Complex sentence: Each merchant ship is required to be registered in a registry created by a country, and a ship is subject to the laws of that country, which are used also if the ship is involved in a case under admiralty law.
Split into simpler sentences: Each merchant ship is required to be registered in a registry created by a country. A ship is subject to the laws of its flag state, and these laws are used if the ship is involved in a case under admiralty law.