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How the International Legal Regime Creates and Contains Flags of Convenience Eric Powell

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How the International Legal Regime Creates and Contains Flags of Convenience Eric Powell Annual Survey of International & Comparative Law Volume 19 | Issue 1 Article 12 2013 Taming the Beast: How the International Legal Regime Creates and Contains Flags of Convenience Eric Powell Follow this and additional works at: http://digitalcommons.law.ggu.edu/annlsurvey Part of the Law of the Sea Commons Recommended Citation Powell, Eric (2013) "Taming the Beast: How the International Legal Regime Creates and Contains Flags of Convenience," Annual Survey of International & Comparative Law: Vol. 19: Iss. 1, Article 12. Available at: http://digitalcommons.law.ggu.edu/annlsurvey/vol19/iss1/12 This Article is brought to you for free and open access by the Academic Journals at GGU Law Digital Commons. It has been accepted for inclusion in Annual Survey of International & Comparative Law by an authorized administrator of GGU Law Digital Commons. For more information, please contact [email protected]. Powell: Flags of Convenience TAMING THE BEAST: HOW THE INTERNATIONAL LEGAL REGIME CREATES AND CONTAINS FLAGS OF CONVENIENCE ERIC POWELL* I. INTRODUCTION Centuries-old maritime jurisprudence continues to guide the law of the sea today. These baseline understandings are necessary to maintain order of the largest international commons, the sea.1 The seas’ central role in globalization, though, strains some of this established law. In particular, the question of jurisdiction has become increasingly complex as ships regularly ply every ocean and visit ports in dozens of countries. Many of these ships are actually subject to the exclusive jurisdiction of States with which they have no connection and which have limited incentives to regulate. This paper explores how this jurisdictional non sequitur arose, and when international law permits concurrent jurisdiction. Specifically, this paper emphasizes when U.S. courts can reach activities on the seas. The seas are both the lynchpin of global trade and the site of global disasters. Nearly 105,000 ships2 transport more than 90% of world * Eric Powell served eight years in the Navy’s active and reserve Information Dominance Corps. He wrote this paper in partial fulfillment of his J.D. It was awarded Harvard Law School’s Addison-Brown Prize for writing on maritime and private international law. He is a graduate of Harvard Law School and Harvard College. 1. 71% of the Earth is covered by water. Aquatic Commons, Distribution of the Earth’s Water, http://aquaticcommons.org/650/1/Poster13E.pdf (last visited March 16, 2013). 2. United Nations Conference on Trade and Development, Review of Maritime Transport, at 36-37, UNCTAD/RMT/2011 (Nov. 22, 2011) [hereinafter RMT]. 263 Published by GGU Law Digital Commons, 2013 1 139 Annual Survey of International & Comparative Law, Vol. 19 [2013], Iss. 1, Art. 12 264 ANNUAL SURVEY OF INT’L & COMP. LAW [Vol. XIX trade,3 including oil, chemicals, consumer durables and non-durables, food, and people.4 Consider, though, recent reminders that the seas are more than globalization superhighways. The quest for new sources of oil tragically resulted in the 2010 Deepwater Horizon spill, which released five million barrels of crude oil into the Gulf of Mexico.5 Less than eighteen months later, the grounding of the New Zealand-bound container ship Rena dumped oil into the sea and onto the shores, harming regional wildlife.6 In January 2012, a cruise liner dramatically sunk off the coast of Italy, killing at least twenty-one passengers.7 Tragedies on the maritime commons present unique considerations.8 On ships, there is a preliminary question of what authority can set and enforce standards on these floating islands. Then, the question of what authority should have jurisdiction arises. The list of potential candidates is long: should it follow the ship owner’s nationality, the crew’s nationality,9 the incident site, or any of a host of other factors? Further complicating the analysis is the possibility that multiple authorities should exercise jurisdiction. For at least four reasons, States, for their part, are invested in regulating seas, even those far from their coastline. First, tragedies can strike in any country’s backyard. Second, even local mishaps such as pollution can have consequences far from the site. Third, every State has an interest in maintaining the utility of the sea. Fourth, States are interested in regulating and protecting their nationals around the world. However, a 3. United Nations International Maritime Organization [IMO], International Shipping Facts and Figures, 7 (2011), http://www.imo.org/KnowledgeCentre/ShipsAndShippingFactsAndFigures/ Statisticalresources/Documents/December%202011%20update%20to%20July%202011%20version %20of%20International%20Shipping%20Facts%20and%20Figures.pdf. 4. RMT, supra note 2, at 36-37. 5. See articles listed at Gulf of Mexico Oil Spill, N.Y. TIMES, http://topics.nytimes.com/top/reference/timestopics/subjects/o/oil_spills/gulf_of_mexico_2010/index .html (last visited March 16, 2013). 6. Oil Spill Disaster New Zealand’s ‘Worst in Decades’, BBC (Oct. 11, 2011), http://www.bbc.co.uk/news/world-asia-pacific-15251319. 7. Italy Extends Probe on Cruise Ship Accident, REUTERS (Feb. 22, 2012), http://www.reuters.com/article/2012/02/22/italy-ship-investigation-idUSR1E8CQ02620120222. 8. Consider, for example, the different risk preferences in the United States and China. American factory safety standards are more stringent than China’s. As one observer noted after a recent fatal Chinese factory fire, “[W]hat’s morally repugnant in one country is accepted business practices in another . .” Charles Duhigg and David Barboza, In China, Human Costs are Built Into an iPad, N.Y. TIMES (Jan. 25, 2012), http://www.nytimes.com/2012/01/26/business/ieconomy- apples-ipad-and-the-human-costs-for-workers-in-china.html?pagewanted=all. 9. Ships’ crews are representative of the global nature of the business: more than 1.5 million seafarers of nearly every nationality operate ships. IMO, International Shipping Facts and Figures – Information Resources on Trade, Safety, Security, Environment, at 9 (March 6, 2012), http://www.imo.org/KnowledgeCentre/ShipsAndShippingFactsAndFigures/TheRoleandImportanceo fInternationalShipping/Documents/International%20Shipping%20- %20Facts%20and%20Figures.pdf. http://digitalcommons.law.ggu.edu/annlsurvey/vol19/iss1/12 2 Powell: Flags of Convenience 2013] INTERNATIONAL LEGAL REGIME CREATES 265 system in which States project unrestrained regulatory power far from their coastlines would be untenable for at least two reasons.10 First, this unrestrained regulatory power may result in commerce-crippling conflicting jurisdiction. United States Supreme Court Justice Jackson presciently emphasized this insight when he wrote: [T]he virtue and utility of sea-borne commerce lies in its frequent and important contacts with more than one country. If, to serve some immediate interest, the courts of each were to exploit every such contact to the limit of its power, it is not difficult to see that a multiplicity of conflicting and overlapping burdens would blight international carriage by sea.11 Second, extraterritorial regulation raises a national sovereignty concern. As Chief Justice Marshall famously penned in the seminal United States Supreme Court case on the matter, “[t]he jurisdiction of the nation within its own territory is necessarily exclusive and absolute.”12 Therefore, a sovereign rightfully claims that foreign powers lack jurisdiction within its land borders. A sovereign would similarly object to foreigners reaching for jurisdiction over its local seas or vessels over which it accepted sovereignty. The limits on regulating the maritime commons inherent in a Westphalian system of nation-States has long been resolved by assigning regulatory, criminal, and civil jurisdiction to a vessel’s State of Registration.13 In other words, the laws of the nation that charter the vessel – which corresponds to the flag the ship flies – govern most aspects of the ship’s operations as well as personal conduct onboard. This compromise is referred to as the “law of the flag.” In order for the law of the flag to satisfy States’ collective maritime interests, registering States must promulgate and enforce legal regimes 10. This is a long-standing conundrum of conflict of law. The United States considered its implications for State-exercised personal jurisdiction in Pennoyer v. Neff, 95 U.S. 714, 722 (1877) And so it is laid down by jurists, as an elementary principle, that the laws of one State have no operation outside of its territory, except so far as is allowed by comity; and that no tribunal established by it can extend its process beyond that territory so as to subject either persons or property to its decisions. 11. Lauritzen v. Larsen, 345 U.S. 571, 581 (1953). 12. The Schooner Exch. v. McFaddon, 11 U.S. 116, 136 (1812). This was the Supreme Court’s first case concerning the United States Federal Courts' jurisdiction over a claim against a friendly foreign military vessel visiting an American port. Interpreting customary international law, the Court concluded that there was no jurisdiction. 13. BOLESLAW ADAM BOCZEK, FLAGS OF CONVENIENCE: AN INTERNATIONAL LEGAL STUDY 158 n.5 (Harvard University Press, 1962) (identifying a number of authoritative sources for this proposition and asserting that “[t]his has been confirmed by practically all writers.”). Published by GGU Law Digital Commons, 2013 3 140 Annual Survey of International & Comparative Law, Vol. 19 [2013], Iss. 1, Art. 12 266 ANNUAL SURVEY OF INT’L & COMP. LAW [Vol. XIX that protect sister States’ reasonable interests. That requirement leads to two simple questions. First, what sorts of States are less likely to create or enforce such a regime? Second, how can sister States legally protect their interests when the registering State fails to do so? One set of States that might neglect to create or enforce a maritime legal regime are those willing to register, or to “flag” ships with which they have minimal or no connection. Perhaps the ship’s owner, operator, captain, and crew are from a different State. Or maybe the ship’s operations are unconnected with the flag State: for example, the ship may never dock there or carry cargo relevant to the flag State.
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