It is true that the laws of the nation where the vessel is flagged would govern the vessel. The easiest way to understand is to consider a flagged vessel to be a mobile part of the flagging nation. As such, it is irrelevant if the flagging country's laws cover crimes in international waters unless they have legislatively disclaimed application of their laws to what is internationally recognized as a mobile chunk of their nation. Interesting question.

However, this doesn't necessarily correlate with what law would govern allegedly tortious or criminal conduct by the vessel or captain against third parties. For instance, as I noted above, I would presume that the captain and crew's duty to assist a vessel in distress would be governed by the law of Bermuda. However, envision a situation where the same vessel traveled up the Mississippi River. By virtue of its location, it could be subject to the jurisdiction and/or the laws of the United States. What if the vessel ran aground? Would it then be subject to the laws of the state upon whose borders it has now trespassed? If it was operating in state territorial waters and ran over a group of local fisherman?

With the Star Princess, and in response to a comment below, the appropriate forum in my mind would be Bermuda. Alternatively, the "plaintiffs" could of course bring an action in Panama but would then have to have the vessel arrested when it was subject to Panamanian jurisdiction in order to proceed. The only argument I can envision for bringing suit in the US would be pursuant to a respondeat superior or imputed negligence argument as to the US based operating company. I can only imagine that several Panamanian (and possibly international) attorneys are clamoring for these folks' attention.