International waters have certain degrees of separation. In this case a certain part of the high seas is under the security jurisdiction of Chile. This area overlaps the Exclusive Economic Zone as well, but it give Chile extra coast guard and police duties.
Additionally Chilean nations who happen to be born in the twilight partially-international and partially-Chilean border zone have a birthright to fly this flag.
The colours orange and black relate to the orange and black colours of the standard international contiguous zone flag.
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