Flag state
The state whose flag a ship flies and which exercises jurisdiction over it, a rating factor as much as a compliance one.
Montego Bay Convention, 1982, Article 91: there must exist a genuine link between the state and the ship flying its flag. So-called open registers have emptied that requirement of meaning by registering ships with no real connection, which gave rise to the vocabulary of flags of convenience. Panama, Liberia and the Marshall Islands alone account for about 40% of world tonnage on UNCTAD figures. The flag state is the one whose colors a ship flies and whose law it follows on the high seas. It is responsible for enforcing the conventions on safety, maritime labor and pollution prevention. Port state control partly makes up for its failings. Regional memoranda inspect calling vessels, detain the worst performers and publish flag lists ranked by detention rate. The Paris memorandum's list, built on three years of data, works as an entry filter for P&I clubs and as a rating factor for hull underwriters. Flag tells the underwriter the likely quality of maintenance and the exposure to international sanctions, and signals which law will govern a casualty. It answers the problem of a movable asset that by nature escapes any permanent territorial jurisdiction.
Panama, Liberia and the Marshall Islands alone account for about 40% of world tonnage on UNCTAD figures, Liberia having overtaken Panama in 2024. The black list published each year by the Paris memorandum, which ranks flags on three years of detentions, works as an entry filter for protection and indemnity clubs as much as a rating factor for hull underwriters.
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