The story of ‘Flag of Convenience’ (FOC) ships is well known. Merchant ships engaged in international trade are registered by their owners in countries that exercise minimal or no regulation over them, resulting in substandard pay and working conditions for crews, poor safety standards, involvement in arms, people and drugs smuggling, and disastrous environmental impacts. Recent changes in Australian shipping law may go some way to mitigating the FOC problem.

The Shipping Registration Amendment (Australian International Shipping Register) Act 2012 (Cth) amended the Shipping Registration Act 1981 (Cth) to provide for the establishment of a new Australian International Shipping Register. Stated objects of the reform included:

• providing an alternative to offshore registration of Australian-owned ships involved in international trade;
• promoting Australian shipping growth and involvement in international trade; and
• ensuring the viability of the Australian shipping industry, including by strengthened regulation and enforcement of seafarer employment conditions, and safety and environmental standards.

The Australian Maritime Safety Authority is the regulatory authority, including in relation to labour standards.

Section 12(1) of the Shipping Registration Act 1981 (Cth) requires that all Australian-owned ships are registered under the Act. As well as the international register, there is also the Australian General Shipping Register (but a ship cannot be registered in both registers). The owner/s of Australian ships are guilty of an offence if their ship is not registered and the ship is liable to detention until registration is effected.

The establishment of the Australian International Shipping Register was made against the background of globalisation and an expansion of Australian ship-borne commodity trade. This context has both encouraged and facilitated the growth of the FOC phenomenon. Under the pressures of heightened international competition and with the facility provided by a more open global economy, shipowners have increasingly sought registration for their ships in FOC countries – Panama and Liberia being two of the more notorious FOC states.

The advantages of registration in an FOC state – for shipowners – include low registration fees, non-existent or little taxation, and the ability to employ labour cheaply. The lack of effective control by the registering state has also meant that FOC ships have not met acceptable standards. For example, they have been responsible for a number of high-profile oil spills. Legal anonymity for the shipowners and therefore their avoidance of criminal and civil liability is another FOC outcome.

With regards to the protection of the labour conditions and rights of seafarers, it is noted that a ship is not allowed to be registered on the Australian International Shipping Register if a collective agreement has not been concluded between the shipowner concerned and the crew’s bargaining unit (Shipping Registration Act 1981, s 15F(3).)

Registration is one of the topics examined in the updated The Laws of Australia Subtitle 34.3 “Shipping” .