The international regulatory framework of ship recycling is constantly evolving and increasingly subjected to attention from governments, NGOs and media around the world. It is important for shipowners, brokers and other stakeholders to be up to date on the relevant rules. This newsletter will highlight some of the recent developments at the end of 2019.
December 2019 saw two important developments in respect of ship recycling. Firstly, on 5 December, the 1995 Basel Ban Amendment finally entered into force internationally. The ban prohibits the export of hazardous waste, including vessels destined for recycling, from OECD to non-OECD states. While the ban has been enforced in the EU and many OECD states for years, the ban will now also enter into force in non-OECD states that have ratified the amendment.
Secondly, on 9 December, the Indian Parliament passed The Recycling of Ships Bill, 2019, ratifying the 2009 Hong Kong Convention on the Safe and Environmentally Sound Recycling of Ships. As the world largest ship recycling nation, India’s ratification is a crucial step in the adoption of the convention worldwide.
The 1989 Basel Convention (the “BC”) forms the backbone of the ‘old’ international ship recycling regime. It applies to the transboundary shipment of all types of waste, including vessels. It entails that owners (and other relevant parties) are required, as a main rule, to seek prior permission of the transfer from the relevant authorities in the states of export, import and transit, if any.
The BC, however, has been very cumbersome and difficult to apply in practice to vessels – a form of ‘self-propelled waste’ – in particular. It is difficult to determine when a vessel is to be treated as ‘waste’ as this largely depends on when the decision to recycle is deemed to have been taken. It will involve an assessment of the intention of the parties concerned. Furthermore, the BC does not apply to movements of vessels from the high seas (outside the national jurisdiction of any state) to any state as there is in such case no ‘transboundary movement’. This has led to allegations by some governments and NGOs that vessel owners are purposely circumventing the BC when the decision is taken on the high seas, negating the effects of the BC. These organisations are not always taking into account the fact that many shipowners are instead observing the requirements of the Hong Kong Convention that is specifically designed for the recycling of vessels (see below).
The 1995 Basel Ban Amendment (the “BBA”) is not changing the overall scope, nor the practical and legal difficulties in applying the BC. Instead, the BBA introduces a prohibition against the export of hazardous waste from OECD to non-OECD states. All vessels are to be surveyed for hazardous materials to be included in an inventory of hazardous materials (IHM). Under the ban, only the so-called “green waste” vessels may be exported (subject to certain documentation requirements). Even such transfers, however, may be denied if there are specific export and import restrictions in place in the states concerned. China, for instance, is currently not admitting the import of any foreign (green or non-green) vessels that are destined for recycling.
Importantly, the BBA is already enforced in the EU under the Waste Shipment Regulation. In theory, the BBA should thus not change the transfer of vessels from the EU to non-OECD states. The BBA will now also be legally binding to other OECD states and non-OECD states which have ratified the BBA. The BBA will apply to a transfer provided merely that one of the states concerned (either the export, import or transit state(s)) has ratified the BBA.
Consequently, owners (and other concerned parties) may now, depending on national laws, be liable to criminal sanctions not only in the EU/OECD state but also in the non-OECD states (likely state of import) under the BBA if the BBA is not complied with in respect of specific transfers. Some of the important recycling states, such as India and Bangladesh, have not ratified the BBA while others, such as China, have. The exact impact of the BBA is therefore yet to be seen.
The list of parties to the BC/BBA is available on the Basel Secretariat’s website.
The Hong Kong Convention (the “HKC”) was adopted by the IMO in 2009 with the explicit purpose of setting out a modern regulatory framework to ensure that ships, when being recycled after reaching the end of their operational lives, do not pose any unnecessary risks to human health, safety and to the environment. Reflecting this, the Indian Minister of State for Shipping states that the protection of the environment and the safety of workers are the “soul” of India’s HKC bill.
While the HKC will be serving many of the same objectives as the BC, it is – unlike the BC – specifically designed to regulate vessels. The connecting factor – determining whether the HKC will apply – is the flag state of vessel. It will thus only apply as a matter of law if the flag state of the vessel has adopted the HKC. On the other hand, it will not be relevant which territories that the vessel travels through en route to the recycling facility (as is the case under the BC/BBA).
While the HKC is yet to enter into force, many shipowners are already voluntarily observing the requirements. It also serves as the basis for the widely used RECYCLECON by BIMCO.
The HKC will enter into force 24 months after (i) its ratification by 15 states (ii) representing at least 40 % of world merchant shipping by GT with (iii) a combined maximum annual ship recycling volume not less than 3 % of their combined tonnage. Following India’s ratification, the HKC has now been ratified by 15 states. While these states include leading flags such as Denmark, Malta, Norway and Panama, they still represent ‘only’ ≈ 30 % of the world GT. In order for the HKC to apply as a matter of law, it is necessary for more shipping nations to ratify the convention.
In any event, it is a major step that India has now ratified the convention. The convention will not be successful unless the flag states as well as the major recycling nations adhere to it.
While the EU Ship Recycling Regulation (the “SRR”) entered into force on 31 December 2018, it applies only to EU flagged vessels. An important note to shipowners is that they should not feel secure ‘simply’ by observing the HKC, or even the SRR, for EU flagged vessels. Crucially, the BC (and the BBA) may still apply, in parallel, in the relevant export, import and transit states.
Shipowners shall therefore expect that the BC and the BBA will continue to pose regulatory issues in respect of ship recycling a long time into the future, i.e. even after the HKC may have entered into force. It all depends on the success of the HKC in flag states and relevant coastal states.
The list of the parties to the HKC is available on the IMO’s website.
Environmental protection, workers’ safety and general compliance are of increasing importance to shipping as well as many other industries. While these new developments described in this newsletter may not alter the regulatory framework immediately in a significant way, they underscore the trend – that ship recycling is becoming a focus area for authorities, NGOs (such NGO Shipbreaking Platform) and media in developed as well as developing states such as India.
 Press release of 13 September 2019, Basel Secretariat (link). It occurred due to the recent ratification of the ban amendment by Croatia.
 The Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and their Disposal, 22 March 1989.
 The Regulation (EC) No. 1013/2006 of 14 June 2006 on shipments of waste, as amended
 Press release of 9 December 2019, see footnote 2 http://gf.omega02.oitudv.dk/viden/nyheder/recent-developments-on-ship-recycling-1995-basel-ban-amendment-enters-into-force-and#_ftnref5supra.