{"id":7449,"date":"2021-02-08T23:14:03","date_gmt":"2021-02-08T23:14:03","guid":{"rendered":"http:\/\/nome.unak.is\/wordpress\/?p=7449"},"modified":"2021-03-02T07:54:48","modified_gmt":"2021-03-02T07:54:48","slug":"what-are-these-countries-doing-here-analyzing-transparency-in-the-current-flag-of-convenience-regime-and-their-impact-on-shipping-in-the-arctic","status":"publish","type":"post","link":"https:\/\/nome.unak.is\/wordpress\/volume-16-no-1-2021\/new-double-blind-peer-reviewed-article-volume-16-no-1-2021\/what-are-these-countries-doing-here-analyzing-transparency-in-the-current-flag-of-convenience-regime-and-their-impact-on-shipping-in-the-arctic\/","title":{"rendered":"What Are These Countries Doing Here? Analyzing Transparency in the Current Flag of Convenience Regime and Their Impact on Shipping in the Arctic"},"content":{"rendered":"\n\n\n\t
\n\n\t\t<\/i><\/span> <\/a>\n\n\t<\/div>\n\n\n\n\n\n

One of the shipping industry\u2019s most systemic issues is the lack of regulation regarding Flags of Convenience (FOCs). Ships with FOCs \u201care ships registered under the maritime laws of a country which is not the home of the country of the ships; owners, because the country of registry offers low tax rates and\/or leniency in crew\u00a0and safety requirements.\u201d[1]<\/a> This lack of enforcement and regulation is made worse even worse for vulnerable environments such as the Arctic[2]<\/a> In the Arctic and Sub-Arctic States, the International Maritime Organization and the Arctic Council face the challenge of controlling and regulating these vessels under foreign flags that transit through Arctic routes. According to the United Nations Convention for the Law of the Sea (UNCLOS) Art. 24, para 1(b): \u201c[\u2026] the coastal State shall not: discriminate in form or in fact against the ships of any State or against ships carrying cargoes to, from or on behalf of any State<\/em>,\u201d[3]<\/a> meaning all flags shall be accepted unless it is proven that vessels do not comply with the international regulations in force at that time. Furthermore, as States considered FOCs are the largest carriers of gross tonnage in the world,[4]<\/a> they play a pivotal role in decision-making and the creation of treaties and conventions established under the auspices of the International Maritime Organization (IMO) and other relevant maritime bodies. Therefore, the lack of good governance from these States is translated into the international shipping regulatory framework and then put into practice by the industry.<\/p>\n

 <\/p>\n

Introduction<\/strong><\/p>\n

Because of FOCs[5]<\/a> ship owners have the flexibility to choose where to register their vessels based on cost, convenience and the international and domestic regulations that would govern their operations, including those that transit the Arctic.[6]<\/a> \u201cNevertheless, this freedom is sometimes abused and somehow ship owners end up in the hands of flag states that are incapable of enforcing international and national jurisdictions over their ships. Once again, these failed flag states are what are referred to as the FOCs.\u201d[7]<\/a> To show this lack of transparency, the authors set about to register a ship through an FOC for a ship they did not own and also show data showing unregulated, non-transparent behavior via registration already ongoing in the Arctic. This contribution will follow two previous contributions to Nordicum-Mediterraneum<\/em>\u00a0as it \u201cwill use the definition of transparency provided by Rachael Lorna Johnstone and Hj\u00e1lti \u00d3mar \u00c1g\u00fastsson, as these authors evaluate transparency according to the ease of accessing information and the quality of this information.\u201d[8]<\/a> Therefore, for the authors\u2019 experiment, \u201ctransparency<\/em>\u00a0is evaluated according to the ease of accessing information, its quality, and the timeliness of disclosure<\/strong>.\u201d[9]<\/a> The authors also support the Governance for Sustainable Human Development, the United Nations Development Programme (\u201cUNDP\u201d) definition of good governance, which \u201cdefines\u00a0good\u00a0governance\u00a0as, among other things, participatory, transparent and accountable as well as effective, equitable and as promoting the rule of law.\u201d[10]<\/a><\/p>\n

In Section II, the authors will briefly outline the current regime\u2019s failure in controlling FOCs regarding criminal, environmental and labor standards. In Section III, the authors focus specifically on the good-governance criterion of transparency in three FOC countries when it came to registering a ship called the Stena Nordica:\u00a0 Liberia, Honduras and Panama. The authors compare these findings to the high-quality vessel registration of the Arctic state of Norway and how that relates to issues within the Arctic such as current violations within the Northern Sea Route (NSR) in Section IV. Section V will briefly consider three policy recommendations for the 8 Artic States of the Arctic Council to consider, and the authors will finish with a short conclusion regarding overall transparency findings.<\/p>\n

 <\/p>\n

Gaps in the Current Regime<\/strong><\/p>\n

\u201cUse of open registers by the\u00a0shipping industry<\/a>\u00a0is increasingly dominating global trade; over the last 50 years, shipping by vessels from open registers has been growing at more than ten times the general world economic growth rate. In 1970 21.6% of vessels were registered in open registries. By 2015 this had grown to 71.3% of the global fleet.\u201d[11]<\/a> Lack of safe conditions on board due to low amounts of regulatory policies, poor pay scales for workers and improper work schedules for FOCs allow inexpensive crews to be drawn from a global labor pool. Average annual labor costs aboard German container ships, for example, were reduced by over 74% by flagging out to FOCs in 1997.[12]<\/a> In the deregulated FOC labor system, the total number of seafarers around the world has fallen as ships have been allowed to become much larger. There has also been a radical change in ocean labor\u2019s ethnic composition, as crew members have been increasingly drawn from countries with relatively low wages and living conditions\u2014leading to massive unemployment among unionized, high-wage seafarers from traditional maritime nations.[13]<\/a> \u201cJail with a salary\u201d has become a common figure of speech for work at sea in the FOC system.[14]<\/a><\/p>\n

Environmental concerns also play a massive role in the current acts of FOCs. For example, the Deepwater Horizon\u2019s registration was under the Marshall Islands,[15]<\/a> a notorious FOC, causing quite a stir in the United States\u2019 Congress, yet we saw no further restrictions on FOCs from this tragic incident.[16]<\/a> Furthermore, the illegal nature regarding the activities of Liberia\u2019s warlord and former President, Charles Taylor, was well documented as he was brought before the ICJ for war crimes, using ships on the Liberian Registry to move illegal goods, such as blood diamonds and illegal arms.[17]<\/a> Even if such a behavior is known, enforcement is nigh impossible. \u201cAs is the case with flags of convenience in the mainstream shipping industry, the process of \u2018reflagging\u2019 enables a continuous circle of non-compliant behavior, as vessels are able to re-flag to a new register when the conditions imposed by their current flag, or the consequences of non-compliant behavior under that flag, become too onerous or restrictive. Similarly, if a previously non-compliant flag State decides to mend its ways and clean up its register, or to de-register vessels in order to reduce overcapacity, de-registering a vessel can export the problem, as the vessel concerned can simply find a new, less responsible flag State.\u201d[18]<\/a><\/p>\n

 <\/p>\n

Registering of the Stena Nordica<\/strong>[19]<\/a><\/p>\n

The Stena Nordica was chosen as it is a ship in which Author Thomas Viguier used to work on as a Merchant Marine Officer in 2015 while it was under the French flag. The vessel currently resides under the Bahamian flag, and thus being flagged under an FOC, made an opportune choice for the authors to have conversations about re-flagging without raising any eyebrows. The authors also chose this vessel as the Author knew the exact details of the vessel, allowing more detailed conversations regarding gross tonnage and net tonnage, as well as other important dates regarding flagging history and construction. Furthermore, Mr. Viguier had the chance to assist to the process of re-flagging the vessel from British to French flag, going through procedures, audits and formalities required to issue all the necessary certificates in order to obtain the right to sail the French flag. Furthermore, such procedures are highlighted by the IMO in its website section \u201cLegal Affairs\u201d under the article \u201cRegistration of Ships and Fraudulent Registration Matters\u201d<\/em>.\u00a0 However, given further considerations of the scope of this paper, the authors decided not to go too far down the path of full re-flagging for legal reasons. However, the countries selected represent an Arctic State, Norway, which is highly respected for its high standards in terms of flag state regulations, and two flags of convenience: Liberia and Honduras, with the second inextricably linked to Panama.<\/p>\n

a. Norway<\/strong><\/p>\n

As all States, even if landlocked, have the right to enjoy the freedom of sailing the high seas and the right of innocent passage within territorial waters of foreign States according to UNCLOS,[20]<\/a> the above considered States may constitute possible flags that may fly in Arctic waters. As will be shown infra<\/em>, such FOCs are currently engaging in Arctic shipping in the Northern Sea Route (NSR). At the top of the safety rankings, the Norwegian Maritime Authority shows transparency and good governance, providing in their website all the regulations in force (both national and internationally) as well as all the legally required documents.[21]<\/a> In addition, the following information may be found online: the organizational structure and employees\u2019 contacts;[22]<\/a> strict rules on the selection of Class Societies are applied, with Norway being the largest and most trusted one;[23]<\/a>and fees are explicit and classified according to types of vessels, length and gross tonnage, which are fully related to the ship and are realistic according to the economic value of both the ship and the possible economic benefit.[24]<\/a>Limitations are set clearly by law for trade areas, and the NIS has legal regulations and frameworks that will rule and explicitly designate the use of the registered vessel,[25]<\/a>and all aspects of a ship\u2019s life are covered, from construction[26]<\/a> to scrapping[27]<\/a> were also found online.<\/p>\n

Norway\u2019s Maritime Authority has a high level of transparency, given the easy access to all fees, documents, and requirements in a highly navigable website, even in English, therefore satisfying the ease of access and quality our information adopted definition of transparency. Using the definition of transparency as ease of accessing information, its quality, and the timeliness of disclosure,[28]<\/a> the information was of high quality, immediately available, and available in Norwegian and English. Thus, Norway is one of the most transparent states in providing shipping registration data.<\/p>\n

b. Panama and Honduras<\/strong><\/p>\n

Panama and Honduras are interwoven, as Honduras admitted that we would need to register the vessel with Panama Port State Control to have a Honduran flag. Despite this connection, the conversations\u2019 outcomes were very different, and the information provided by both websites was not in accordance with the information provided on the phone.<\/p>\n

For Panama, the names, contact information and pictures of the board members can be found, including their organizational structure. However, Panama shows a lack of transparency on the documents required to register a vessel. Point 4 on \u201cAbanderamiento Regular\u201d (Regular flag attribution) states the Direcci\u00f3n General de la Marina Mercante reserves its right to ask for further documents for the flag attribution.[29]<\/a> On the very short phone call,[30]<\/a> conducted in Spanish, Thomas Viguier spoke with two persons. The first was a female secretary who transferred our call to a man who spoke incomprehensibly and placed Mr. Viguier on hold. The hold was subsequently cut short. Therefore, we received no information for simply asking, \u201cWe would like to register a vessel under the international registry of Panama.\u201d Again, using the authors\u2019 accepted definition from Johnstone and \u00c1g\u00fastsson, the authors classify Panama as non-transparent as the website was nearly inoperable, not all information was accessible in English, and even a native speaker could not gather more information on the phone. Furthermore, the authors could not confirm the information on the website provided was accurate, which was an issue for other countries.<\/p>\n

On the opposite end of the spectrum of transparency, Honduras had an unwieldy website where very little information regarding the board could be found.[31]<\/a> There was part labeled \u201clawyers\u201d with no names in the organizational chart, yet Mr. Viguier learned on the phone call that these lawyers are on standby to sign off on any accepted registration for a low price equivalent to 300 USD.[32]<\/a> Furthermore, there is a \u201ctransparency\u201d box on the website that lead to another complex website where opposite information may be found (e.g., the name of the General Director on the Direcci\u00f3n General de la Marina Mercante is \u201cRoberto E. Cardona\u201d[33]<\/a> and the name in the Transparency Website is \u201cJuan Carlos Rivera Garcia.\u201d[34]<\/a> The website itself raised transparency concerns before the call was even commenced.<\/p>\n

An additional red flag for transparency was information sharing. When the Authors attempted to share the website\u2019s link on Facebook, they received a message saying the link was violating the Facebook Community Standards:<\/p>\n

\"\"<\/p>\n

 <\/p>\n

 <\/p>\n

 <\/p>\n

 <\/p>\n

 <\/p>\n

Picture 1<\/strong><\/p>\n

 <\/p>\n

The three pillars of Facebook\u2019s Community standards are authenticity, safety, and privacy.[35]<\/a> Therefore, either the website itself was insecure, unauthentic, or was violating unique visitors\u2019 data privacy. The authors\u2019 thoughts are that the site was insecure as it was probably not willfully hiding authentic information or harvesting data but was a result of mere negligence in the website\u2019s maintenance. Either way, that shows a lack of upkeep by the State and allows the system to be infiltrated. In this sense, the transparency was negligible. This negligible transparency has massive repercussions due to the its insecurity as it means that it is highly vulnerable to cyberattacks by individuals or groups, leading to stolen data, deliberate spreading of misinformation, or compromising the security of the ship database itself. All of these outcomes would not only affect the State\u2019s ability to run an efficient shipping registry but could also lead to legal disputes due to lack of privacy concerns.<\/p>\n

Thomas Viguier called the phone number provided on the website,[36]<\/a> and he spoke in Spanish with a person[37]<\/a> who, within 15 minutes, gave an incredibly cheap fee for a provisional registry of the Stena Nordica,[38]<\/a> by merely taking the Gross tonnage as stated (usually the Net tonnage is used but requires specific documents to be found that are not publicly available), at around 20,000 GT, as the tonnage for calculations. The person gave us his private phone number to accelerate the process through WhatsApp, and his email. The fee was USD 8013.18 for 6 months. The only required conditions to get the provisional license were:\u00a0 The owner\u2019s official documents accredited by a lawyer from Honduras (photocopy allowed and lawyer provided) and the Certification from the Class Society.<\/p>\n

The representative told Mr. Viguier that the only delay and denial he could get was from checking the arrest file regarding the ship. Furthermore, in the official documents posted online, there is a clause we, as owners, can benefit from in which the owners receive a discount if the vessel is not arrested of up to 40%.[39]<\/a> The provisional fee is 8013.18 USD, which is half the price to the registration fee of 16,000 USD under the Norwegian International Register (NIS), and is 82.7% cheaper compared to the whole year fee of 46,310 USD under the NIS during year 1. Table 1 illustrates the calculation of both fees for a 20.000 NT vessel.<\/p>\n

 <\/p>\n

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Table 1: Fee Comparisons Between Honduran and Norwegian Registration<\/strong><\/p>\n

 <\/p>\n

The calculated fee from Honduras Maritime Authority and the one was given on the phone call aligned. The Net tonnage given on the phone was slightly smaller, justifying the difference. The person also told us that they cooperate with Panama for their international registry, being able to register a vessel in Honduras via Panama\u2019s Maritime Authorities.<\/p>\n

There were other concerns on the call since our representative pushed very hard for a deal to get done and did not ask a single question besides the information needed to get the price, such as whether the ship was in working order or it had been arrested. There were no questions about who the caller was, where the ship was currently located or who the owner was. The authors conclude that if they had had the money on hand, they could have registered the ship in a very non-transparent manner given the information requested. Given the above, Honduras had a shocking lack of transparency and may even encourage borderline illegal behavior. While access to information was easy for a Spanish speaker, an English speaker would have struggled, based on the other authors\u2019 attempts.[40]<\/a> These low prices, the little information provided, as well as inoperable websites and preferential treatment for Spanish-speakers (at least anecdotally) shows that there is little transparency in the process given the adopted definition of transparency by the authors.<\/p>\n

c. Liberia<\/strong><\/p>\n

Given that Liberia\u2019s official language is English and provided that author Jonathan Wood is a New York-barred attorney in good standing, he called the Liberian Registry office in New York City,[41]<\/a> hoping to achieve better results. He announced himself as a researcher for the University of Akureyri, attempting to fight the stigma of the term \u201cFlag of Convenience.\u201d The answerer, Claire Williams, said everyone is busy and would not speak with him, and she referred to their YouTube channel. When further elaborating on the research, she grew slightly warmer and provided her email address to make a formal inquiry. The Author made such an inquiry via email and followed up, yet never received any response. The Author reviewed online material and YouTube videos (which were thinly-veiled propaganda[42]<\/a> and testimonials), finding accessible information in English; however, the forms such as in the case of Honduras and Panama were lacking. While language was not a concern for transparency, the ease of access of information was difficult, given the many offices Liberia uses, which is 24, and the timelines of information (of which there was none). Therefore, Liberia\u2019s Registry was non-transparent, according to the authors based on their adopted definition given no information was provided, and the website itself provided no valuable information as it was a Kafka-esque experience to find a number to call to even register a vessel.<\/p>\n

 <\/p>\n

FOCs in the Arctic:\u00a0 A Growing Concern<\/strong><\/p>\n

The lack of transparency is spilling into the Arctic, as from over 23 commercial vessels that transited through the NSR in 2018, 6 were from flags of convenience (Panama, Saint Kitts and Nevis, Bahamas, Liberia, Antigua and Barbuda), representing 26% of the transit.[43]<\/a> While these numbers are small, scholars have predicted increased shipping via the NSR in the coming years, as Russia and China collaborate on infrastructure rebuilding.[44]<\/a> See Table 2, which shows NSR shipping statistics for FOC flag states.<\/p>\n

 <\/p>\n

\"\"\u00a0<\/strong><\/p>\n

Table 2: Vessels that Sailed the NSR under a FOC<\/strong><\/p>\n

 <\/p>\n

Four vessels are registered under the ice-class \u201cArc 4,\u201d which is, according to the Russian Maritime Register of Shipping, the lowest legal ice-class for Arctic ships.[45]<\/a> Moreover, one ship is a tanker registered for ice-class \u201cIce 3,\u201d which is, again, according to the Russian Maritime Register of Shipping, for non-Arctic ships.[46]<\/a> Such a ship, which sailed through the Northern Sea Route between October 23, 2018, and October 30, 2018, represented a significant oil-spill threat, given that it was below code and traversing the NSR at a time when sea ice begins to return. Finally, the last of the six ships are registered and approved for ice-class \u201cIce 1,\u201d the lowest ice-class for non-Arctic ships, and sailed through the Northern Sea Route from October 22, 2018, and October 31, 2018, showing a significant deviation from Russian legal regulations on paper and a lack of enforcement. Such FOC shipping can present danger to the environment due to its fragility and human life, given the lack of search and rescue infrastructure. Given that there is no transparency from the FOC Flag states, how are other States, let alone NGOs and individuals, to monitor the increased shipping and risk in the near future? Overall, six of the seventeen ships were not registered and approved as Arctic ships[47]<\/a>.<\/p>\n

Despite being classified as Ice-Class Arc4, vessels may follow navigation conditions depending on the service areas,[48]<\/a> the conditions varying from Extreme to Easy. However, in the document \u201cRules for the Classification and Construction of Sea-Going Ships\u201d of the Russian Maritime Register of Shipping,[49]<\/a> the conditions are not defined per se, showing a lack of good governance, as that leaves open loopholes and lets FOCs off the hook.<\/p>\n

Flexibility has always been at the core of maritime regulation, which is reflected in the IMO\u2019s conventions due to the changing nature of sea conditions. One example is Rule 2 of the COLREG 72 Convention,[50]<\/a> but at what point are conditions to be considered easy for a well-defined ice-class hull and what type of class is meant to handle strictly defined maximum ice conditions? These questions must be resolved before a catastrophic incident in the NSR or elsewhere in the Arctic.<\/p>\n

The previous analysis highlights the environmental risk the FOCs represent in the Arctic. Furthermore, following a study carried out by Arctic Council\u2019s PAME Working Group, of over 207 vessels that sailed the NSR from 2011 to 2015, 94 were tankers,[51]<\/a> representing 45% of the traffic and underlining the environmental risk in terms of oil spills in the Arctic. Based upon the above research, both online and via in-person phone calls, the authors conclude FOCs are not transparent and should be held more accountable.<\/p>\n

\u00a0<\/strong><\/p>\n

Future Policy Proposals<\/strong><\/p>\n

There are several future policy proposals to improve transparency and accountability among the FOC States. The first future policy proposal is to require transnational corporations to begin doing country-by-country reports. This type of reporting requires companies that engage in international production to name each country the company is operating in as well as all the subsidiaries and affiliates within said country, the performance and tax charge of each subsidiary and affiliate, details of the cost and net book value, gross and net assets of its fixed assets in each country.[52]<\/a> This type of report was implemented for mineral and energy companies registered with the U.S. Securities and Exchange Commission in July 2010 from the passing of the Dodd-Frank Wall Street Reform and Consumer Protection Act and has been global in its reach, given the participant States in the Leading Group.[53]<\/a> The reports detailed the payments remitted to countries of corporate origin (home) and countries of investment (host). This type of corporate, country-by-country reporting (CbC) creates a natural, albeit limited, sanction. Corporations eager to annul disclosure are forced to give up locations.<\/p>\n

Similarly, the E.U. has already begun to receive CbC corporate records \u201cto help investors to better assess the different national activities of multinational companies; and to enhance transparency about capital flows, for instance, to better enforce tax rules.\u201d[54]<\/a> This should be broadened to ensure that companies using FOCs to obfuscate dubious activity are brought to account. Implementing country-by-country reports for transnational corporations will create a transparency requirement for these companies, many of which operate shipping vessels engaged in IUU fishing. Often the FOC States do not have protections to ensure full disclosure by the owner of the ship.[55]<\/a> The owner may be trying to hide this info for financial reasons, such as gaining anonymity using a tax haven. In contrast, others may be conducting illegal activities, such as illegal fishing, money laundering, and human trafficking,[56]<\/a> and the owner wants not to be directly linked with those activities.<\/p>\n

The second future policy proposal would call for upgraded Domestic Port State Controls. Port State Controls refers to \u201cthe inspection of foreign ships in national ports to verify that the condition of the ship and its equipment comply with the requirements of international regulations and that the ship is manned and operated in compliance with these rules.\u201d[57]<\/a> By upgrading those controls, ships can be held more accountable even if the flag of which it flies under is not holding it up to the same standards. One such way is to encourage the signing of the 2017 Paris Memorandum of Understanding, which creates a White, Grey, and Black List, with Ukraine joining the latter in 2019.[58]<\/a> It has resulted in 3,781 detentions in 2016[59]<\/a> and is slowing gaining more membership.<\/p>\n

This can also be done in creative ways. In the United States on February 19, 1998, RCCL was indicted in Miami on a single count, not for dumping, but for \u201cmaking\u201d a false statement to the Coast Guard. The Nordic Empress discharged its waste in international waters, but the ship had presented the Coast Guard in Miami with an oil record book that omitted the discharge. While making a false statement to the Coast Guard is a crime in the United States, this was one of the first times the statute was used in this manner.[60]<\/a> This is an example of upgraded Domestic Port State Controls that can help prevent illegal operations that FOC states otherwise go unchecked.<\/p>\n

The final future policy proposal is to enhance regional\/international agreements. In addition to cooperative efforts, existing conventions may be strengthened by supporting international agreements, such as MOUs. Fisheries management officials have proposed bilateral agreements between states with adjacent fishing zones or RFMOs that include mutual arrest powers. For example, Australia and France recently agreed to such a treaty, which would allow a French warship, for instance, to enter Australian waters and arrest a pirate FOC-IUU toothfish vessel and allow an Australian boat to do the same in French waters.[61]<\/a> There are additional agreements regarding regulations on shipping. One such agreement is the Model Agreement on Exchange of Information put out by the Organization for Economic Cooperation and Development\u2019s Committee on Fiscal Affairs.[62]<\/a> Currently, 33 countries\/jurisdictions have made these commitments.[63]<\/a> This means those countries\/jurisdictions will begin implementing the standards laid out in the agreement of transparency and exchange of information, which include measures to ensure transparency of ownership, by allowing agreements such as the Australian and French as well as the Model Agreement on Exchange to be implemented domestically and internationally increases the ability to regulate ships in other ports and policy regarding FOC vessels.<\/p>\n

 <\/p>\n

Conclusion<\/strong><\/p>\n

The FOCs of Panama, Honduras, and Liberia are uniformly and highly non-transparent based on their adopted definition of transparency, which stands in stark contrast to the transparency of Norway. This is based on the Authors\u2019 personal experiences with live calls and comparing access to information in different jurisdictions, it is clear that FOCs are reticent to give any information over the phone and clam up if approached by any outsider, such as Jonathan Wood\u2019s call with Liberia in English. Thomas Viguier\u2019s call in Spanish to Honduras resulted in disorganized information, yet led to results that one could not call \u201cgood governance,\u201d given the pushy attitude of the Honduran representative in trying to make a sale at any cost; however, Mr. Viguier experienced silence in Spanish as well in his Panamanian call. Overall, the authors noted inaccessibility and conflicting information on all of the websites explored, particularly Honduras. The best-run website was Liberia\u2019s, yet it was a labyrinthine experience to find a phone number to call. Even the Spanish countries as their primary language did not provide accurate information, and the translations to English were severely lacking. As to timeliness, we did not receive any calls back or responses to email, yet the authors are confident that they could have registered the Stena Nordica via Honduras. While this contribution focused primarily on transparency, this impinged on multiple levels of good governance and gave the authors a tangible sense of agreement that FOC enforcement\u2019s, or lack thereof, of the status quo and its transparency, as earlier defined, is severely lacking.<\/p>\n

This lack of transparency is already having an impact. Given the fact that FOCs are already using the Northern Sea Route, including oil tankers, the risk of an emergency of an oil spill from an FOC-flagged vessel in the Arctic is imminently possible. Therefore, by bringing up the various proposals from Section V, supra<\/em>, within the auspices of the Arctic Council, the ad hoc meetings of the Coastal Arctic Five, or the International Maritime Organization, there can be a much-needed dialogue on preventing the disasters that have occurred in the global South through lack of transparency and enforcement from happening in the very fragile environment in the Arctic. Given Norway\u2019s membership in all of the above fora, and their transparency in ship registration, perhaps they may play a leadership role for stewardship of Arctic shipping transparency.<\/p>\n

 <\/p>\n

Endnotes<\/strong><\/p>\n

[1]<\/a> Jamie Christy,\u00a0\u201cThe Almost Always Forgotten, Yet Essential Part of Our World: An Examination of the Seafarer’s Lack of Legal and Economic Protections on Flag of Convenience Ships<\/em>,\u201d 32 U.S.F. Mar. L.J. 49, 50\u201351 (2020).<\/p>\n

[2]<\/a> Protection of the Arctic Marine Environment, \u201cArctic Marine Strategic Plan 2015-2025,\u201d PAME, available at <\/em>https:\/\/www.pame.is\/images\/03_Projects\/AMSP\/AMSP_2015-2025.pdf (Last accessed August 25, 2020).<\/p>\n

[3]<\/a> United Nations Treaty System, \u201cUnited Nations Convention for the Law of the Sea,\u201d United Nations (1982), at Art. 24, para. 1(b), available at<\/em> https:\/\/www.un.org\/depts\/los\/convention_agreements\/texts\/unclos\/unclos_e.pdf (Last accessed August 25, 2020).<\/p>\n

[4]<\/a> Lloyd\u2019s List, \u201cTop 10 Flag States 2018,\u201d Lloyd’s List Maritime Intelligence, (December 10, 2018), available at<\/em> https:\/\/lloydslist.maritimeintelligence.informa.com\/LL1125024\/Top-10-flag-states-2018 (Last accessed August 25, 2020).<\/p>\n

[5]<\/a> See<\/em> Christy, supra <\/em>note 1, at pp. 49-51.<\/p>\n

[6]<\/a> See<\/em> Goodman, Camille Jean, \u201cThe Regime for Flag State Responsibility in International Fisheries Law – Effective Fact, Creative Fiction, or Further Work Required?\u201d Australia & New Zealand Mar. L.J., Vol. 23, pg. 157 (2009), available at <\/em>https:\/\/www.researchgate.net\/publication\/266440227_The_Regime_for_Flag_State_Responsibility_in_International_Fisheries_Law_-_Effective_Fact_Creative_Fiction_or_Further_Work_Required<\/a> (Last accessed August 25, 2020).<\/p>\n

[7]<\/a> Hamad, Bakar, \u201cFlag of Convenience Practice: A Threat to Maritime Safety and Security,\u201d IJRDO-Journal of Social Science and Humanities Research, 1:8 at pg. 218(August 2016), available at <\/em>https:\/\/www.researchgate.net\/publication\/308308749_Flag_of_Convenience_Practice_A_Threat_to_Maritime_Safety_and_Security<\/a>.<\/p>\n

[8]<\/a> Tiili, Kristin & Ramakers, Annelien, \u201cRule of Law and Transparency in Modern Norwegian Whaling (2006-2015),\u201d Nordicum-Meditteraneum 12:1 (2017) available at <\/em>https:\/\/nome.unak.is\/wordpress\/volume-12-no-1-2017\/double-blind-peer-reviewed-article\/rule-law-transparency-modern-norwegian-whaling-2006-2015. (Last accessed August 25, 2020).<\/p>\n

[9]<\/a> Johnstone, Rachael Lorna & \u00c1g\u00fastsson, Hj\u00e1lti \u00d3mar, \u201cPracticing What They Preach: Did the IMF and Iceland Exercise Good Governance in Their Relations 2008-2011?\u201d Nordicum-Meditteraneum 8:1 (2013) available at<\/em> https:\/\/nome.unak.is\/wordpress\/08-1\/c48-article\/practicing-what-they-preach-did-the-imf-and-iceland-exercise-good-governance-in-their-relations-2008-2011\/<\/a> (Last accessed August 25, 2020) (emphasis in original).<\/p>\n

[10]<\/a> Friedl Weiss & Assisted by Silke Steiner,\u00a0\u201cTransparency As an Element of Good Governance in the Practice of the EU and the WTO: Overview and Comparison<\/em>,\u201d 30 Fordham Int’l L.J. 1545, 1549 (2007).<\/p>\n

[11]<\/a> Ford, Jessica & Chris Wilcox, \u201cShedding Light on the Dark Side of Maritime Trade\u2014A New Approach for Identifying Countries as Flags of Convenience,\u201d Marine Policy, pg. 298, (January 2019).<\/p>\n

[12]<\/a> See<\/em> Morris, R., & T. Kilkauer, \u201cCrews of Convenience from the Southwest Pacific,\u201d New Zealand Journal of Industrial Relations, 26(2), (2001) at pg. 188.<\/p>\n

[13]<\/a> See<\/em> Broeze F., The Globalisation of the Ocean: Containerisation from the 1950s to the Present, (St. John\u2019s Newfoundland: International Maritime Economic Historic Association) (2002).<\/p>\n

[14]<\/a> Urbina, Ian, \u201cStowaways and Crimes Aboard a Scofflaw Ship,\u201d N.Y. Times (July 19, 2015), available at<\/em> https:\/\/www.nytimes.com\/2015\/07\/19\/world\/stowaway-crime-scofflaw-ship.html<\/a> (Last accessed August 25, 2020).<\/p>\n

[15]<\/a> Kshetri, Nir, \u201cMarshall Islands,\u201d The Statesman\u2019s Yearbook (Jan. 4. 2020) at pp. 813-815.<\/p>\n

[16]<\/a> See<\/em> Clark, Andrew, \u201cBP Oil Rig Registration Raised in Congress Over Safety Concerns,\u201d The Guardian, (May 30, 2010), available at <\/em>https:\/\/www.theguardian.com\/environment\/2010\/may\/30\/oil-spill-deepwater-horizon-marshall-islands<\/a> (Last accessed August 25, 2020).<\/p>\n

[17]<\/a> See<\/em> Sharife, Khadija, \u201cFlying a Questionable Flag:\u00a0 Liberia\u2019s Lucrative Shipping Industry,\u201d Reportage World Policy Journal, (Winter 2010\/2011) at pg. 113, available at <\/em>https:\/\/www.jstor.org\/stable\/pdf\/40963779.pdf?refreqid=excelsior%3Af0254f5d81676f199b2878706f9454f9<\/a> (last accessed August 25, 2020).<\/p>\n

[18]<\/a> Goodman, note 9 supra<\/em>, at pg. 164.<\/p>\n

[19]<\/a> The authors may be contacted to provide any more details on the ship, as necessary, to prove their knowledge of this vessel.<\/p>\n

[20]<\/a> See <\/em>UNCLOS, note 3 supra<\/em> at Arts. 26, 53.<\/p>\n

[21]<\/a> Norwegian Maritime Authority Website, \u201cRegistration of Ship in the NIS,\u201d Sj\u00f8fartsdirektoratet, available at<\/em> https:\/\/www.sdir.no\/en\/shipping\/registration-of-commercial-vessels-in-nisnor\/new-registration-nis\/documentation-requirements-nis\/ (Last accessed August 25, 2020).<\/p>\n

[22]<\/a> Norwegian Maritime Authority Website, “Organizational Structure and Employees,”\u00a0 Sj\u00f8fartsdirektoratet, available at<\/em> https:\/\/www.sdir.no\/en\/organization\/organizational-structure-and-employees\/ (Last accessed August 25, 2020).<\/p>\n

[23]<\/a> See<\/em> Norwegian Maritime Authority Website at “Recognized Organizations,” supra <\/em>note 17, available at<\/em> https:\/\/www.sdir.no\/en\/shipping\/vessels\/vessel-surveys\/approved-classification-societies\/ (Last accessed August 25, 2020.)<\/p>\n

[24]<\/a> See id.<\/em> at “21-December-2009-No.-1738-Tariff-of-Fees,” supra <\/em>note 17,\u00a0 available at <\/em>https:\/\/www.sdir.no\/contentassets\/e7ee839cecce49cb8286b5fba381c841\/21-december-2009-no.-1738-tariff-of-fees.pdf?t=1582119505790. (Last accessed August 25, 2020).<\/p>\n

[25]<\/a> See id<\/em>. at “Trade Areas NIS Ships,” supra <\/em>note 18, available at<\/em> https:\/\/www.sdir.no\/en\/shipping\/registration-of-commercial-vessels-in-nisnor\/new-registration-nis\/trade-areas-nis-ships\/ (Last accessed August 25, 2020).<\/p>\n

[26]<\/a> See id.<\/em> at “New Registration in the Shipbuilding Register,” supra <\/em>note 17, available at <\/em>https:\/\/www.sdir.no\/en\/shipping\/registration-of-commercial-vessels-in-nisnor\/new-registration-the-shipbuilding-register\/ (Last accessed August 25, 2020).<\/p>\n

[27]<\/a> See id.<\/em> at “New Registration in the Shipbuilding Register,” supra <\/em>note 17 available at <\/em>https:\/\/www.sdir.no\/en\/shipping\/registration-of-commercial-vessels-in-nisnor\/new-registration-the-shipbuilding-register\/ (Last accessed August 25, 2020).<\/p>\n

[28]<\/a> See <\/em>Johnstone & \u00c1g\u00fastsson, supra<\/em>, note 11.<\/p>\n

[29]<\/a> Autoridad Maritima de Panama, “Servicio Exterior,” Republica de Panama, available at <\/em>https:\/\/amp.gob.pa\/servicios\/marina-mercante\/abanderamiento-de-naves\/servicio-exterior\/ (Last\u00a0 accessed August 25, 2020).<\/p>\n

[30]<\/a> All phone call logs were conducted using Jonathan Wood\u2019s phone and logs are available to review upon request.<\/p>\n

[31]<\/a> Direcci\u00f3n General de la Marina Mercante Honduras Website, “Directorio de Contactos,” Direcci\u00f3n General de la Marina Mercante Honduras, available at<\/em> https:\/\/marinamercante.gob.hn\/?page_id=2336 (Last accessed August 25, 2020).<\/p>\n

[32]<\/a> Author Jonathan Wood, currently working as an attorney in private practice, can provide insight into the legal market and provide more details, if necessary, as to how out of line that price is with the market.<\/p>\n

[33]<\/a> See <\/em>note 27 supra<\/em>.<\/p>\n

[34]<\/a> See id.<\/em> at “IAIP,” supra <\/em>note 27, available at <\/em>https:\/\/portalunico.iaip.gob.hn\/portal\/index.php?portal=343&Itemid=59 (Last accessed April 18, 2020).<\/p>\n

[35]<\/a> See<\/em> Facebook, \u201cCommunity Standards,\u201d Facebook, available at <\/em>https:\/\/www.facebook.com\/communitystandards\/<\/a> (Last accessed August 25, 2020).<\/p>\n

[36]<\/a> See <\/em>\u00a0“Registro de Buques,” supra<\/em> note 24, available at<\/em> http:\/\/marinamercante.gob.hn\/?page_id=2342 (Last accessed August 25, 2020).<\/p>\n

[37]<\/a> Information on this individual can be provided privately as the authors found him on LinkedIn but for purposes of this paper, we choose to preserve his anonymity.<\/p>\n

[38]<\/a> Marine Traffic Website, “STENA NORDICA (Ro-Ro\/Passenger Ship) Registered in Bahamas,” MarineTraffic, which includes Vessel Details, Current Position and Voyage Information (IMO 9215505, MMSI 311000843, Call Sign C6EB2), available at <\/em>https:\/\/www.marinetraffic.com\/en\/ais\/details\/ships\/shipid:194642\/mmsi:311000843\/imo:9215505\/vessel:STENA NORDICA (Last accessed August 25, 2020).<\/p>\n

[39]<\/a> See<\/em> Direcci\u00f3n General de la Marina Mercante Honduras, “Ver Documento 7,” La Gaceta, (May 24, 2018), available at<\/em>\u00a0\u00a0 https:\/\/portalunico.iaip.gob.hn\/portal\/ver_documento.php?uid=MzkyMjU4ODkzNDc2MzQ4NzEyNDYxOTg3MjM0Mg== (Last accessed August 25, 2020).<\/p>\n

[40]<\/a> Furthermore, seeking more information was difficult as the office itself did not know where all of the information was located as while Mr. Viguier was on hold, the initial person on the phone did not place him on hold. He heard shouting from the individual who picked up the phone, asking where certain offices were physically located and who was supposed to handle the topic of international ship registration. An entire discussion, held in Spanish, over the phone about whom to transfer him to before the individual realized his mistake and placed Mr. Viguier on hold. Therefore, Honduran transparency was shockingly low.<\/p>\n

[41]<\/a> See <\/em>Liberian Registry, \u201cContacts,\u201d Liberian Registry, available at<\/em> https:\/\/www.liscr.com\/liberian-registry#new-york<\/a> (Last accessed August 25, 2020).<\/p>\n

[42]<\/a> See<\/em> Liberian Registry, \u201cAll Flags Are Not Alike,\u201d YouTube (June 28, 2018), available at <\/em>https:\/\/www.youtube.com\/watch?v=AKY3pp6wtUA<\/a> (Last accessed August 25, 2020).<\/p>\n

[43]<\/a> Arctic-LIO, “Transits 2018,” Northern Sea Route Information, available at<\/em> https:\/\/arctic-lio.com\/wp-content\/uploads\/2019\/02\/Transits_2018.pdf (Last accessed August 25, 2020).<\/p>\n

[44]<\/a> See generally<\/em> Tom R\u00f8seth,\u00a0\u201cRussia\u2019s China Policy in the Arctic,\u00a0Strategic Analysis,\u201d Taylor & Francis,\u00a038:6,\u00a0pp. 841-859,\u00a0available at<\/em> DOI:\u00a010.1080\/09700161.2014.952942<\/a> (Last accessed August 25, 2020).<\/p>\n

[45]<\/a> See<\/em> Russian Maritime Register of Ships, \u201cRules for the Classification and Construction of Sea-Going Ships,\u201d Government of the Russian Federation, at pp. 12\u201313, (September 9, 2016), available at<\/em> https:\/\/rs-class.org\/upload\/iblock\/ee4\/ee42f902bc2f1b2eb2bbeff75efffcee.pdf (Last accessed August 25, 2020).<\/p>\n

[46]<\/a> See id. <\/em>at pg. 12.<\/p>\n

[47]<\/a> Approved ships included an icebreaker, a harbor tug, a fishing vessel, a bunkering vessel engaged in harbor activity and 2 cargo vessels engaged in short-term cabotage.<\/p>\n

[48]<\/a> See id.<\/em> at pg. 13.<\/p>\n

[49]<\/a> See id. <\/em><\/p>\n

[50]<\/a> United Nations Treaty Series, \u201cConvention on the International Regulations for Preventing Collisions at Sea,\u201d United Nations (1972), available at<\/em> https:\/\/treaties.un.org\/doc\/Publication\/UNTS\/Volume%201050\/volume-1050-I-15824-English.pdf> (Last accessed August 25 2020).<\/p>\n

[51]<\/a> Protection of the Arctic Marine Environment, “Types of Ships 2011-2015,” PAME (no date given), available at\u00a0 <\/em>https:\/\/www.pame.is\/images\/03_Projects\/AMSA\/NSR\/types-of-ships_2011-2015.jpg (Last accessed August 25, 2020).<\/p>\n

[52]<\/a> See<\/em> Richard Murphy, \u201cCountry-by-Country Reporting: Holding Multinational Corporations to Account Wherever They Are,\u201d Task Force for Financial Integrity & Economic Development, (June 2009), available at <\/em>http:\/\/www.financialtransparency.org\/wp-content\/uploads\/2015\/04\/Final_CbyC_Report_Published.pdf<\/a> (Last accessed August 25, 2020).<\/p>\n

[53]<\/a> See id.<\/em> at pg. 2.<\/p>\n

[54]<\/a> European Commission \u201cCommission Staff Working Document Impact Assessment assessing the potential for further transparency on income tax information Accompanying the document Proposal for a Directive of the European Parliament and of the Council amending Directive 2013\/34\/EU as regards disclosure of income tax information by certain undertakings and branches,\u201d European Commission, SWD\/2016\/0117 final – 2016\/0107 (COD), (April 12, 2016), available at https:\/\/eur-lex.europa.eu\/legal-content\/IT\/TXT\/?uri=CELEX:52016SC0117<\/a><\/p>\n

(Last accessed August 25, 2020).<\/p>\n

[55]<\/a> See<\/em> Hamad, Bakar, \u201cFlag of Convenience Practice: A Threat to Maritime Safety and Security,\u201d IJRDO-Jounral of Social Science and Humanities Research, 1:8 at Abstract, (August 2016), available at <\/em>https:\/\/www.researchgate.net\/publication\/308308749_Flag_of_Convenience_Practice_A_Threat_to_Maritime_Safety_and_Security<\/a> (Last accessed August 25, 2020).<\/p>\n

[56]<\/a> See<\/em> Sharife, Khadija, \u201cFlying a Questionable Flag:\u00a0 Liberia\u2019s Lucrative Shipping Industry,\u201d Reportage World Policy Journal, (Winter 2010\/2011) at pg. 115, available at <\/em>https:\/\/www.jstor.org\/stable\/pdf\/40963779.pdf?refreqid=excelsior%3Af0254f5d81676f199b2878706f9454f9<\/a> (last accessed August 25, 2020).<\/p>\n

[57]<\/a> Anonymous, \u201cPort State Control,\u201d International Maritme Organization, available at <\/em>http:\/\/www.imo.org\/en\/OurWork\/MSAS\/Pages\/PortStateControl.aspx<\/a> (Last accessed August 25, 2020).<\/p>\n

[58]<\/a> See <\/em>Press Release, \u201cSafeguarding Responsible and Sustainable Shipping,\u201d Paris Memorandum of Understanding, at Executive Summary (2017), available at<\/em> https:\/\/www.parismou.org\/2017-paris-mou-annual-report-%E2%80%9Csafeguarding-responsible-and-sustainable-shipping%E2%80%9D<\/a> (Last accessed August 25, 2020).<\/p>\n

[59]<\/a> See id.<\/em><\/p>\n

[60]<\/a> See<\/em> United States v. Royal Caribbean Cruises, Ltd.,<\/em> 11 F. Supp. 2d 1358, 1365 (S.D. Fla. 1998) (holding \u201cAct to Prevent Pollution from Ships (APPS), as an allegedly more specific \u2018false\u00a0statements\u2019 law regulating cruise ship’s conduct in failing to properly report alleged discharge of oil, did not preclude prosecution under the\u00a0False\u00a0Statements\u00a0Act for\u00a0false\u00a0statements\u00a0allegedly made to Coast Guard upon ship\u2019s arrival in United States port.\u201d)<\/p>\n

[61]<\/a> Australia Country Fact Sheet, \u201cTreaty Between the Government of Australia and the Government of the French Republic on Cooperation in the Maritime Areas Adjacent to the French Southern and Antarctic Territories (TAAF), Heard Islands and the McDonald Islands,\u201d Government of Australia, (Canberra, 24 November 2003), available at <\/em>www.aphref.aph.gov.au_house_committee_jsct_12may2004_treaties_frnia.pdf<\/a> (Last accessed August 25, 2020).<\/p>\n

[62]<\/a> See<\/em> Maritime Transport Committee, \u201cMaritime Security\u2014Ownership and Control of Ships: Options to Improve Transparency,\u201d Organisation for Economic Co-operation and Development, (December 17, 2003), available at<\/em> http:\/\/www.oecd.org\/officialdocuments\/publicdisplaydocumentpdf\/?cote=DSTI\/DOT\/MTC(2003)61\/REV1&docLanguage=En<\/a> (Last accessed August 25, 2020).<\/p>\n

[63]<\/a> See id<\/em>. at pg. 22.<\/p>\n","protected":false},"excerpt":{"rendered":"

As countries such as the Russian Federation begin the exploration and development of alternative sea routes in the Arctic due to climate change, the private shipping industry has also begun to focus on the region. However, even with this new focus, old problems continue to fester. One such problem is Flags of Convenience, which are those countries that will flag vessels cheaply and provide little to no oversight. This paper is an exploration of the transparency and good governance of selected Flag of Convenience countries through various methods as compared to a model, highly transparent Arctic model. By attempting to flag a vessel familiar\u00a0to the authors, the authors uncovered a lack of transparency in these Flag of Convenience countries, show statistical evidence of the Flag of Convenience problem already being an issue in the Arctic, and provide some policy proposals in order to help to rectify a small but growing issue of Arctic shipping.<\/p>\n","protected":false},"author":605,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"footnotes":""},"categories":[1911],"tags":[747,973,1983,1985,646,1984,1334,451],"coauthors":[1986],"class_list":["post-7449","post","type-post","status-publish","format-standard","hentry","category-new-double-blind-peer-reviewed-article-volume-16-no-1-2021","tag-corruption","tag-good-governance","tag-honduras","tag-liberia","tag-norway","tag-panama","tag-shipping","tag-transparency"],"_links":{"self":[{"href":"https:\/\/nome.unak.is\/wordpress\/wp-json\/wp\/v2\/posts\/7449","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/nome.unak.is\/wordpress\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/nome.unak.is\/wordpress\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/nome.unak.is\/wordpress\/wp-json\/wp\/v2\/users\/605"}],"replies":[{"embeddable":true,"href":"https:\/\/nome.unak.is\/wordpress\/wp-json\/wp\/v2\/comments?post=7449"}],"version-history":[{"count":5,"href":"https:\/\/nome.unak.is\/wordpress\/wp-json\/wp\/v2\/posts\/7449\/revisions"}],"predecessor-version":[{"id":7529,"href":"https:\/\/nome.unak.is\/wordpress\/wp-json\/wp\/v2\/posts\/7449\/revisions\/7529"}],"wp:attachment":[{"href":"https:\/\/nome.unak.is\/wordpress\/wp-json\/wp\/v2\/media?parent=7449"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/nome.unak.is\/wordpress\/wp-json\/wp\/v2\/categories?post=7449"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/nome.unak.is\/wordpress\/wp-json\/wp\/v2\/tags?post=7449"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/nome.unak.is\/wordpress\/wp-json\/wp\/v2\/coauthors?post=7449"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}