Why are cruise ships registered in foreign countries?

[Jason]

Most American travelers have multiple options when it comes to securing their rights if something goes wrong with a trip. You can file complaints with consumer organizations and trade associations. Contact regulatory agencies and attorneys general. And even litigate through the court system (though the airline industry's "federal preemption" limits your rights via state and local judiciaries).

But when it comes to a cruise industry that does not fly American flags on its ships, addressing problems can be more daunting—and often unsatisfying.

Foreign flags, domestic problems

As I reported last year, only one major cruise ship—NCL America's Pride of America—is registered in the United States, according to data from CyberCruises.com. Most of the big boats fly Bahamian flags, but other popular registries include Panama, Bermuda, Italy, Malta and the Netherlands. In fact, according to Cruise Lines International Association, 90% of commercial vessels calling on U.S. ports fly foreign flags.

CLIA maintains there are reasons for such policies: "There are many factors that determine where a cruise ship—or for that matter, any maritime vessel—is flagged. Those determinations are made by individual cruise lines and other ship operators based on varying factors including the capabilities of the flag to deliver the services needed; representation and reputation of the flag in the international shipping community; the performance of the flag state, which dictates how a ship is prioritized by port states; the pool of seafarers able to meet the needs of the flag; and the flag's fees/charges and taxes," the association said by e-mail.

This can be viewed as a robust free-market debate. Some maintain burdensome U.S. regulations have forced cruise operators to plant their flags elsewhere, while others say these corporations are seeking to attract American dollars while skirting American safety and consumer protection laws.

You can read a detailed analysis of this debate from Caitlin E. Burke of the University of Florida, in her paper "A Qualitative Study of Victimization and Legal Issues Relevant to Cruise Ships." She notes the "flags of convenience" trend dates back to Prohibition: "Cruise lines have been circumventing U.S. statutes and regulations since as early as the 1920s." She also cites a legal journal report on ship registry practices: "By opting to re-flag in a new nation, a vessel owner becomes subject to the safety, labor and environmental codes of that nation. Thus, those nations whose open registries have become the most popular also tend to be those who possess the most lax labor, safety and environmental codes." Burke's summation is that "the legal rights and remedies of U.S. passengers are greatly inhibited."

This is a fact that even the Federal Maritime Commission acknowledges: "It is important to know that the Commission has no authority over: passenger line vessel operations, safety issues, amenities onboard vessels or fare levels."

Asserting your rights

That said, you still retain some basic consumer rights if you book through U.S.-based travel agencies or tour operators and/or use a U.S.-issued charge card. But be warned that you may not be completely satisfied with dispute resolution, particularly if it involves vouchers for a future sailing.

Linda Burbank, who writes this section's Traveler's Aide column, has often addressed readers' concerns about cruising. She warns travelers seeking redress that "with cruise lines, refunds are rare; a credit is more likely."

CLIA asserts that, "U.S. consumers have extensive legal remedies in the event they need to file a claim," but it notes that "for claims against cruise lines based in foreign nations and that offer cruises that do not stop at U.S. ports, foreign laws may apply and claims may be resolved abroad."

If you need more information before making a booking decision, or guidance on a consumer problem, here's a list of key resources that can provide assistance:

• The Better Business Bureau has reviewed many cruise lines and cruise travel agencies, and those records can be viewed online.
  
• The American Society of Travel Agents offers advice on filing and pursuing travel complaints, both during and after your trip. ASTA also offers specific tips on cruising with "How to Book and Board."
  
• The Federal Maritime Commission has issued a Notice to Cruise Passengers that details the role of the FMC.
  
• The Centers for Disease Control and Prevention's Vessel Sanitation Program provides advice for travelers and inspection scores of cruise ships.
  
• The U.S. Coast Guard's Cruise Ship National Center of Expertise details all the relevant federal regulations. In addition, the USCG's Marine Safety Center provides oversight on ship safety "subject to U.S. laws."
  
• The Federal Trade Commission provides information on its investigations into cruise lines' trade practices.
  
• You also may want to consult the National Association of Cruise Oriented Agencies.
  
• The leading travel insurance companies can offer assistance as well. It's important to note if a cruise line you are considering booking is included on an insurance "black list," since this could indicate serious concerns about financial stability or even safety.
  
• Cruise Lines International Association provides historical perspective on the international maritime industry.
  
• For those pursuing justice for victims of crime onboard cruise ships, the International Cruise Victims Association provides a wealth of resources.
  
• British citizens have the added advantage of working through the U.K.-based Passenger Shipping Association, which provides dispute conciliation service, provided the cruise line in question is a PSA member, though many major lines are covered.
  
• Finally, always remember to purchase travel with a charge card, for protection under the Fair Credit Billing Act, since it states "federal law limits your responsibility for unauthorized charges to $50."
  

By Bill McGee, special for USA TODAY

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[DebbieandJerry]

Interesting article. It never bothered me that the ship's were registered outside of the U.S.

[WeCruiseToo]

I don’t think it’s as much about “skirting American safety and consumer protection laws” as it is the taxes and labor regulations, but what do I know. We’ve never had any major issues with the cruise lines but whatever problems we’ve had were dealt with quickly and fairly.

[tmpcase]

good to know