Classification Societies - Flags of Convenience

Flags of Convenience

For more details on this topic, see Flag of convenience.

The advent of open registers, or flags of convenience, has led to competition between classification societies and to a relaxation of their standards.

Flags of convenience have lower standards for vessel, equipment, and crew than traditional maritime countries and often have classification societies certify and inspect the vessels in their registry, instead of by their own shipping authority. This made it attractive for ship owners to change flag, whereby the ship lost the economic link and the country of registry. With this, also the link between classification society and traditional maritime country became less obvious - for instance Lloyd's with the United Kingdom and ABS with the United States. This made it easier to change class and introduced a new phenomenon; class hopping. A ship owner that is dissatisfied with class can change to a different class relatively easily. This has led to more competition between classes and a relaxation of the standards. In July 1960, Lloyds Register published a new set of rules. Not only were scantlings relaxed, but the restrictions on tank size were just about eliminated. The other classification Societies quickly followed suit. This has led to the shipping industry losing confidence in the classification societies, and also to similar concerns by the European Commission.

To counteract class hopping, the IACS has established TOCA (Transfer Of Class Agreement).

In 1978, a number of European countries agreed in The Hague on memorandum that agreed to audit whether the labour conditions on board vessels were according the rules of the ILO. After the Amoco Cadiz sank that year, it was decided to also audit on safety and pollution. To this end, in 1982 the Paris Memorandum of Understanding (Paris MoU) was agreed upon, establishing Port State Control, nowadays 24 European countries and Canada. In practice, this was a reaction on the failure of the flag states - especially flags of convenience that have delegated their task to classification societies - to comply with their inspection duties.