Liberian flag challenges ‘flags of convenience’

WASHINGTON — The Liberian Ship Registry is urging the Federal Maritime Commission to set a new standard when referring to the quality of foreign-flag ship registries and the ship owners that use them by ditching the long-standing “flags of convenience” (FOC) label.

The tag has been used as a “pejorative short-hand,” the registry told the FMC, to imply that because they are open to foreign ship owners – as opposed to flag states that limit vessel registration to ship owners based in that country, such as the United States – they are used to evade regulations and as a way to register vessels cheaply.

“While there are certainly such flag states in existence, the distinction between those that require national linkage and those that do not as a shorthand for low cost, poor quality, or regulatory evasion, is no longer apt,” the Liberian Flag stated in comments filed in the FMC’s flag registry fraud investigation.

“And today, among the highest-performing vessel registries, are international flags, such as the Liberian Flag as well as the Marshall Islands Flag.”

The registry recommends that instead of a “binary” choice between national flag (closed) registries and FOC (open) registries, a more appropriate categorization should be:

International Flag: Flag states that allow for the registration of vessels with foreign ownership.
National Flag: Flag states that limit the registration of vessels to owners of that country.
Flags of Non-Compliance (FONCs): Flag states – whether international or national – that eschew national and international laws, standards, norms, and responsibilities, and are utilized by shipowners to operate on the cheap, evading international customary laws, national laws of port and coastal states, and related regulations.

The registry pointed out that large international flags such as Liberia and the Marshall Islands are sought after by ship charterers because of their quality, which in turn is an incentive for shipowners to choose them.

The three largest international authorities that measure ship registry quality (by assessing vessel detention records) is the Paris MoU, a cooperative of 27 countries mainly in Europe, the Tokyo MoU, a cooperative of 22 countries mainly in the Asia-Pacific, and the United States Coast Guard.

The Paris MoU has consistently “white-listed” the Liberian Flag’s ships, the registry told the FMC, which demonstrates Liberia’s performance as a high-quality flag state. At the same time, the authority currently has on its “grey list” 13 national-flag vessels.

“This is evidence of the fact that international flags such as Liberia and Marshall Islands even outperform many national flags on a quality basis,” the registry stated. “This also demonstrates that quality is not inherent in national flags, and they too can have quality and performance deficiencies just like FONCs.”

For its vessels calling at U.S. ports, the registry pointed out that it has achieved the Coast Guard’s annual “Qualship 21” designation for highest performing flag states (based on vessel detention records) nine times between 2011 and 2024.

The Liberian Flag lost that quality designation starting July 1, however, according to the Coast Guard’s latest Port State Control assessment, and will be ineligible for Qualship 21 status through June 30, 2026.

In addition to retiring “flags of convenience,” the registry suggested the FMC should consider imposing other requirements on flag states depending on what it uncovers in its investigation, including:

Becoming a signatory member of the Registry Information Sharing Compact, a platform used by flag states to share information regarding sanctions-evading vessels.
Using Long Range Identification and Tracking and Automatic Identification System data in their sanctions compliance assessment of vessels.
Creating an office in the U.S. that can coordinate with government agencies, including the Coast Guard and the Treasury Department.
Creating an in-house sanctions compliance department.
Producing their ISO 9001:2015 certifications to relevant regulatory bodies to encourage effective flag state quality management.