Palau’s government has moved to nationalise the Palau Open Ship Registry following sanctions imposed on the private company that had been operating the flag.
Palau’s Ministry of Public Infrastructure and Industries (MPII) said the registry continues to operate normally under the direct authority of the government of the republic of Palau, with all services now delivered through the Bureau of Marine Transportation.
Since December 15, the bureau has assumed responsibility for vessel registration, statutory certification, regulatory oversight and flag-state administration, with the government insisting there has been no interruption to services.
The move follows recent amendments to Palau’s Maritime and Admiralty Act, which allow the state to take over full operational control of the registry. Officials acknowledged that the change was prompted by issues arising from the registry’s former corporate operating structure, after the private company running the flag was hit by international sanctions, raising concerns about governance, exposure and operational resilience.
Palau said the legislative changes are designed to ensure a “gradual and orderly transition” and to safeguard the efficient provision of registry services during the handover. The government said it had acted to address risks linked to the sanctions while preserving institutional knowledge and technical expertise within the registry.
The government was also keen to distance the move from any criticism of individuals involved in the registry’s previous management. It said its administrative actions relate strictly to corporate and governance matters and “do not reflect on the professional integrity or experience of Mr Panos Kirnidis”, the former chief executive of the Palau International Ship Registry.
Hayes Moses, director of the Bureau of Marine Transportation, underlined that the flag’s day-to-day operations remain unchanged despite the shift to state control.
“Our priority is to ensure continuity of service and the effective administration of the Palau flag,” Moses said. “All registry services continue to be delivered in accordance with established procedures and international standards.”
Palau’s ship registry is widely regarded as a second-tier open flag, with a mixed reputation in the global maritime community. It is often used on a ship’s final voyage towards demolition sites. Unlike top quality registries which consistently show strong performance indicators, Palau falls short in the International Chamber of Shipping’s flag state performance table. The ICS table, which uses objective indicators such as Port State Control records, ratification of key IMO and ILO conventions and regulatory engagement, is designed to help shipowners assess whether a flag state has sufficient substance before using it, and to encourage improvements where necessary.
Palau’s performance in regional Port State Control (PSC) statistics under the Paris MoU corroborates this middling standing. In the 2024 Paris MoU annual report, Palau-flagged ships had a detention rate of 11.5%, notably above the average of around 4% and higher than larger flags such as Panama or Liberia.
While Palau remains a legitimate and legally recognised flag, these indicators place it closer to the grey zone — acceptable for many commercial vessels, but requiring careful vetting by charterers and financiers, particularly in high-risk trades.
Pictured, the dire conditions onboard the 1993-built Serafina, a Palau-flagged general cargo ship, detained in Israel 18 months ago, with 29 defects. No employment contracts, food storage freezers all at above 0°c, the stench of rotten meat, a bug infestation, broken sanitation facilities – these were some of the inhuman conditions seafarers faced aboard the ship after an inspection by the International Transport Workers’ Federation (ITF).
Palau has just shy of 5m gt on its books, with its flagged fleet having an average age of 27.7 years, some five years higher than the global average, according to data from Clarksons Research.
