Calls on IMO to solve legal inconsistencies on ship recycling
BIMCO has, together with the International Chamber of Shipping, Norway, Bangladesh, India and Pakistan, urged the International Maritime Organisation (IMO) to solve possible conflicting requirements between the Hong Kong Convention and the Basel Convention ahead of the entry into force of the Hong Kong Convention on 26 June 2025. The potential conflicts may expose shipowners and others to severe consequences, particularly when recycling ships in the major ship recycling countries in South Asia such as Bangladesh, India and Pakistan, even if the ships and facilities comply with the Hong Kong Convention.
In the previous edition of the Shipping Offshore Update (December 2023) we addressed the entry into force of the Hong Kong Convention, which will change the global legal framework on ship recycling and is expected to improve the standards on safe and environmentally sound ship recycling particularly in South Asia. We also addressed the potential conflicts between the Hong Kong Convention and the Basel Convention, which the IMO has now been called on to solve.
What is the problem?
Once the Hong Kong Convention enters into force, it will require ships flagged in contracting states to comply with the Convention, including the requirement that ships must only be recycled at facilities authorised under the Convention. It will also require recycling facilities in contracting states to be authorised by national authorities and to operate in compliance with the Convention.
Once a ship has obtained an International Ready for Recycling Certificate (so-called IRRC) under the Hong Kong Convention, which is valid for three months, there is however a risk that it will at the same time be considered as hazardous waste under the Basel Convention.
The Basel Convention does not directly apply to ship recycling, but controls the movement of hazardous waste across international borders and its disposal. Ships are, however, normally considered as hazardous waste under the Basel Convention when they are heading for recycling. Shipowners must then seek prior informed consent from the exporting, transiting and importing state if they are contracting states, which may take up to 60 days, during which the ships must remain idle in the exporting state. The Basel Ban Amendment goes one step further and prohibits export of hazardous waste to non-OECD states. That would prohibit ships from being exported from an OECD state to be recycled in any of the major ship recycling states in South Asia such as Bangladesh, India, Pakistan, even if the ships and the facilities comply with the requirements of the Hong Kong Convention.
This would entail a risk that the ship could be arrested and can result in severe sanctions for the shipowners and others involved, including several months of imprisonment of key personnel, as has been seen in several cases particularly in the Netherlands and in Norway.
Potential solutions
Some believe that the Hong Kong Convention will take precedence over the Basel Convention since the Basel Convention allows other instruments to supersede if they impose waste management requirements not less environmentally sound than those under the Basel Convention, and also since the Hong Kong Convention is a more recent convention which regulates a more specific subject matter. However, whether the Hong Kong Convention takes precedence is disputed by some, including several NGOs.
The lack of clarity regarding the relationship between the Hong Kong Convention and the Basel regime creates unwanted uncertainty and risks for stakeholders involved, both in respect of owners of ships that are soon to be recycled and the recycling facilities that are now investing to improve their facilities.
A potential resolution could draw inspiration from the EU’s approach to the interface between the EU Ship Recycling Regulation and the EU Waste Shipment Regulation. While the former is based on the Hong Kong Convention and the latter on the Basel regime, the EU has established that the Waste Shipment Regulation does not apply when the Ship Recycling Regulation does. Whether such a solution is feasible in practice in connection with the Hong Kong Convention, remains to be seen. Some NGOs have indeed advocated for the opposite, namely that it should be established that the Basel regime should take precedence over the Hong Kong Convention.
The recent submission to the IMO is in any event a welcome development, as this will hopefully result in a resolution of the issue. Addressing these legal challenges will be essential to realise the full potential and widespread compliance with the Hong Kong Convention as we approach its entry into force in June 2025.