A Rotterdam court has found Dutch reefer
operator Seatrade and two of its directors criminally liable last week for
illegally selling vessels for demolition in South Asian yards in breach of the
EU Waste Shipment Regulation.
The decision appears to be the first time an
EU shipowner has been held criminally liable for the illegal export of vessels
for demolition to South Asian yards.[1] The Dutch public prosecutor brought the
cases against Seatrade over historic sales of vessels for demolition in India,
Bangladesh and Turkey in 2012. The sales of the vessels took place via cash
buyers. All vessels departed from Rotterdam and Hamburg on their last voyage to
the South Asian yards.
Seatrade and its directors were fined up to
750,000 euros and the directors have been banned from working in the shipping
industry for a year. The public prosecutor also sought prison sentences for the
directors, but the court did not impose these.
The decision sets a precedent in the
Netherlands. It makes it clear that shipowners who sell vessels for demolition
in South Asian scrap yards in breach of the EU Waste Shipment Regulation risk
facing criminal liability. It is the first successful prosecution of a
shipowner for non-compliance with the EU Waste Shipment Regulation, which
prohibits the export of hazardous waste to non-OECD countries, and bans the
export of waste for disposal.
Importantly, the case reflects the political
climate and the greater interest shown by European countries in environmental
issues and may be followed by other European countries. Cases of illegal demolition of vessels are
currently being investigated by national authorities, such as the UK and
Norway. In Norway for example, the vessel the MV “Tide Carrier” was arrested by
the Norwegian environmental authorities, and these have been investigating its
owners for illegally selling the vessel to a South Asian yard for demolition.
Shipowners should therefore take greater
notice of the regulations when considering demolition.
International law and the demolition of
end-of-life vessels
Any shipowner considering selling an
end-of-life vessel for demolition should first consider whether the sale
complies with the Basel Convention. An end-of-life vessel will likely be
considered as “waste” under the Basel Convention, since waste is defined broadly
to include ‘substances or objects which are disposed of or are intended to be
disposed of or are required to be disposed of by the provisions of national
law’. Therefore, a sale of a vessel for demolition is likely to be considered a
‘transboundary movement of waste’ under the Basel Convention.
Shipowners should be aware that if there is
anything onboard the vessel that could be considered ‘hazardous’ waste under
the Basel Convention or under the national laws of the destination country of
the vessel being scrapped, the country of import and any countries of transit
will need to be notified of the movement of waste. In addition, the countries
of import and transit will need to give their consent for the movement of
waste.
The Hong Kong Convention for the Safe and
Environmentally Sound Recycling of Ships was adopted in 2009, but has still not
been ratified by enough shipowning and scrapping countries so the Basel
Convention remains the main
international regulation.While an increasing number of demolition yards have
been obtaining certificates and statements of compliance with the Hong Kong
Convention, shipowners should be mindful that the Hong Kong Convention is not
yet in force. There may be different
certification providers and their standards of issuing the certification may
not be entirely clear. Shipowners should therefore not decide on demolition
yards solely based on a yard’s statement of compliance with the Hong Kong
Convention.
EU rules and the demolition of end-of-life
vessels
The Dutch case brought against Seatrade
concerned the illegal sale of a vessel in breach of the EU Waste Shipment
Regulation (the “Regulation”) that applies to ship demolition.
EU Shipowners with vessels trading in EU
waters are advised to consider whether the sale of the end-of-life vessel for
demolition complies with the Regulation. Importantly, the Regulation applies
also to vessels of all flags that trade within EU waters – not just EU-flagged
vessels.
Under the Regulation ship demolition of
end-of-life vessels moving in EU waters is likely to be considered as ‘waste’,
which is defined as ‘any substance or object which the holder discards or
intends or is required to discard’. Shipowners should note that it is enough
for an intention to discard the end-of-life vessel to arise for the vessel to
be considered ‘waste’ under the Regulation.
If the intention to discard arises when the
vessel is in EU waters, it is possible that the intention to scrap the vessel
will make it ‘waste’ for the purposes of the Regulation. If the end-of-life
vessel leaves an EU port destined for demolition in another country, the sale
of the vessel is likely to be considered a shipment of waste; whether within
the EU, exported from the EU to a third country, in transit through the EU to a
third country, or imported into an EU state from a third country.
Shipowners should note that under the
Regulation, the shipment of waste for disposal is prohibited from EU countries
to non-EU, and non-OECD countries. The shipment of hazardous waste for recovery
from the EU to non-EU and non-OECD countries is also prohibited.
There may be the possibility that the
end-of-life vessel is a ‘green-listed’ vessel destined for recovery. If it is
destined for recovery in an OECD country, it will be subject to the written
notification and consent procedure under the Regulation. If the vessel is
‘green-listed’ waste destined for recovery to a non-OECD country, such as
India, Pakistan or Bangladesh, it is important to check whether such countries
have notified their position with the EU authorities as to the requirements of
the import of such waste.
EU Shipowners with vessels trading in EU
waters should therefore be aware that sales of vessels for demolition in a
non-OECD country may be considered as shipment of waste for disposal, and
therefore be prohibited by the Regulation. The decision of the Rotterdam court
makes it clear that if a vessel is sold for demolition in a non-OECD country in
breach of the Regulation criminal liability including fines and possible imprisonment
for the directors making those decisions may follow.
Ship Recycling Regulation
While the Hong Kong Convention is not yet in
force, the EU has adopted the “Ship Recycling Regulation”, which effectively
implements the Hong Kong Convention.
The Ship Recycling Regulation is effective,
but at the time of writing is not yet applicable. The Ship Recycling Regulation
applies to vessels flying the flag of an EU Member State. Vessels flying the
flag of an EU Member State may be recycled only in safe and sound ship
recycling facilities included in the European List of ship recycling
facilities, which currently contains 18 shipyards, all located within the EU.
The EU has also seen applications from yards in India, Turkey, China and the US
hoping to be approved and included on the European List.
Conclusion
Recent increased national investigations into
sales of end-of-life vessels for demolition in South Asian yards, and in
particular the retrospective criminal charges brought against Seatrade
emphasise the need for shipowners to be extremely careful when selling ships
for demolition. In addition, a voluntary alliance of banks in northern Europe
and Scandinavia has been encouraging their shipowner clients to declare their
policies on scrapping to encourage best practice of demolition of end-of-life
vessels. Given banks’ reputational risks, this may become an even more
important consideration in future financings for shipowners.It is advisable for
shipowners to seek legal guidance on the laws applicable to their particular
proposed sale before executing the same or face the consequences.
Source: jd supra. 22 March 2018
