The term flag of convenience describes the business practice of registering a merchant ship in a sovereign state different from that of the ship's owners. The term refers to the civil ensign the ship flies to indicate its country of registration or flag state. A ship operates under the laws of its flag state, and these laws are used if the ship is involved in an admiralty case. The modern practice of flagging ships in foreign countries began in the 1920s in the United States, when shipowners frustrated by increased regulations and rising labor costs began to register their ships to Panama. As of 2009, more than half of the world’s merchant ships are registered under flags of convenience. (more...)