Bangladesh and Liberia have recently ratified the Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships (the “Hong Kong Convention”). This triggered the criteria for the Hong Kong Convention to enter into force in two years’ time, on 26 June 2025. As the Hong Kong Convention is finally coming into force, Watson Farley & Williams (WFW) Partner Nick Walker and Associate Lauren Buchan, raise some immediate questions on what the global framework for ship recycling will look like.
The Hong Kong Convention was adopted in 2009 and aims to improve the safety and standard of ship recycling so that it does not pose unnecessary risks to human health, safety and the environment as well as managing hazardous materials on a ship. There are now 22 contracting states: Bangladesh, Belgium, Republic of the Congo, Croatia, Denmark, Estonia, France, Germany, Ghana, India, Japan, Liberia, Luxembourg, Malta, the Netherlands, Norway, Panama, Portugal, São Tomé and Príncipe, Serbia, Spain, and Turkey.
Meanwhile, the EU Ship Recycling Regulation (SRR) has been in place since 2013 coming into force incrementally up until 2020. It essentially transposed into EU law the provisions of the Hong Kong Convention. The scope of the SRR is legally enforceable against ships flying the flag of a Member State and has limited application to non-EU flagged vessels calling at a port or anchorage of a Member State.
Questioning how effective the Hong Kong Convention will be on implementation and enforcement, WFW experts note that
A shipowner can largely avoid the SRR by flagging out. When the Hong Kong Convention comes into force, flagging out becomes more limited but is still an option.
Some NGOs have already expressed concerns about the adoption of “flags of convenience” towards the end of a ship’s life and particularly for a voyage to a shipbreaking yard. Sanctions against a ship for violating the Hong Kong Convention requirements are published and enforced on a state-by-state basis by the Administration. By adopting the flag of a state not party to the Hong Kong Convention, sanctions are still avoidable.
WFW adds that approved ship recycling facilities will also be regulated under the Hong Kong Convention. ”There is no guarantee that the facilities approved under the Hong Kong Convention will mirror those on the European List, although the SRR indicates that as part of its review in six months’ time, it will consider including the facilities authorised under the Hong Kong Convention.”
The approval process of facilities under the Hong Kong Convention is currently under question. There has been a proliferation of “statements of compliance” (“SoCs”) being issued by classification societies to confirm that the requirements of the Hong Kong Convention are met. However, the SoCs do not necessarily carry the degree of weight sought by other sector participants – financiers, for example.
The Hong Kong Convention would instead require “competent authorities”, being governmental authorities or authorities designated by a state ratifying the Hong Kong Convention, to approve ship recycling facilities in line with the requirements under the Hong Kong Convention. Arguably, the interpretation of whether those requirements are being met is still subjective, as is the level of expertise of the “authorities” approving the facilities in each jurisdiction.
There is therefore still risk of fragmentation between contracting parties under the Hong Kong Convention in relation to enforcement action, penalties and the standards of recycling facilities.
The Commission’s consultation in early June 2023 did consider whether ships with Hong Kong Convention certification should automatically be included in the European List. Currently, a recycling facility must apply to the Commission to be included in the list demonstrating its compliance with the EU SRR standards.
In view of the above certification practises, the EU – holding its stricter line – might still want to keep in place its own European List of facilities it knows are meeting the required standards; and the ability to remove facilities when they are not meeting those standards, as happened recently with a number of yards in Turkey. This is particularly in view of the Basel Convention’s stance on beaching, discussed below.
However, unless the Commission takes the financial instrument, and expanding the scope of the SRR generally, forward, it will have a hard time preventing ship owners seeking to circumvent its higher standards.
The Basel Convention for the Transboundary of Movement of Hazardous Waste (the “Basel Convention”) and treatment of ships scheduled for recycling as “waste” could assist with circumvention. The application of the EU Waste Shipment Regulation and Basel Convention is not subject to the flag of the ship but its location when it becomes “waste”.
The Basel Convention also prescribes the use of impermeable floors for facilities used for the treatment of ‘waste’ and necessarily, any substances within it. Such restriction is absent in the Hong Kong Convention, casting further doubt on its effectiveness as a global enforcement tool.
It is unlikely that the Hong Kong Convention text will be re-opened to address some of the gaps and developments that have arisen over 14 years – including the questions raised in this note – in the next two years, say the WFW experts
What is clear is that the Hong Kong Convention cannot just be dusted off and implemented without changes in the near future that consider the new global framework regulating ship and waste disposal that it is slotting into.
As informed, WFW will be tracking the Commission’s consultation response in view of its obligation to review the SRR in the next six months, alongside the developments of the Hong Kong Convention, with keen interest and publishing a follow-up article. We hope at that stage we will have more answers than questions, but should you have any questions in the meantime please refer to our key contacts below.
One of the key challenges I encountered was the safe and environmentally sound recycling of ships. While the Hong Kong Convention emphasizes responsible ship recycling practices, the lack of adequate infrastructure in some shipbreaking yards and the absence of globally uniform standards have hindered its effective enforcement. In certain regions, there are limited options for sustainable ship recycling, making it challenging for shipowners to meet the convention’s requirements. / Furthermore, the financial burden of retrofitting existing vessels to meet the convention’s standards is substantial. As the maritime industry faces economic uncertainties, shipowners often grapple with the cost of compliance, which can lead to delays in adopting the necessary changes. Additionally, the article rightly points out that the ratification of the Hong Kong Convention by more countries is essential for its successful implementation. As international shipping involves various nations, a unified global effort is crucial for effectively regulating ship recycling practices. Encouraging more countries to ratify the convention and align their policies will be pivotal in achieving its goals. Based on my personal experience, I agree with the article’s assessment that changes are necessary for the Hong Kong Convention’s successful implementation. Policymakers, industry stakeholders, and international organizations must collaborate to address the current challenges and make the convention more feasible and effective. By doing so, we can create a sustainable future for ship recycling and safeguard our marine environment.