The Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships 2009 (the Hong Kong Convention) is scheduled to come into force on 26 June 2025, having received the requisite number of ratifications in June 2023.
In November 2023, we reported on the key implications of this development for the international ship scrapping industry. Since then, the following developments are worth noting.
Pakistan ratifies Hong Kong Convention
On 30 November 2023, Pakistan acceded to the Hong Kong Convention, becoming the 23rd country to ratify the Convention. This is a significant development because Pakistan is a major ship recycling nation, reportedly the world’s fourth largest shipbreaking nation. The Convention has now been ratified by all the major ship recycling nations. BIMCO estimates that around 95% of the world’s recycled tonnage is recycled by Turkey, Bangladesh, India and Pakistan and, therefore, almost all ship recycling will in due course have to comply with the requirements of the Hong Kong Convention.
While the UK has not yet ratified the Hong Kong Convention, it is expected to do so before the Convention comes into force.
EU agreement on hazardous waste shipment
On 17 November 2023, the European Parliament and the European Council agreed to amend the EU Waste Shipment Regulation in order to allow exports of hazardous waste, including hazardous waste in EU-flagged ships, to non-OECD countries if the facility is an EU-approved ship recycling facility and if it can demonstrate sustainable management and disposal of the hazardous waste in line with EU regulations.
The export of hazardous waste in EU-flagged ships is currently prohibited under the Basel Convention on transboundary movements of hazardous waste that is given effect in the EU by the Waste Shipment Regulation. The proposed amendment is expected to be ratified by the end of 2023. It is thought that this amendment could lead the way for more non-OECD facilities to be included on the EU List of approved facilities, which would provide shipowners with EU-flagged vessels with a wider choice of facilities for decommissioning tonnage.
EU evaluates Ship Recycling Regulation
Following a public consultation that ended in June 2023, the European Commission has been evaluating the EU Ship Recycling Regulation, particularly with a view to whether its provisions need to be further aligned with the provisions of the Hong Kong Convention. The Commission is expected to provide its evaluation by 31 December 2023. Depending on the outcome, the Commission might launch a revision process.
EU updates list of approved ship recycling facilities
On 6 December 2023, the European Commission adopted the 12th edition of the European List of Ship Recycling Facilities. The List names the shipyards that are qualified to dismantle European flagged ships as required by the Ship Recycling Regulation. The European List now contains 45 ship recycling facilities, including 35 yards in Europe (EU, Norway and UK), nine yards in Turkey and one yard in the USA.
UAE updates its ship recycling regulations
The UAE is enacting a new maritime law that is due to come into force on 29 March 2024. Part of the new maritime code is an updated and comprehensive ship recycling regulation that expressly prohibits beaching activities.
The regulation is reported to be similar in its requirements to the EU Ship Recycling Regulation and will apply to all ships above 500 gt that are UAE-flagged and to foreign ships that are recycled in the UAE. UAE-flagged newbuilds will be required to have onboard an inventory of hazardous materials.
Ships that come under the UAE regulation must only be recycled in facilities approved by the UAE maritime administration, whether these are UAE or foreign yards. In addition, foreign vessels destined for beaching or substandard recycling practices will not be allowed to enter UAE waters.
Prosecution
In November 2023, it was reported that the Hamburg Public Prosecutor had charged three individuals in connection with the sale of a container ship that was recycled in India in 2017 in contravention of the EU Waste Shipment Regulation. The ship’s final voyage was from Italy to Alang. The ship was allegedly sold to a cash buyer in Hong Kong with knowledge that it would be scrapped in India under unsatisfactory environmental conditions.
This follows on from the fines issued by the Rotterdam Court in July 2023 in relation to the sale of two vessels for demolition in a Turkish yard in 2014 and 2015 in breach of notification procedures under the Waste Shipment Regulation. The vessels were located outside European waters at the time of sale and therefore there was no prosecution in relation to the sale itself.
As discussed above, under the Waste Shipment Regulation, it is currently prohibited to dispose of waste originating in the EU in a non-OECD country although this is expected to change when the proposed amendment to the Regulation comes into force. However, the amendment will not affect cases where the conditions in the non-OECD facility do not comply with EU requirements and are not included on the EU-approved list. Such prosecutions will not, therefore, automatically go away.
Poseidon Principles
The Poseidon Principles are a global framework for responsible ship finance. It has been suggested that the Principles will be extended to ship recycling once the Hong Kong Convention comes into force. In the meantime, 13 banks have signed up to the Responsible Ship Recycling Standards initiative.
Banks that finance the shipping industry are increasingly adopting policies that require them to only finance shipping companies that adhere to a responsible ship recycling and dismantling policy. Among other things, they may require their clients to have an inventory of all hazardous materials onboard ships financed by them and to only recycle their ships at facilities on approved lists.
For further information, please contact:
Trudie Protopapas, Hill Dickinson
trudie.protopapas@hilldickinson.com
