The “Mirror Flags”: Ship registration in globalised ship breaking industry

The incorporation of new international regulations is a rational way to avoid the use of substandard Asian ship-breaking yards. However, more restrictive regulations and agreements could lead to increase the proliferation of the use of third countries in connection with ship recycling industry. The new Open Registries provides ship-owners with legal loopholes in order to avoid strict national legislations and international rules, thus the “genuine link” disappears and the ship-owner's responsibilities relax. Ship-breaking industry is a complex interconnected system with many important key actors, such as shipping companies, ship-owners, ship registries, brokers, and ship-breaking yards, all of which are discussed in this paper under the vision of a new global ship recycling policy, and focusing in those cases when a ship changes its flag state registration just before scrapping. This paper analyses the most common flags selected in order to send ships for scrapping. Empirical investigation to determine the relation between States and ship-breaking industry has been carried out using the multivariate statistic technic known as “Simple correspondence analysis”. The results show a relation between ship registry selection and ships that are about to end their lives, re-flagging solely for the purpose of scrapping. If we observe the evolution of the different flag states at the end of the ship's life, we find incremented use of new open registers or “Mirror Flags”. General abuse of new registries in ship-breaking industry would lead to a ship-breaking industry without rules or transparent procedures, which could violate labour and environmental standards.