Flag State

Every merchant ship must be registered in a country, and that country is its flag state. Registration gives the ship a nationality, which matters enormously in international law: the flag state has jurisdiction over the vessel on the high seas, its law governs matters aboard, and it is the flag state that is responsible under the IMO conventions for ensuring the ship is safely built, equipped, crewed and operated. In practice the flag state discharges much of this duty by issuing the ship's statutory certificates and by authorising classification societies, acting as recognised organisations, to survey ships and certify compliance on its behalf.

Flag states fall broadly into two groups. Traditional or national registries mainly serve ships owned by nationals of that country. Open registries, sometimes called flags of convenience, allow owners from anywhere in the world to register their ships, often with lower costs, lighter taxation and more flexible crewing rules. Several of the largest ship registries in the world (such as Panama, Liberia and the Marshall Islands) are open registries, and a great share of the world fleet flies these flags even though the beneficial owners are based elsewhere.

The quality of flag states varies, and this is precisely why Port State Control exists as a check. A flag with a strong record of enforcing standards enhances a ship's standing, whereas a flag known for lax oversight attracts more inspections and scrutiny abroad. The Paris and Tokyo MoUs publish white, grey and black lists ranking flags by their ships' detention records. Owners weigh cost, reputation, tax, labour rules and the credibility of the register when choosing a flag, and the decision affects everything from which certificates apply to how closely the ship will be watched in foreign ports.