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![]() ![]() The use of open registries steadily increased, and in 1968, Liberia grew to surpass the United Kingdom with the world's largest ship register. Owners soon began to perceive advantages in terms of avoiding increased regulations and rising labor costs and continued to register their ships in Panama even after Prohibition ended. The modern practice of ships being registered in a foreign country began in the 1920s in the United States when shipowners seeking to serve alcohol to passengers during Prohibition registered their ships in Panama. ![]() Furthermore, the foreign owners pay no income taxes. 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. ![]()
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