Shipowners Face Risk of Criminal Liability for Illegal Demolition of End-Of-Life Vessels

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  • Dutch reefer operator Seatrade fined for illegal vessel demolition activity in South Asia.
  • This is highlights stringent end-of-life vessel demolition rule.
  • Shipowners should abide by the rules laid down in the Basel Convention and the Hong Kong Convention.
  • The EU Ship Recycling Regulation is ideal in this regard as it adopts both conventions guidelines.
  • Any deviation or departure from the regulation would be liable to prosecution (fine and imprisonment).  

Recently, the Dutch reefer operator Seatrade were fined 750,000 euros and year long ban from working in the shipping industry, after a rotterdam court held them guilty in illegal vessel demolition activity in South Asian yards, which is a breach of the EU Waste Shipment Regulation. This was the first case where an EU shipowner is found liable for the illegal export of vessels for demolition to South Asian yards, says a report.

Implications of the verdict

This 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 on the demolition of end-of-life vessels

1. The Basel Convention

Any ship owner 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 atransboundary movement of waste’ under the Basel Convention.

Shipowners should be aware that if there is anything onboard the vessel that could be considered hazardouswaste 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.

2. The Hong Kong Convention

This convention was adopted in 2009 for the Safe and Environmentally Sound Recycling of Ships, 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 on 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. 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 aswaste’, 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.

Green Listed Vessels

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 isgreen-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

Thus, in the light of recent developments, the necessity of following the end-of-life vessels rules have become paramount and any departure or deviation from the standard procedures will make shipowners liable to prosecution.

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Source: Mondaq