Ship owners beware - Developments in the framework for recycling of ships

| Insight

Over the last few weeks, significant media attention has been given to the practice of recycling ships at facilities that do not sufficiently ensure the protection of health, safety and the environment. The regulations governing recycling of ships tend to be defined by international legal instruments and may be difficult waters to navigate. Here is a brief overview.

There are three sets of rules governing the recycling of ships. The regulation with the widest application is currently the Basel Convention, which regulates the transboundary movement and disposal of hazardous waste. As ships about to be recycled may both carry and contain hazardous waste, the convention will in such cases apply. It is however not specifically tailored for the purpose of regulating ship recycling and has been rather ineffective in doing so. One of the reasons is that it is somewhat unclear whether these rules apply to sale of fully operational and seaworthy vessels with class and certificates maintained, and in particular in respect of vessels being sold  to «cash buyers». Governments seeking to enforce the ban on transboundary movement of waste will then have a greater challenge arguing that the ship was «waste» when exported.

Two more recent initiatives from the International Maritime Organization and the EU, takes a more aggressive approach. The IMO initiative is the Hong Kong convention, which will enter into force 24 months after ratification from 15 states representing a combined 40 % of the world merchant fleet tonnage and a maximum annual recycling volume of 3 % thereof. Currently we are quite far off this threshold, but the expected accession of India is by many considered a major step towards reaching the required target.

The EU initiative is the Ship Recycling Regulation, which was adopted in November 2013 and is expected to fully enter into force within 2019. Broadly speaking, this instrument implements a very similar regulation as the Hong Kong convention, but only applies to EU flagged vessels. Its stated purpose is to facilitate early ratification of the Hong Kong convention.

These two instruments takes a cradle to the grave approach to ship recycling with the implementation of in particular three important sets of rules:

First, the regulations restricts or prohibit the use of certain hazardous materials in the construction of new buildings. Secondly, vessels are required to carry on board an inventory of hazardous materials specifying the location and quantity of such materials. Finally, vessels subject to the rules may only be recycled at pre-approved facilities, which are required to comply with certain HES-standards. The EU has already approved several yards which comply with the rules, but capacity is still lacking, in particular for larger vessels. The capacity issue may prove to be a challenge considering the numbers of vessels which are anticipated being recycled in the years to come resulting from various regulations coming into force.

The above is only a brief outline of a relatively new and quite complex set of rules with several nuances both in respect of scope of application, time limits, as well as the specific criteria required. Ship owners would be well advised to stay ahead of the curve and ensure compliance, regardless of their vessels’ flag and age.