Posted on: 23 May 2023
The commitment made by Bangladesh, a leading ship recycling nation, to ratify the Hong Kong Convention for the Safe and Environmentally Sound Recycling of Ships 2009 (the HKC) in the coming weeks is a seminal moment for the HKC, says William MacLachlan, Partner in a briefing issued by international legal firm HFW.
The criteria for the HKC’s entry into force is complex, requiring (i) not less than 15 states to have acceded to it, (ii) the combined merchant fleets of the accession states to be not less than 40% of the gross tonnage of the world’s merchant fleet and (iii) the combined annual ship recycling volume of the accession states over the past 10 years to be not less than 3% of the gross tonnage of the combined merchant shipping fleets of the same states.
It has proved difficult for the HKC to achieve the third limb of the criteria. The first limb has been met, whilst the second could be met but, to date, has not been for fear of making it still harder to meet the third. However, with Bangladesh’s very significant recycling volumes, if it does indeed ratify the HKC, the way should be clear for one of the major flag states or a coalition of smaller flag states to accede and thus satisfy the second limb of the criteria. With a need to find approximately another 9.89% of the gross tonnage of the world’s merchant fleet to do so, accession by Liberia or the Marshall Islands would be enough. If this happens, the criteria for the HKC’s entry into force will finally have been met and 24 months later it will duly come into force.
It remains to be seen how the saga of the HKC’s entry into force pans out but, regardless of what happens, this development once again puts ship recycling in the spotlight, which is timely given the huge number of vessels expected to be sent for recycling in the coming years.
Whilst the news from Bangladesh is warmly welcomed, ultimately the entry into force of the HKC will not be a panacea to concerns around ship recycling capacity. In the 14 years since the HKC was adopted, the world has moved on in so many ways. The likely patchwork approach to enforcement by flag states and recycling states and the conflict with the approach adopted by the EU and others will do little to simplify the regulatory environment around ship recycling, which, for many, remains one of the least understood aspects of the maritime world.
For the vast majority of ship owners, regulatory compliance is a routine part of the day job and most take their environmental responsibilities seriously. However, whilst many will have in place detailed environmental policies, few of these policies pay serious regard to the subject of ship recycling. Historically, this was perhaps understandable, but not so any more.
In conclusion, MacLachlan says that ship recycling can be a complex and reputationally challenging business but, with care, all ship owners can develop policies and procedures that will enable them to face it with a greater degree of confidence and certainty. With further care and due diligence, deals can be structured and contracts drafted that mitigate the risk and apportion liability appropriately.
Within the confines of maritime law (itself already a niche corner of the legal profession), very few have a genuine understanding of the subject of ship recycling. Having worked with the full range of stakeholders in this sector for over 40 years, HFW is one of very few law firms who can genuinely claim real expertise on the subject of ship recycling. For this reason, HFW is regularly engaged by ship owners, offshore contractors, insurers, lenders and other stakeholders to support them in navigating this complex regulatory environment and ensuring that their risks are managed and their end-of-life vessels are recycled in a compliant and sustainable manner.
Download the full briefing here.
