closed registry system may have other stipulations such as a requirement for all
officers and crew to be nationals of the flag state; that all certificates and licenses held
by the personnel be issued by the national authorities; or that the ship be built in the
flag state and classed only by a nationally recognized classification society.
33 The
rigid connecting factors and strict provisions in the closed registry system have been
economically cumbersome and unfavourable from the viewpoint of many shipowners. The effect has been for some of them to register their vessels, or flag out
to registries that provide more convenience and are amenable to their economic
interests.
2.2.2 The Open Registry System
In the open registry system, the stringent requirements of the closed registry system
are absent or greatly diminished. Supporters of and participants in the open registry
system view ship registration as an economic activity, that is, a service provided for a
fee rather than as a statement of sovereignty.
34 Opponents of the open registry
system have referred to these less stringent flag states as flags of convenience.
This term has become stigmatized, because it conveys the impression that such a
flag harbours sub-standard ships where the ship registration regime is devoid of any
regulatory control by the flag state authorities. They are viewed as bearing the
following characteristics:
• the country of registry allows ownership and/or control of its merchant vessels by
non-citizens;
• Access to the registry is easy. A ship may usually be registered at a consul’s office
abroad. Equally important, transfer from the registry at the owner’s option is not
restricted;
• Taxes on the income from the ships are not levied locally or are low. A registry
fee and an annual fee, based on tonnage, are normally the only charges made. A
guarantee or acceptable understanding regarding future freedom from taxation
may also be given;
• Receipts from very small charges on a large tonnage may produce a substantial
effect on its national income and balance of payments; and
• Manning of ships of non-nationals is freely permitted.
35
33 Mukherjee and Brownrigg (2013), p. 205.
34 Ibid. pp. 205–206.
35 Ready (1998), p. 6.
Ship Nationality, Flag States and the Eradication of Substandard Ships:. . .
587
officers and crew to be nationals of the flag state; that all certificates and licenses held
by the personnel be issued by the national authorities; or that the ship be built in the
flag state and classed only by a nationally recognized classification society.
33 The
rigid connecting factors and strict provisions in the closed registry system have been
economically cumbersome and unfavourable from the viewpoint of many shipowners. The effect has been for some of them to register their vessels, or flag out
to registries that provide more convenience and are amenable to their economic
interests.
2.2.2 The Open Registry System
In the open registry system, the stringent requirements of the closed registry system
are absent or greatly diminished. Supporters of and participants in the open registry
system view ship registration as an economic activity, that is, a service provided for a
fee rather than as a statement of sovereignty.
34 Opponents of the open registry
system have referred to these less stringent flag states as flags of convenience.
This term has become stigmatized, because it conveys the impression that such a
flag harbours sub-standard ships where the ship registration regime is devoid of any
regulatory control by the flag state authorities. They are viewed as bearing the
following characteristics:
• the country of registry allows ownership and/or control of its merchant vessels by
non-citizens;
• Access to the registry is easy. A ship may usually be registered at a consul’s office
abroad. Equally important, transfer from the registry at the owner’s option is not
restricted;
• Taxes on the income from the ships are not levied locally or are low. A registry
fee and an annual fee, based on tonnage, are normally the only charges made. A
guarantee or acceptable understanding regarding future freedom from taxation
may also be given;
• Receipts from very small charges on a large tonnage may produce a substantial
effect on its national income and balance of payments; and
• Manning of ships of non-nationals is freely permitted.
35
33 Mukherjee and Brownrigg (2013), p. 205.
34 Ibid. pp. 205–206.
35 Ready (1998), p. 6.
Ship Nationality, Flag States and the Eradication of Substandard Ships:. . .
587