A Little Too Convenient? Norwegian Air International and Flags of Convenience in Aviation

Flags of Convenience (FOC) are a phenomenon that arose in the 20th century: vessels owned by persons in one country would no longer flag under their home nation, but instead flag in a foreign country.[1]  This action of “flagging out” to a foreign country is a form of regulatory forum shopping, premised on the ability for economic gain by the ship owners who are “flagging out.”[2]

            While FOCs have typically been confined to ships, another common mode of transportation registers and operates in many similar ways: airplanes. Aircraft and aviation participating in international cabotage have long been considered immune from FOCs. Most airlines began as nationally owned or controlled entities, and this model is still prevalent today. However, a recent development has shaken the confidence that aviation is insulated from the emergence of FOCs.

This paper will examine the case of Norwegian Air International and the possibility of ‘flagging out’ under current international aviation treaties and regulations. Section I will open with an analysis of maritime regimes and the history of ‘flagging out,’ concluding with effects of FOCs and global efforts to curtail FOCs.

            Section II of this paper will analyze whether or not FOCs exist in aviation. To begin, Section II will discuss access of the skies, from the Paris Convention to the current support of open skies regimes. This will be followed by an in-depth discussion of the possible development of FOCs in aviation through an analysis of the recent Department of Transportation permit approval for an Irish-based subsidiary of a Norwegian Airline, NAI. Specific attention will be paid to regulatory revisions of 49 U.S.C. §41302, which appears to have opened the door for the development of FOCs in airlines in the US. Section II will end with an examination of whether FOC concerns from maritime are applicable to aviation and current legislative efforts to bar granting of permits to airlines deemed to be FOCs.

            Finally, Section III will close this article with a brief examination of efforts to combat FOCs in maritime and aviation.  

I.                The Seas

Oceans are vital to the way that society has developed and continues to operate. Sailing and shipping enables societies to explore, resettle, connect, and create global economies. The importance of shipping and its impact on the lives of global citizens is reflected in the numbers of the shipping industry. In 2015, the world’s fleet consisted of about 90,000 vessels, with a total carrying capacity of 1.75 billion deadweight tons. In 2014, the world’s fleet shipped 9.84 billion tons of cargo, and in 2016 an estimated eighty percent of global trade by volume was carried on the seas.[3] With such an immense quantity of goods and people moving in this water-borne arena, regulation of this industry has global effects.

            This portion of the paper will begin with an analysis of the legal regimes that regulate a state’s control over the ocean and vessels, including freedom of the high seas and flagging of ships. The custom of registering ships under a sovereign’s flag will then lead into a discussion of how flags of convenience were developed. This section will close with a discussion of how the rapid expansion of flags of convenience in the last seventy years has drastically impacted economies, fleets, and the overall maritime system, and the possibility that it could be addressed through access control, or port controls. 

a.     Freedom of the Sea High Seas

While states hunger for sovereignty over new land and resources, there is one region of the world that has remained largely immune from their attempted control: the high seas. Freedom of the high seas was a concept elucidated by Hugo Grotius in 1609,[4] largely arising from the principle that a state could not legitimately or logistically exercise sovereignty over the world’s oceans. Some states have histories of attempting to assert claims to the oceans, namely Portugal and Spain, but these attempts failed based upon an inability to enforce sovereignty claims.[5] Freedom of the high seas is now customary international law, codified in the 1982 United Nations Convention on the Law of the Sea (UNCLOS).[6]

b.     Nationality of Vessels

International law requires that every ship have a flag state.[7] Ships are conceptualized as the floating property of a state, subject to that State’s exclusive jurisdiction. To signal this jurisdiction, a vessel is ‘flagged’ under the sovereign. Flagging of ships is beneficial for the global order, as it ensures that each vessel will be subject to some system of laws. Flagless or unregistered vessels “have no right to freedom of navigation because they are ‘international pariahs’ that pose a threat to the order of the seas.”[8]

Beyond flagging national vessels, States may also register and flag commercial ships. These registries of commercial ships were traditionally a secondary source vessels for times of conflict.[9] This form of registry has existed since Roman times[10], and one of the first acts of the US Congress was to establish a system of vessel registration and documentation.[11]

c.      Development of Flags of Convenience

There is a long tradition of States flagging foreign vessels. In 1905, the Hague Court of Permanent Arbitration allowed a Sultan of Muscat to fly a French flag above a sailing vessel owned by the Sultan’s subjects. [12] The court held that “generally speaking it belongs to every sovereign to decide to whom he will accord the right to fly his flag and to prescribe the rules governing such grants.”[13] This rationale has been upheld in US courts, with the Supreme Court in Lauritzen v. Larsen reasoning that “[e]ach State under international law may determine for itself the conditions on which it will grant its nationality to a merchant ship, thereby accepting responsibility for it and acquiring authority over it.”[14]

Each State may impose its own restrictions on vessels as a condition of registration. Once flagged, a ship must follow the laws of its flag state, including labor laws, safety regulations, taxes, and the like. While another State may have better ties with a vessel than the flag state, courts will still typically apply the law of the flag when confronted with legal problems.[15] The Supreme Court in Lauritzen affirmed this, reasoning that the law of the flag would apply “unless some heavy counterweight appears.”[16]

Some countries only flag commercial vessels owned by their own nationals, while others allow foreign-owned registration. Internationally, there are only four restrictions on States dictating registration requirements: registration (1) cannot infringe another State’s rights; (2) cannot be granted if there is reasonable suspicion that the vessel will be used to violate international law; (3) must be for a single nationality; and, (4) must be in accordance with State treaties.[17] The Convention on the Law of the Sea affirmed that “[e]very State shall fix the conditions for the grant of its nationality to ships.”[18] Registries are differentiated as “open” or “closed,”[19] with closed registries requiring domestic ownership of vessels.[20] The ability of vessel owners to forum shop between countries’ open registries with their various restrictions or potential benefits was the beginning of flags of convenience.

Ships “flag out” for three main reasons: (1) to avoid higher taxes; (2) to access cheap labor, or avoid employment standards; and, (3) to avoid higher and more stringently enforced safety standards.[21] The first US ships to flag under Panama in 1922 transferred registries in order to be able to serve alcohol during Prohibition.[22] After WWII, European vessels began switching flags to avoid higher taxes, and US ships followed suit.[23] As ship owners began regulatory forum shopping, countries around the globe responded; there are now an estimate thirty-five FOC countries worldwide.[24]

In countries with FOC registries, registries are easily accessible, usually even maintaining registration offices abroad.[25] States open their registries for economic gains–the registry will usually impose minimal or no income taxes, instead deriving profit from registry and annual fees.[26] For example, Panama, brought in a half a billion dollars in fees, services, and taxes from its registry in 2014.[27] FOC registries will also commonly lack domestic crewing requirements;[28] the estimated daily operating costs for foreign-flagged shipping vessels in 2010 was $7,454, while costs for U.S. flagged vessels was $20,053, largely due to the difference in labor regulations.[29] Today, the top ten FOC countries register 55% of the world’s deadweight tonnage.[30] This is the race to the bottom.

d.     Effects of Flags of Convenience on the Global Maritime Regime

Flags of convenience are worrisome on both the national and international level. Nationally, countries are quickly losing their merchant marine fleet. Internationally, FOC nations generally lack the power and administration to effectively impose or enforce their own regulations, impacting safety on the high seas, environmental conditions, and security overall. Registration under an FOC is a commodity to be bought and sold, and the original considerations of a flag state–jurisdiction and responsibilities over crew welfare, safety, and protection of the environment–matter little in this economic equation.[31]

Flags of convenience decimated the US commercial fleet. The US merchant marine fleet registered 1,288 vessels in 1951–as of 2018, that number has fallen to just 81 vessels.[32] There is a loophole in the Internal Revenue Code that allows ships and aircraft to not tax gross income if they are involved in international operations, the corporation is organized in a foreign country, and the foreign country grants an equivalent exemption to corporations in the US.[33] Due to this loophole, US businesses are free to flag-out to countries with decreased labor, employment, and safety standards, with the added incentive of avoiding income taxation, all while maintaining their status as US companies. The US fleet has flagged out to primarily three countries: the Marshall Islands, Liberia, and Panama, with China and Singapore as fourth and fifth, respectively.[34]

Internationally, FOC are criticized for failing to enforce their lax regulatory regimes, leading to oil spills, objectionable crew conditions, failure in the structural integrity of ships, and a rise in smuggling.[35] The international community has attempted to address the problems presented by flags of convenience. Article 9(1) of UNCLOS stated that “[t]here must exist a genuine link between the State and the ship.”[36] Unfortunately, the treaty failed to specify what constitutes a ‘genuine link,’ and the article has largely been unsuccessful in having any effect on the prevalence of FOCs. FOCs were again addressed in the 1986 UN Convention on the Conditions for Registration of Ships (UNCCORS).[37] However, this treaty has not yet garnered the forty signatories representing 25% of the world’s gross weight tonnage required to come into force.[38]  FOCs remain a threat to the safety and security of the maritime environment, impacting nations individually and the world as a whole.

e.      Freedom of Ports and the Possibility of Constraining FOCs

While there is no sovereignty over the high seas, States have met with more success when attempting to claim a portion of the water that surrounds their coast, referred to as territorial sea. The Justinian Code of 529 A.D. extended a state’s authority to the high-water mark on the coastline.[39] Later, a “canon shot” rule arose, extending a State’s sovereignty to match the range of how far the state could shoot with a canon from the coastline and therefore enforce sovereignty.[40] This gunpowder-backed jurisdiction eventually transitioned into a territorial sea with a three nautical mile limit.[41] During the 20th century, the limit of a state’s territorial see was again gradually expanded, resulting in the current limit of twelve nautical miles.[42]

The legal delimitation of territorial sea is important because, while there is open access to the high seas, a state today exerts prescriptive sovereignty in a twelve nautical mile[43] ‘buffer zone’ from its coast.[44] Included in this sovereignty then, are ports. A state’s authority to control traffic into and out of its ports implicates not only sovereignty, but whether a state can take direct discriminatory action against vessels flying a foreign flag. The ability to selectively manage traffic would be a bargaining chip for a state when concluding interstate agreements. But is this legally possible to selectively limit port access?

There is current debate over whether or not foreign commercial vessels[45] have a right of open access to ports. A port is defined as “the outermost permanent harbor works which form an integral part of the harbor system, regarded as forming part of the coast.”[46] This definition is lacking in guidance on the legality of access to ports for maritime vessels.

UNCLOS would appear to support the presumption that ports are open access to all peaceable vessels. Article 17 states that ships have a right of innocent passage through a state’s territorial sea,[47] and under Article 18, passage includes the navigation through territorial sea for the purpose of calling on a port.[48] However, ports are part of the coast of a state[49],  and as such, a state has sovereignty over its ports and control of the port. The International Court of Justice has supported the view that states control ports and access to ports, as it held that “only a sovereign country has the right to determine whether to allow access to its ports by foreign-flagged ships.”[50] The right of port access to foreign vessels is largely conferred by international treaties, national legislation, or special permissions.[51] In total, while the high seas are open access, it can be asserted that under international law there is no legal right of port access for foreign flagged vessels; consent of access must be explicitly or implicitly granted by the State.[52] 

A state may prescribe and enforce conditions tied to consent for entry into ports.[53] Internationally, there is a question of how limiting these conditions can be. While UNCLOS Article 25(2), which lays out the rights of protection of the coastal state, does not appear to set any limits on denying port access, some scholars advocate that arbitrary denials should be curtailed by the principle of “abuse of rights.”[54]  The adherence to an abuse of rights concept is echoed in Article 300 of UNCLOS, which charges states party to the treaty with fulfilling obligations assumed in “good faith” and in a manner that “would not constitute an abuse of rights.” [55] It remains to be seen whether regulations constricting port access for suspected FOC vessels or whole nations would be challenged under an abuse of right principle.   

In conclusion, while international law recognizes freedom of the seas, states with coasts enjoy sovereignty over both their territorial sea and ports.  There is still much debate regarding whether States may control port access to deny entry for foreign-flagged vessels, but the argument can be made that States affirmatively possess this power. The ability to restrict access by non-national vessels may be one way to combat the prevalence of FOCs.

II.             The Skies

Unlike the seas, the skies were never conceived of as a realm of transportation until the development of reliable air travel. When airplanes burst onto the global stage, the legal regime governing airspace was quickly crystallized in the Convention Relating to the Regulation of Aerial Navigation of 1919 (Paris Convention), and developed under close governmental scrutiny. This section will begin with an examination of how access and registration of commercial aircraft has proceeded in the twentieth century. It will then turn to the 2016 Department of Transportation (DOT) permit grant for Norwegian Air International Limited, and the beginning of fears of FOCs in aviation. This section will conclude with a comparison of the ills visited on the maritime regime by FOCs and analyze whether these same ills are possible in aviation.

a.     Access to the Skies – Historical Treaties 

The Wright brother’s first flight in 1903 had global implications; no longer was the sky an unreachable expanse, but a domain through which people and goods would soon be able to travel. In 1910, eighteen European states convened to discuss an international air law code. At the conclusion of WWI, the Paris Peace Conference included an Aeronautical Commission which facilitated the production of the 1919 Paris Convention. Signed by twenty-six Allied and Associated powers, and ultimately ratified by thirty-eight States, the Paris Convention’s forty-three articles laid the groundwork for an international framework of air law.[56] The Paris Convention unequivocally established that each State has “complete and exclusive sovereignty over the air space above its territory.”[57] Under the Paris Convention, each contracting state extended to the other the right of innocent passage through their airspace, in times of peace, by aircraft of the contracting states, as long as the conditions of the convention were met.[58]

At the conclusion of WWII, planes were becoming much more technically advanced the world order once again met to discuss air law in the new technological age. The Chicago Convention was called, with goals to work out the technical, economic, and sovereignty issues of international airlines. [59] The Chicago Convention produced the Convention on International Civil Aviation (Chicago Convention), singed by fifty-two states in December of 1944.[60] Two important rights were established in Article 5 of the Chicago Convention: (1) freedom of overflight, or the right of innocent passage; and (2) the freedom to make emergency landings.[61] Chicago also laid the groundwork for the establishment of the International Civil Aviation Organization (ICAO) in 1947[62]

b.     Development of Registration of Aircraft

As cabotage between countries became more liberalized, so too did registration requirements for aircraft. Originally, the Paris Convention stated that “[n]o aircraft shall be entered on the register of one of the contracting States unless it belongs wholly to nationals of such State.”[63] For companies owning aircraft, the state of incorporation and registration were required to be the same, “unless the president or chairman of the company and at least two-thirds of directors possess such a nationality,” with the possibility of having to fulfill other prescribed conditions.[64] Similar to maritime regulations, an aircraft could only be registered in one state,[65] and the registering state would issue or render certificates of airworthiness.[66]

The Chicago Convention instituted one major change to the Paris registration regime–it stopped short of requiring that national ownership of aircraft and nationality of registration match. This was, in part, due to the opposition of a coalition of small countries that highlighted a need for outside capitol and expertise in order to start their own civil aviation programs.[67] 

At the Chicago Convention there was support for a requirement of national ownership. It is easy in hindsight to analogize a safety concern from FOCs in maritime, but that is likely not the reason for national ownership support, as there are provisions of the Chicago Convention that require each foreign nation to comply with all applicable air regulations (including safety) of the host nation.[68] Rather, the support of national ownership was likely tied to geopolitical concerns of the time.[69] In particular, prior to WWII, there were concerns of German and Italian influence in South America, and post-WWII, there were similar concerns regarding the USSR.[70] The support at the Chicago Convention for nationality requirements thus likely arose from geopolitical powers hoping to keep their opposition from owning and supporting nascent airlines in proximate countries, and not from fears of FOCs developing in aviation. 

Following the Chicago Convention, the US and the UK concluded Bermuda I, a bilateral treaty agreement which allowed each State to withhold or revoke cabotage rights “in the event that it is not satisfied that substantial ownership and effective control of such carrier are vested in nationals of either Contracting Party.”[71] Again, this could be seen as a response to fears of FOC developing in aviation. However, this assumption is disproven by the UK’s liberal interpretation of the treaty language; the UK interpreted the treaty as permitting a US national to control a British registered airline.[72]

In sum, internationally, there is no overarching multinational international treaty requirement that an airline be the same nationality as the state in which it is registered. However, this gap has been largely filled by treaty-specific language that majority ownership of an aircraft must be vested with a state’s national, exemplified by the Bermuda I agreement above. If majority ownership is not vested in a treaty party’s national, but instead some third ambiguous body, a treaty party does not have to accept those flights into their airspace. In this way, ownership requirements limit the ability of any airline that would ‘flag out’ from being able to operate under existing international treaties. This majority ownership language is included in the new form of cabotage agreements that that US developed in the late 1990s: open skies agreements.

c.      Open Skies Agreements

At the Chicago Convention, the US was a large proponent of unrestricted international operating rights, opting to let market forces determine fares and frequency of flights.[73] However, this proposition was unattractive to the rest of the world, namely Britain, and Chicago constrained signatories to negotiate agreements on cabotage limits between countries.[74]

After the Chicago Convention, and prior to the Clinton administration, the US typically had protectionist bilateral aviation agreements for international flights.[75] These treaties would generally include strict definitions of what routes could be serviced, whether fares were subject to each government’s approval, how frequent flights between the two countries could be, and how many airlines were allowed to fly the prescribed routes.[76]

The access regime for US airspace changed when Clinton took office. The US under Clinton was hoping to shift from strict, bilateral regimes to new open skies agreements, moving towards the unrestricted international operating rights that the US had originally advocated for at the Chicago Convention. In 1992, the Department of Transportation received a new initiative, designed to liberalize the aviation markets between the US and Europe, and hopefully the rest of the world.[77] The order, signed by Secretary Carl Jr., stated that “we find that the Open-Skies program represents a further progression along the path toward a truly open environment for international aviation services, an environment in which all the participants–communities, travelers, shippers, and providers–will reap genuine and lasting benefits.”[78] The US concluded its first open skies agreement with the Netherlands in 1992.[79]

In pursuing open skies agreements, the US looked to both economic value and to markets which would have “strategic value in influencing the transformation of entire regions.”[80] Open sky agreements had two main goals: (1) eliminate government interference in airline decisions; and, (2) spur economic growth by freeing carriers to provide more affordable, convenient, and efficient air service to customers.[81] Functionally, an open skies agreement allows for carriers of both countries to compete on an equal basis for passengers traveling between the two countries.[82] This is because, in a pure open skies regime, all restrictions on routes, capacity, frequency, pricing, and entry are eliminated, leaving only the physical restraints of airport capacity as well as safety regulations.[83]

The efficacy of Open Skies agreements is demonstrated by the effects of the conclusion of the Open Skies agreement between the US and Canada in 2007. In the three years after Canada agreed to an open skies arrangement with the US, passenger volume between the US and Canada increased by twenty-eight percent,[84] and Air Canada began servicing forty-three new US destinations.[85] Currently, the US has over 120 open skies agreements with different partners, as well as two multinational open skies agreements; [86] one with the EU member states, and another encompassing New Zealand, Singapore, Brunei Darussalam, Chile, Samoa, Tonga, and Mongolia.[87]  Seventy percent of US international departures fly to open sky partners,[88] and open sky agreements save airline passengers an estimated $4 billion every year.[89]

The US model for Open Skies agreements contains an ownership provision. Article 3(a) states that each Party shall grant authorizations and permissions, with one of the requirements being that “substantial ownership and effective control of that airline are vested in the other Party, nationals of that Party, or both.”[90] While this ownership language has previously stoppered development of FOCs in aviation, a flaw has recently been exposed–multilateral Open Skies agreements.

d.     The Rise of Concern Over Flags of Convenience in Aviation

Until recently, no one thought that FOCs were possible in aviation. Most international agreements and cross-border conventions included ownership requirements, mandating that airlines of the contracting States could only register or operate if they were wholly or majority owned by a national of the registering State.[91] However, in the wake of recent events, there is now a major concern for some in the aviation world that FOCs are permeating from maritime.

i.     NAI/NAUK

In 2013, Norwegian Air International Limited (NAI) filed an application with the US for a foreign air carrier permit to operate under the US–European Union–Iceland Air Transportation Agreement of 2011.[92] This raised an alarm because NAI is a wholly owned subsidiary of the Norwegian flag carrier Norwegian Air Shuttle (NAS),[93] and yet the application was for NAI to operate as an Irish carrier. As an Irish carrier, NAI would operate under Irish labor laws. Voicing analogies to FOC deceptions, NAI was accused of incorporating in Ireland to enjoy a lower tax rate[94] and escape Norwegian labor laws.

Unlike most arrangements, the NAI application falls under one of the two multilateral open skies agreements that the US currently is party to; the agreement between the US and the EU.[95] Norway is not an EU member, but the US–European Union–Iceland Air Transportation Agreement of 2011 accords Norwegian carriers the status of EU “community carriers.” This means that the US-EU agreement governs for this dispute because Norway is part of the EU for civil aviation purposes.[96]

The main point of contention, and grounds on which it was asserted a permit to NAI could be denied, is Article 17 bis of the US-EU agreement.

Article 17 bis “Social Dimensions”

(1)   The Parties recognize the importance of the social dimension of the Agreement and the benefits that arise when open markets are accompanied by high labour standards. The opportunities created by the Agreement are not intended to undermine labour standards or the labour-related rights and principles contained in the Parties’ respective laws.

(2)   The principles in paragraph 1 shall guide the Parties as they implement the Agreement, including regular consideration by the Joint Committee, pursuant to Article 18, of the social effects of the Agreement and the development of appropriate responses to concerns found to be legitimate.

Opponents to the permit argued that, under the lower regulatory burden of Irish laws, NAI would be able to hire pilots and crews from a third-party company domiciled in Singapore, and that this form of business arrangement would not be in accord with the goals of Article 17 bis to encourage fair wages and working conditions.[97]

While a compelling argument, the Secretary of Transportation concluded that Article 17 bis provides “no independent basis for rejecting an otherwise qualified applicant.”[98] This conclusion rested on three main considerations.

First, NAI in its 2015 Motion for Expedited Treatment, while disagreeing “vigorously” with legal opponents, asserted that it would commit to using only American and European pilots and crews on transatlantic flights.[99] As FedEx’s filing in support of NAI argued, this commitment “effectively nullifies the primary objection of opponents to NAI’s application.”[100] NAI’s commitment to US and European national crews appears to play into the considerations of the Department of Transportation.

Second, the language of the US-EU agreement does not appear to reference Article 17 bis as a constraint on granting a permit. Article 4 of the US-EU Agreement states that, upon receipt of an application, the other party “shall grant appropriate authorizations and permissions with minimum procedural delay” provided Article 4 requirements are met.[101] These requirements are: (1) ownership and control; (2) whether the applying airline is qualified under regulations normally applied by the permitting country; and (3) that safety and security provisions are being maintained and administered.[102] Nowhere does Article 4 condition issuance of a permit upon Article 17 bis, nor make reference to it. The legal counsel of the Department of Justice emphasized that the articles must be interpreted in light of the overarching goal of the treaty, and that it would “be defeated by allowing a Party to deny permits based upon the incorporation in the Agreement of generally-worded language about how the opportunities of the Agreement are not intended to undermine labor standards of the labor-related rights and principles contained in the Parties’ respective laws.”[103]

Finally, the grant of a permit turned upon an imbedded application of US law. Namely, in Article 4 of the US-EU agreement, one condition of granting a permit is that the applicant is qualified “to meet the conditions prescribed under the laws and regulations normally applied to the operation of international air transportation by the Party considering the application.”[104] So what is the US regulation? And did it in some manner allow for the growth of a FOC airline?

ii.     US Regulation - 49 U.S.C. §41302

Under US statutory law, a foreign air carrier must hold a permit in order to service the US.[105] A permit may issue if: (1) the carrier is found fit; and (2) either (a) the carrier is qualified and designated by its government under an agreement with the US; or (b) the service would be in the public interest.[106]

      The ‘or’ in 49 USC §41302 is where the opponents to the NAI permit failed. The text of §41302 would seem to indicate that the US, on its own, could have considered employment-related detriments when deciding whether to accept or deny NAI’s operating permit based upon the language of “service would be in the public interest.”[107] Indeed, following the issuance of the NAI permit, the Air Line Pilots Association (ALPA) brought suit in the D.C. Circuit over this very issue. The court held that the “petition fails on the merits as neither federal law nor agreement requires the Secretary to deny a permit on freestanding public-interest grounds where, as here, an applicant satisfied the requirements for obtaining a permit.”[108] “Section 41302 provides two paths to authorization.”[109]

      The real kicker is that historically, §41302 did not provide two paths to authorization – both considerations of carrier qualification and service in the public interest were mandatory. However, in the International Air Transportation Competition Act of 1979, the ‘and’ in §41302(2) was changed to an ‘or’–the public interest finding became optional instead of mandatory. “The provision will be most helpful in eliminating a dilemma previously faced on occasion where a service agreement by a foreign air carrier was authorized by a bilateral agreement but nevertheless attacked…as not being in the ‘public interest.’ The provision, in effect, creates a conclusive presumption that a service authorized by a bilateral agreement is in the public interest.”[110] Essentially, in the interest of open skies and economic progress, Congress wanted to avoid long and exhaustive determinations of whether agreements were in the public interest, instead opting for the view that “the negotiation of a Bilateral agreement itself represents a determination by the Government of the United States that the grant of route authority provided for under the bilateral is in the “public interest”.”[111]

      If ALPA had brought suit under §41302 prior to the statutory revision in 1979, they may have prevailed on a finding that the grant of a operating permit to NAI was not in the public interest. However, the Congressional alteration of the statute from ‘and’ to ‘or’ foreclosed this argument–public interest is presumed from the conclusion of an air carrier treaty by the mere negotiation of a treaty, and not separate grounds to deny an air carrier permit.

e.      Threats Posed by Flags of Convenience in Aviation

One main question remains, hidden in this whole NAI debacle – are FOCs truly possible in aviation, and are they as villainous as in the maritime industry? The answer to this question is partially yes and partially no. The concerns over FOCs can be broadly categorized into three areas: (1) anonymity; (2) lack of scrutiny; and, (3) regulatory forum shopping. The following section will discuss each area in maritime, and its corresponding concerns in aviation.

i.     Anonymity

In maritime, FOCs have made it easy for vessels to maintain a form an anonymity. FOC nations with open registries typically allow ownership interests in vessels to remain anonymous. Vessels can be registered under bearer shares, nominee shareholders, nominee directors, and intermediaries.[112] This sort of anonymity is preferential for owners who want to limit their own liability by hiding behind a “Gordian knot of connections to various countries.”[113] For example, both Panama and Liberia, two of the largest FOCs, do not require disclosure of beneficial ownership interests in vessels applying for registration.[114]

            In aviation, at first blush, anonymity of owners would not appear to be an issue. In most Open Skies agreements, the US includes that there must be “substantial ownership and effective control” vested in the foreign nation, its nationals, or both.[115] However, there may be a loophole in this scheme, and it may be fault of the US.

            In the US, the FAA allows trustees and non-US citizens to register an aircraft through a trust. Title of the aircraft is transferred to a trustee who is a US citizen,[116] and regulations mandate that non-US citizens have no more than 25% of the power to influence, limit, direct, or remove the US citizen trustee from the trust.[117] The loophole is that FAA policy and regulations do not require trustees to identify the trustor, beneficiaries, or operators as a condition of registration; they only have to provide this information upon request.[118] When the FAA audited its registration for trustees in 2013, it estimated that there are 3,283 aircraft registered on behalf of non-US citizens.[119] For forty-seven of the aircraft registered by five of the major trusts, each trust allowed trustors to remove the trustee, a power in direct violation of US regulations.[120]

            While aviation may not have a Gordian knot level of ownership on par with maritime, this regulatory loophole is cause for concern. In 2006, a bank became a trustee for an aircraft registered with the FAA. Upon investigations to comply with Federal regulations regarding financial institutions, the bank discovered that the trustor was backed by a US-recognized terrorist organization.[121] In 2012, the FAA was unable to locate the operator of an aircraft registered on behalf of a foreign trustor, who had then leased the aircraft to the United Arab Emirates, and that had a complaint filed stating it was being operated contrary to US regulations and for illegal revenue.[122] These few instances clearly harken to maritime concerns of vessel anonymity being used for nefarious ends.

            There are current measures to combat this US regulatory loophole. In 2017, Representative Stephen Lynch introduced the Aircraft Owner Transparency Act of 2017 in the House. This Act would require the FAA to obtain the identity of any ‘beneficial owner’ before registering an aircraft. The Act defines “beneficial owner” as “a natural person who exercises control over or has an interest in the entity seeking the aircraft registration.”[123] This bill is currently before the House Subcommittee on Aviation.[124] While this legislative measure is a unilateral solution, it may behoove the rest of the world to institute similar precautions to limit the anonymity of aircraft registration. In this one, one of the ills flowing from FOCs may be stymied. 

ii.     Lack of Scrutiny

The second major concern in the maritime realm that stems from FOCs is a lack of scrutiny, or lack of oversight.  FOC nations are historically deficient in tracking vessels and verifying their registration.[125] Some nations with open registries are landlocked and do not even have ports at which their registered ships could call. This lack of scrutiny allows for easy renaming and repainting of vessels, as well as facilitates registration with forged documents.[126] Additionally, flag nations under international law have the responsibility for their registered vessels, including the responsibility to check that the vessels comply with safety regulations and cargo laws.[127] A lack of scrutiny by flag nations has enabled pirates to easily repaint and sell hijacked vessels, terrorist organizations to acquire ownership cargo vessels, and vessels to participate in the smuggling of cocaine.[128] Lack of scrutiny for ship integrity is also a serious concern, as ships flagged in developing economies, the bulk of FOCs, average ten years older than those flagged in developed economics.[129] Two of the largest oil spills of the quarter century were caused by lack of scrutiny; in one case, the tanker was over the age of authorized and did not have the necessary double-hull, and the other tanker was operated by a man not qualified to Master oceangoing vessels.[130]

In aviation, the biggest danger from lack of scrutiny is a failure to enforce safety regulations. International safety regulations do exist and are arguably the largest international uniform regulation–under Article 12 of the Chicago Convention, there is a safety ‘floor’ of standards and recommended practices (SARPs) or regulations promulgated by ICAO. Under Article 33 of the Chicago Convention, airworthiness certifications only have to be respected by party states so long as the requirements for certification meet or exceed minimum standards established under the Convention.[131] 

While there are inevitable accidents and oversights in the international forum, the safety record of aviation as compared to maritime is notable. In 2019, the accident rate of flights per million departures was 2.6%, or 98 accidents in total for fixed-wing aircraft. Of that figure, runway safety accounted for nearly half of all accidents, with loss of in-flight control representing only 36%.[132] This amounted to eleven fatal accidents worldwide, totaling 514 fatalities. In contrast, for solely EU registered vessels, there were 1,500 cargo ships involved in accidents, resulting in twenty-five fatalities. Across all forms of shipping, there was an average of 3,315 casualties per year.[133] The numbers indicate that, luckily, the safety concerns and lack of oversight of FOCs have not migrated from a marine to aviation environment at this point in time.

iii.     Aviation and Regulatory Forum Shopping

It is difficult to assert affirmatively that FOCs exist in aviation, as there is still one major roadblock to regulatory forum shopping: ownership requirements. “The current international regime consists of bilateral agreements with the general idea that only ‘flag carriers’ that are substantially owned and effectively controlled by the designating state and/or its nationals can be designated to exploit their country’s traffic rights.”[134] The FAA examples above demonstrate that where countries allow registration by a trustee, and do not thoroughly enforce regulations, it is possible for some anonymity to enter the system. But this is a far cry from aircraft being able to freely swap registries as vessels are allowed to be–some ships have even switched registries mid-voyage.[135]

That being said, the possibility of FOCs developing due to the multilateral nature of some Open Skies agreements cannot be discounted. As the NAI case shows, an airline could still forum shop between all of the countries that are parties to a multinational or regional Open Skies agreement; from the US perspective, NAI was still wholly or partially owned by one treaty partner (Norway), so it did not matter that they had incorporated in a separate state that was part of the same regional Open Skies treaty (Ireland). While the EU allows for trans-European carriers, labor and licensing authorities still rest with the specific States, allowing EU carriers to forum shop within the region.[136] The Article 17 bis of the US-EU Open Skies agreement was a direct attempt to fix this regulatory loophole,[137] but at the conclusion in the NAI case demonstrates, the US no longer mandates a finding of public interest in order to issue air carrier permits. In conclusion, while regulatory forum shopping cannot exist on the a grand scale due to bilateral ownership requirements, FOCs are beginning to seep into the international aviation market through conducive multilateral frameworks.

III.           Current Efforts to Combat Flags of Convenience

In maritime, there have been multiple attempts to curtail FOCs, from a treaty yet to go into force, safety requirements at ports, to FOC countries de-listing foreign flagged vessels. Proceeding after a series of oil spills in the late twentieth century, countries have been increasingly tightening port controls as a way to combat FOCs. Multiple MOUs exist on a regional scale that mandate inspection of vessels in ports, with detention possible to cure any defects of a vessel.[138] If a vessel attempts to run from a detention, other parties to the MOU are to refuse port access for the vessel until deficiencies have been cured.[139]

Taking the idea one step further, the concept of denying port access to vessels in violation of international rules and regulation has gained traction, being elucidated by both the Food and Agriculture Organization of the UN [140] and by the Organization for Economic Co-operation and Development [141]as a promising way to combat illegal fishing. While legally questionable, this could be a road of further investigation. In aviation, FOCs were historically largely forestalled by the mechanisms of access control and co-contaminate ownership rights–an air carrier cannot fly into a country and use its airport under normal operating circumstances if there is no agreement between the two states. There is an assumed limit on access to airports. Such a limitation of access rights in maritime may prove an effective way to combat FOCs.

In aviation, the NAI permitting fiasco awoke a fear that FOC phenomenon would begin spilling over from ships to planes, and US lawmakers are responding to that fear. In the 2018 reauthorization for the Federal Aviation Administration (FAA), the House strongly pushed a provision that would bar the Department of Transportation from issuing operating permits to any airline deemed to be a FOC.[142]

The Department of Transportation defined FOC as “a foreign airline registered in a country other than the home country of its majority owners in order to avoid the regulations of the home country.”[143] This provision was supported by US airline labor unions, including Air Line Pilots Association, and opposed by an industry coalition, including Airbus, Airports Council International-North America, Atlas Air, Corporate Aircraft Association (CAA), FedEx, IATA, and more.[144] Opponents saw this FOC definition as overly board, argued that they were already able to access less expensive labor as long as licensing and immigration laws were met, and asserted that the analogy between freedom of the seas and freedom of the skies is a false analogy.[145]

            While the House version of the FAA reauthorization was unable to carry the FOC provision, there is a new push in the same view. Currently, Representative Peter DeFazio, chairman of the House Transportation and Infrastructure Committee, is chairing a bill in the house to target FOC carriers. The bill would apply only to new applicants and would aim to prevent forum shopping for favorable labor laws.[146]

IV.           Conclusion

Flags of convenience inflict a myriad of ills upon the world, from unenforced safety standards to humanitarian concerns over employment contracts. FOCs have ruled the maritime industry post-WWII, and while the globe is responding, change has not been swift. In 2016, the NAI permit grant sparked new fears of FOCs penetrating the aviation world as well. Happily, largely due to the coupling of bilateral air cabotage treaties with ownership restrictions, aviation today is still largely immunized from the emergence of FOCs. But as the NAI case demonstrates, multilateral Open Skies agreements weaken this immunity by allowing air carriers to forum shop as long as they remain within the states covered by the multilateral Open Skies treaty, just as NAI did between EU member states.  Aviation treaties should be thoroughly examined not just on the international level, but at a national enactment level to close regulatory loopholes. NAI highlighted one US regulator loophole; 49 USC §41302, which was amended to assume a finding in support of public interest if an air carrier treaty has been negotiated and effectively killed the intent behind the US-EU treaty Article 17 bis,[147] ultimately allowing an air carrier to effectively act in a manner consistent with ‘flagging out.’ Due diligence in regulatory investigation must be encourage to kill the ability of flags of convenience to develop in aviation, or the skies will surely become a more dangerous place. 

Citations

[1] Allan I. Mendelsohn, Flags of Convenience: Maritime and Aviation, 79 J. Air. L. & Com. 151 (2014).

[2] Id.

[3] Shipping: Indispensable to the World, Int’l Mar. Org. (Nov. 4, 2016), http://www.imo.org/en/About/Events/WorldMaritimeDay/Documents/World%20Maritime%20Day%202016%20-%20Background%20paper%20(EN).pdf.

[4] Barry E. Carter et al., International Law 825 (Wolters Kluwer 7th ed., 2018). 

[5] Id.

[6] UN Convention on the Law of the Sea, opened for signature Dec. 10, 1982, 1833 U.N.T.S. 3, reprinted in 21 I.L.M. 1261 Art. 87 (1982) [hereinafter UNCLOS].

[7] H. Edwin Anderson, The Nationality of Ships and Flags of Convenience: Economics, Politics, and Alternatives, 21 Tul. Mar. L.J. 139, 144-45 (1996).

[8] Eric Powell, Taming the Beast: How the International Legal Regime Creates and Contains Flags of Convenience, 19 Ann. Surv. Int'l & Comp. L. 263, 270 (2013).

[9] H. Edwin Anderson, supra note 7 at 144-45.

[10] Id. at 145.

[11] Act of Sept. 1, 1789, ch. 11, 1 Stat. 55 (1789) (referred to as The Registration Act of 1789).

[12] H. Edwin Anderson, supra note 7 at 145.

[13] Id.

[14] Lauritzen v. Larsen, 345 U.S. 571, 584 (1953).

[15] H. Edwin Anderson, supra note 7 at 148.

[16] Lauritzen v. Larsen, 345 U.S. 571, 586 (1953).

[17] Eric Powell, supra note 8 at 271.

[18] UNCLOS, supra note 6 at Art. 91.

[19] The US registry is closed, and “has the most stringent registration requirements of any maritime nation,” governed by the Vessel Documentation Act of 1980. H. Edwin Anderson, supra note 7 at 151.

[20] Eric Powell, supra note 8 at 272.

[21] Allan I. Mendelsohn, supra note 1 at 152.

[22] Why So Many Shipowner’s Find Panama’s Flag Convenient, BBC (Aug. 5, 2014), https://www.bbc.com/news/world-latin-america-28558480.

[23] Id.

[24] This includes countries such as Mongolia, Cambodia, Bermuda, Georgia, Panama, North Korea, and Moldova, to name a few. However, it should be noted that a how an FOC registry is defined can change what countries are counted as FOC registries. The above figure is a reflection of the list compiled by the International Transport Worker’s Federation’s joint committee of seafarers’ and dockers’ unions. Eric Powell, supra note 8 at 275; Flags of Convenience, International Transport Workers’ Federation (last visited Feb. 1, 2020), https://www.itfglobal.org/en/sector/seafarers/flags-of-convenience.

[25] Eric Powell, supra note 8 at 273.

[26] Id.

[27] BBC, supra note 22.

[28] Eric Powell, supra note 8 at 272.

[29] 63% of operating cost for US vessels was due to crew costs, compared to 35% on foreign-flagged vessels. Colin Grabow et al., The Jones Act: A Burden America Can No Longer Bear, CATO Institute (June 28, 2018), https://www.cato.org/publications/policy-analysis/jones-act-burden-america-can-no-longer-bear.

[30] Allan I. Mendelsohn, supra note 1 at 152.

[31] Ademun-Odeke, An Examination of Bareboat Charter Registries and Flag of Convenience Registries in International Law, 36 Ocean Dev. & Int’l L. 339, 343 (Aug. 9, 2004).

[32] Tim Johnson, The US Merchant Marine Fleet Is Dying – And It May Hurt America’s Ability to Wage War Abroad, Task&Purpose (May 15, 2018), https://taskandpurpose.com/us-mercant-marine-fleet-military.

[33] 26 U.S.C. § 883(a)(1)-(2) (2018).

[34] This order of ranking is by number of ships owned. Per dead weight tonnage, the US has flagged out to the Marshall Islands, Liberia, and China. 2019 e-Handbook of Statistics, Merchant Fleet, UN Conference on Trade & Dev. (Dec. 10, 2019), https://stats.unctad.org/handbook/MaritimeTransport/MerchantFleet.html.

[35] More effects of FOC will be elucidated later in this article to contrast with aviation. See generally Richard J. Payne, Flags of Convenience and Oil Pollution: A Threat to National Security, 3 Hous. J. Int’l L. 67 (1981).

[36] UNCLOS, supra note 6 at Art 9(1).

[37] See Id. Articles 8(2), 9(1), and 7.

[38] UN Conference on Conditions for Registration of Ships, 1984, U.N.  Doc  No.  TD/RS/Conf/ C.1/L.2,1/08/84 Article 19 [hereinafter Paris Convention]; H. Edwin Anderson, supra note 7 at 150-51.

[39] Barry E. Carter et al., supra note 4 at 825.

[40] Id. at 845.

[41] Id.

[42] UNCLOS, supra note 6 at Art. 89.

[43] Id. Art. 3.

[44] Territorial seas extend out from the baseline for twelve nautical miles. Id. The discussion of how baselines are drawn is beyond the scope of this paper.

[45] Treaties and regulations differ on treatment of merchant ships and government ships operated for commercial purposes, as opposed to warships and other government ships operated for non-commercial purposes. Id. at Art. 27-32. This paper is only concerned with the treatment of the former – merchant ships and commercially operated government ships.   

[46] Id. Art 11.

[47] Id. Art 17.

[48] Id. Art 18.

[49] Id. Art 11.

[50] Vasilios Tasikas, The Regime of Maritime Port Access: A Relook at Contemporary International and United States Law, 5 Loy. Mar. L.J. 1, 16 (2007).

[51] Id. at 44.

[52] Id.

[53] UNCLOS, supra note 6 at Art 25(2); Vasilios Tasikas, supra note 50 at 31.

[54] UNCLOS, supra note 6 at Art 25(2); Vasilios Tasikas, supra note 50 at 32.

[55] UNCLOS, supra note 6 at Art 300.

[56] European and North Atlantic Office, History: The Beginning, Int’l Civil Aviation Org. (last visited Feb. 1, 2020), https://www.icao.int/EURNAT/Pages/HISTORY/history_1910.aspx.

[57] Paris Convention, supra note 38 Art. 1.

[58] Id. Art. 2.

[59] Betsy Gidwitz, The Politics of International Air Transport 46 (LexingtonBooks, 1980).

[60] Convention on International Civil Aviation, Int’l Civil Aviation Org. (last visited Feb. 1, 2020), https://www.icao.int/publications/pages/doc7300.aspx.

[61] International Civil Aviation Organization (ICAO), Convention on Civil Aviation ("Chicago Convention"), 7 December 1944, (1994) 15 U.N.T.S. 295 Art. 5 [hereinafter Chicago Convention]; Howard E. Kass, Cabotage and Control: Bringing 1938 U.S. Aviation Policy Into the Jet Age, 26 Case W. Res. J. Int’l L. 143, 149 (1994).

[62] Betsy Gidwitz, supra note 59 at 46.

[63] Paris Convention, supra note 38 Art. 7.

[64] Id. Art. 7.

[65] Id. Art. 8.

[66] Id. Art. 11.

[67] Howard E. Kass, supra note 61 at 150.

[68] Chicago Convention, supra note 61 Art 11.

[69] Howard E. Kass, supra note 61 at 151.

[70] Id.

[71] Air Servs. Agreement Between the United States of Am. & the United Kingdom of Great Britain & N. Ireland., T.I.A.S. No. 1507, Art. 6 (Feb. 11, 1946). 

[72] Howard E. Kass, supra note 61 at 151.

[73] Betsy Gidwitz, supra note 59 at 48.

[74] Howard E. Kass, supra note 61 at 149.

[75] Derek Lick, More Turbulence Ahead: A Bumpy Ride During U.S.-Japanese Aviation Talks Exemplifies the Need for a Pragmatic Course in Future Aviation Negotiations, 31 Vand. J. Tansnat’l L. 1207, 1211 (1998).

[76] Id.

[77] Defining  “Open  Skies”,  Order  No.  92-8-13, 1992 WL 204010 (U.S. Dep’t of Transp.  Aug. 5, 1992).

[78] Id.

[79] Id.

[80] Derek Lick, supra note 75 at 1215.

[81] John R. Crook, U.S. Open Skies Agreements Number More than One Hundred, 105 Am. J. Int’l L. 586 (2011).

[82] Derek Lick, supra note 75 at 1213.

[83] Id. at 1213.

[84] Id. at 1218-19.

[85] Id. at n.79.

[86] Civil Air Transport Agreements, U.S. Dep’t of State (last visited Feb. 3, 2020), https://www.state.gov/civil-air-transport-agreements.

[87] Hannah E. Cline, Hijacking Open Skies: The Line Between Tough Competition and Unfair Advantage in the International Aviation Market, 81 J. Air L. & Com. 529, 536 (2016).

[88] John R. Crook, supra note 81 at 586.

[89] Hannah E. Cline, supra note 87 at 538.

[90] Current Model Open Skies Agreement Text, U.S. Dep’t of State (Jan. 12, 2012), https://2009-2017.state.gov/e/eb/rls/othr/ata/114866.htm [hereinafter Model Open Skies].

[91] Philip Donges Snodgrass, Aviation Flags of Convenience: Ireland and the Case of Norwegian Airlines International, 14 Issues Aviation L. & Pol'y 245, 247 (2015).

[92] Application of Norwegian Air International Limited Order to Show Cause, Order No. 2016-4-12 (U.S. Dep’t of Transp. April 15, 2016) [hereinafter NAI Order to Show Cause].

[93]  Id.

[94] In 2013, the corporate tax rate in Norway was 28%. Comparatively, the corporate tax rate in Ireland was 12.5%. Corporate Tax Rates Table, KPMG Int’l (last visited Feb. 1, 2020), https://home.kpmg/xx/en/home/services/tax/tax-tools-and-resources/tax-rates-online/corporate-tax-rates-table.html.

[95] Air Transport Agreement, U.S.-EU, Apr. 30, 2007, 46 I.L.M. 470 [hereinafter US-EU Agreement]. 

[96] NAI Order to Show Cause, supra note xx Appendix E at 3.

[97] NAI Order to Show Cause, supra note 92 at 3

[98] The Sec of DoT also solicited the views of the DoS and DoJ in reaching this determination. Air Line Pilots Ass'n, Int'l v. Chao, 889 F.3d 785, 788 (D.C. Cir. 2018).

[99] NAI Order to Show Cause, supra note 92 at 4.

[100] Id. at 5.

[101] Id. at Appendix F at 5.

[102] Id.

[103] Id. at Appendix F at 6.

[104] US-EU Agreement, supra note 95 Art. 4.

[105] 49 USC § 41301 (2018).

[106] Id.

[107] 49 USC § 41302(2)(b) (2018).

[108] Air Line Pilots Ass'n, Int'l v. Chao, supra note 98 at 786.

[109] Id. at 791.

[110] International Air Transportation Competition Act of 1979: Hearings on S. 1300 Before the Subcommittee on Aviation of the Senate Committee on Commerce, Science and Transportation, 96th Cong. 101 (1979) (statement of Richard N. Cooper, Under Secretary for Economic Affairs, Department of State).

[111] NAI Order to Show Cause, supra note 92 at Appendix E at 2; S. Rep. No. 96-329 at 4 (1979).

[112] Alexander J. Marcopoulos, Flags of Terror: An Argument for Rethinking Maritime Security Policy Regarding Flags of Convenience, 32 Tul. Mar. L.J. 277, 281 (2007).

[113] Id. at 310.

[114] Id. at 294.

[115] Model Open Skies, supra note 90.

[116] Memorandum from Louis King, Assistant Inspector Gen. for Fin. & Info. Tech. Audits, to Fed. Aviation Adm’r 1 (Jan. 31, 2014), https://www.oig.dot.gov/sites/default/files/Registry%20Management%20Advisory%20FINAL%201-31-2014.pdf [hereinafter FAA Registration Memo].

[117] Id. at 3.

[118] Id.

[119] Id.

[120] Id.

[121] Id.

[122] The bill was referred to the House Subcommittee on Aviation on July 31, 2017. Id.

[123] Aircraft Ownership Transparency Act of 2017, H.R. 3544, 115th Cong. (2017).

[124] Id.

[125] Alexander J. Marcopoulos, supra note 112 at 295.

[126] Id.

[127] Id. at 297-98.

[128] Id. at 278, 295-98.

[129] The Global Fleet Revealed, The Maritime Executive (Nov. 5, 2017), https://www.maritime-executive.com/article/the-global-fleet-revealed.

[130] Tina Shaughnessy & Ellen Tobin, Flags of Inconvenience: Freedom and Insecurity on the High Seas, 5 Penn St. Int'l L. & Pol’y 1, 18-9 (2006).

[131] Chicago Convention, supra note 61 at Art. 33.

[132] State of Global Aviation Safety, Int’l Civil Aviation Org. 24-5 (2019 eds., 2019), https://www.icao.int/safety/Documents/ICAO_SR_2019_29082019.pdf.

[133] Annual Overview of Marine Casualties and Incidents 2018, European Mar. Safety Agency 8 (2018), http://www.emsa.europa.eu/damage-stability-study/items.html?cid=77&id=3406.

[134] Kirsten Bohmann, The Ownership and Control Requirements in U.S. and European Union Air Law and U.S. Maritime Law–Policy; Consideration; Comparison, 66 J. Air L. & Com. 689, 690 (2001).

[135] Re-registering ships mid-voyage has a history dating back to the early 1920s, when vessels running rum would re-flag mid voyage to confuse local authorities. More recently, oil tankers have re-flagged mid voyage; however, this is largely due to geopolitics and moderately to an effort to undo FOCs. In 2019, Panama, Tot, and Sierra Leone all participated in the de-listing of foreign-registered Iranian oil tankers, causing the tankers’ flags to revert to Iranian mid-voyage. Lisa Lindquist Dorr, A Thousand Thirsty Beaches: Smuggling Alcohol from Cuba to the South During Prohibition 32 (The University of North Carolina Press, 2018); Jonathan Saul et al., Flags of Inconvenience: Noose Tightens Around Iranian Shipping, Reuters (July 26, 2019), https://www.reuters.com/article/us-mideast-iran-tanker-flags-insight/flags-of-inconvenience-noose-tightens-around-iranian-shipping-idUSKCN1UL0M8.

[136] Ensuring That Open Skies Delivers on its Promise, Transp. Trade Dep’t (Oct. 29, 2019), https://ttd.org/policy/ensuring-that-open-skies-delivers-on-its-promise/.

[137] Id.

[138] John Hare, Port State Control: Strong Medicine to Cure a Sick Industry, 26 Ga. J. Int’l & Comp. L. 571, 579-80 (1997); see generally Ho-Sam Bang, Recommendations for Policies on Port State Control and Port State Jurisdiction, 44 J. Mar. L. & Com. 115 (2013).

[139] Id. at 580.

[140] Terje Lobach, Port State Control of Foreign Fishing Vessels, Food & Agriculture Organization of the United Nations § 4.4. (2003), http://www.fao.org/3/y8387e/y8387e06.htm#bm6.4.

[141] Kathleen Gray et al., Fish Piracy: Combating Illegal Unreported and Unregulated Fishing, Org. for Econ. Corp. & Dev. 96 (2003).

[142] Robert Silk, IATA Opposes U.S. Airline Labor Unions in “Flag of Convenience” Dispute, Travel Weekly (Sept. 17, 2018), https://www.travelweekly.com/Travel-News/Airline-News/IATA-opposes-labor-unions-in-flag-of-convenience-dispute.

[143] Id.

[144] Aviation Coalition Urges End to Flag-of-Convenience Clause, AviationDaily (Sept. 19, 2018).

[145] Id.

[146] Ashley Halsey III, House Bill Targets ‘Flag of Convenience’ Carriers, Washington Post (July 10, 2019), https://www.washingtonpost.com/local/trafficandcommuting/house-bill-targets-flag-of-convenience-carriers/2019/07/10/a533f502-a332-11e9-bd56-eac6bb02d01d_story.html.

[147] Josheph Z. Fleming, International Labor and Employment Law: The Continuing Conflicts, CY016 ALI-CLE 609, 34 (2017).