Comment on Article by Philippe Van Dijk regarding Panama Papers and Flags of Convenience

I do not believe that there can be any doubt that the Panama Papers revelations will have consequences for many jurisdictions and a discussion of the taxation of shipping can be deferred to another day. However, I do take issue with the implications that the so-called “open” registries provide inferior safety regulation or inferior maritime services of any sort.

The decision to use a registry has many facets – flexibility in vessel registration, inspections, adequate representation of shipowners at IMO, processing of seamen’s papers are but a few of the concerns. As noted by others, the open registries have generally acceded to the IMO and ILO conventions. Information on the status is available at

Regulation of vessels generally originates from the United Nations and is implemented by the flag states and their enforcement of inspections and surveys. In addition to flag state regulation, each state at which a vessel calls is entitled to inspect the vessel for compliance with IMO and local standards. This is documented in several agreements, the most recognized of which is the Paris Memorandum of Understanding. Within the annual report by the Secretariat for the Paris MOU are many statistics and, based on the ratio of vessel detentions to inspections, a list of registries as white, grey or black. Needless to say, vessels registered in grey or black listed registries will most likely be subject to local inspection. 

I note that all of the open registries mentioned are in the white list and, in order of fewest detentions per inspection (based on the 2012 report) are the Bahamas (8), Liberia (14), Marshall Islands (18), Bermuda (26) and Panama (32). All of these have fewer detentions/inspection than the United States (39). For completeness, Belgium ranked (19). 

We have only begun to see the fallout from the Panama Papers revelations. However, a review of the safety standards of open registries is not one that I anticipate.