According to reports, Queen Victoria's captain was told she would face a substantial fine if she didn't lower the flag -- a red ensign, representing Britain's merchant marine fleet.
A spokeswoman for Cunard confirmed the incident, which took place in late January, saying: "As requested by the port authorities, whilst Queen Victoria was in Argentinian waters, the Cunard flag was flown, in this instance, rather than the ensign."
Britian's Foreign & Commonwealth Office responded to the incident with a statement accusing the Argentine government of "unacceptable harassment and intimidation," and saying: “We are urgently discussing the matter with Carnival UK and will raise this with the Argentine authorities.”
Tension between the U.K. and Argentina has been high since 2012 -- the 30th anniversary of 1982's Falklands War -- and a number of cruise ships have been affected.
The incident also comes just over a year after protests in Buenos Aires culminated in an attack on the offices of the Argentine Shipping Services.
Channel 4 quoted former head of the Royal Navy and veteran of the Falklands campaign, Admiral Lord West of Spithead, who was onboard Queen Victoria at the time, who said: "After we'd gone round Cape Horn I was at dinner with the captain, and the captain said to me that when they were in Buenos Aires that the ship had basically been threatened with a very punitive fine – about 10,000 US dollars – and also told there would be 'trouble' in inverted commas – not specified – if he didn't take down the red ensign which the ship flies."
Disruption to shipping in the region is tied to the Gaucho Rivero Bill, a provincial law voted by the local legislatures from the provinces of Tierra del Fuego, Santa Cruz, Chubut, Rio Negro and Buenos Aires. The legislation -- impeding access to the ports of these provinces -- refers mainly to British or convenience-flagged vessels involved in the Falklands' hydrocarbons industry, but local unions, politicians and other groups have, in recent years, extended the interpretation to include cruise ships.
A referendum addressing the Falklands' sovereignty that went forward in March 2013, saw the 3,000 island residents reject Argentine efforts to claim ownership over the disputed archipelago -- and support continued British rule.
Cunard's Queen Victoria is currently on a 116-night world cruise.
--By Jamey Bergman, UK Production Editor