Each contracting party is responsible for placing the observers on board the vessels. That's not to say they can't make arrangements with other countries if they so please, but generally Canadian vessels carry Canadian observers, European vessels carry European observers--not necessarily from the same country, the flag state, but certainly from the same contracting party.
Now, there have been in the past some Scandinavian states--I believe Norway, and some of the Baltic states, before they entered into the European Union--that did contract Canadian observers simply as a matter of economics--it was cheaper--but by and large, the observer on board the vessel will be provided by the contracting party to which the vessel belongs.