
In 2011, Cunard Line registered all its ships in Bermuda, which, besides other considerations, enabled its ship captains to marry couples at sea. Such was a consideration when Carnival Cruise Line changed the flag of the RMS Empress of Canada in 1972 to that of Panama. Prior to the implementation of the International Convention on Tonnage Measurement of Ships, 1969, shipowners may have selected a jurisdiction with measurement rules that reduced the certified gross register tonnage of a ship, to reduce subsequent port of call dock dues. Some ships with flags of convenience have been found engaging in crime, offering substandard working conditions, and negatively impacting the environment, primarily through illegal, unreported and unregulated fishing. One criticism is that shipowners who want to hide their ownership may select a flag-of-convenience jurisdiction which enables them to be legally anonymous. Open registries have been criticised, mainly by trade union organisations based in developed countries, especially those in the European Union, United States, Japan, Canada, or the United Kingdom.
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Panama, for example, offers the advantages of easier registration (often online) and the ability to employ cheaper foreign labour. A registry which does not have a nationality or residency requirement for ship registration is often described as an open registry. The term "flag of convenience" has been used since the 1950s. They may also select a jurisdiction to reduce operating costs, avoiding higher taxes in the owners' country and bypassing laws that protect the wages and working conditions of mariners. A ship's owners may elect to register a ship in a foreign country which enables it to avoid the regulations of the owners' country which may, for example, have stricter safety standards. Each merchant ship is required by international law to be registered in a registry created by a country, and a ship is subject to the laws of that country, which are used also if the ship is involved in a case under admiralty law.

The term is often used pejoratively, and although common, the practice is sometimes regarded as contentious.

MV Mainport Pine, a seismic support vessel owned by Irish company Mainport Group, flies the flag of the Marshall Islands and bears the home port of Majuro.įlag of convenience ( FOC) is a business practice whereby a ship's owners register a merchant ship in a ship register of a country other than that of the ship's owners, and the ship flies the civil ensign of that country, called the flag state.
