Free Essay On Shipping Law
The concept of genuine link has proved to be a controversial one. Genuine link is a political and legal issue which is described in the international maritime law. The study of international maritime law has therein faced many problems due to this concept and the requirements needed for ships and nations to have a genuine link (Oxman & Bantz 2000). This concept requires that the ships operating in international waters should be registered to certain countries. These ships should be linked with the countries and should fly the country’s flag. Any ship not flying a flag or flying more than one flags is in breach of the international maritime laws and cannot be granted international protection (Ozcayir 2000).
Genuine link gives the country of registration rights and jurisdiction over the ship. The ship owners on the other hand are not bound by any rules to register their ships under their nationalities. They have the freedom to register their ships under any nationality of their choice. The choice of the nationality that the ship is to be registered in is dependent on the owner’s evaluation of several factors. Some of the factors may be legal. Legal factors that may influence the decision on the country of registration is the type of laws governing marine vessels. Some nations have very strict laws that may be considered strict and hard to adhere to by the ship owners. These laws may include the legal requirements or safety measures to be employed on the ships.
Economic factors may influence the genuine link decisions made by the owners. Generally, the owners consider working under conditions that would be of economic value to them. A country’s economic status may make the owner to choose in favor or against registration in it. A country that is undergoing hard economic times would make the ship owners to avoid registering their ships in the country. For example, a country that is undergoing inflation would not be favorable for ship registration economically. This would be attributed to the high costs of doing business that are usually associated with inflation. High costs often translate to very low profits for the owners. Shipping is a business that is governed by the core objectives of wealth maximization and profit maximization. To maximize profits, ship owners thus have to make decisions that favor them economically.
Political factors influence the decisions of the ship owners on the country of registration of the ships. Mostly, politically sound countries that have stable governments tend to have more ship registrations as compared to the countries which are characterized with wars and unrests. Political stability ensures smoothness in doing business in the countries. The ship owners would want to be associated with countries that promote smooth business operation. Political stability is always accompanied with security in the seas. Political stable countries usually maintain security in the high seas and cases of piracy and other criminal activities are rare as compared to the unstable countries. Every ship owner would want maximum security for the goods in transit and the crew. This is achieved by registering in politically stable nations.
In determination of the country of registration, the ship owners are supposed to consider the interests of other sea farers too (Barr 2003). The decisions made should not be solely based on their own personal interests. For example, the ship owners may decide to register their vessels in countries which have good economic conditions. Consideration on this may blur other factors such as crew safety on the land, since they are not always on the sea. Ship owners may have dark skinned crew who are more susceptible to racial abuse from other people. Deciding the country of registration according to economic factors may make the ship owners fail to realize that the country in which they have registered the ship has high occurrences of racial abuse against the said race. This would be dangerous to the crew. The characteristics of the sea surrounding the country of registration may not be favorable to the safety of the goods (Coles 2002). Stormy seas pose a danger to the safety of goods and the crew. The vessel may be insured so the ship owners would not feel the pinch if the goods were lost due to certain sea perils.
The Article 2 of the 1958 convention clearly provides the freedoms that are to be followed and applied on individuals in the high seas (Xhelilaj 2013). Ships have the freedom to operate in the high seas with or without a state in which there is genuine link. The ship however would not have any protection from the international laws in case of any atrocities committed by the crew members or in the case of ferrying of illegal substances (David 1988). In the case the ships are captured by other countries or in other territories, these countries tend to have the right to apply their jurisdiction on the ship in accordance to the provisions of the law of the land (Odeke 1988). In normal cases where the ships or vessels are registered and have a genuine link, the international laws provisions would be applied and in some cases the ship would be charged under the laws of the registered country.
The provisions of the international law however were not applied when MV Transporter was arrested by the Argentinian authorities. This was for the fact that the ship’s registration with panama had expired at the time of arrest. This made the ship to be stateless and thus had no international protection. Panama had also no obligation to take responsibility of the ship since at the time of arrest, it was not registered. Even though the ship was previously registered in Panama, there was no any ascertainment that the owner would still register it in the country following the expiry of the previous registration. Panama could therefore not lay claim on the vessel. Argentina on the other hand undertook proceedings according to the Argentinian laws since the ship could not be charged with the laws of any other country or the internal laws.
The type of registration in which MV Transporter was registered in is known as the open registration. This type of registration is whereby the ships are registered in other countries other than that of the owner’s origin (Churchill 2001). The owner of the ship was Venezuelan while the ship was registered in Panama. This type registry has also been given other names by different scholars and can be referred differently in many countries. The most common descriptions of this type of registration is flag of convenience or free flags (Ready 1998). The description of this has no uniform international description. However, despite the different descriptions in different nations, open registration has some general uniform characteristics.
The registration of the ships is open to all nationalities. People from different countries are allowed to register their ships despite their nationality. Jurisdiction on the individuals would be carried out on the country of origin of the owners or the crew members. The decisions on the actions taken on the ship itself, either destroying the ship along with its contents or keeping the ship is down to the country of registration. This is the same as the conditions applied when a stateless ship is arrested by another country. In short, the country of registration has powers and authority over the vessel. Any crimes or wrongs committed by the crew members are not under the jurisdiction of the country of registration. The jurisdiction is on the crew members is under their different nationalities.
The case of MV Transporter was determined on this basis. The arrest by the Argentinian authorities did not mean that the master of the ship and the crew members were under the jurisdiction of Argentina. The members were under the jurisdictions of their personal countries and could not be charged under the laws of Argentina, even if found guilty of the criminal charges. That is a provision by the international maritime laws. The master of the ship and the crew members were released due to these provisions. That was despite the fact the ship was not protected by the international laws.
Another feature of the open registry is the fact there is easy access to the registry. Owners can easily register their ships under this provision. This is actually one of the advantages of open registry. Members do not need to go through complicated processes like vetting and having restrictions on the nationals operating or working in the ship (Dedire & Krista 2000). For example, the MV Transporter did have many nationalities in the ship. Actually, there were differences in nationalities from the ship owner, master of the ship, crew members and the owner of the bunker oil of which it was transporting. The routes in which the ship operates are also different. In open registration, the owners are given all the freedom to make decisions about their ships and no restrictions exist (IMST n.d).
Open registration gives the countries of registration the rights to own and control the merchant vessels (Churchll 2000). This can be viewed both as an advantage or a disadvantage of ship registration to the ship owners. A country that decides to have total control over the vessels would make the owners to have little control over their own property (William 2003). This may influence or affect the objectives the owners may need to achieve. Certain objectives like the economic objectives may be greatly interfered as the country may have other objectives in mind to be achieved. This could prove to be a huge disadvantage to the owners. On the other hand, this type of control would also have an advantage. The owners may find it easy and less costly to maintain their vessels as many activities may be done by the state of registration.
Control over the vessels would make it easier for the ship owners to comply with the laws and regulations in place in the country of registration (Viscount 1970). The governments or the marine authorities in the countries would always ensure that the vessels operate under the law and all requirements are met. This is boosted by the fact the authorities are in a better place to tell what is exactly required by the law and what is not. The authorities are also in better positions to access all the relevant information and updates on changing international maritime provisions that the vessel owners. Access to first-hand information makes it easy in managing the vessels.
The control over the vessels also makes the country of registration to be liable for certain activities. This would be key in distribution of liability to the vessel owners as the countries are more likely to carry the burdens (Boczek 1962). In the case of MV Transporter, Panama was also named as a defendant. This would have reduced the liability of the owner if there were any charges going on. The ship owner would have been relieved if there were any fines to be paid. Also, if the authorities had decided against suing for collective liability by the owners and the state, there were more odds that the country would instead be sued and made liable. The decision to make the country liable is that it is in a better financial position to pay for any damages caused or pay the fines charged.
Open registry has an advantage to ship owners in that they have low taxes or do not get tax expenses at all (Zwinge 2011). Tax wavering by the countries in which the ships have genuine link with promotes registration by merchants. Absence of taxes encourages ship owners to register their ships in the countries. Most countries use this technique as an incentive in promoting maritime trade in the countries. The more the ships registered in the countries, the more the level of trade in the countries. Ease in conducting international trade is also achieved as the importers and exporters get to move their products in and out of the country easily. Tax waivers on the ship owners’ side translate to higher profits. Most companies are discouraged by high taxation levels which tend to reduce the profit levels of the companies. Having tax waivers would definitely promote genuine link in the countries.
Open registration allows the ships to be manned by non-nationals (Mukherjee & Brownrigg 2007). MV Transporter was being manned by foreign nationalities. The ship was managed by a Brazilian firm and chartered to a Spanish company. The master of the ship along with several crew members were Honduran while other two were Sri Lankan. The freedom in choosing who mans the ship is an advantage to the ship owners. They are able to get the best crew possible who are capable of managing the vessel and achieving their objectives (Louis & John 2004). Having crew from different nations would also aid in several situations like breaking communication barriers when the ship gets cargo to transport to other ends of the world (McDougal & Vlasic n.d). For example, if MV Transporter got cargos to transport to Sri Lanka or other eastern nations, there would be no communication barrier as the Sri Lankan crew would help in communicating. Employing crew from different nationalities would also ensure high levels of professionalism in the work and chances of having sabotage by the crew members are eliminated.
Different countries have different rules in which they determine the genuine link. There are no discrete international standards in determination of genuine link. However, the genuine link between a country and ship can be determined by the flag being flown on the ship (Chorlei & Giles 1987). The ships flag is an indication that it is linked to the country. The nationality of the crew members, chartered company, managing company or the owner’s nationality is irrelevant in determination of the genuine link of the ship. Ships are not allowed to fly flags of countries that they are not registered in. Ships are also not allowed to fly more than one flag, which would be intended to mean genuine link with different countries. This is because the international provisions state that the genuine link of a ship should be with only one country.
Genuine link can be defined as the registration of a ship in a certain country of owners’ choice. Registration of ships is not limited to the owner’s country of origin, but can be registered in other a different country. This type of registration is known as the open registration and reaps numerous advantages to the ship owners. Some of these benefits accrued to registration is distribution of liability, help in management and control of vessels and economic benefits like low taxes. The genuine link of ships can be determined by the flag flown on the ship. More than one flag or lack of a flag would render the ship stateless. The consequences of this is lack of international law protection on the ship. Anything that happens on the ship would not be protected by the internal law and justice may be impossible to be rendered.
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