The world of shipping is only a few months away from the Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships coming into force, on Thursday, 26 June 2025. However, clarification on the legal framework for shipowners and Flag States to recycle vessels is yet to be confirmed, and is not expected to be revealed until mere weeks before the new convention takes effect, ICS highlights in the latest Leadership Insights newsletter.
IMO Circular HKSRC.2/Circ.1 “Provisional guidance on the implementation of the Hong Kong and Basel Conventions with respect to the transboundary movement of ships intended for recycling” was approved by the Marine Environment Protection Committee’s 82nd session (MEPC 82) in October 2024. The meeting noted that “additional work was required to improve the guidance in order to provide further legal clarity and certainty, in cooperation with the Secretariat of the Basel Convention.”
Herman Steen, Partner at Wikborg Rein, told ICS Leadership Insights that once a ship has obtained an International Ready for Recycling Certificate (IRRC) under the Hong Kong Convention, which is valid for three months, there remains a risk that it will at the same time be considered hazardous waste under the Basel Convention.
In such a situation, owners would be exposed to criminal liability and arrest of the ship while still trading during the three month period or when they have sent their ship for recycling in compliance with the provisions of the Hong Kong Convention in any of the major recycling states in South Asia.
Steen said there are some experts who believe that the Hong Kong Convention will take precedence if the waste management requirements are equally or more environmentally sound than those under the Basel Convention. This opinion is compounded by the fact that the Hong Kong Convention is also a more “recent convention which regulates a more specific subject matter”, Steen added. “This is however disputed by many.”
The challenges of navigating regulations on ship recycling and the international shipment of waste have been highlighted in Europe, where high-profile cases have ended in settlement – and even prison for one shipowner.
The Eurus London case focused on shipowner liability for injuries sustained at a Chittagong recycling yard and was settled out of court. In 2024, shipowner Seatrade settled a case with Dutch authorities regarding the export of four ships for scrapping in 2012, agreeing to pay EUR5.7m including fines for violation of rules including the European Waste Shipment Regulation, which implements the Basel Convention and its Ban Amendment within the EU.
Shipowner Georg Eide was sentenced to six months in prison for attempting to export Eide Carrier for scrapping by selling the ship to new owners, and cash buyer Wirana was fined NOK7mn (EUR 598k).
The shipping industry faces regulatory uncertainty as the Hong Kong Convention nears enforcement. Experts welcome the IMO guidance but note it primarily targets states, leaving shipowners reliant on how flag states implement the rules.
Furthermore, while parts of the shipping industry welcome the recognition of beaching yards under the HKC, the European Union remains cautious. The EU has yet to announce its approach to enhancing the EU Ship Recycling Regulation (EU SRR), which was introduced in 2013 to prioritize sustainable and safe waste management.
The enforcement of the HK Convention represents a significant milestone for sustainable ship recycling. The NGO Shipbreaking Platform underscored the urgency of enforcing stricter regulations, revealing that 80% of the global tonnage scrapped in 2023 was dismantled under substandard conditions, posing severe environmental and human rights risks. With the HKC’s implementation, these concerns will be addressed through standardized procedures and compliance requirements.
With limited time before the Convention takes effect, stakeholders are urged to plan ahead. Recent legal cases highlight the risks of non-compliance, including fines and prison sentences. Upon enforcement, ships over 500 GT must carry hazardous material inventories and be recycled at authorized facilities.
Despite uncertainties, industry leaders encourage adherence, expecting the convention to provide much-needed clarity.
Shipowners now face an intricate web of overlapping regulations. BIMCO, along with other maritime organizations, has raised concerns about potential conflicts between the HKC and the Basel Convention on the Control of Transboundary Movements of Hazardous Wastes.
BIMCO submitted a paper ahead of the MEPC 81 meeting in March 2024, urging the IMO to provide clarity and ensure that compliance with the HKC does not inadvertently lead to violations of the Basel Convention. In response, BIMCO launched the Ship Recycling Alliance in November 2024 to promote safe and sustainable ship recycling practices.
Key guidance for compliance
To navigate the evolving regulatory landscape, DNV offers the following recommendations:
- Assess the regulatory framework: Shipowners should conduct a thorough review of all applicable regulations, obligations, and commitments affecting their company.
- EU-based shipowners: Companies within the EU should develop sustainability due diligence policies in accordance with the EU Corporate Sustainability Reporting Directive (CSRD). A separate, well-defined ship recycling policy is advisable.
- ESG Reporting: Shipowners should include circular economy (ESRS E5) and social standards for workers (ESRS S2) in their Environmental, Social, and Governance (ESG) reports. These should cover ship recycling and worker rights at recycling facilities.
- Guidance for non-EU shipowners: While not bound by EU laws, shipowners outside the EU should align their ship recycling policies with the OECD Guidelines for multinational enterprises to ensure best practices.
