By: Pranathi Charasala
Introduction
If the Suez Canal blockage of March 2021 reminded us of anything, it’s that the shipping industry is vital to global trade supply chain maintenance. Although the ship, Ever Given, was only stuck in the canal for six days, the effects of the event could be felt for weeks afterward, exposing the interconnectedness and vulnerability of the shipping industry to operations worldwide.1 However, even as the shipping industry proves its importance to the global economy, seafarers, dockworkers, and other maritime employees are often shoved out of sight through business practices such as flying a “Flag of Convenience” (FOC).
FOC refers to when ships fly, or register under, the flags of countries other than the country of ownership. When employees work under ships with FOC, they may be vulnerable to less stringent labor laws, working conditions, and overall regulation. In many cases this can include not receiving pay or getting underpaid. The practice also allows shipping companies to employ workers around the world, exploiting cheap labor.2 In addition, by registering a ship under other countries, ship owners can escape prosecution, making it difficult to detect when ship workers are wrongfully treated by their employer. Proponents of FOC argue that the ability to keep labor and tax expenses low allows certain shipping companies to remain competitive in the market and keep product prices low.
For as long as ships have been flying countries’ flags, various ships would fly different flags to avoid attacks and searches.3 In 1919, the ship Belen Quezada was the first foreign ship to register under Panama’s flag to run illegal alcohol between the U.S and Canada. However, the term “flag of convenience” was coined in the 50s when more ships realized the economic advantages of operating under another nation’s laws.4 FOC allows ships to bypass environmental laws, employment conditions, and taxes because they only have to follow laws in their registered country. As of 2022, around 40% of the world’s fleet is registered to either Panama, Liberia, or the Marshall Islands.5
During the initial phases of the COVID-19 pandemic, cruise ships were not allowed to dock into the ports of countries their flags did not belong to. These ships, which flew different flags, could not get the proper resources, and help from their flag countries. The Zaandam was a particularly public case in which up to 2,000 cruise workers and passengers were left stranded for weeks.6 Even after passengers were allowed, tens of thousands of cruise ship workers were left on their vessels, across the cruise industry, with limited resources. Without sufficient medical equipment, doctors, and ventilators, several crew members died.7
The Pandemic called into question who was responsible for assisting the ships and maritime workers under FOC. The United Nations Convention on the Law of the Sea (UNCLS) states that vessels should primarily be cared for by its home nation. Therefore, the nation in which a ship is registered has the responsibility of deeming a ship fit under its regulations. UNCLS doesn’t state to which degree or how strong the relationship between a ship and country should be and does not mention how countries should proceed in a case of an emergency such as the pandemic, in which a ship needs to dock. However, other legal maritime agreements state that ships should provide assistance regardless of nationality in moments of distress. UNCLS and The SAR Convention outlined this further by defining ‘distress’ as needing imminent assistance. Yet, countries also have the right to refuse port entry to vessels that may threaten the safety of the country.8 The Pandemic brought to light the uncertain nature of FOC in combination with existing maritime law as nations grappled with who is supposed to protect workers’ rights under such circumstances?
Labor’s Solutions
While FOC ships have brought up concerns for the environment, the economy, and geopolitics, the practice has been fought against by labor groups around the world. The International Transport Workers’ Federation (ITF) is a prominent union fighting against FOC ships on behalf of their members. As a union, their focus lies on the safety and working conditions of maritime workers. The ITF argues that ships should have a “genuine connection” between the owner of the ship and its flag country and in accordance with UNCLS. 9 The ITF operates by pushing for collective bargaining agreements and contracts with FOC ships. The union also has its own inspectors that work with the union, creating an independent safety inspection apart from the ship’s management. On top of working with ships, the ITF is politically involved with trying to dismantle the FOC practice.
Although the ITF has succeeded in collective bargaining agreements around the world, they face problems with an ununified international community and may lack the resources to reach many countries affected by FOC vessels. As shipping regulations are subject to change from country to country, international unions may have difficulty with keeping up with and fighting changing regulations. In addition, unionization in one country can be dangerous if the ship owner changes its registry in retaliation to the workers’ actions, threatening the power of unions. There are also problems with whether ship owners implement union contracts fairly or at all, meaning that the union will need extensive legal resources.
The International Labor Organization (ILO) is also a sector of labor that has attempted to tackle FOC through negotiating The Maritime Labor Convention (MLC), that focuses on the rights of seafarers, creates distinct obligations for port and flag states, “including a requirement that flag states adopt laws that make shipowners responsible for "health protection and medical care" and liable for the costs of treatment.”10 However, during the Pandemic, this agreement was not used to send cruise members back home because of the relaxed rules around what types of aid countries are supposed to give to their ships.
Solutions
There is a severe lack of research around FOC and its impact on international law. The 1986 United Nations Convention on the Registration of Ships was last ratified by a country in 1999 and the MLC was written in 2006. The Pandemic shone a light on the gaps within these conventions and agreements. Without sufficient treaties that discuss international responsibility towards protecting workers at sea, protecting labor falls on labor unions, individual state obligations, and redefining or rewriting maritime laws. The largest problem within international law is the refusal to properly define what a “genuine link” between a flag and its ownership should look like. Because there are slack regulations around this definition, countries are allowed to have open registries where almost anyone can register a ship under them, often never having set foot in the country and can complete registration completely online.
The UN states that a “genuine link” is important between nations and ships, but does not outline this relationship, giving countries freedom to decide when foreign ship owners qualify under this statute. By defining “genuine link,” ship owners will need to prove their affiliation with countries like Panama and the Marshall Islands, hopefully getting rid of the anonymity of FOC ship owners. However, when this was attempted in the 1986 United Nations Convention on the Registration of Ships, which attempted to states that a ship should fly the flag of the country it belongs to, not enough countries signed for it to be entered into force.11 Yet, even if the agreement was ratified by enough states, the language of the agreement still gives nations enough discretion to decide what constitutes a “genuine link.”
The second problem deals with enforcement. The MLC agreement, while trying to expand the rights of seafarers by enforcing labor protections, does not specifically outline these regulations. In addition, countries that have open registries and allow for FOC ships, must have their ships overseen by “recognized organizations,” implying that these processes will be outsourced to private companies. This poses a problem because it alludes to future complications in which unions and managers need to address a third-party within their negotiations.12
There should be a unified and clear seafarers’ employment and labor conditions code drafted through the IMO. The IMO has the power to implement the proper legislation to hold ship owners accountable, however, as the countries that have more ships registered under their flag hold more power in the organization (such as Panama and the Marshall Islands)13, it is difficult to influence labor focused agreements.
Therefore, is the responsibility on individual states? In the United States, would passing laws prohibiting American companies from registering under other countries be feasible? Most likely not, for companies rely on cheap transportation costs to remain competitive in the market, which also extends to paying cruise employees. Then, are labor unions the only solution? With the international community refusing to outline and define maritime agreements, international labor unions might be the more practical solution to protecting workers’ rights. However, international unions are difficult to implement because of differing labor laws and cultures. Expanding union protections through the ILO may be the first step and a solution, along with clearly defining and strictly enforcing registries and a “genuine link.”
Conclusion
Ship workers have long been shoved aside from the public eye due to their occupations on the vast and invisible sea, and in favor of cheaper goods. The interconnectedness of the global economy has resulted in the “open registry” system that many have coined a “race to the bottom,” as countries compete to give further and further relaxed shipping regulations that have resulted in poor working conditions. There is no clear answer for how the international community should tackle FOC ships, but it is clear that the industry can no longer stay invisible.
References
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Robin, Churchill. The Meaning of the “Genuine Link” Requirement in Relation to the Nationality of Ships. International Transport Workers Federation , 2000, https://orca.cardiff.ac.uk/id/eprint/45062/1/ITF-Oct2000.pdf.
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