2 The traditional position
When deciding choice of law questions in shipping-related matters, the country in which the vessel is registered has - undoubtedly - played an important role. This is particularly true in relation to public law/ administrative law questions, such as safety, pollution, access to harbours, seizure, applicability of criminal law, neutrality in times of war, etc. However, the law of the flag has also been applied in the private law sector, and the Supreme Court decision is a confirmation of its continuing importance today.
Before discussing the Eimskip case, it is necessary to give an outline of Norway’s historical development as regards registration and the seaman’s employment contract - a development which is not dramatically different from what has happened in other countries.
In the latter part of the 19th century Norwegian shipping was expanding: Vessels were being built right along the Norwegian coast. They were to a great extent owned locally, and manned by people from the same district as where the owner or owners were domiciled. Boys went to sea when they were 14-15 years old, and the parents knew that their young boy would meet a crew recruited from their neighborhood, perhaps even relatives. Non-Norwegian crew members were exceptions.
Putting this in other words: the vessel was tightly connected to Norway. The non-Norwegian element was carriage from or to non-Norwegian harbours, often with non-Norwegian goods. There was no particular interest from abroad in investing in Norwegian shipping; consequently, on the ownerside side too, shipping was Norwegian. Therefore, the expression that the vessel was a floating part of Norway was not an overstatement. Since the vessel was undoubtedly Norwegian, the vessel should of course fly the Norwegian flag and be registered in the Norwegian ship register.
With the First World War, the picture changed: Norway was a neutral country during those tragic years, with unrestricted submarine warfare and the capture of vessels carrying contraband cargo. In order to protect Norwegian shipping, it was deemed necessary to have strict rules on nationality: the right to fly the Norwegian flag and to be registered in the Norwegian register, required - broadly speaking -at least 60 percent of the equity capital to be owned by Norwegian persons or companies, and that the operation of the vessel should be handled from Norway. Basically, flying the Norwegian flag was a privilege.
The difficult period after the First World War and the Second World War, followed by the cold war, gave no reason to loosen the reins: On the contrary, the rules were made stricter - no exceptions should be allowed.
The post war period, however, brought in other factors of importance. Currency and taxation considerations led to the consequence that a vessel fulfilling the Norwegian registration requirements had to stay in the Norwegian register. An additional consideration was preparedness for war or warlike situations, where urgent transport requirements might necessitate requisitioning of the national fleet. Further, the employment situation for seamen became an issue. The international trends, for “flags of convenience” or open registers, threatened the traditional Norwegian flag and Norwegian crew. The seamen’s unions were an important political pressure group in those days, trying to protect the Norwegian seaman.
The former privileges became obligations on the industry!
However, in the 1980’s, the pressure from other directions became too strong. The obligation to register in Norway disappeared, and we even introduced an international ship register, in addition to the traditional one reserved for Norwegian owned tonnage.(1) See Act 12th June 1987 no. 48 on Norwegian International Shipsregister (NIS).
The important finding - in our context - is that the solid connection between registration and the registry state disappeared in Norway in the latter part of the 20th century, and we will find the same development - earlier, simultaneously or later - in other countries. In short: in matters of ship registration, Norway is today in line with the majority of shipping countries. Regarding private law, this means that we often have the situation where the vessel - apart from its registration - has all its connections to another country, or to a number of other countries.
The conclusion is clear: the real and good grounds for emphasis on the registration country, when deciding on choice of law issues in the private law sector, have eroded. However, applying the law of the flag gives a plain, unambiguous, foreseeable rule.