9.

Since the regulation cannot therefore apply to Community nationals working on a non-Community vessel, it must be determined whether under certain circumstances it is possible to deem the vessel to be a Community vessel. In its third question the national court is in fact essentially asking whether the ‘Onkel Sam’ must indeed be considered a Panamanian vessel or whether it can be regarded as a Danish vessel since the company which owns it, formally under Panamanian law, has entirely Danish interests behind it, the crew is Danish and the State of refuge is normally Denmark. In short, the problem is one of flags of convenience. Much has been written and said on the phenomenon of flags of convenience, which started in the stormy years of prohibition and spread in particular at the beginning of the Second World War when neutrality limited the mercantile activities of vessels flying the United States flag but not that of vessels flying the flag of Honduras, Costa Rica or Panama, regardless of whether American interests were behind them. After the phenomenon had become established in better times and the economic advantages discovered, the phenomenon was often criticized, if only in the emotional wake of very serious incidents. The legal antidote to it was also loudly proclaimed, and summed up in the descriptive term of ‘genuine link’, established as a limit on the freedom of States to grant their flags. However, the words do not find the necessary and precise counterpart in precedents, either in arbitration or in conventions. Indeed, the statement that ‘it is for each sovereign State to decide to whom it will grant the right to fly its flag’ ( 10 ) has not so far been disputed as regards its substantive content. In the I'm Alone case, in which a vessel, belonging to United States interests but registered in Canada, was smuggling alcohol into the USA and for that reason was ‘captured’ by the Coast Guard, the capture was held to be unlawful. ( 11 ) The International Court of Justice, in an advisory opinion delivered on the composition of the Committee for Maritime Safety of the intergovernmental consultative organization on maritime organization (IMCO) did not express a contrary opinion. On that occasion, in fact, the Assembly of the IMCO had ruled out the inclusion of Panama and Liberia among the countries with the greatest fleet tonnages, as members of the Committee, because there was no genuine link between the majority of the vessels and those countries, which in fact granted flags of convenience. The Court firmly and categorically rejected that argument stating that such a method for appraising the ranking of a nation that possesses a merchant fleet was neither safe nor practical, and found no support whatsoever in the case-law, in international literature, maritime terminology or in the international agreements on safety at sea. ( 12 ) When an attempt was made to codify the law of the sea, the United Nations' Commission on International Law sought to introduce into the 1958 Geneva Convention on the High Seas the principle that States may disregard the nationality of the flag of a vessel when there is no genuine link with that State, from the point of view in particular of relevant ownership and the composition of the crew. The result was Article 5 of the Convention, which, as the Court is aware, turned the question of the genuine link around and required the flag State actually to exercise its governmental power and control over vessels to which it grants nationality. Nor has the attempt to interpret Article 5 differently met with success: by way of example the above-mentioned advisory opinion of the International Court of Justice may be mentioned. The Montego Bay Convention on the Law of the Sea of 10 December 1982, finally, while not yet in force, confirms the comments made above in so far as it provides that when one State regards the control exercised over a vessel as inadequate, it can ‘signal the fact’ to the flag State, and the latter ‘shall carry out an investigation and take, where appropriate, the necessary measures to remedy the situation’ (Article 94(6)). Thus the nationality of the vessel is that of the flag State, in the present case Panamanian. That nationality must clearly be respected in so far as it is consistent with the Panamanian legislation on the requirements for immatriculation of vessels, even if the capital of the company that owns the vessel, constituted under Panamanian law, depends on exclusively Danish interests. That means that governmental power lies in principle with the flag State, subject to the limits connected with international agreements and the exercise of the governmental power of the coastal State in areas which are not the high seas.