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Compare open registry versus national registry

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Those readers familiar with this column know that my day job requires the wearing of many hats: policeman, advisor, inspector, surveyor, researcher, and even sometimes babysitter.  During the course of our company’s work on behalf of various flag states, we receive an endless barrage of questions from our worldwide survey staff and clients.  

In one recent exchange, a crew member had the unfortunate occasion of being dismissed from the yacht without cause (per his opinion). The crew member approached the flag to investigate the reason for his unjustified dismissal because it was unknown what he was fired for. A Flag Administration has certain responsibilities regarding crew employment complaints.

In the course of gathering facts, an extremely strong attitude was expressed regarding the role of the flag. In short, it was felt that by the yacht being registered with an open registry versus a national registry, the yacht was somehow circumventing international rules.  

First, let us define the difference between an open registry and a national registry.  The term open registry refers to the business practice of registering a yacht in a sovereign state that is different from that of the owners.  

The yacht then flies the ensign of that state versus the flag of the owner’s nationality.  The reasons for registering a yacht as such are numerous.  These may include ownership, corporate structure, financing, taxation, crewing, and in a recent surprising reason, the actual color of the flag (go figure).  

In any case, the reason for registering a yacht in a particular flag is an important one that definitely should involve legal counsel.  We touched upon this subject in a column at the end of 2015.  Examples of open registries include Panama, Liberia, the Cayman Islands, Isle of Man, the Bahamas, Malta, Antigua and Barbuda, and St. Vincent & the Grenadines.  Examples of national registries are the United States, United Kingdom, Australia, and New Zealand.  There are some countries that offer both a national and international (open) registry.  These countries include France, Norway, Jamaica, and Denmark.

An article published by the shipping group Clarksons, provided an objective and factual explanation of the maritime industry’s embracement of international integration and the drain from the “nation state.”  The article stated, “As globalisation got started in the early 1950s, shipowners took a decisive step which, over the years, has played a crucial part in making it the international carrier of choice.  In a nutshell, they traded in nationality for open registries. In 1959, these flags were legally recognized by the International Maritime Organization (IMO) and soon other states started offering a ‘flagging-out’ service.”  

It is important to note that in mid-2011, open registers reached a key landmark. Two-thirds of the world’s gross tonnage was flagged under an open registry.

Recalling the history and purpose of open registries, we can now address one of the largest misconceptions used to describe them and the reason for this month’s column.  

Commonly, open registries are referred to as “flags of convenience.”  This significantly outdated term is usually used when describing an exceptional situation such as an accident or crew dispute.  The term invokes images of dishonest captains getting away with criminal behavior by forcing crews to work like slaves without adequate pay or rest under appalling conditions.  While this may sound like the typical 10-day charter routine, it is not realistic.

As we know, history repeats itself.  It can teach us a lot about how to react to situations presented to us in the current day.  For this particular subject, we have to remember that the world changes.  Business and leisure – including yachting – change with it. Yes, in years past ships and yachts used to fly the flags of their nations.  Everyone kept to his or her home flag.  Very true; and Americans used to only drive cars made by Ford and Chevrolet.  For the most part, things do change for the better.  Open registries emerged and developed largely because national registers were not doing their jobs properly, nor providing the service that owners needed. In many cases, they are still not doing their jobs.  If they were, we would see a reversal in these roles.  And please, to keep the broiling nationalism at bay, please note that the author is a solid supporter and decades-long member of the US merchant marine.

It is often claimed that negligence is ignored by open registries, where owners can slip away, unpunished and unaccountable. This is a horrible delusion. Conscientious open registries are just as attentive as their national registry counterparts in eliminating substandard yachts.  In the same way, poor national registers are equally susceptible to accusations of turning a blind eye.

Another negative connotation expressed relates to crew.  Today, crew demographics consist of multiple nationalities.  Why is this cause for concern?  Is there a particular nationality that inherently produces infallible professional seafarers?  While that statement should invoke a few emails from various friends, we must be realistic.  Yachting is the ultimate international mix.  We should celebrate its multicultural identity, rather than belittle it.

The role of a yacht registry has changed dramatically over the years. Our industry demands proactive flags that recognize difficulties, and responds to them, often before the yachts realize what is required of them. It demands the highest levels of attention to safety, quality, and crew needs.  It warrants effective representation at the highest levels of government and industry, plus knowledge of the major issues facing yachting today.

It is foolish to compare a modern yacht registry today with its equivalent of, say, 50 years ago, or even 10 years ago when some registries were accused of being little more than a pizza parlor in the front store and a yacht registry in the back office.  Yacht registries cannot be considered “evil” simply by virtue of not being national registers.  The sooner our industry accepts that there are good and bad national and open registers, the sooner we can begin to fix the issue of poorly performing flags.

Are you looking for a quality flag for the boss’ next boat?  Your choices are endless, but be well-informed.  Start by looking for a flag, which is easily found among the list of ever-expanding registries, excellent customer service, but difficult to find on the world’s port state control detention websites.  It’s not a guarantee, but it’s a place to start, and certainly better than simply choosing one by the color.

Capt. Jake DesVergers currently serves as Chief Surveyor for the International Yacht Bureau (IYB), a recognized organization that provides flag-state inspection services to private and commercial yachts on behalf of several flag-state administrations.  A deck officer graduate of the US Merchant Marine Academy at Kings Point, he previously sailed as Master on merchant ships, acted as Designated Person for a shipping company, and served as regional manager for an international classification society.  Contact him at 954-596-2728 or www.yachtbureau.org

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