Why Ships are Registered Under Foreign Countries

[kentuckyluckyguy]

On our recent cruise on the Elation, my GF asked why the ship was registered to Panama when Carnival is basically a U.S. company. My rather lame explanation had something to do with it likely being a tax loophole....boy was I wrong. After a little research, I found this:

 

http://www.cruiseresearch.org/Legal%20Issues%20Relevant%20to%20Cruise%20Ships.html

 

It's a very detailed and interesting read as to why cruise lines register ships in various countries. Long story short, once you are on the ship you are under maritime laws/jurisdiction and there's not a lot you can do legally if something happens on the cruise to you. If the ship is registered to a foreign country then it basically falls under that countries jurisdiction.

 

I'm sure this is in the contract to sail in the fine print somewhere...but I found it pretty interesting.

[firefly333]

So you jumped to the conclusion this is the real reason for foreign flags?

 

Sorry, but I would say it has a whole lot more to do with labor laws in the U.S. where they can work folks for endless hours without U.S. laws complicating things.

 

NCL tried to flag under U.S. and had to employ U.S. workers .. and see how well it worked out for them... nothing to do with victimation as you claim. It has to do with payment of the workers on the ship mostly. Im sure there are other reasons .. but your reason is one of many.

[kentuckyluckyguy]

No, I didn't jump to the conclusion....if you read the link it does indeed discuss the fact that it has to do with workers, minimum wage, salaries, working conditions and so forth early on in the article.

 

Then it goes into maritime law and if you thoroughly read it, it does explain everything in regards to a lot of different subjects.

 

I wasn't being critical or hypersensitive, just pointing out something I'd never known or read before on cruise critic or other places. I thought the article did a pretty good job explaining it.

 

While I would agree with you that it likely has more to do with employment of workers and working conditions/treatment/standards, there can be no denying that the maritime law issue still would come into play if needed.

[eposadas]

probably has alot to do with not paying taxes in this country...same reason why you rarely see americans working on cruise ships....

 

they work 12 hour days and get an afternoon off a week.....

 

not many americans would work those hours for the pay they are paying....

[marym933]

U.S. flagged ships have to abide by U.S. laws which, in most cases, mean no casino. That would mean a lot less profit for the cruise lines which equals higher prices.

 

I've been on the Pride of America, NCL's U.S. flagged ship. We had a great time. I didn't notice any difference in service due to U.S. labor laws. I did miss the casino, but how could you have a bad time sailing around Hawaii?

[elcuchio24]

Taxes, and not having to pay minimum wage are the biggest issues. I am suprised OP was not aware of that before sailing. As far as being a US Company, well, any publically held inc is pretty liquid as far as where it is 'based'.

[5waldos]

It also has to do with the safety upkeep of the ships. For example the gulf rig was registered in the Marianna's Islands and their requirements fall far short of US requirements.

 

So all in all, it is a real boon NOT to have a ship registered in the US.

[firefly333]

Taxes, and not having to pay minimum wage are the biggest issues. I am suprised OP was not aware of that before sailing. As far as being a US Company, well, any publically held inc is pretty liquid as far as where it is 'based'.

 

As usual you and I agree.

[LemurCat]

Taxes, and not having to pay minimum wage are the biggest issues. I am suprised OP was not aware of that before sailing. As far as being a US Company, well, any publically held inc is pretty liquid as far as where it is 'based'.

 

CCL is actually organized in Panama, but registered in the State of Delaware for purposes of being a publically traded company. It reports to the SEC and is registered under the Corporations Act of 1934 - http://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0000815097&owner=exclude&count=40

 

And as for the maritime law thing, passengers do have recourse in the Florida courts as per the contract.

[Mrs.G's Mr.G]

It also has to do with the safety upkeep of the ships. For example the gulf rig was registered in the Marianna's Islands and their requirements fall far short of US requirements.

 

So all in all, it is a real boon NOT to have a ship registered in the US.

 

If the ships do not have to follow U.S. requirements, then why are all cruise ships required to conform to United States Coast Guard safety rules and inspections, and United States Health laws?

 

Can we please stop speculating. Just because something is written on CC does not mean it is true. I will research this and provide the correct information.

[LemurCat]

If the ships do not have to follow U.S. requirements' date=' then why are all cruise ships required to conform to United States Coast Guard safety rules and inspections, and United States Health laws?[/quote']

 

Because the are using US ports. The US Coast Guard has purview over any vessels entering or leaving a US port:

 

http://www.uscg.mil/hq/cg5/cg532/pwcs.asp

 

As for health codes, the CDC uses a quartantine law to enforce sanitation codes:

 

http://www.cdc.gov/nceh/vsp/

 

Foreign-flagging of ships themselves and foreign organization has everything to do with fees, taxes, and dealing with laxer employment laws:

 

http://www.panama-law.com/Web%20Pages/Ships/ships.htm

[Mrs.G's Mr.G]

I found this so far:

 

http://www.justia.com/admiralty/cruise-ships/

 

I emailed Carnival and asked for the "fine print" on a ticket. All of my previous tickets are long gone.

[kentuckyluckyguy]

I am continually amazed at how defensive people get on this board. I was NOT in any way slamming the cruise industry...I just provided a link that discussed why ships are registered to foreign countries. Carnival may be registered in Delaware but it specifically states they are "headquartered in Miami"...and if you do a google search about Mobile, AL losing Carnival you will see that the Mayor of Mobile went to Miami to meet with several Cruise Lines which are "headquartered there"....

 

I just thought it was an interesting read as to why ships are registered to foreign countries...that's all. It was not meant to be an accusatory or derogatory post, more so an informative type post. And, that said, this probably isn't the ONLY link to such material out there. I'm CONFIDENT that not everything written in the link I provided is totally accurate, however I'd tend to believe quite a bit of it as it does make sense, if you read it OBJECTIVELY.

[LemurCat]

I am continually amazed at how defensive people get on this board. I was NOT in any way slamming the cruise industry...I just provided a link that discussed why ships are registered to foreign countries. Carnival may be registered in Delaware but it specifically states they are "headquartered in Miami"...and if you do a google search about Mobile, AL losing Carnival you will see that the Mayor of Mobile went to Miami to meet with several Cruise Lines which are "headquartered there"....

 

They are registered in Delaware for corporate taxation purposes - most big companies are as there are no taxes or registration fees. Delaware is extremely business friendly. You can be registered in Delaware and HQ'ed anywhere.

 

I just thought it was an interesting read as to why ships are registered to foreign countries...that's all. It was not meant to be an accusatory or derogatory post, more so an informative type post. And, that said, this probably isn't the ONLY link to such material out there. I'm CONFIDENT that not everything written in the link I provided is totally accurate, however I'd tend to believe quite a bit of it as it does make sense, if you read it OBJECTIVELY.

 

That's the thing, not everything is. And people are trying to correct what isn't. Unfortunately, when you post a link on the internet, you're kinda speaking to the veracity of the information unless you're asking if it's accurate. You're basically saying "This is the basis for my opinion." If you weren't doing that - which you clearly were not - perhaps you should have phrased your post a bit differently, such as, "Is this accurate? Or is there something more?"

[kentuckyluckyguy]

They are registered in Delaware for corporate taxation purposes - most big companies are as there are no taxes or registration fees. Delaware is extremely business friendly. You can be registered in Delaware and HQ'ed anywhere.

 

 

 

That's the thing, not everything is. And people are trying to correct what isn't. Unfortunately, when you post a link on the internet, you're kinda speaking to the veracity of the information unless you're asking if it's accurate. You're basically saying "This is the basis for my opinion." If you weren't doing that - which you clearly were not - perhaps you should have phrased your post a bit differently, such as, "Is this accurate? Or is there something more?"

 

Based on what else I've seen the link I posted makes the most sense. I'd say each of these lines has their tails covered from every angle possible in more ways than most of us can imagine.

 

Will it stop me from cruising? No. Will I read all the fine print from now on? Sure.

 

Obviously the Coast Guard can board a vessel at any point in US waters and likewise the CDC could likely prevent a ship from sailing at any point from a US port.

 

I think ALL of the lines fully realize this and keep their ships up to the US "standards". But should there ever be a situation occur I think there are probably tons of "grey areas" where the cruise line can cover their tails.

 

To think otherwise would be absurd.

[LemurCat]

Based on what else I've seen the link I posted makes the most sense. I'd say each of these lines has their tails covered from every angle possible in more ways than most of us can imagine.

 

Will it stop me from cruising? No. Will I read all the fine print from now on? Sure.

 

Obviously the Coast Guard can board a vessel at any point in US waters and likewise the CDC could likely prevent a ship from sailing at any point from a US port.

 

I think ALL of the lines fully realize this and keep their ships up to the US "standards". But should there ever be a situation occur I think there are probably tons of "grey areas" where the cruise line can cover their tails.

 

To think otherwise would be absurd.

 

I completely agree. It's a lot of CYA and legalese.

[kentuckyluckyguy]

I completely agree. It's a lot of CYA and legalese.

 

Yup...and makes for interesting conversation. And I agree with you completely that for the most part, the reason the ships are registered to foreign countries has to do with Labor Laws and taxes. I was just making the point that there are "other benefits" for the cruise line as well, should the need ever arise.

 

I'd hope and think most if not all US based corporations would have enough "PR sense" to handle things in the right way should an unfortunate situation occur, instead of reverting to "martime law"...but in this day and age, you just never know what some CEO might call for....

[LemurCat]

I'd hope and think most if not all US based corporations would have enough "PR sense" to handle things in the right way should an unfortunate situation occur, instead of reverting to "martime law"...but in this day and age, you just never know what some CEO might call for....

 

Because they are registered under the 1934 Act, they do fall under the purview of the Securities and Exchange Commission and Department of Justice. They can't just hide behind the Panamanian flag with no consequences.

[kentuckyluckyguy]

Because they are registered under the 1934 Act, they do fall under the purview of the Securities and Exchange Commission and Department of Justice. They can't just hide behind the Panamanian flag with no consequences.

 

I wouldn't disagree with that statement without researching it more...however I'd not hesitate to say that it does in some way make things "stickier" and more difficult rather than going after a corporate land based business like Wal Mart etc....but, I'm not a lawyer, just a regular joe that stays in a Holiday Inn Express every now and then LMAO

[DocF]

The most basic reason for the flag of convenience registration is that U. S. law requires U. S. registered vessels to be built in the U. S. The only reason Norwegian was able to get away with a foreign built ship being registered U. S. to sail in Hawaii, was a special act of congress and the fact that the two ships in question were partly constructed in Biloxi, Mississippi which is the home of a fairly powerful (now former) senator, one Trent Lott.

 

Doc

[big_duck]

No, I didn't jump to the conclusion....if you read the link it does indeed discuss the fact that it has to do with workers, minimum wage, salaries, working conditions and so forth early on in the article.

 

Then it goes into maritime law and if you thoroughly read it, it does explain everything in regards to a lot of different subjects.

 

I wasn't being critical or hypersensitive, just pointing out something I'd never known or read before on cruise critic or other places. I thought the article did a pretty good job explaining it.

 

While I would agree with you that it likely has more to do with employment of workers and working conditions/treatment/standards, there can be no denying that the maritime law issue still would come into play if needed.

 

Sorry, but reading one article on onw site run be a gentleman with a long history of being anti-cruise does not constitute good research. I would suggest you dig a little deeper and perhaps find the info from a more neutral source.

[MagSeven1413]

I've been on the Pride of America, NCL's U.S. flagged ship. We had a great time. I didn't notice any difference in service due to U.S. labor laws. I did miss the casino, but how could you have a bad time sailing around Hawaii?

I found this interesting. A few years ago we were considering one of the NCL Hawaiian cruises and upon researching both online and in discussions with a few TAs, I was under the impression that NCL was having problems with their American crews. In fact, our personal TA had been on one of the cruises and crew would just quit in the middle of a cruise and leave the ship on one of the islands. Face it, we Americans are not great when it comes to giving customer service like we experience on a cruise ship. Of course, this would be considered 'hearsay', but I do trust my TA (who I have dealt with for 10 years).

[Guest LoveMyBoxer]

The most basic reason for the flag of convenience registration is that U. S. law requires U. S. registered vessels to be built in the U. S. The only reason Norwegian was able to get away with a foreign built ship being registered U. S. to sail in Hawaii, was a special act of congress and the fact that the two ships in question were partly constructed in Biloxi, Mississippi which is the home of a fairly powerful (now former) senator, one Trent Lott.

 

Doc

 

And the fact that they bought the United States as an excuse to have an "American built ship", promising to refurbish and then letting her rot away!

 

Kentucky, thank you or posting that, it was informative and sorry that everyone is jumping on you, just because you found something you didn't know before and wanted to share!

[BOSN]

If the ships do not have to follow U.S. requirements' date=' then why are all cruise ships required to conform to United States Coast Guard safety rules and inspections, and United States Health laws?

 

Can we please stop speculating. Just because something is written on CC does not mean it is true. I will research this and provide the correct information.[/quote']

 

U.S. flagged/registered vessels must comply to all applicable U.S. Federal Laws and Regulations all over the globe.

 

Foreign flagged/registered vessel comply to the laws and regulations pertaining to their individual flag state.

 

Vessel traveling internationaly also comply and are regulated by S.O.L.A.S. (Safety Of Life At Sea) regulations.

 

Foreign flagged vessel entering U.S. Territorial waters (refered to as 12 mile limet by United Nations act of 1982) must comply certain with U.S. regulations. These usually have to do with health and safety (regulations under CDC/Dept of Health; Dept of Agriculture, etc). When the U.S. Coast Guard boards foreign flagged vessel in U.S. waters they enforce "Applicable (US) Federal Rules and Regulations". When concerns or violations are found that deal with health or agriculture issues, enforcement officers for those agencies are contacted to assist in investigating and enforcing as necessary. I.C.E. (Immigration and Customs Enforcement also deals with the foreign persons aboard such vessels. The Coast Guard does check passports and licenses, and relays the information in for checking against "lists"; while I.C.E. does even more extensives checks of foreign personnel.

 

If you ever see a foreign flagged vessel in a designated anchorage area in/near/at a U.S. port flying the international code flag "Q" (Quebec {square yellow flag}); that means they are awaiting clearance from U.S. authorities (Coast Guard, ICE, Health, Agricultue, etc), or that they have been quarentined and given permission to enter port.

The same thing happens to U.S. flagged/registered vessel that enter foreign ports. Yes, even U.S. Naval and Coast Guard vessels must notify foreign port agents to clear the ships before being allowed to disembark.

 

And yes, being foreign flagged/registered, they do not have to comply with U.S. labor Laws. I was appalled many times boarding foreign flagged tankers and freighters doing commerce in the U.S. A few times it got dicey when we contacted our parent command and up the chain. Many times the foreign flag state counsel would be contacted and informed about conditions we observed. We also contacted local "Seamans Institutes/Churches" for assistance along with the vessel U.S. port agent to intervene and get fresh food for the crews, and also to assist in rectifying some of these conditions. Sometimes these vessels, if seaworthy, were ordered out of port, and also banned from U.S. waters. Sometimes the vessels were ordered "not to leave port" until certain conditions were corrected. Those issues were dealt with between the vessels Master/Captain, the U.S. Coast Guard, the vessels agent in the U.S. port, and an inspector from the "Classification Society" representing the foreign flag state.

[Ratt]

On our last Carnival cruise I was talking to a couple of the pit bosses in the casino and they said that they will not hired Americans to work in the casino period. They said that Americans are lazy and can't take the hours or work load.

 

I want to say that I've also heard that the only place that will allow Americans to work is the entertainment department.

 

Didn't I also read somewhere recently that the U.S. is wanting to or trying to pass laws that will require cruise ships docking in the U.S. to conform to U.S. labor and other laws?