Registration of Ships - the international registers of Norway, Panama and the Republic of Liberia

Table of contents

Table of literature and sources

Table of abbreviations

A. Introduction

B. Facts and Figures
I. The Norwegian International Register
II. The Panama register
III. The register of the Republic of Liberia

C. Legal principles, international conventions and national laws on ship registration
I. The freedom of the high seas
II. International conventions
1. The 1958 Geneva Convention on the High Seas
2. The United Nations Convention on the Law of the Sea 1982
3. The United Nations Convention on Conditions for Registration of Ships 1986
4. IMO and IMO associated Conventions
a. International Convention for the Safety of Life at Sea 1974
b. International Convention on Standards of Training, Certification and Watchkeeping for Seafarers 1978
c. The International Convention for the Prevention of Pollution from Ships, 1973, as modified by the Protocol of 1978 relating thereto
5. ILO Conventions
6. Table of Conventions to which the three states are parties to
III. The national laws of Liberia, Panama and Norway on ship registration
1. Liberia
2. Panama
3. Norway

D. Registration, manning and certification requirements
I. Liberia
1. Age
2. Minimum tonnage
3. Ownership
4. Surveys
5. Manning
II. Panama
1. Age
2. Minimum tonnage
3. Ownership
4. Surveys
5. Manning
III. NIS
1. Age
2. Ownership
3. Surveys
4. Manning

E. Registration procedures
I. Liberia
II. Panama
III. NIS

F. Taxation and fees

G. Conclusion

Table of literature and sources

Books and periodicals: (in order of publishing date)

LSM Guide

International Ship Registers Directory Informa: 2000 ISSN: 0265-2455

Introduction to Maritime Law

Falkanger, Thor ; Bull, Hans-Jacob Teno Aschehoug: 1998 ISBN: 82-518-3648-4

Ship Registration, third edition Ready, N.P. LLP: 1998 ISBN: 1-85978-192-6

Sjolovene Haxtor, Viktor Universitetsforlaget: 1997 ISBN: 82-00-22707-3

Introduktion til Söretten

Falkanger, Thor; Bull, Hans-Jacob GadJura, Köbenhavn: 1996 ISBN: 87-607-0373-3

Internet: (in alphabetical order)

Bundesministerium für Verkehr, Bau- und Wohnungswesen

http://www.bmvbw.de 17.05.2000 3:00 p.m.

Embassy of The Republic of Liberia Washington D.C.

http://www.liberiaemb.org/maritime.html 17.05.2000 0:03 p.m.

International Maritime Organisation

http://www.imo.org 17.05.2000 12:25 p.m.

Royal Norwegian Ministry of Foreign Affairs (UD-ODIN)

http://odin.dep.no/ud/nornytt/uda-238.html 17.05.2000 0:18 p.m.

The Norwegian Ship Registers

http://www.nis-nor.no 17.05.2000 0:21 p.m.

Wasser- und Schiffahrtsverwaltung des Bundes

http://www.wsv.de 17.05.2000 4:00 p.m.

Table of abbreviations

(in alphabetical order)

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A. Introduction

Modern maritime industry is especially for the industrialised countries of high importance. Large amounts of persons, resources and products are distributed over maritime transportation modes, and many national economies are depending therefore on a functioning and safe shipping industry. Quality of shipping could be ensured, by letting as many ships as possible flying the flag of the industrialised countries. This would be also appropriate to represent the large amount of shipping traffic and export activities these countries have in relation to the number of goods transported worldwide by ship. Germany for example was importing in 1997 136,2 Mio.t, and exporting 69,1 Mio.t. of goods by sea. It was therefore on the second rank of the exporting nations. On the other hand have been in the beginning of 1998 only 769 merchant ships flying the German flag¹, and it was as other major industrial countries not represented in the top ten of the world biggest ship registers². In contrast, developing or only sparely industrialised countries like Panama, Liberia and the Bahamas are on the top of the statistic. Only Norway as a country in Western Europe seems to be able to compete with these countries concerning the number of tonnage and vessels registered³.

The following paper will give an overview about the legal background in three countries within the top ten of international ship registers. These are Panama and Liberia on rank one and two, as well as Norway lying on the seventh rank as a representative of a Western legal system on maritime law⁴. With the knowledge of the legal systems it might become more apparent why the situation is like described above.

B. Facts and Figures

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Figure 1

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Figure 2

I. The Norwegian International Register

The Norwegian International Register is a quality register⁵, which became effective the first of July 1987⁶ after a governmental discussion in 1980-81 on the problematic of flagging out starting in the early 1970s⁷. Reason was to establish a high quality register that can compete with other registers. Today 750 ships having a tonnage of 19,1 M. gross tons are registered (see Figure 2 above). Seat and contacting address for the NIS is the Skipsregistrene in Bergen⁸, also the Norwegian Shipowners´ Association can be contacted concerning a registration on the NIS. It is a register existing beside the Norwegian Ordinary Register, and is intended for the registration of ships of the foreign trading fleet. Ships involved only in domestic transportation can not be registered in the international register. Special PSC on ships on the NIS was in 1999 neither recommended by the USCG nor the PMOU States⁹.

II. The Panama register

The Panama open register is existing since 1925¹⁰, and its merchant fleet was in 1999 the largest in the world (See Figures 1 and 2 above). In 1999 the Lloyd´s Register recorded 5235 vessels of 101,450 M. Gross tons. It is a classical FOC register¹¹, and in connection with this fact, the USCG as well as the PMOU States are doing and recommending special PSC controls on the vessels registered in Panama¹². Competent authority which should be contacted on registration is the Directorate General of the Merchant Marine in Panama City as well as the New York Representative Office or the worldwide located Panama Merchant Marine Consultants. A shipowner society like in Norway is not existing.

III. The register of the Republic of Liberia

Liberia opened its international register approximately 50 years ago¹³. It was in 1999 the second largest in the world, with 1963 vessels of an overall tonnage of 64 M. gross tons registered¹⁴ (See Figures 1 and 2 above). Responsible for the register is the Bureau of Maritime Affairs in Liberia, but it is practically handled by the Deputy Commissioner of Maritime Affairs of the Republic of Liberia in New York. Remarkable is also, that the administrational work on the register is done by private companies. Since January 2000 it is the Liberian Ship and Corporate Registry in New York and Vienna, USA¹⁵. Even as Liberia is as Panama considered to be a FOC, the USCG and the PMOU States are not targeting it for special PSC controls.

Details on the legal outline, and its impact e.g. for the manning and technical requirements for the ships registered in the registers shown above will be discussed later on.

C. Legal principles, international conventions and national laws on ship registration

To understand the differences in the procedure and legal conception of the three different international registers mentioned above, it is necessary to have a look on the purpose and requirements of ship registration and flagging in general. As well as to have further on a look on the international conventions, that have been adopted to concretise the general principles and to provide a world-wide uniformity of legal rules.

I. The freedom of the high seas

One of the fundamental principles of public international law connected to the registration of ships, is the principle of the freedom of the high seas. It means the unrestricted access of vessels belonging to all states to all parts of the sea that are not included in the territorial or internal waters of a State¹⁶. But to prevent anarchy and unsecurity within these waters, international laws are requiring to the individual states to provide a framework of rules to exercise jurisdiction over their national vessels. Basically said expresses this rule nothing else, than to give a ship a nationality like a person. This constitutes three legal principles corollary to the freedom of the seas and its limitations:

(1) Jurisdiction over a vessel on the high seas solely resides with the State of its nationality.
(2) All vessels using the high seas must possess a national character¹⁷.
(3) Even the freedom only to navigate on the open sea is only a freedom granted to vessels under the flag of a state¹⁸.

Therefore ships which are possessing no nationality are enjoying no protection under international law. They can be freely captured and can not engage in lawful trade. The case of Naim Molvan v. Attorney General for Palestine¹⁹ is showing this on the example of a not registered ship, which was arrested by a British battle ship on the high seas. Nationality and registration are in this context connected to each other, as the registration on a public record of a state constitutes the national character of a vessel. Individual states have therefore to fix the conditions for the entry of their ships in their registers, and such entry is generally a precondition for the possession of that State´s nationality, the hoisting of the national flag and the issuance to the vessel of documents attesting to its nationality²⁰.

II. International conventions

As already mentioned, there is existing a range of conventions which are directly concerned or connected to ship registrations. Their task is to look on the individual states to ensure compliance with the rules they lay down for the exercise of the freedom of the high seas as discussed above. Therefore it is important to have a look on these conventions as they are forming the skeleton for the national laws. Especially the problem of the genuine link between the legal character, manning and management of the ship to be registered and the flag State will be shown up in the presentation of some of these Conventions.

1. The 1958 Geneva Convention on the High Seas

Purpose of this convention is mainly to fix the rules on identification of the nationality of ships, and how to fly a flag in different type of waters. In Aa.5 and 10 are referring to the exercise of jurisdiction and control in administrative, social and technical matters of the state over the ships flying its flag. It is also the first Convention containing in it's A.5 the idea of a genuine link, which was taken up by the United Nations Convention on the Law of the Sea from 1982. It says, that as a condition for granting nationality, and therefore for registration, there must exist a genuine link between the ship and the State of registration. This broad formulated expression is of high importance especially in the case of open and international registers, as we will see later on.

2. The United Nations Convention on the Law of the Sea 1982

This convention fixes, that the freedom of the high seas is exercised by States under the conditions laid down by the Convention and other rules of international law, especially “with due regard for the interests of other states”²¹. A.91 demands from each state to fix conditions for registration and demands a genuine link between the State and the Ship. These obligations are described in more detail in A.94 of the Convention. E.g. to maintain a register, the assumption of jurisdiction under its internal law over ships in this register and to take necessary steps to ensure safety at sea including regular surveys²². In A.217 the States are obliged to ensure that their vessels are in compliance with international laws like the MARPOL Convention and to adopt therefore appropriate national laws to ensure the application and enforcement of these international laws.

3. The United Nations Convention on Conditions for Registration of Ships 1986

Neither Norway nor Liberia nor Panama have ratified or acceded to the Convention. It is also not yet ultimately in force. But this convention is anyway important, as it tries to describe and shape out the term of general link in more detail. As we have already seen above in the discussion on the two other conventions, this genuine link is of main significance for granting registration of a ship in an international or open ship register. Therefore the objective of this Convention is to ensure, or as the case may be, strengthening the genuine link between a State and ships flying its flag. To reach this objective, this Convention includes in contrast to the earlier conventions, the concept of an economic link by participation of nationals of the flag State in the ownership, manning and management of the ship. Therefore the flag State can choose according to A.7 for his national law, whether to fix rules which are requiring that the ship to be registered have to be owned in a certain way by nationals, or to be manned in a certain way with nationals of the flag State. These two options are regulated in Aa.8 and 9 of the Convention. A.10 regulates the role of the flag State in respect of the management of shipowning companies and ships on its register. The State of registration “shall ensure that the shipowning company, or a subsidiary shipowning company is established and/or has its principle place of business within its territory in accordance with its laws and regulations”²³. Nevertheless the Convention states, and this point is remarkable in respect of existing national rules on ship registration, that where these circumstances are not existing, the requirement mentioned above, may be satisfied by the appointment of a “representative or management person who shall be a national of the flag State or to be domiciled therein”. As this constellation is already possible on the NIS²⁴ and the Panama²⁵ register (not in Liberia !), it becomes clear that one of the purposes of this Convention, namely to tight up the requirements for open registers can not be met practically, as the Convention still leaves too many possibilities open to locate suitable nominees in the flag States²⁶. A.11(1) of the Convention lines out the purpose of the registers similar to the two conventions mentioned above. In A.11(2) it describes which content shall be recorded in the registers:

(1) the name of the ship and the previous name and registry if any
(2) the place or port of registration or home port and the official number or mark of identification of the ship
(3) the international call sign of the ship, if assigned
(4) the name of the builders, place of build and year of building of the ship
(5) the description of the main technical characteristics of the ship
(6) the name, address and, as appropriate, the nationality of the owner or of each of the owners

As we have seen, the principle of the freedom of the high seas can only be exercised, if a ship is registered. The purpose of registration can be summarised in two points:

(1) identification of the nationality of a ship and therefore under which jurisdiction it lies
(2) identification of the owner, so that official directives and possible enforcement actions can be directed to the appropriate party²⁷

As the jurisdiction of the state is also governing technical, manning and managing standards, it is influenced by international conventions on these areas. Therefore the registration of a ship is automatically influenced by the requirements demanded by these conventions, if the flag State has ratified them. Some of these Conventions will be presented in a short form in the following under points 4 and 5.

4. IMO and IMO associated Conventions

The International Maritime Organisation is the United Nations' specialised agency responsible for improving maritime safety and preventing pollution from ships²⁸. To improve these purposes, the IMO has prepared several important conventions, which are important to ship registration, as the ratifying flag State has to safeguard and supervise the standards set out in these Conventions on the ships on its register. They are also important for the application procedure for a register, as ships to be registered have to satisfy the requirements set out in the Conventions. In the following some of the most important IMO Conventions will be shortly described.

a. The International Convention for the Safety of Life at Sea 1974

The main objective of the SOLAS Convention is to specify minimum standards for the construction, equipment and operation of ships, compatible with their safety. Flag States are responsible for ensuring that ships under their flag comply with its requirements, and a number of certificates are prescribed in the Convention as proof that this has been done. G Important general provisions are concerning the survey of the various types of ships and the issuing of documents signifying that the ship meets the requirements of the Convention. The chapter also includes provisions for the control of ships in ports of other Contracting Governments. Subdivision and stability: The subdivision of passenger ships into watertight compartments must be such that after assumed damage to the ship's hull the vessel will remain afloat and stable. Requirements for watertight integrity and bilge pumping arrangements for passenger ships are also laid down as well as stability requirements for both passenger and cargo ships. Machinery and electrical installations: these requirements are designed to ensure that services which are essential for the safety of the ship, passengers and crew are maintained under various emergency conditions. The steering gear requirements of this chapter are particularly important. Fire protection, fire detection and fire extinction: These and other amendments, particularly detailed fire safety provisions for tankers and combination carriers, such as inert gas, were incorporated in chapter II-2 of the 1974 Convention. Radiotelegraphy and radiotelephony: Here it is described which types of facility have to be carried. Operational requirements for watchkeeping are listed and detailed technical provisions are shown up. This also includes technical provisions for direction- finders and for motor lifeboat radiotelegraph installations, together with portable radio apparatus for survival craft. Safety of navigation: certain navigation safety and services to be provided by Contracting Governments are identified²⁹.

b. International Convention on Standards of Training, Certification and Watchkeeping for Seafarers 1978

The Convention was the first to establish basic requirements on training, certification and watchkeeping for seafarers on an international level.

The technical provisions of the Convention were contained in an Annex, divided into six chapters:

(1) Master-deck department: This chapter outlines basic principles to be observed in keeping a navigational watch. It also lays down mandatory minimum requirements for the certification of masters, chief mates and officers in charge of navigational watches. The chapter also includes regulations designed to ensure the continued proficiency and updating of knowledge for masters and deck officers. Further requirements are contained in a number of Annexes.

(3) Engine Department: This chapter outlines basic principles to be observed in keeping an engineering watch. It includes mandatory minimum requirements for certification of chief and second engineer officers.

(4) Radio Department: The first regulation in this chapter deals with radio watchkeeping and maintenance. The chapter goes on to establish mandatory minimum requirements for certification of radio officers and radio operators, and requirements to ensure their continued proficiency and updating of knowledge. Another regulation establishes mandatory minimum requirements for certification of radiotelephone operators.

(5) Special requirements for tankers: This chapter deals with additional mandatory minimum requirements for the training and qualification of masters, officers and ratings of oil tankers, chemical tankers and liquefied gas tankers.

(6) Proficiency in survival craft: This chapter is concerned with mandatory minimum requirements for the issue of certificates of proficiency in survival craft.

The requirements of the Convention are augmented by 23 resolutions adopted by the Conference, of which many contain more detailed provisions on the subjects covered by the Convention itself³⁰.

c. The International Convention for the Prevention of Pollution from Ships 1973, as modified by the Protocol of 1978 relating thereto (MARPOL 73/78)

The Convention has two Protocols dealing respectively with Reports on Incidents involving Harmful Substances and Arbitration; and five Annexes which contain regulations for the prevention of various forms of pollution. Important for the registration of ships are several provisions which are demanding special requirements for the design and construction of a ship. These are for example: that all oil-carrying ships are required to be capable of operating the method of retaining oily wastes on board through the "load on top" system or for discharge to shore reception facilities. Or new oil tankers are required to meet certain subdivision and damage stability requirements, so that they can survive after damage by collision or stranding³¹.

5. ILO Conventions

The ILO is, as the, IMO a agency of the United Nations. One of its purposes connected to the field of ship registration is to provide appropriate working conditions for seafarers, like working times, working environment and different kinds of insurance. E.g. to provide a minimum age for seafarers³², sickness insurance and pensions³³, inspection of seafarers working and living conditions³⁴. Their impact on ship registration is, that the flag State has to provide the appropriate national laws to adopt these Conventions and the surveillance of the conditions on ships on its register. The shipowner self has to provide these conditions on the ship flying a flag appropriate to the laws of this state. As seafarers wages, pensions, working times and insurances are an important economic factor, the choice of a flag State is highly influenced by the ILO Conventions. To ensure worldwide high standards for the conditions of the seafarers, the ITF is releasing regarding technical standards and social welfare the so called “Blue Certificate”. This is a certificate that is released to shipowners which are operating their vessels under certain standards fixed by the ITF even if the flag State has not ratified certain important ILO Conventions³⁵.

6. Table of principal Conventions, to which the three States are parties

The following table is showing up the most important conventions connected to ship registration, and shows, if Norway, Panama or Liberia are parties to them.

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Source: LSM Directory 2000 and Ready; Ship Registration 1998 / no guarantee for the correctness of these information

III. The national laws of Liberia, Panama and Norway on ship registration

As seen above under the presentation of the international conventions, it is on the flag states side to implement the measures on ship registration in their national laws. The national laws are also important to understand why the shipowner is choosing the particular state to register his ship. In the following part, the actual national regulations will be shown up.

1. Liberia

The Liberian legislation on ship registration is highly influenced by US mercantile law³⁶. They are fixed in the Liberian Code of Laws of 1956 under Title 22, which is also called the Maritime Law title. This title was updated by amendments made in 1989³⁷ and is containing detailed provisions over the jurisdiction, documentation and identification of vessels. Further on it contains other parts important for registration like mortgages, liens, radio regulations, rules of navigation, manning certification and seafarers rights and duties. These rules are supplemented by special maritime regulations on vessel registration requirements and requirements for merchant marine personal certification. Of importance is also Section 51 of Title 22 of the Liberian Code of Laws as it contains since 1989 new rules on the scope of Liberian vessel ownership³⁸.

2. Panama

Of importance for the international registration in Panama is the Law 11 of 1973 amending A.3 of Law 8 of 1925 which allows foreign registration in Panama³⁹ and Law 83 of 1973 amending A.3 of Law 8 of 1925 on Bareboat Registration⁴⁰. Concerning taxation on vessels, Law No.36 of 1995 is of special interest⁴¹. Manning requirements are fixed in the Panamanian Labour Code under the Aa.266, 251 and 276.

3. Norway

Basis for the NIS and the international registration is the Norwegian Maritime Code of 1985 and the NIS Act, Act 12 June 1987 No.48. The NIS Act was establishing the NIS as an international register itself in comparison with the NOR. It contains details of the legislation concerning the conditions for registration, trading, areas, fees, wages and working hours, jurisdiction, documentation and identification of vessels.

D. Registration, manning and certification requirements

We have seen above in the description of applicable international laws, the requirements on registration could be widely differ, as they are depending on the conventions adopted by the flag States or how these conventions are shaped out in national laws. Therefore the following chapter will describe the different requirements on the examples of the international or open register of Liberia, Panama and Norway. The requirements will be shown up under the categories of age, minimum tonnage, ownership and surveys. Notice that the special case of the so called “bareboat registration” will be left out, as this matter is too complicated to get discussed in the framework of this paper.

I. Liberia

1. Age

In general, a vessel to be registered in Liberia should not be older than 20 years. But chapter 2 of the Liberian Maritime Law as described above, leaves the possibility open to register even older ships, if the Maritime Safety Division has approved the ship and its owner/operator to be operating under imposed stringent safety conditions⁴².

2. Minimum tonnage

The minimum tonnage for ships to be registered on the Liberian Register has to be over 1600 net tons. If the ship has less tons, the Deputy Commissioner must grant the exemption according to chapter 2, s.51(5) of the Liberian Maritime Law⁴³.

3. Ownership

Before starting to describe the detailed outline of the ownership requirements on the register of Liberia, it is important to call back in our minds, that the ownership criteria is the most important point to establish the genuine link between the ship and the flag State. As required by A.91 of the United Nations Convention on the Laws of the Sea 1982. It might be surprising, that exactly Liberia is demanding in its conditions for registration, that only Liberian citizens or corporations and partnerships formed and registered in Liberia can register a ship⁴⁴. But this requirement is not a real hurdle for foreign citizens, as Liberian corporations can easily formed all over the world in the LISCR offices. These are existing e.g. in London, Tokyo, Zürich, Pireäus or Hong Kong⁴⁵. Even if the ship is not owned by such a company national or a Liberian citizen exemptions can be granted by the Commissioner and Deputy Commissioner if the owner can proof that:

(1) the vessel meets all other requirements for registration
(2) it has been demonstrated that there is a genuine need for such a waiver
(3) the shipowning entity is a foreign maritime entity and appoints a qualified registered agent in the Republic⁴⁶.

4. Surveys

Vessels to be registered in Liberia must be classed fully by a recognised classification society. These are in Liberia: ABS, BV, DNV, GL, LR, ClassNK, RINA, CCRS, RMRS, KRS, PRS Such class must be maintained in order to stay on the Liberian register⁴⁷.

5. Manning

These requirements are set out in Chapt.X of Title 22 of the Liberian Civil Code. It requires that all seafarers on board of the Liberian ship must hold a valid seamans identification and record book. Officers must posses a Liberian licence, which they can get against a recognised foreign one. The nationality of the officers and crew is of no importance under Liberian Maritime Law. The minimum amount of crews, engineers and officers on board is fixed for each ship by the Deputy Commissioner. But basically each ship needs a licensed master and on vessels with over 500 hp a licensed chief engineer⁴⁸.

II. Panama

1. Age

As Panama has always been one of the accessable registers, there are no limitations for the age of the ships to be registered. The only requirement is, that ships have to fulfill the minimum standards and conditions of the international conventions adopted. See therefore the table of conventions above. However, ships which are over 20 years old on first registration are subject to a special inspection covering certification of the crew, condition of the ship and living conditions. These inspections are repeated afterwards on an annual basis by the Shipping Bureau of Panama⁴⁹.

2. Minimum tonnage

Panamanian law does not require a minimum tonnage of ships to be registered on its open register.

3. Ownership

Nationality of the owner is under Panamanian Maritime Law immaterial It accepts all ships for registration, as long as they have a legal representative in Panama⁵⁰. It becomes apparent, that here the idea of the genuine link is interpreted in a very liberal and wide way.

4. Surveys

Ships to be registered on the Panama register have to be technical certified by approved classification societies. They are: ABS, BV, CCRS, CCS, DNV, GL, HRS, KRS, LR, ClassNK, PRS, RINA and some national organisations within Panama.

5. Manning

As Panama has only recently begun to introduce an examination system for officers and crews, certificates of competency of other countries are recognised. Anyway crew and officers have to apply for a statutory Panamanian certificate which will be issued after an approval time of 8 months. It replaces then the transitional certificates. Aa.251 to 276 of the Panamanian Labour Code are requiring a standard crew list (Rol de tripulación) on each ship under its flag. This list have to be duly legalised by the Directorate General of the Merchant Marine and should contain:

(1) crews name, address and position onboard
(2) salary and date of engagement and disembarking

A.266 of the Labour Code demands that at least 10% of a vessels crew must be Panamanians. However this requirement is in practice not insisted upon. The minimum number of crew is varying according to the gross register tonnage of a vessel and the duration of the voyage undertaken. Notice that the demands for passenger ships are higher than the ones for cargo ships⁵¹.

III. NIS

1. Age

There are no restrictions on the age of the vessel that may be registered in the NIS, provided that the technical standards are found satisfactory⁵². This especially in accordance with the requirements of the international conventions adopted.

2. Ownership

If the vessel is Norwegian according to §1 of the Maritime Code, than the vessel can be registered on the NIS or NOR⁵³. In the case that the vessel is owned by a foreign company, it can be registered if the companies head office is in Norway, and if it is operated by a Norwegian shipping company with its head office in Norway⁵⁴. According to §1 annex Sjolovene, registration can be granted in the case that the foreign owner has his principal place of residence in Norway. It is also possible to register a vessel if just the operator is Norwegian as §103 Sjolovene is holding. Even in the case that none of the owners is Norwegian, the ship can be registered, if an authorised representative in Norway is entrusted significant parts of the onshore technical and commercial management.

3. Surveys

Concerning manning and seafarers qualifications, the ships on the NIS are subject to controls by the Maritime Directorate. All other inspections and certifications are carried out by accepted classification societies⁵⁵. These are: ABS, BV, DNV, GL, LR.

4. Manning

Manning requirements on the NIS are fixed in Reg.17 from March 17 1987. Vessels registered must have a manning certificate issued by the Norwegian Maritime Directorate. The nationality plays no role despite of the fact that the crew has to come from IMO-member countries and have to have adequate qualification documents. Officers must come from countries published on the IMO “White List”. For the number of the crew of a vessel, technical, administrative, tonnage and many other factors are taken into consideration by the Maritime Directorate in order to specify it. Most personal certificates from other countries can be changed to Norwegian documents, if the issuing country has ratified the STCW and ILO No.69 Convention⁵⁶.

E. Registration procedure

To get registered and to obtain a certificate of registry, the owner of the ship has to show up different documents and certificates to the competent authority and if it is necessary, e.g. due to the age of the ship, to allow inspections. In the specific countries discussed, the following documents and statements are required to get a ship registered.

I. Liberia

(1) application for official number, call sign and safe manning certificate
(2) ISM code declaration form and vessel status affidavit of a classification society as well as international convention certificates like e.g the ones deriving from SOLAS or MARPOL.
(3) proof of ownership (bill of sale, or building certificate)
(4) power of attorney certificate to act in applicants name
(5) proof of cancellation from former register
(6) proof that vessel is free of liens on the old register
(7) manning certificates according to the STCW⁵⁷

II. Panama

(1) application for radio licence
(2) original bill of sale or builders certificate
(3) proof of cancellation from former register
(4) proof that the vessel is free of liens or mortgages on the former register.
(5) technical, tonnage or measurement certificates according with international conventions
(6) power of attorney from owner to person requesting registration
(7) STCW manning certificates

III. NIS

(1) name, tonnage and type of the vessel
(2) place and year of build, home port and signal letters
(3) construction number, building material and name and address of the shipyard
(4) type of engine
(5) name, address, birthdate and nationality of the ship owner or in the case of a company the related information including the amount of shares hold by different owners
(6) name and address of the Norwegian representative or of the Norwegian managing company.
(7) name of the former register and the deletion certificate from this register
(8) builders or owners tonnage and SOLAS certificates
(9) attestation of the name of the ship and its seaworthiness by the Maritime Directorate
(10) manning certificates including STCW certificates⁵⁸

F. Taxation and Fees

The following table will show up on the example of the most important fees on ship registration the different costs arising on different registers. Notice that there is a large amount of different fees existing in the countries, like e.g. for the different manning and technical certificates that have to be shown up during the registration procedure like we have seen above. Neither in Liberia, nor in Panama nor on the NIS are existing special taxes on the ships income. However, owners in Norway will be liable to taxation, if their state of nationality has a tax treaty with Norway. Net financial income is taxed as ordinary income as well as the taxes for the necessary Norwegian management company⁵⁹. Companies which are necessary to establish in Liberia to register a ship, have to pay a fixed annual tax of $450⁶⁰.

illustration not visible in this excerpt

Source: LSM Directory 2000 pp.42,44,62,66

G. Conclusion

Different flag States - different approaches interpreting international laws and offering different economic reasons to register on a specific international or open maritime register. This might be the key to the answer on our basic question why flags of convenience like Liberia or Panama have a leading position in the rankings of the most popular flag States. Other factors connected are social and reputation ones.

Flags of convenience - mostly euphemistically defined as the flag of a country allowing the registration of foreign-owned and foreign-controlled vessels under conditions which are convenient and opportune for the persons who are registering the vessel⁶¹. Liberia and Panama are classical FOC. As we have seen above it is quite easy there to register a ship as a foreigner. As it is sufficient to name a legal representative in Panama. But also the required Liberian Company is easy to establish at a consuls office abroad. In these States the idea of the general link is basically void because it is just formally upheld. In Panama an Liberia the registration and annual fees are simply said the only expenses to be done. Low social standards for the crews are enforcing the economical advantages for the owner in these countries. In contrast to Norway, there is no taxation on the income of the ships at all, only the Liberian fixed company tax has to be paid. Even in Norway direct taxes on the ships income are arising only in specific cases as mentioned above. Another factor which all three countries have in common is, that they have no manning requirements with their nationals. Is the NIS for its quite easy accessability for foreigners, and the other factors mentioned, a FOC as Panama ? Is this the reason why it is in the top ten of worlds registers ?

Surely not, as the Norwegian Government expressed its will to maintain with the NIS a quality register. This is also shown by the serious control of the ships on its register Norway is undertaking. Also high social standards for the crew are not speaking for a consideration of the NIS as a FOC register.

On the other hand can the FOC states like Panama and Liberia even control their relatively low standards for the ships on their registers? Is this point perhaps the true reason why they are successful ? The answer is yes, as a developing country like Panama with its small and inefficient administrative body can not really seriously control its own standards. Evidence herefore is the fact, that Panamanian ships are targeted to special PSC by the USCG and PMOU States. Even Liberia is a State which is in civil war status and has transferred large administrative competence to private companies abroad. On the other hand this might be an advantage, as the efficient management methods of these undertakings are providing better standard controls. Therefore Liberia was in 1999 not targeted to special PSC.

Still the success of the NIS became not clear ? How can a limited quality register survive against the FOC and even gaining ground ?

In the last view years the situation seems to be changing a bit, as many shipowners, and here especially oil companies are facing massive liabilities for environmental damages. Also the strategy of the ITF by issuing “Blue Certificates” might have impact on the changes. Therefore it is important to many companies to have a quality flag showing the suitability of a vessel for special modes of transportation, like the one for crude oil. They are even avoiding some damage claims of consignors in the case of late delivery on the ground of strikes or blockades of socially disadvantaged seafarers on FOC. Another factor is, that in FOC States like Liberia and Panama the fees are only on the first look low. There are many more hidden fees which can grow up to astronomical sums. Like e.g. transportation fees, special mortgage fees, fees for the consuls of the flag State. Often there is also insecure judicial protection with slow proceedings and unfamiliar legal systems and bank documentations.

Facing the advantages and disadvantages of FOC, the NIS offers a compromise between high quality technical standard requirements and judicial transparency on the one side and low costs and easy accessability on the other. This might be the appropriate explanation for the success of the NIS. Even a tighter economic interpretation in national law of the international concept of the genuine link can lead onto the top of the world registers.

Jens-Peter Katzoreck

Universität Augsburg

[...]

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¹ See www.wsv.de

² See LSM International Ship Registers Directory 1999 and 2000 p.2 referring to Lloyd´s Register

³ See LSM International Ship Registers Directory 2000; Graphic 2 p.2 referring to Lloyd´s Register

⁴ See Figure 1 under point B. of this essay

⁵ term will be explained later on

⁶ See LSM Directory 2000 p.61

⁷ See Bull, Introduction to Maritime Law p.55

⁸ See http://www.nis-nor.no

⁹ See LSM Directory 2000 p.63

¹⁰ See Ready, Ship Registration p.131

¹¹ term will be explained later

¹² See LSM Directory 2000 p.65

¹³ Due to the civil war in Liberia, the server of the Liberian Maritime Program was during the time of research on this paper not accessable. Detailed information is therefore not given.

¹⁴ See LSM Directory 2000 p.41

¹⁵ See LSM Directory 2000 p.43

¹⁶ See Ready, Ship Registration p.1

¹⁷ See Ready, Ship Registration p.1

¹⁸ See Ready, Ship Registration p.2

¹⁹ See Ready, Ship Registration p.1 referring to case 1948 A.C. 351,369 per Lord Simonds

²⁰ See Ready; Ship Registration p.2

²¹ See A.87 of the Convention

²² See Ready; Ship Registration p.9

²³ See A.10 of the 1986 Convention

²⁴ See LSM Directory 2000, p.63 under point ”Ownership”

²⁵ See LSM Directory 2000, p.66 under point ”Ownership”

²⁶ See Ready; Ship Registration pp.13-15 for the informations on the 1986 Convention

²⁷ See Falkanger; Bull, Introduction to Maritime Law p.57

²⁸ See http://www.imo.org/imo/introd.htm

²⁹ See IMO description of the Convention on: http://www.imo.org/imo/convent/safety.htm

³⁰ See IMO description of the Convention on: http://www.imo.org/imo/convent/safety.htm

³¹ See IMO homepage: http://www.imo.org/imo/convent/pollute.htm#MARPOL

³² See ILO Convention No.7 1920

³³ See ILO Conventions No.56 1936 and No.71 1946

³⁴ See ILO Convention No.178 1996

³⁵ See Falkanger; Bull, Introduction to Maritime Law p.54

³⁶ See LSM Directory 2000, p.41

³⁷ See LSM Directory 2000, p.41

³⁸ See LSM Directory 2000, p.42

³⁹ See Ready; Ship Registration p.137

⁴⁰ See Ready; Ship Registration p.137

⁴¹ See Ready; Ship Registration p.140

⁴² See Ready, Ship Registration p.109 and LSM Directory 2000 p.44

⁴³ See Ready, Ship Registration p.109

⁴⁴ See Ready, Ship Registration p.109

⁴⁵ See LSM Directory 2000 p.44

⁴⁶ See for the waivers LSM Directory 2000 p.44 and Ready, Ship Registration p.109

⁴⁷ See Ready, Ship Registration p.110 and LSM Directory 2000 p.44

⁴⁸ See Ready, Ship Registration p.111

⁴⁹ See LSM Directory 2000 p.65 and Ready, Ship Registration p.131

⁵⁰ See LSM Directory 2000 p.66 and Ready, Ship Registration p.131

⁵¹ See LSM Directory 2000 p.67 and Ready, Ship Registration p.133

⁵² See LSM Directory 2000 p.63

⁵³ See Falkanger; Bull, Introduction t0o Maritime Law pp.60-63

⁵⁴ See §1(1),(2),(3) MC (Sjolovene) for more details

⁵⁵ See LSM Directory 2000 p.63

⁵⁶ See LSM Directory 2000 p.64

⁵⁷ See LSM Directory 2000 p.44

⁵⁸ See LSM Directory 2000 p.64

⁵⁹ See LSM Directory 2000 p.64

⁶⁰ See LSM Directory 2000 p.44

⁶¹ See Ready, Ship Registration p.17