The Legal and Ethical Environment of Business - Essay Example

As a result of this open registration system, shipping companies that are located within the United States or other countries can register their ships in countries such as Liberia, Mangolia or Cyprus where the labor laws and environmental standards are much less stringent and thereby is able to escape liability for many of the regulations that are enforced upon ships registered in other countries. Harun Ur Rashid (2005) points out how the flag of convenience is one aspect of international shipping law that has allowed ships to escape liability for some of the worst accidents that have occurred, such as the oil spills off Spain’s northwest Coast on November 13, 2002, which was one of the worst environmental disasters in history, yet no liability could be pinned on the ship that was operating at below optimum standards.

Ships can also escape liability for issues involving immigration and the liability of individual citizens of various countries who are employees on board its vessels. For example, the case of Empresa Hondurana de Vapores v McLeod involved an issue aboard a ship with a flag of convenience, which was registered in Honduras. The National Labor relations Board directed that an election be conducted among all foreign seamen aboard the ship. This was contested by the Honduran company that owned the ship as a violation of the private law of Honduras and thereby a violation of international treaty obligations1 as well as a violation of the United States Constitution itself.

The Plaintiffs relied upon the case of Fay v Douds in which the Court held that district courts have jurisdiction over proceedings where constitutional rights are violated. The company therefore sought and won an injunction in a federal district court against the order of the National Labor relations Board on the basis that the Board had extended its jurisdiction into the foreign relations field through ordering such an election (Powar, 1962). Moreover, in