IMO addresses fears that ­owners and others who comply with the Hong Kong Convention may be in legal jeopardy

The Hong Kong Convention was adopted in 2009 in response to growing concerns about recycling practices particularly in South Asia, where ships are often rammed up on beaches at high tide and broken up in the tidal zone in ways that are unsafe for the workers and release pollutants into the environment. 

An issue which has surfaced is that once the Hong Kong Convention enters into force, which will change the global legal framework for ship recycling, there are situations where recycling in compliance with the Convention may be a breach of the Basel Convention, which may result in severe sanctions.

For insurers these issues are relevant when insuring the last voyages, as well as in casualty scenarios where the vessel becomes a constructive total loss and/or where there is a wreck removal.

Hong Kong Convention

The aim of the Hong Kong Convention is to ensure the safe and environmentally sound ship recycling on a global basis. 

It adopts a cradle-to-grave approach by setting out extensive regulations that ­apply from when the ship is designed until recycling. 

The Convention applies to ships flagged in contracting states, which will be ­required to carry an Inventory of ­Hazardous Materials (IHM) and will only be allowed to be recycled at ­authorised ­facilities. For the purpose of the ­Convention, ships include not only ­conventional ships but also floating ­platforms, jack-ups, FPSOs and FSOs.

The Convention also applies to recycling facilities located in contracting states, which must be authorised by national authorities. The facilities are required to have in place a Ship Recycling Facility Plan (SRFP) and also, in each project, to develop a Ship-Specific Recycling Plan (SRP). National authorities will be responsible for ensuring that recycling facilities under their jurisdiction comply with the requirements of the Convention.

Since the EU believed that the entry into force of the Hong Kong ­Convention was taking too long and that it was not strict enough, it enacted the EU Ship ­Recycling Regulation 2013, which ­implemented the Hong Kong Convention on an EU/EEA level. It also introduced ­additional requirements, most importantly that EU/EEA flagged vessels shall only be recycled at facilities which are approved by the EU Commission and placed on the so-called European List. 

Once the Hong Kong Convention enters into force, recycling facilities and ships flagged in contracting states outside of the EU/EEA will also need to comply with the Convention.

The entry into force of the Hong Kong Convention represents an important commitment by the international community towards sustainable and responsible ship dismantling practices, especially as it ensures important and binding minimum standards applicable to facilities in most of the countries where the problems related to recycling have been greatest.

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.

The Basel Ban Amendment goes further by prohibiting export of hazardous waste to non-OECD states.

The Basel Convention and the Ban Amendment were implemented in the EU and EEA under the EU Waste Shipment Regulation 2006. 

The rules are very strictly enforced, as has been seen in a number of countries, including in Norway, where the owners of the “Tide Carrier” was sentenced to 6 months in prison for having assisted a cash buyer in attempting to export the ­vessel from Norway for recycling at a beach in Gadani, Pakistan. 

What is the problem?

Once a ship has obtained an International Ready for Recycling Certificate (IRRC) under the Hong Kong Convention, which is valid for three months, there is a risk that it will at the same time be ­considered as hazardous waste under the Basel Convention.

The owners would therefore be exposed to criminal liability and arrest of the ship while still trading during this period or when they have sent their ships for recycling in compliance with the provisions of the Hong Kong Convention in any of the major recycling states in South Asia.

Some believe that the Hong Kong Convention will take precedence over the Basel Convention if the Hong Kong Convention impose waste management requirements which are no 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. This is however disputed by many.

Following the submission by BIMCO, the International Chamber of Shipping, ­Norway, Bangladesh, India and Pakistan, the IMO Secretariat has drafted a provisional guidance for state parties to the Hong Kong Convention, which was approved early October 2024 at the 82nd session of the IMO’s Marine Environment Protection Committee.

The provisional guidance stresses that interpretation of treaties is the sole ­prerogative of the state parties, but ­recommends that states that are parties to both ­conventions should consider notifying the Basel Convention Secretariat that the Hong Kong Convention shall take precedence in respect of ships intended to be recycled in accordance with the Hong Kong Convention.

The provisional guidance has been forwarded to the Basel Convention ­Secretariat and is expected to be discussed at the Conference of the Parties to the Basel Convention at their 17th meeting in April and May of 2025, which is just a few weeks before the Hong Kong Convention enters into force.

Whether this results in a clarification before the entry into force of the Hong Kong Convention remains to be seen. In the meantime owners and others are well advised to carefully consider their position and plan well ahead in situations where recycling is on the agenda.