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Open Registry, the Genuine Link and the 1986 Convention on Registration Conditions for Ships*

Published online by Cambridge University Press:  07 July 2009

H.W. Wefers Bettink
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Ever since its origin in the early 1920s, open registry shipping has been the subject of much debate in international, governmental and industrial shipping circles. The first opposition came from labour unions in traditional maritime countries, whose members' jobs were threatened by the transfer of ships to Liberia, Panama and other open registry countries. Later, shipowners from a number of European countries persuaded their governments to take action against the unfair competition which in their opinion was presented by open registries. In the 1970s, developing countries called for them to be phased out, as they felt that the existence of open registries hampered the development of their merchant fleets.

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Netherlands Yearbook of International Law , Volume 18 , December 1987 , pp. 69 - 119
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Copyright © T.M.C. Asser Press 1987

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References

*** The author is indebted to Professor Piet Jan Slot of Leyden University, for his encouragement and valuable criticism throughout the writing of this article. Thanks are also expressed to former colleagues at the Netherlands' Directorate-General of Shipping and Maritime Affairs for their assistance and information, especially Mr. Hans de Jong, Ms. Eva Meijer and Ms. Sylvie Maier. Special thanks to Ms. Anneke Siersema of the Documentation Section for helping to locate and exploit numerous sources of information.

1. The terms ‘flag of convenience’ or ‘flag of necessity’ are perhaps better known than the expression ‘open registry’, which has been popularized by UNCTAD. As this article focuses on UNCTAD's involvement in the matter, the term ‘open registry’ will be used.

2. McConnell, M.L., ‘Darkening Confusion Mounted Upon Darkening Confusion: The Search for the Elusive Genuine Link’, 16 Journal of Maritime Law and Commerce (1985) pp. 365–396Google Scholar. McConnell clearly demonstrates that the central issue in the genuine link debate has always been the competitive advantage which could be obtained by registration of ships on open registries. While opponents considered this ‘unfair’, users of open registries claimed it was a ‘necessity’ or at least a ‘convenience’.

3. Boczek, B.A., Flags of Convenience. An International Legal Study (1962) p. 9Google Scholar, mentions the transfer of two cruise ships in 1922 from the American to the Panamanian register, to evade the prohibition on selling or transporting alcoholic beverages on board American-owned vessels. R. Carlisle, who in his Sovereignty for Sale (1981) makes a historical analysis of open registries, demonstrates at p. 17 that the real motives were the possibility of saving on crew costs and to evade burdensome inspection regulations. Similar reasons were given by the buyer of six freighters which the US Government had confiscated from the Central Powers during World War I, when these were transferred to a Panamanian registry in 1922, ibid., pp. 9–11.

4. Amendments to the Neutrality Act of November 1939 prohibited American ships from entering war zones, i.e., the East Atlantic. Registration in Panama enabled American companies to evade this prohibition and to keep their ships in a trading position with the United Kingdom and Western Europe, Carlisle, op.cit. n. 3, p. 71 et seq.

5. Liberia had a special relationship with the US as it had been founded in 1822 on the West Coast of Africa by liberated American slaves. The Liberian register was set up by former US Secretary of State Edward Stettinius Jr., in response to requests from American shipowners looking for an alternative to Panamanian registration. As Carlisle explains his initiative was partly philanthropic, partly commercial. Under an agreement with the Liberian Government he set up the Liberia Company to implement plans for Liberia's development: Carlisle, op.cit. n.3, p. 115 et seq. Profits were to be shared with the Liberian Government. Stettinius was to set up the International Trust Company in New York, to handle the registration of ships. It was kept separate from the Liberia Company and was purchased by the International Bank of Washington in 1954. See also Boczek, op.cit. n. 3, p. 13.

6. The Transport Studies Group of the Central London Polytechnic, which has been concerned with open registries since 1976, defines a country of open registry as:

‘A State whose government sees registration not as a procedure to impose sovereignty and hence control over its shipping but as a service which can be sold to foreign shipowners wishing to escape the fiscal or other consequences of registration under their own flags.’

See Grundey, K., Flags of Convenience in 1978 (1978) p. 2Google Scholar.

An often cited definition is that contained in the so-called Rochdale report:

‘(i) The country of registry allows ownership and/or control of its merchant vessels by non-citizens.

(ii) Access to the registry is easy. A ship may usually be registered at a consul's office abroad. Equally important, transfer from the register at the owner's option is not restricted.

(iii) 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.

(iv) The country of registry is a small power with no national requirement under any foreseeable circumstances for all the shipping registered, but receipts from very small charges on a large tonnage may produce a substantial effect on its national income and balance of payments.

(v) Manning of ships by non-nationals is freely permitted.

(vi) The country of registry has neither the power nor the administrative machinery effectively to impose any government or international regulations, nor has the country the wish or the power to control the companies themselves.’

See Committee of Inquiry into Shipping (1970), a Report by its Chairman, Lord Rochdale, p. 51.

7. In addition, Malta, Gibraltar and Vanuatu are considered open registries. The following countries have been considered open registries in the past: Costa Rica, Honduras, Lebanon, Somalia and Singapore. Grundey, op.cit. n. 6, p. 9 mentions as quasi-open registries, the Bahamas, Bermuda, the Seychelles, the Cayman Islands and the Maldives.

8. Plans for offshore registers have also been forwarded for the Åland Islands (Finland), the Canaries (Spain) and Heligoland (FRG). Furthermore, Yugoslavia has proposed setting up an international register, as has Luxembourg. See various reports in Lloyd's List in October-December 1986.

9. Naess, E.D., The Great PanLibHon Controversy (1972) p. 3 et seq.Google Scholar, tells of the registration of whaling ships in Panama in 1933, which for tax reasons were transferred from British registry.

10. Action on the Question of Open Registries, a Report by the UNCTAD Secretariat, TD/B/C.4/220 of 3 March 1981.

11. Kerr, D.A. and Gold, E., ‘Flags of Convenience — the “Offshore” Registration of Ships’, in Gold, E., ed., New Directions in Maritime Law (1978) p. 93Google Scholar. Action on the Question of Open Registries, op.cit. n. 10, pp. 7 - 10. See also G.R. Jantscher, Bread upon the Waters. Studies in Economic Regulation. Structure of World Shipping, a Report by the UNCTAD Secretariat, TD/B/C.4/301 of 25 August 1986. Chapter I sub B (pp. 5 - 11) deals with investment and support policies in shipping and shipbuilding.

12. Action on the Question of Open Registries, op.cit. n.10, p. 27.

13. For instance, in the Netherlands the conditions required for the granting of a shipping investment subsidy include the requirement of six years continued operation under the national flag and the manning of the ship with nationals (in as far as this is allowed under the EEC-treaty). In case of new ship construction, national ship yards are favoured.

14. According to Boczek, op.cit. n. 3, at p. 11, the possibility of saving on crew costs had been the primary reason for American owners since the first registrations in Panama prior to W.W.II. See also Metaxas, B.N., Flags of Convenience: a Study of Internationalisation (1983) p. 77Google Scholar; Economic Consequences of the Existence or Lack of a Genuine Link between Vessel and Flag of Registry, a Report by the UNCTAD Secretariat, TD/B/C.4/168 of 10 March 1977, p. 73; Kerr and Gold, op.cit. n. 11, p. 93; Carlisle, op.cit. n. 3, pp. 9–17.

15. Comparative Labour Costs, a Report by the UNCTAD Secretariat, TD/222/Supp. 4 of 21 December 1978. Another indicator is the basic rate for the wages of an Able Seaman (excluding all fringe benefits, special allowances, overtime and other extras).

Table 2. Basic rate Able Seaman in US $ per month

16. See Bergstrand, S.J., ‘Buy the Flag. Developments in the Open Registry Debate’, Discussion paper no. 13, Transport Studies Group, Polytechnic of Central London (1983) p. 59 et seq.Google Scholar

17. ‘Changing Loyalties as Owners Ship Out’, Seatrade Business Review (1986) pp. 6–9Google Scholar. See also various articles in Lloyd's List in October-December 1986.

18. The worst ship related oil spill on record is the 300,000 tons which entered the sea as a consequence of the collision between the Atlantic Empress (Liberia) and the Aegean Captain (Greece) in July 1979. Other massive spills involving open registry tankers were the 1978 Amoco Cadiz disaster (220,000 tons) and the 1967 Torrey Canyon accident (110,000 tons), which were both registered in Liberia.

19. The conventions are the 1974 Convention on Safety of Life at Sea (SOLAS), the 1966 Loadlines Convention, the 1969 Tonnage Measurement Convention, the 1973/78 Convention on the Prevention of Marine Pollution from Ships (MARPOL) and the 1978 Convention on Standards of Training, Certification and Watchkeeping for Seafarers (STCW). The latter has not yet been ratified by Panama. Liberia does not accept ships which are more than twenty years old, although this does not apply to existing registrations. Recently, maritime law has been amended to allow for registration of ships up to 25 years of age, provided the ship has previously been registered in Liberia and the change in registration results from a sale; Lloyd's List (29 January 1987). The Liberian inspection service started in 1971. In 1982 it employed over 200 inspectors in over 150 major ports around the world. They are independent from the six classification societies which Liberia has authorized to issue certain safety and other convention certificates.

See Wiswall, F.L., ‘Port State Enforcement of IMCO-originating Safety Legislation — a Liberian Perspective’Google Scholar, a paper presented at the Shipcare 82 Conference. The Panamanian efforts date back to the early 1980s. See Bergstrand, loc.cit. n. 16, p. 36 et seq; Metaxas, op.cit. n. 14, p. 58.

20. In several cases, total loss statistics have been cited to point out that open registry ships are less safe than ships on other registries. See for instance Doganis, R.S. and Metaxas, B.N., The Impact of Flags of ConvenienceGoogle Scholar, Research report no. 3, Transport Studies Group, Polytechnic of Central London (1976); OECD, Report by the Maritime Transport Committee on Flags of Convenience (1975)Google Scholar; Grundey, op.cit. n. 6, p. 25 et seq. Bergstrand, who has calculated weighted loss ratios for ten flags over the period 1975–1980, taking into account the size, age and type of ships, (loc.cit. n. 16, at p. 19 et seq.) submits that analyses of total loss statistics (including his own) do not give an accurate picture of a flag's safety record, because safety covers a much wider field than just total losses. However, as there are hardly any statistics for less serious casualties or for accidents to crew members (which are also indicative of a flag's safety record) the only statistics available — on total losses — are used to indicte safety standards. Bergstrand's analysis of the weighted loss ratios of ten different flags for 1975–1980 leads to the conclusion that Sweden is very safe; Italy, the UK and Singapore (then an open registry) are relatively safe; Liberia and India are relatively unsafe; and Greece, Panama, South Korea and Cyprus are very unsafe (see Bergstrand, p. 29) A similar analysis by Drewry covering the period 1978–1983 concludes that the loss rate for the UK, US, Norway, Singapore, Brazil, France and Japan are considerably below that expected on the basis of the composition of these fleets in respect of type, size and age. Italy, Liberia and India have rates close to or marginally above expected levels, whereas the records of Cyprus, Panama, Greece and South Korea is appreciably worse than might be expected; Drewry, H.P. Shipping Consultants, ‘Summary and Conclusions’, An Analysis of Safety Records of the World's Merchant Fleets (1984) pp. 5–8.Google Scholar

21. Liberia annually received between US $ 18 and 24 million during the 1980s from registration fees. This did, however, amount to some 10% of the total national income: Lloyd's Shipping Economist (November 1986) p. 11.Google Scholar

22. Beneficial Ownership of Open-registry Fleets, 1984, a Report by the UNCTAD Secretariat, TD/B/C.4/290.

23. See Farrell, S., ‘The Use of Flags of Convenience by Latin American Shipping’, 11 Maritime Policy and Management (1984)CrossRefGoogle Scholar. According to this article, Brazil, Chile, Mexico and Venezuela each had 200,000 tons dwt. or more registered in open registries in 1981.

24. International Labour Office, Substandard Vessels, Particularly those Registered Under Flags of Convenience, Report V, Preparatory Technical Maritime Conference (1975) p. 3Google Scholar. In this report, reference is made to the ILO's Minutes of the Tenth Session of the Joint Maritime Commission, ILO (1934).

25. Carlisle, op.cit. n. 3, p. 110, submits that these owners were faced with competition from Europe, where the UK and Norway sought to rebuild the fleet they had lost during the war, with the help of government aid. Again, the possibility of avoiding payment of taxes and to cut labour costs were the main attractions of the Panamanian registry.

26. International Labour Office, Conditions in Ships Flying the Panama Flag, Report of the Committee of Enquiry of the International Labour Organisation (1950). According to Carlisle, op.cit. n. 3, pp. 139–141, shipowners and governments from traditional maritime States from Europe backed the ILO investigation. They ‘were in a good position to discredit Panamanian registry, for they controlled the committee’ (it was composed of a government representative from Belgium, an employer's representative from the Netherlands and a union official from the UK).

27. Northrup, H.R. and Rowan, R.L., The International Transport Workers' Federation and Flag of Convenience Shipping (1983) pp. 43–45.Google Scholar

28. According to Boczek, op.cit. n. 3, p. 30, in 1962 the American scale was the highest in the world and under United States law all the officers and at least 75% of the crew aboard a US flag vessel had to be American citizens. He cites an example in which daily manning costs for a 16,500 tons dwt F-2 tanker were US $ 1200 under the US flag and only US $ 280 under an unspecified foreign flag.

29. Boczek, op.cit. n. 3, p. 68; Northrup and Rowan, op.cit. n. 27, p. 45.

30. Already during World War II, the US Government had used American owned ships registered abroad, notably in Panama. After the war the doctrine of effective US control was developed, on the basis of this practice. The doctrine held that charter agreements between the Government and the American owners of ships registered in particular foreign countries — such as Panama and later Liberia — put these ships under effective US (management) control in case of emergencies. It was realized, however, that this would only be the case if the country of registry renounced its prerogative as a flag State to requisition these ships in times of emergency and allowed the ships to return to the US if an emergency arose there. This was the case with Panama and Liberia. Carlisle, op.cit. n. 3, pp. 193–216; Boczek, pp. 188–208.

31. International Labour Office, Report IV, Flag Transfer in Relation to Social Conditions (1957) p. 5 et seq.Google Scholar

32. Resolution 174 (II), adopted on 21 November 1947, UN GAOR A/CN.4/4 (1949) p. 1. The Committee's composition changed somewhat over the seven years of its deliberations and included experts from Bolivia, Brazil, China, Colombia, Cuba, Czechoslovakia, France, Greece, India, Mexico, the Netherlands, Panama, Sweden, Syria, the USSR, the UK and the US.

33. See Boczek's account of the deliberations within the ILC, op.cit. n. 3, p. 214 et seq.

34. McDougal, M.S. and Burke, W.T., The Public Order of the Oceans (1962) p. 798 et seq.Google Scholar, traces as the origin of the principle the opinion of Sir William Scott (Lord Stowell) in the Le Louis (1817) 165 Admir. Rep. 1464. According to Boczek, op.cit. n. 3, p. 94, the notion of nationality of ships was not fully developed until the 1830s. Until the end of the eighteenth century merchant vessels were allocated to nationals of the State, not to the State itself. Meijers, H., The Nationality of Ships (1967) at p. 2Google Scholar describes nationality as a concept comprising the rights and duties of a State in respect of the ship vis-à-vis other States.

35. According to Boczek, op.cit. n. 3, pp. 221–222, Alfaro from Panama, a representative of this school of thought, recognized a decline of the principle of absolute sovereignty, which was generally being supplanted by the concept of the interdependence of States. Therefore he recognized that international law could place limitations on the freedom of each State to set registration conditions. Alfaro proposed to include a principle which would limit States' freedom by requiring that the registration legislation should not prejudice the interests of other States, particularly in regard to dues, taxes and to industrial legislation: ILC Yearbook 1951, vol. 1, p. 330.

The traditional school was supported by the opinion of the Permanent Court of Arbitration in The Hague in the arbitral award of 8 August 1905 in the Muscat Dhows case between France and Britain (Scott, J.B., ed., The Hague Court Reports (1916) pp. 93–109Google Scholar). The Court proclaimed that ‘generally speaking, it belongs to every sovereign to decide to whom he will accord the right to fly his flag and to prescribe the rules governing such grants …’ Proponents of the traditional school include Oppenheim, L.F.L., International Law, Lauterpacht, H., ed., vol. 1, 8th edn. (1955) p. 595Google Scholar; Fauchille, P., Traité de droit international public, vol. 1, pt. 2 (1925) p. 899Google Scholar; Calvo, C., Le droit international théorique et pratique, vol. 2, 5th edn. (1896) p. 522Google Scholar, cited by Boczek, op.cit. n. 3, p. 103, n. 39.

36. François was the clear proponent of this school in the ILC. He refers to Neumeijer, K., Internationales Verwaltungsrecht, vol. 3 (1926)Google Scholar and Verdross, A., Völkerrecht, 4th rev. edn. (1959)Google Scholar. See ILC Yearbook 1951 vol. 1, p. 328. Boczek, op.cit. n. 3, p. 213, adds several authors who in his opinion supported the modern school much more clearly. He mentions, inter alia, Gidel, G., Le droit international public de la mer, vol. 1 (1932) p. 81Google Scholar, and Quadri, R., Le navi private nel diritto internazionale (1939)Google Scholar who held that international law ‘in coincidence with municipal law’ lays down the principles regulating the nationality of ships.

37. By a majority vote the ILC adopted a motion recognizing the principle that the grant of nationality to ships was limited by certain principles of international law. Alfaro from Panama was the only member voting against: ILC Yearbook 1951 vol. 1, p. 330.

38. ILC Yearbook 1951 vol. 2, p. 76. In support of this François quoted a statement on the matter from the preparatory committee of the Hague Conference for the Codification of International Law of 1930, which referred to the nationality of individuals.

39. The nationality of ships is governed by Art. 311 of the Netherlands' Commercial Code. Art. 341a thereof provides that only nationals may be employed as a master on Dutch ships.

40. ILC Yearbook 1951 vol. 1, p. 333. Boczek, op.cit. n. 3, p. 225.

41. ILC Yearbook 1955 vol. 1, p. 22.

42. ICJ Rep. 1955 p. 4.

43. ICJ Rep. 1955 p. 23.

44. Boczek, op.cit. n. 3, p. 122 relates that ‘in the Nottebohm case, the Court defined the effective and real nationality of an individual as the juridical expression of the social fact of the individual's connection with his country by his behavior, his activities, his family ties, his tradition, his interests, sentiments and establishment. All these are criteria characteristic of human beings, but quite irrelevant for an inanimate object’. Similarly, McDougal and Burke, op.cit. n. 34, p. 1032, reject the comparison. Meijers, op.cit. n. 34, on the other hand, seems to accept the analogy as he frequently uses it to clarify his views on ship's nationality. See, e.g., pp. 92–93, 269–275.

45. ILC Yearbook 1956 vol. 2, p. 15. The relevant part of the proposal reads:

‘Each State may fix the conditions for the registration of ships in its territory and the right to fly its flag. Nevertheless, for purposes of recognition of the national character of the ships by other States, there must exist a genuine connection between the State and the ship.’

46. There were three votes against and nine in favour, with three abstentions. Padilla-Nervo explained his vote against — as did Faris Bey el-Khoury — by stating that it was contrary to international practice: ILC Yearbook 1956 vol. 1, p. 72.

47. ILC Yearbook 1956 vol. 2, p. 278.

48. The ILC had been aware of the vagueness but had not considered it possible to state in any greater detail what form this link should take: ILC Yearbook 1956, vol. 1, pp. 68–72.

49. United Nations Conference on the Law of the Sea, Official Records, Geneva 1958, vol. 4, p. 64.

50. The basic proposal was made by the Italian delegation, with the French adding the words ‘in administrative, technical and social matters’: UNCLOS Official Records 1958, vol. 4, p. 61. A similar proposal had come from the UK in its comments in 1956. These views were strongly supported by the UK member of the ILC, Sir Gerard Fitzmaurice, who recognized the effective control as the only correct criterion for the recognition of a ship's nationality: ILC Yearbook 1956 vol. 1. p. 262.

51. The motion was submitted by El Salvador and supported by the United Arab Republic and Iran. UNCLOS Official Records 1958, vol. 2, p. 20.

52. The text of the Convention is contained in 450 UNTS 82.

53. ICJ Rep. 1960 p. 151 et seq.

54. Boczek, op.cit. n. 3, p. 125 et seq., describes the procedural manœuvring that took place in order to prevent the election of Liberia and Panama. Instead of taking a vote on a list of eight countries, there was a separate vote for each seat. This enabled the European maritime nations to use their majority to bar the two countries from the Maritime Safety Committee.

55. ICJ Rep. 1960 p. 171.

56. Ibid.

56a. McConnell, loc.cit. n. 1, p. 377. This has proved as unfounded the fears of McDougal and Burke (op.cit. n. 34, p. 1137 et seq.) that insertion of the genuine link concept in the High Seas Convention might lead States to ‘look behind the flag’. No State seems to have followed their advice (at p. 1140) to ‘reject the segment of Art. 5 which expresses the requirement of the genuine link’.

57. The Social Conditions and Safety (Seafarers) Recommendation (no. 108), ILO Maritime Labour Conventions and Recommendations (1983) p. 4.

58. ITF Reports 1958–1959, p. 64.

59. Northrup and Rowan, op.cit. n. 27, p. 50 et seq. In the United States, the Supreme Court in 1963 ruled that the United States had no jurisdiction over foreign ships nor could it apply its laws to the internal management and affairs of such ships. Consequently, the unions' actions were not sanctioned. McCullock v. Sociedad Nacional de Marineros de Honduras, 372 US 10 (1963). In the Netherlands, the Panhonlibco decision of the Hoge Raad [Supreme Court] in 1960 declared the boycott actions contrary to contractual obligations and decided that such violations were subject to actions of injunction for damages, HR 15 January 1960, NJ 1960 no. 84.

60. Northrup and Rowan, op.cit. n. 27, p. 55 et seq.

61. According to Northrup and Rowan, op.cit. n. 27, p. 142, the ITF's Welfare Fund is growing rather than being expended on welfare activities for two reasons: legal actions of shipowners and governments against the ITF may require the return of the money in the future and the Fund is regarded as a ‘potential war chest’ for the continuing campaign against open registries. In respect of backpay, which the ITF collects from owners which have been boycotted, ‘the extent to which these monies find their way into the seaman's pockets in whose name they are collected is certainly limited’ (p. 147).

62. Northrup and Rowan, op.cit. n. 27, pp. 56–70 (Scandinavia) and 78–88 (UK).

63. Such as the tankers owned and chartered by the major oil companies. Northrup and Rowan mention boycotts in Scandinavia (op.cit. n. 27, p. 57 et seq.) and in the UK (ibid. p. 78 et seq.).

64. Within the ILO, the emphasis shifted in this period. In 1972 the Joint Maritime Commission unanimously adopted a resolution on substandard ships, particularly those registered under flags of convenience. The issue was put on the agenda of the Preparatory Technical Maritime Conference of the ILO, which met in October 1975. Prior to the meeting, the ILO had prepared a report on substandard ships, which concluded that a ‘shift of emphasis has recently taken place from discussion of the specific, yet somewhat elusive question of “flags of convenience” to consideration of the more general and socially relevant question of “substandard vessels” wherever they may be registered’, International Labour Office, Substandard Vessels, Particularly those Registered under Flags of Convenience, Report V, Preparatory Technical Maritime Conference (1975) p. 16Google Scholar. For a report on the discussions, see ibid. Report V (1) (1975). The report proposed to adopt a general convention on substandard ships, which was to become ILO Convention no. 147.

65. Merchant Shipping (Minimum Standards) Convention, 1976 (no. 147), ILO Maritime Labour Conventions and Recommendations (1983) p. 13.

66. The following Conventions and Recommendations contained in the Appendix to the Convention, are to be applied by contracting States:

Minimum Age Convention, 1973 (No. 138), or

Minimum Age (Sea) Convention (Revised), 1936 (No. 58), or

Minimum Age (Sea) Convention 1920 (No. 7);

Shipowners' Liability (Sick and Injured Seamen) Convention, 1936 (No. 55), or

Sickness Insurance (Sea) Convention, 1936 (No. 56), or

Medical Care and Sickness Benefits Convention, 1969 (No. 130);

Medical Examination (Seafarers) Convention, 1946 (No. 73);

Pevention of Accidents (Seafarers) Convention, 1970 (No. 134) (Arts. 4 and 7)

Accommodation of Crews Conventions (Revised), 1949 (No. 92);

Food and Catering (Ships' Crews) Convention, 1946 (No. 68) (Art. 5);

Officers' Competency Certificates Convention, 1936 (No. 53) (Arts. 3 and 4);

Seamen's Articles of Agreement Convention, 1926 (No. 22);

Repatriation of Seamen Convention, 1926 (No. 23);

Freedom of Association and Protection of the Right to Organise Convention, 1948 (No. 87);

Right to Organise and Collective Bargaining Convention, 1949 (No. 98).

In the original proposal for the convention, the Appendix also included SOLAS 1960 (or 1974 when it would enter into force), Loadlines 1966, COLREG 1960 (or 1972 when it would enter into force) and OILPOL 1954 (or MARPOL when it would enter into force) See ILO Report V(2), Substandard Vessels, Particularly Those Registered Under Flags of Convenience, (1976) p. 17Google Scholar. In response to a questionnaire from ILO after the 1975 Preparatory Conference, a majority of States suggested deleting the IMO Conventions. The proposed ILO Convention allowed States to apply standards which were ‘substantially equivalent’ and, while this was deemed acceptable for ILO standards, it was feared that this would weaken the strict IMO-safety standards. See ILO Report V(2), Substandard Vessels, Particularly Those Registered Under Flags of Convenience (1976).

In the end, it was agreed to retain the linkage between the ILO instruments and the remaining IMO conventions (SOLAS, Loadlines and COLREG), as they do affect the conditions on board. Therefore, Art. 5 ILO no. 147 now provides that only States which have ratified these three IMO conventions can become a party to ILO no. 147.

67. Northrup and Rowan, op.cit. n. 27, p. 132, Table IV-10 shows that the amount rose from 95 in 1970 to 640 in 1975 and 1,307 in 1980. After 1982 the number declined (1,722 in 1983).

68. ITF: Tactics Change but FOC Campaign Continues, Lloyd's Shipping Economist (1984) pp. 8–11.Google Scholar

69. Northrup and Rowan, op.cit. n. 27, p. 96 et seq.

70. TD/B/C.4/NGO/11. This statement was elaborated by the representative of the International Confederation of Free Trade Unions at the May 1981 special session of UNCTAD's Shipping Committee, dealing with open registries: TD/B/855, p. 11.

71. The developing countries feel that the elimination of open registries would induce shipowners to register ships in their countries instead. See section 7.2 supra.

72. OECD, Maritime Transport (1971) pp. 85–86.Google Scholar

73. Ibid. Chapter V. This was not the first time that the OECD contemplated open registries. In 1958 it had already reported on the unfair competition aspects of their existence. See, OECD. Study on the Expansion of the Flags of Convenience Fleets and Various Aspects Thereof, Doc. C (57) 246, 28 January 1958.Google Scholar

74. Maritime Transport, op.cit. n. 72, pp. 103–107.

75. On 8 June 1972, the MTC decided to establish an Ad Hoc Group on Flags of Convenience to review various national and international aspects of the open registry phenomenon. The Group reported in 1975, OECD, Report by the Maritime Transport Committee on Flags of Convenience (1975).Google Scholar

When the standards of Liberian flag ships were discussed in the 31st meeting of the Maritime Safety Committee of IMO in 1974, the UK representative said that a more profitable approach would be to deal with the problem of substandard ships irrespective of their flag. At MSC's next meeting in March 1975 the matter was referred to an ad hoc working group which reported to the 33rd meeting of the MSC. The working group in its report (WGS I/4 of 31 July 1975) recommended control procedures in order to develop and strengthen the existing arrangements under IMO Conventions. These were examined by the MSC at its thirty-third session in September 1975. The Committee adopted a draft resolution which was transmitted to the Assembly for adoption. See MSCXXX III/18 of 2 October 1975, Report of the Maritime Safety Committee on its thirty-third session. The Assembly adopted Resolution A. 321 (IX) on Procedures for the Control of Ships in March 1976. Since then, the MSC has developed and updated guidelines for the inspection of ships.

76. Well publicized were the stranding of the Arrow (Liberia) on Canada's East Coast, in February 1970, the collision in which the Pacific Glory (Liberia) was involved in May 1970, and the accidents in the United States in January — March 1971 involving three US flag tankers: the Oregon Standard, the Esso Gettysburg and the Texaco Oklahoma. Infamous later pollution accidents included the Greek tanker Zoe Colocotronis which became stranded in March 1973 on the Puerto Rican coast, and the Netherlands Antilles' flag Metula which in August 1974 became stranded in the Magellan Straits.

77. The Maritime Safety Committee prepared a revision of the 1960 Convention for the Prevention of Collisions at Sea (adopted in 1972), the 1960 SOLAS Convention (adopted in 1974, amendments adopted in 1978, 1981, 1983 and 1986) and several amendments to the 1966 Loadline Convention. In addition, it elaborated the 1978 Convention on Standards for Training, Certification and Watchkeeping for Seafarers. In 1973 IMO prepared the MARPOL Convention for which amendments had been prepared by IMO's Marine Environment Protection Committee in 1978, 1981 and 1986.

78. See section 7, supra.

79. Resolution A.500 (XII), adopted on 20 November 1981, containing the Objectives of the Organization in the 1980s. Doc. A XII/Res.500 of 8 January 1982. At UNCLOS III, the developing countries had requested to include a double standard in environmental matters. They proposed the inclusion, in the part on the protection of the marine environment, of a provision which would authorize a developing country to disregard its duties under that part, if that was warranted by that State's economic and financial ability and its stage of economic development: Doc. A/CONF.62/C.3/L 1 of 22 August 1974. The proposal was eventually defeated in the Third Committee.

80. Supra. This clause is contained in SOLAS 1974/78 (Art. 2 jo. regulation 19 of Chapter I), MARPOL (Art. 5, para. 2, jo. Art. 6), STCW (Art. X jo. reg. 1/4) and ILO no. 147 (Art. 4). In addition, in 1976, the IMO Assembly adopted Resolution A.321 (IX), on the procedures for the control of ships. In 1981 this was followed by Resolution A.466 (XII).

81. For instance, Arts. 67 and 69 of the Dutch Schepenwet (Ships Act of 1909) and Art. 462 of the UK Merchant Shipping Act 1894.

82. MTC Report on Flags of Convenience, p. 1.

At the 32nd meeting of IMO's MSC, in March 1975, the United Kingdom submitted a document that may have been the basis for the Netherlands' proposal (MSC/XXXII/15). In this submission attention was drawn to the Articles of SOLAS 1960 and Loadlines 1966 which enabled the port authorities to detain a ship until it could proceed to sea without any danger to passengers or crew. The United Kingdom considered that much could be done to reduce the number of substandard ships if these procedures were fully and effectively operated. To achieve this, a sort of intelligence service was proposed. In the opinion of the Netherlands — and especially the then Director-General of shipping, Dr. Jansen — it was necessary to undertake action against substandard ships because of the great dangers involved with respect to the safety of passengers and crew, the threat to the environment and the unfair competition by these ships. The meeting, convened by the Netherlands in September 1976, was attented by representatives from Belgium, Denmark, France, the Federal Republic of Germany, the Netherlands, Norway, Sweden and the United Kingdom.

83. On 2 March 1978 the representatives of the eight maritime administrations in The Hague signed the Memorandum of Understanding between certain Maritime Authorities on the maintenance of standards on merchant ships. On 1 November 1980 Greece acceded to the MOU Parties to the revised MOU, which was signed in Paris on 26 January 1982, and included the nine signatories to the previous MOU, as well as Finland, Ireland, Italy, Portugal and Spain.

84. These include the following international conventions and all amendments thereto in force:

— the International Convention on Load Lines, 1966;

— the International Convention for the Safety of Life at Sea, 1974, as amended by the Protocol of 1978;

— the International Convention for the Prevention of Pollution from Ships, 1973, as modified by the Protocol of 1978;

— the International Convention on Standards of Training, Certification and Watchkeeping for Seafarers, 1978;

— the Convention on the International Regulations for Preventing Collisions at Sea, 1972;

— the Merchant Shipping (Minimum Standards) Convention, 1976 (ILO Convention no. 147).

85. Section 1.3 of the MOU reads: ‘Each Authority will achieve, within a period of three years from the coming into effect of the Memorandum, an annual total of inspections corresponding to 25% of the estimated number of individual foreign merchant ships, hereinafter referred to as “ships”, which entered the ports of its State during a recent representative period of twelve months.’

86. It may be concluded from the 1985 annual report of the Memorandum's secretariat that most ships sailing to a port in a State which has signed the MOU now comply with the standards of the modern IMO and ILO conventions.

87. The co-operation would initially be confined to an exchange of information and an invitation to attend each other's meetings on the subject.

88. United Nations Convention on the Law of the Sea, done at Montego Bay, 10 December 1982. The Convention is published as part of: The Law of the Sea. United Nations Convention on the Law of the Sea with Index and Final Act of the Third United Nations Conference on the Law of the Sea (1983). Part XII of the Convention, containing Arts. 192 to 237, concerns the protection and preservation of the marine environment.

89. Under Art. 211 of UNCLOS the scope of a coastal State's pollution legislation in respect of ships is extended to include the 200 mile exclusive economic zone, provided the rules and standards do not exceed those which are internationally accepted. Under Art. 220 a State has the power to enforce those rules and standards on board ships navigating through its exclusive economic zone, including the power to stop and inspect a ship which is suspected of violations and to detain it if warranted by the evidence. Perhaps even more important is the power which is attributed to a State under Art. 218, paras. 1 and 2 to institute proceedings against a foreign ship in its ports in respect of a violation of international discharge standards which occurred on the high seas. This jurisdiction of the port State concurs with the traditional penal jurisdiction of the flag State over acts committed by a ship flying its flag on the high seas.

89a. McConnell, loc.cit. n. 2, p. 380. There are no indications in the records of UNCLOS' Second Committee — which covered nationality of ships — that the concept of an economic link has been discussed at UNCLOS III. According to Mr. A. Bos, who represented the Netherlands in the Second Committee, no such discussion took place in full Committee meetings, although it may have been deliberated in an informal group.

89b. The discussion took place in the Ad hoc Intergovernmental Working Group on the economic consequences of the existence or lack of a genuine link between vessel and flag of registry. The Report is contained in TD/B/C.4/177 of 16 March 1978.

90. The proposal of the United Kingdom on behalf of the OECD member States is contained in DOC.A/CONF.62/C.2/L54.

The text of Art. 94 paras. 1 and 2 of the UNCLOS Convention is reproduced in section 7.3. Paras. 3 and 4 provide:

‘3. Every State shall take such measures for ships flying its flag as are necessary to ensure safety at sea with regard, inter alia, to:

(a) the construction, equipment and seaworthiness of ships; (b) the manning of ships, labour conditions and the training of crews, taking into account the applicable international instruments; (c) the use of signals, the maintenance of communications and the prevention of collisions.

4. Such measures shall include those necessary to ensure:

(a) that each ship, before registration and thereafter at appropriate intervals, is surveyed by a qualified surveyor of ships, and has on board such charts, nautical publications and navigational equipment and instruments as are appropriate for the safe navigation of the ship; (b) that each ship is in the charge of a master and officers who possess appropriate qualifications, in particular in seamanship, navigation, communications, in particular in seamanship, navigation, communications and marine engineering, and that the crew is appropriate in qualification and numbers for the type, size, machinery and equipment of the ship; (c) that the master, officers and, to the extent appropriate, the crew are fully conversant with and required to observe the applicable international regulations concerning the safety of life at sea, the prevention of collisions, the prevention, reduction and control of marine pollution, and the maintenance of communications by radio.’

91. Soviet protests have been made at IMO and UNCTAD. The matter was studied within UNCTAD pursuant to Resolution 49 (X) of the Committee on Shipping of June 1982. The report which was issued in October 1984, concluded that: ‘it would not appear that there is evidence that discrimination [against particular flags] has been practiced in the implementation of the MOU agreement’: TD/B/C.4/275, at p. 11.

92. See n. 79 supra.

93. Gold, E., Maritime Transport. The Evolution of International Marine Policy and Shipping Law (1981) at p. 275 et seq.Google Scholar Gold gives an inspiring analysis of the problems encountered by the newly independent countries after the Second World War, and the reluctance of the former colonial powers to bridge the economic gap between the rich and the poor countries.

See also UNCTAD's The History of UNCTAD (1985), Chapter IV concerns shipping.

94. Gosovic, B., UNCTAD: Conflict and Compromise (1972) p. 142 et seq.Google Scholar

95. Gosovic, op.cit. n. 94, pp. 146–150; Gold, op.cit. n. 93 at p. 279, also refers to Singh, N., Achievements of UNCTAD I (1964) and UNCTAD II (1968) in the Field of Shipping and Invisibles (1969).Google Scholar

96. Gosovic, op.cit. n. 94, pp. 146–150; Gold, op.cit. n. 93, p. 280.

97. Gold, op.cit. n. 93, p. 349 et seq.

98. Official Records of the Trade and Development Board, Tenth Session. Supplement no. 5, Report of the Committee on Shipping on its fourth session, TD/B/301.

99. Denmark, Finland, Norway, Sweden, Switzerland, the United Kingdom and the United States. Fifty-eight developing countries voted for adoption of the Code, as did the socialist countries of Eastern Europe, China and the Group B countries of Australia, Belgium, France, the Federal Republic of Germany and Japan. Abstentions came from Canada, Greece, Italy, the Netherlands and New Zealand.

100. Around 63% of all exports and 18% of imports. See Review of Maritime Transport (1972) p. 3Google Scholar; a Report by the UNCTAD Secretariat (1975) Table 3 on pp. 8–9.

101. Proceedings of the United Nations Conference on Trade and Development, Third Session, vol. I Report and Annexes, Annex I, p. 101.

102. See Finance for Ship Purchase, a report by the UNCTAD Secretariat; TD/B/C.4/139 of 19 September 1975. The discussions are represented in: Official Records of the Trade and Development Board, Fourteenth Session. Supplement no. 2, Report of the Committee on Shipping on its Sixth Session, 29 July - 9 August 1974. TD/B/521.

The depressed market conditions in 1970 increasingly induced governments to subsidize their shipyards, thus enabling better terms to be offered than previously. See Report of the Group of Experts on improved methods of financing ship acquisition by developing countries, held at the Palais des Nations, Geneva, from 29 May to 2 June 1978. TD/B/C.4/179 of 24 July 1978.

103. Economic Co-operation in Merchant Shipping, a report by the UNCTAD Secretariat: TD/B/C.4/113 of 9 October 1973.

104. Sixth Session of the Committee on Shipping, pp. 10–11.

105. Ibid, p. 31.

106. Economic Consequences of the Existence of Lack of a Genuine Link between Vessel and Flag of Registry, a report by the UNCTAD Secretariat: TD/B/C.4/168 of 10 March 1977.

107. Through nationalisation, reduction of manning levels and employment of seafarers from low-cost countries, bulk shipping could still be profitable. This was the case for instance in Norway.

108. Not all Group B countries were in favour of open registries. France, for instance, opposed open registries during the late 1970s and on several occasions called for their elimination. This opposition became stronger after the stranding of the Amoco Cadiz in March 1978 on the coast of Brittany. The subsequent breaking up of this Liberian tanker released the ship's cargo of 220,000 tons of crude oil which spilled onto the shore, inflicting damage on the tourist and fishing industries and requiring a massive clean-up operation by the French authorities.

109. This was the main conclusion of the report, although it was admitted that several developed market economy countries also had suffered from the existence of open registries, Economic Consequences, op.cit. n.106, pp. 63–66.

110. Economic Consequences, op.cit. n. 106, p. 74 at para. 229.

111. Ibid., pp. 71–72 at para. 218.

112. TD/B/C.4 (VIII)/Misc. 3.

113. Proceedings of the United Nations Conference on Trade and Development, Fourth Session, vol. 1 (1977) p. 6Google Scholar. This resolution concerns the Integrated Programme for Commodities. One of the aims thereof is the improvement of marketing, distribution and transport systems for commodities exported by developing countries and their increased participation in these activities and in their earnings from them.

114. Ibid. n. 112, at p. 5.

115. Report of the Ad hoc Intergovernmental Working Group on the economic consequences of the existence or lack of a genuine link between vessel and flag of registry, held at the Palais des Nations, Geneva, from 6 to 10 February 1978. TD/B/C.4/177 of 16 March 1978.

116. The resolution is reprinted in the Annex to the Report of the Ad hoc Working Group (see n. 115 supra).

117. Beneficial ownership of open-registry fleets, TD/222/Supp. 1 of 19 December 1978; Statistical annexes on cargo flows, TD/222/Supp. 2 of 19 December 1978; The maritime transport of hydrocarbons, TD/222/Supp. 3 of 19 December 1978; Comparative labour costs, TD/222/Supp. 4 of 21 December 1978; Trade routes of open registry vessels, TD/222/Supp. 5 of 27 December 1978; Review of trends, 1977/78, TD/222/Supp. 6 of 23 March 1979.

118. Merchant Fleet Development, TD/222 of 18 December 1978.

119. Ibid., at pp. 23–24.

120. McConnell, loc.cit. n. 2, p. 389. The UNCTAD Secretariat considers this dominance to create barriers for the entry of developing countries' fleets into bulk trade. See, e.g., Control by Transnational Corporations over Dry Bulk Cargo (TD/B/C.4/203) and Participation by Developing Countries in the Maritime Transportation of Dry Bulk Cargoes (TD/B/C.4/27).

The matter has been referred to two expert groups, which could not agree whether barriers exist or not. The reports illustrate that in the major dry bulk trades iron ore, phosphate rock and bauxite/alumina as well as in the oil trade the goods are usually sold f.o.b., which leaves it to the buyer to choose the carrier. This reflects the fact that buyers need to be certain of a regular supply, and that they have the experience and know how — and often also the ships — to secure the required transport. It also reflects a lack thereof on the side of the sellers which are usually developing countries.

Report of the Group of Experts on problems faced by the developing countries in the carriage of bulk cargoes, First session (2 to 6 March 1981) TD/B/C.4/22; Second Session (30 November to 4 December 1981) TD/C.4/234. Report of the Group of Experts on international sea transport of liquid hydro carbons in bulk, First Session (25 to 29 April 1983) TD/B/C.4/257; Second Session (30 January to 3 February 1984) TD/B/C.4/263. See also OECD's Maritime Transport 1981 (1982) pp. 42–47.

121. For an account of the discussions that took place, see Proceedings of the United Nations Conference on Trade and Development, Fifth Session, vol. I UN (1979) pp. 78–81Google Scholar. The position of the developing countries had been laid down in the so-called Arusha-declaration (the Arusha Programme for collective self-reliance and framework for negotiations). See ibid., pp. 162–163.

122. Statement on behalf of Group B States: TD (V)/NG V/CRP, 17 of 24 May 1979; Group B statement on item 14 (b), conference paper B/120 of 2 June 1979. This view had already been forwarded at the 1978 meeting of the Ad hoc working group. See Report of the working group, pp. 8–9.

123. TD(V)/CG/CRP.3 of 31 May 1979.

124. TD/RES/120 (v) of 27 June 1979. Reproduced in Proceedings of UNCTAD V, op.cit. n. 121, p. 25.

125. The Repercussions of Phasing Out Open Registries, a report by the UNCTAD Secretariat, TD/B/C.4/AC.1/5. The quoted phrase is on p. 4.

126. Legal Mechanisms for Regulating the Operations of Open-Registry Fleets During the Phasing Out Period, a report by the UNCTAD Secretariat, TD/B/C.4/AC.1/6 of 27 September 1979, p. 9.

127. The Repercussions of Phasing Out, op.cit. n. 125, p. 17.

127a. Report of the Ad hoc Intergovernmental working group on the economic consequences of the existence or lack of a genuine link between vessel and flag of registry on its second session, held at the Palais des Nations, Geneva, from 14 to 22 January 1980: TD/B/C.4/191.

128. Action on the Question of Open Registries. Open Registry Fleets, a report by the UNCTAD Secretariat, TD/B/C.4/220 of 3 March 1981.

129. Ibid., p. 6.

130. Ibid., pp. 18–19.

131. Ibid., p. 11. See also Structure of World Shipping, TD/B/C.4/301 of 25 August 1986.

132. Action on the Question of Open Registries, op.cit. n. 128, p. 28.

133. Official Records of the Trade and Development Board, Twenty-third Session. Supplement no. 3, Report of the Committee on Shipping on its Third Special Session, 27 May - 6 June 1981: TD/B/855, at pp. 4–5.Google Scholar

134. Resolution 43-S III of 5 June 1981. Third Special Session of the Committee on Shipping, p. 19.

135. The first IPG was held from 13–30 April 1982. The second was held from 8–26 November 1982. Prior to the first IPG, the UNCTAD Secretariat prepared a report on the Conditions for registration of ships (TD/B/AC. 34/a of 22 January 1982). Based on responses from 69 countries to a questionnaire concerning national requirements for registration, the report concentrates on the requirements in these countries for manning by nationals and equity participation in, and management of, a shipowning company by nationals. A table on p. 11 of the report gives an overview of the various requirements in these countries. Prior to the second IPG, the Secretariat prepared a report entitled Practices in Relation to Recording of Operators, the Use of Bearer Shares and Bareboat Charters (TD/B/AC.34/6 of 20 August 1982).

136. Carlisle, op.cit. n. 3, pp. 211–216.

137. (a) Since 1 January 1979 the EEC has been monitoring the involvement of East-European fleets in the trade between the EEC and East Africa, Central America and (since 1 July 1981) the Far East. So far, this has not resulted in conclusive evidence of dumping practices by the companies from these State-trading countries.

(b) Recently, the so-called Hard Core Group, of which Belgium, France, the Federal Republic of Germany, the United Kingdom and the Netherlands are members, has decided to take action against specific shipping companies. Consequently, the Dutch Government in 1986 requested information concerning the Soviet line, Baltic Steamship, from their Dutch-based agents, Transworld Marine. TWM has ignored the request and questioned its legality in a case before the Court of Appeal for Trade and Industry in The Hague, which commenced in October 1986.

(c) According to a recent publication on the involvement of Soviet shipping in world trade, there is considerable evidence that Soviet liner companies undercut conference rates in major markets. However, the study suggests that this is also a function of the generally poor quality of services offered by Soviet operators. See Bergstrand, S.J. and Doganis, R., The Impact of Soviet Shipping (1987).Google Scholar

138. See the report of the first IPG: TD/B/904 — TD/B/AC.34/4 and for the second session: TD/B/935 — TD/B/AC. 34/8.

139. Report of the first IPG, pp. 5–6; Report of the second IPG, pp. 8–9.

140. See sections 5 and 6 supra.

141. Resolution 2 (II) of the IPG, contained in Annex I to the Report of the second session of the IPG.

142. UN General Assembly, Official Records of the 37th session. Supplement no. 51 (A/37/51) pp. 139–140.

143. This was stated by the representative of the United States on the first day of the PrepCom meeting. Report of the Preparatory Committee for the United Nations Conference on Conditions for Registration of Ships, held at the Palais des Nations, Geneva from 7 to 18 November 1983: TD/RS/CONF/3 of 3 January 1984, p. 7.

On the general US position towards UNCTAD, see Michalak, S.J. Jr., UNCTAD: An Organisation Betraying its Mission (1983).Google Scholar

144. A set of basic principles concerning the conditions upon which vessels should be accepted on national registers (TD/RS/CONF/PC/2 of 17 March 1983).

145. Preparation of a draft international agreement on the conditions for registration of ships. Composite text: TS/RS/CONF/DC/L.3 of 17 November 1983.

146. This had already been decided in Resolution 37/209 of 20 December 1982.

147. Each of the meetings delivered a composite text, in which the gradual elimination of square brackets signified the progress of the negotiations. The texts are contained in TD/RS/CONF/10/Add. 1 of 16 August 1984 (first session, from 16 July to 3 August 1984); TD/RS/CONF/15/Add.1 of 28 February 1985 (second session, from 28 January to 15 February 1985) and TD/RS/CONF/19/Add.1 of 7 August 1985 (third session, from 8 to 19 July 1985).

148. United Nations Conventions on Conditions for Registration of Ships (TD/RS/CONF/23 of 13 March 1986).

149. For a comprehensive discussion of the text of the Convention, see Sturmey, S.G., ‘The United Nations Convention on Conditions for Registration of Ships’, Lloyd's Maritime and Commercial Law Quarterly (February 1987) pp. 97–117.Google Scholar

150. As Sturmey, ibid., p. 105, observes, it seems difficult to imagine laws and regulations which would be invalid because they were contrary to the letter of this most permissive of conventions.

151. This does not justify Sturmey's conclusion, loc.cit. n. 149, p. 101, that ‘a flag State which chooses to establish its genuine link through regulations concerning manning [i.e. Art. 9] is thus absolved from the need to exercise effective jurisdiction and control’. Admittedly, Art. 9 (contrary to Art. 8) does not require the conditions set in accordance with its own provisions, to enable the flag State to exercise such jurisdiction and control. However, for the effective exercise of jurisdiction and control compliance with the requirements prescribed under Arts. 8 and 9 is not sufficient. Even if a ship were wholly owned by and exclusively manned with nationals, this in itself would not enable the flag State to exercise effective jurisdiction and control. For this purpose, a competent and adequate maritime administration, as required by Arts. 5 and 11, are indispensable. These articles are not optional and therefore have to be implemented by all contracting parties, including those choosing a genuine link based on Art. 9. See also section 7.3.

152. The Philippine fleet, for instance, consists for a large part of ships bareboat chartered in. Since enabling legislation was adopted in 1975, the Philippine fleet has grown from 878,000 tons dwt. to 9.9 million tons dwt. by the end of 1985. See Seatrade Business Review (September/October 1986) pp. 51–55.Google Scholar

153. ‘UNCTAD Sanctions Open Registry’, reported in American Shipper (April 1986) pp. 60–61Google Scholar. The remark comes from G. Maitland, official of the International Trust Company which administers the Liberian ship registry. At the request of the International Chamber of Commerce, Maitland later gave a more thorough evaluation of the bareboat charter provisions of the Convention. These raise several important questions of private maritime law such as the applicable law in case of ranking of mortgages and of maritime liens. See ICC Document No. 321–321/INT 45 of 9 October 1986.

154. See section 6.2 supra.

155. At UNCLOS III no agreement could be reached on a definition of these terms. See van Reenen, W., ‘Rules of Reference in the New Convention on the Law of the Sea’, 12 NYIL (1981) p. 10CrossRefGoogle Scholar. According to an analysis, carried out by Prof. H. Meyers at the request of the Dutch Government, the expression ‘generally accepted’ in this context refers to those rules and standards which have been accepted as international law by the States, whose combined fleets represent the great majority of world tonnage — Internal Note of the Ministry of Transport.

156. Insurance for oil pollution damage is compulsory in States which have ratified the 1969 Convention on Civil Liability for Oil Pollution Damage. The basic principle of the Convention is that the shipowner is strictly liable for oil pollution damage caused by oil which has escaped from his tanker. The owner may limit his liability to a certain aggregate amount (according to the 1984 Protocol to the convention: 59.7 million special drawing rights) provided he is adequately insured or maintains adequate financial security.

157. A preoccupation with achieving a compromise may also explain why the Convention has failed to provide the link between registration and nationality which has been missing since the 1958 High Seas Convention. This is the provision that ships registered in a (flag) register of a particular State ipso facto have that State's nationality. Like Art. 5 of that Convention and Art. 91 of UNCLOS, Art. 4 of the Registration Convention only provides: ‘Ships have the nationality of the State whose flag they are entitled to fly.’

158. UNCTAD Sanctions Open Registry (see n. 153 supra). The ITF, disappointed at the text of the Convention, has advised governments not to ratify it as ratification would legalize open registries.

159. Sturmey, loc.cit. n. 149, p. 117.

160. In a report on the structure of world shipping for the Twelfth Session of the Trade and Development Board (TD/B/C.4/30/ of 25 August 1986) the UNCTAD Secretariat did not mention cargosharing (nor phasing out of open registries) as a means of increasing developing countries' participation in bulk trade. Instead, the report proposed to establish regional shipbroking centres in developing countries. As a first step, the report proposes to develop a pool of bulk cargo fleets in different developing regions. See also the Report on Ways and Means of Establishing Shipbroking Centres in Developing Countries on a Regional Basis (UNCTAD/ST/SHIP/3).