09 July 2017

Legal status of shipbreaking:

When a ship has reached the end of its life, its owner is faced with the decision of how to dispose of it in a manner that is both commercially viable and environmentally sustainable. The controversial practice of beaching vessels in less-developed countries has prompted initiatives to tighten regulations on the recycling of ships. This update looks at the existing legal framework and future proposals.

The Basel Convention (Convention on the Control of Transboundary Movements of Hazardous Wastes and Their Disposal 1989) is the only internationally recognised legal framework currently in force concerning the recycling of ships. The Basel Convention does not specifically apply to the recycling of ships, but regulates the cross-border transportation of hazardous waste. Since many older ships contain materials and substances which are categorised as hazardous waste, the Basel Convention has a significant impact on the recycling of ships.

In respect of ship recycling, one of the most important rules under the Basel Convention in practical terms is the ban on the export of waste from developed countries to less developed countries. This rule is set out in an addendum to the Basel Convention which is not yet in force, but has already been implemented by a number of signatories. However, it is unclear under the Basel Convention when a ship is considered to be classified as waste.

The lack of clear and comprehensive regulation on the recycling of ships inspired the Hong Kong Convention (Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships 2009), which was the result of nine years of negotiations leading up to a diplomatic conference held in Hong Kong in 2009. Eight years later, the Hong Kong Convention still has not entered into force because of an insufficient number of ratifications. It is uncertain when it will enter into force, but when it does it will represent a significant shift towards stricter regulation on the recycling of ships.

The Hong Kong Convention covers the design, construction, operation and preparation of ships for recycling, as well as the operation of ship recycling facilities. The aim of the convention is to ensure that ship recycling is completed in a safe and environmentally sustainable manner. To ensure compliance, the Hong Kong Convention also provides for the establishment of an enforcement mechanism, incorporating certification and reporting requirements.

Ships being recycled will be required to carry an inventory listing hazardous materials, which will be specific to each ship. An initial survey will be required to verify the inventory of hazardous materials, followed by intermediate renewal surveys and a final survey before recycling. Ship recycling yards will be required to provide a ship recycling plan specifying the manner in which the individual ship will be recycled, according to the particulars of the ship and its inventory.

Due to the uncertainty surrounding when the Hong Kong Convention will enter into force, the European Union has enacted its own regulation, the EU Ship Recycling Regulation,(1) which applies to vessels flying EU flags or calling at EU ports. The Ship Recycling Regulation entered into force on December 30 2013 and is broadly similar to the Hong Kong Convention, but with the notable exception that it explicitly prohibits the practice of beaching, stipulating that recycling must be completed in "built structures".

Ship recycling is something which owners predominantly need to consider towards the end of a ship's life, but given the introduction of much tighter regulations in the foreseeable future, the disposal of ships will need a greater amount of planning, which means it will be much harder for owners to make last-minute decisions.

For further information on this topic please contact √ėyvind Axe or Mattias Grieg at Wikborg Rein by telephone (+47 55 21 52 00) or email (axe@wr.no or mgr@wr.no). The Wikborg Rein website can be accessed at www.wr.no.

Source: international law office. 05 July 2017

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