The Flag of Convenience (FOC) system is a core, structural driver of human and labour rights risk in maritime supply chains. The FOC system enables shipowners to flag a ship in a country of their choosing, with little or no connection to where the ship is owned or operated, in order to reduce regulatory oversight and enforcement, lower costs and avoid tax obligations.
Under international law, a ship is subject to the national laws and jurisdiction of its flag state. In practice, this enables companies to choose the legal and regulatory regime that applies on board, often selecting jurisdictions with lower operating costs and standards, and limited enforcement capacity. Although the UN Convention on the Law of the Sea (UNCLOS) requires a ‘genuine link’ between the shipowner and the flag state, this is widely ignored by states operating ‘open’ international registries. Seafarers employed on board a ship flagged to a state other than their home state are a category of migrant worker.
Complex and opaque ownership and management structures further obscure accountability, making it difficult to identify who is responsible for human and labour rights violations. Seafarers on FOCs ships face systemic human and labour rights abuses, including low or unpaid wages, excessive working hours, denial of rest, unsafe working and living conditions, and lack of access to healthcare and compensation for injury. . In severe cases, abuses extend to wage theft, abandonment and forced labour, leaving workers without pay or a way home. These abuses are inherent to the FOC model of weak accountability and diffuse responsibility. The use of FOC shipping exposes companies and supply chain actors to human and labour rights risks. These risks cannot be addressed through compliance alone and must be actively identified, prevented and mitigated through robust HRDD, including engagement with trade unions and enforceable mechanisms such as ITF Agreements.
The ITF has established the only internationally recognised system of collective bargaining agreements on board FOC ships (known as ITF Agreements), currently covering around 15,000 ships – around half of all FOC ships, with FOC ships in turn representing around 30 percent of the entire merchant fleet. These agreements set enforceable minimum standards on wages, working conditions and protections, and are negotiated with ITF and our affiliated maritime trade unions to secure higher wages, fair wage scales, acceptable working and living conditions, and recognition of training and skills. The presence of ITF Agreements provides companies and supply chain actors with an assurance of decent, enforceable working conditions on contracted shipping services.
Enforcement of ITF Agreements is supported by the ITF’s global inspectorate, a network of more than 130 inspectors and contacts, based in over 100 ports in 55 countries worldwide. ITF inspectors inspect ships to enforce ITF Agreements, verify wages and conditions, recover unpaid wages, resolve disputes, support seafarers to access remedy, and take action against non-compliant operators.