to

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outwit and surround the existing regulatory framework set by

UNCLOS III (Mansell, 2009).

It can be concluded from the above that, despite the

articles concerning the role and responsibility of the Flag

States under UNCLOS III being structured better than those

concerning the vessel nationality, there are still several

ambiguities leading to interpretation issues.

In addition, the provisions related to the duties of the

Flag States are perhaps too general. Analysis of the actual

implementation of these provisions and the consequences

arising from the gaps left in UNCLOS III is provided in the

next section of this report.

Flags of Convenience: In order to achieve an accurate analysis of the role and

the responsibility of the Flag States under UNCLOS III, this

report is focused not only on the current issues related to

the text of the provisions but also on the consequences

arising from them.

The lack of definition of the term „genuine link” and the

ambiguities in the relevant articles in UNCLOS III provide the

possibility for the ship owners to register their ships in a

country different from the country of ownership. In her book,

“Modern Admiralty Law”, Aleka Mandaraka-Sheppard states that some

States have developed very liberal system for entry of foreign

ships in their ship registers due to the freedom to establish

their own regulations for ships under their flag (Mandaraka-

Sheppard, 2001). Thus, according to Mandaraka-Sheppard, these

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States provide beneficial opportunities for ship owners who

choose to register their ships with them. This has led to a

rise in popularity of the open register, or flag of

convenience, e.g. states which provide attractive advantages

(Mandaraka-Sheppard, 2001). Both the ICS and Mandaraka-

Sheppard state that some of the important advantages provided

by the flags of convenience for the ship owners are the

confidentiality of who is the actual beneficial owner of the

ship; the permission for the owners to operate the ship and to

keep the profits in a different country; the minimum (or the

lack of) taxation; and the opportunity to man those ships by

crew with different nationality (ICS, 2012), (Mandaraka-

Sheppard, 2001). Figure 1, containing the top 10 ship

registers is provided to illustrate the increased popularity

of the flags of convenience.

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Fig.1: The top 10 ship registers; Source: Lloyds List (2013)

Six from the top 10 registers displayed in Figure 1 are

classified as Flags of Convenience according to the

International Transport Worker’s Federation (ITF), namely

Panama, Liberia, Marshall Islands, Bahamas, Malta and Cyprus

(ITF, 2012). Several common features of the Flags of

Convenience and their implication on shipping are described

below.

According to the ITF, one common feature of the Flags of

Convenience is the fact that they are often operated from a

different country than the country concerned (ITF, 2012). For

example, according to the websites of the Liberian, Cambodian

and the Marshall Islands registers, the headquarters of the

Liberian and the Marshall Islands registers are located in

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Virginia, USA and those of the Cambodian registers are located

in Busan, South Korea (Liberian Registry, 2013), (Cambodian

Registry, 2013), (Marshall Islands Registry, 2013). As a

result these registers do not comply effectively with the

UNCLOS III provision, which states that every state shall

create and maintain a register of the ships flying its flag.

An evidence for the failure of the Flag of Convenience to

comply with the UNCLOS legislations is described in the

research prepared for the ITF and the World Wide Fund for

Nature (WWF) by Matthew Gianni. In his paper, Gianni presents

the case of the merchant vessel So San. This vessel which was

carrying North Korean built scud missiles was inspected in

December 2002 by Spanish and USA naval and after the

inspection the vessel was declared stateless. Although the

vessel claimed that it was flying under Cambodian flag, three

days after the incident the Cambodian government was unable to

establish whether the vessel is actually registered under

their flag due to the fact that the Cambodian Register was

operated from Singapore and the Cambodian government was not

provided with accurate information concerning the vessels

flying under its flag (Gianni, 2008).

Safety is another area, where the Flags of Convenience

are ineffective. Some Flags of Convenience are unable to

comply with the provisions under Article 94 subsections 3 and

4 of UNCLOS III concerning the measures which the States shall

take in order to ensure safety shipping. Gianni puts forward

the opinion of Weng Mengyong, China’s Vice-Minister in the

Ministry of Communications: “Countries that offer flags of convenience

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usually charge a small amount in registration fees, but do not have sound safety

supervision systems” (cited in Gianni, 2008, p.8). As a result, many

substandard ships, registered under these flags, are often

involved in serious accidents. For example, according to the

ITF all of the top five registers in terms of numbers of ships

lost for 2001 were Flag of Convenience (ITF, 2012).

In addition some Flags of Convenience fail to exercise

their duties in the area of the environmental protection.

According to Paul Martin, former Prime Minister of Canada and

owner of Canadian Steamship Lines, some Flags of Convenience

such as Equatorial Guinea and Cambodia do not have any

environmental policies at all (cited in Gianni, 2008). Thus

such States do not comply with the provisions in UNCLOS III

related to the prevention and the reduction of marine

pollution.

Another point of concern in the performance of some of

the Flags of Convenience under UNCLOS III is related to the

working and living conditions on board. According to the ITF

many ship owners reduce costs by paying minimum wages and

lowering the living and working conditions on board (ITF,

2012). In his research Gianni expands further this idea by

stating that $12.7m from the $17.1m recovered unpaid wages in

2006 came from ships registered under Flags of Convenience

(Gianni, 2008).

To summarise, some Flags of Convenience are unable, or

fail to perform their duties under UNCLOS III in the areas of

safety, environmental protection and working and living

conditions on board. This lack of jurisdiction and control

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attracts many ship owners willing to cut costs in order to

maximize profit. As a result these Flags are transformed from

a vital part in the IMO implementation and enforcement

machinery into successful business organisations. For example,

an article in The Economist states that during the civil war

in Liberia 90% of the government revenues came from its ship

registry (The Economist, 2007).

However, the written above do not apply to all Flags of

Convenience. For example, The Register Panama is included in

the IMO white list due to its adequate and effective practices

(IMO, 2001).Perhaps the best summary of the subject is given

by David Cockroft, General Secretary of the ITF: “We have never

believed that all FOC ships are bad and all national flag ones are good. But the

existence of the FOC system is dragging standards down to a point where we are

seriously worried about what even some genuine national Flag States are now doing

to compete” (cited in Gianni, 2008). An overview of current

measures taken by the IMO is presented in the next section of

this report alongside suggested improvements and

recommendations.

Recommendations:There are several measures which can be taken by the IMO

in order to improve the unsatisfactory performance of some of

the States under UNCLOS III. One of these measures is the

revival of the „genuine link” concept proposed by Hosanee in

her research (Hosanee, 2009). Thus it will be harder for the

ship owners to register their ships under the Flags of

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Convenience and they might turn to the traditional maritime

registers.

Another measure is proposed by John N. K. Mansell in his

book “Flag state responsibility: historical development and contemporary issues”.

According to Mansell the seaworthiness of the ships can be

ensured by amendment in Safety Of Life At Sea (SOLAS)

convention imposing mandatory survey before registration and

transfer of flag (Mansell, 2009). Furthermore Mansell states

that the Voluntary IMO Member State Audit Scheme (VIMSAS) is

the most effective way for evaluation of the Flag State

performance. Mansell suggests that if VIMSAS become mandatory

its effectiveness will be further increased (Mansell, 2009).

In addition, according to Mansell the effectiveness of the

Flag States might be improved by imposing sanctions such as

refusal of access to ports of substandard ships (Mansell,

2009).

If the above mentioned measures are enforced, the

performance of the Flag States might be significantly

improved. Moreover, the performance of the States might be

further improved by adopting the 1986 Convention on Conditions

for Registration of Ships, which needs to be signed by 26 more

member states in order to enter into force (UN 2013).

Conclusion:This report analysed the role and the responsibility of

the Flag States under UNCLOS III. It explored several key

subjects such as the „genuine link” concept, the actual text

of the relevant articles in UNCLOS III and the Flag of

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Convenience problem. As a result, it was concluded that the

unclear definition of the term „genuine link” and some

ambiguities in the relevant articles in UNCLOS III led to the

increased popularity of the Flags of Convenience. Although

some of these States exercise effectively their jurisdiction,

others are unable to comply with the provisions in UNCLOS III

in the areas of safety, environmental protection and the

working and living conditions on board. However, by imposing

additional sanctions and regulations the performance of these

States might be significantly improved.

Reference List:

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Churchill R.R., (2000), The meaning of the “„genuine link”” requirement in relation to the nationality of ships, [online], [viewed 13 November 2013],Available from: http://www.itfglobal.org/seafarers

Elferink A.G.O., (1999), The „genuine link” concept; Time for a Post Mortem, [online], [viewed 11 November 2013], Available from: http://www.uu.nl/faculty/leg/NL

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Gianni M., (2008), Real and Present Danger: Flag State Failure and Maritime Security and Safety, [online], [viewed 15 November 2013], Available from: http://www.assets.panda.org

Hosanee N.M., (2009), A critical analysis of flag state duties as laid down under Article 94 of the 1982 United Nations Convention on the Law Of the Sea, [online], [viewed 10 November 2013], Available from: http://www.un.org

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Lloyd’s List, (2013), The Flag State, [online], [viewed 16 November2013], Available from: http://www.lloydslist.com/ll/news/special-reports/article428247.ece

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Critical analysis of the role and the responsibility of flag States under UNCLOS III

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