- The Hong Kong Convention entered into force on June 26, 2025, introducing stricter global rules for ship recycling.
- Major maritime nations and leading recycling hubs are contracting states, expanding its global reach.
- Shipowners, recycling facilities, and lenders face new compliance, operational, and financial obligations.
Three months after its entry into force, the Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships (Hong Kong Convention) is already reshaping practices across the maritime industry. Enforced on June 26, 2025, in 24 contracting states, the Convention introduces new obligations for both shipowners and ship recycling facilities, aiming to improve worker safety while reducing environmental risks linked to shipbreaking.
Strengthening Standards for Ship Recycling Facilities and Shipowners
The Convention requires that ships be dismantled only at authorized recycling facilities within contracting states. To obtain authorization, recycling yards must submit a Ship Recycling Facility Plan, outlining how they will safeguard workers’ health and manage hazardous materials. Additionally, a Ship Recycling Plan must be prepared for each vessel before dismantling begins.The regulations apply to ships of at least 500 gross tons that operate internationally under the flags of contracting states. They extend across the entire lifecycle of a vessel—from design and operation to end-of-life dismantling. Ships must maintain an Inventory of Hazardous Materials throughout their service and undergo final inspections before receiving an International Ready for Recycling Certificate, ensuring compliance prior to recycling.
Expanding Global Reach
The Convention’s reach is significant, as contracting parties include major maritime nations such as Denmark, Germany, Japan, Liberia, Malta, the Marshall Islands and Panama, alongside leading recycling hubs like Bangladesh, India, Pakistan and Turkey. This global participation ensures that both shipowners and recycling facilities must adhere to higher, standardized practices.
In Europe, the Convention coexists with existing frameworks such as the EU Ship Recycling Regulation (SRR) and the EU Waste Shipment Regulation. Both impose strict controls on hazardous materials and recycling practices, particularly for vessels calling at EU ports. Unlike the SRR, which was limited by loopholes such as reflagging vessels before end-of-life, the Hong Kong Convention’s broader adoption—especially by the largest recycling nations—promises to deliver stronger and more uniform standards worldwide.
Economic and Financial Implications
The Convention’s influence extends beyond environmental and labor standards to the financial sector. Many lenders had already incorporated compliance with the Hong Kong Convention or the EU SRR into loan covenants before the treaty came into force. Now, these covenants may require compliance regardless of a vessel’s flag, effectively expanding the Convention’s reach.
Shipowners face higher costs to maintain hazardous material inventories and undergo mandatory surveys, while recycling facilities must invest in compliance to retain authorization. For lenders, particularly those financing older ships or specialized recycling projects, the Convention introduces new considerations in structuring credit and assessing risk.
Key Considerations for Industry Stakeholders
The Hong Kong Convention marks a pivotal shift in global ship recycling practices. Shipowners, lenders and industry participants must recognize its binding obligations and the potential overlap with EU regulations. With its widespread adoption by both maritime and recycling nations, the Convention is set to elevate environmental and safety standards globally while increasing operational and compliance costs.
To navigate this evolving regulatory landscape, stakeholders are advised to work closely with legal and compliance experts, ensuring they meet both international and regional requirements while adapting to the Convention’s lasting impact on the maritime industry.
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Source: Holland & Knight
