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.

Advice on navigating the overlap between the Hong Kong Convention— an International Maritime Organization (IMO) regulation aimed at minimising risk to humans and the environment from ship recycling— and the Basel Convention—an international convention controlling the movement of hazardous and other types of waste between nations—is due to be considered at the Basel Convention’s next Conference of the Parties in April/May 2025.

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.”

Hill Dickinson Partner Mark Johnson and Associate Victor Oliynik welcomed the circular as a positive step that encourages a standardised, state-level approach to the interplay of the two conventions. Speaking to ICS Leadership Insights, they said, “For shipowners, however, the guidance is unlikely to be considered sufficient, as it is guidance to States rather than to individuals or companies. Therefore, the manner in which States (particularly the Flag State of their vessel) implement the Hong Kong Convention and manage [the interplay with the Basel Convention] under applicable national laws will be the key consideration for shipowners.”

Noting the short time between the Basel Convention meeting and Hong Kong Convention’s entry into force, Steen advised that owners and others considering ship recycling to carefully consider their position and plan well ahead while the industry awaits clarification.

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).

“Seatrade, the Eide Carrier, and the Eurus London are examples of the risks that shipowners may face for non-compliance with applicable regulations and are a clear message that scrapping and recycling face increased scrutiny from a range of industry organisations, NGOs, and authorities,” Annie Kalogianni, Senior Claims Executive at NorthStandard, told ICS Leadership Insights.

Non-compliance with applicable regimes may expose insurers themselves by unwittingly insuring non-compliant scrapping voyages, Kalogianni added.

Upon entry into force this summer, the Hong Kong Convention will require applicable ships of over 500 GT trading internationally to carry an Inventory of Hazardous Materials (IHM), an International Certificate on Inventory of Hazardous Materials (ICIHM), and to be recycled at authorised facilities.

Owners of ships nearing their end-of-life will also need to carefully consider EU regulations, warned Johnson. “By way of illustration, a non-EU flagged vessel currently in layup in EU waters and lined up for sale or recycling would not fall within the scope of the EU Ship Recycling Regulation but may well fall within the scope of, amongst other thing, the EU Waste Shipments Regulation No. 1013/2006.

“At the same time, if that same vessel is flagged in a (Non-EU/EEA) state that is party to the Hong Kong Convention, then the owner will also need to comply appropriately with the laws of that vessel’s flag state implementing the Hong Kong Convention.”

Despite the lack of clarity, John Stawpert, Manager (Environment and Trade) in the ICS Marine Department, encouraged the shipping industry to stay course ahead of the Hong Kong Convention’s entry into force. “Although the shipping industry now finds itself in uncertain territory, there is still an opportunity to resolve this quickly if States simply stand by the position agreed at the last MEPC,” he said. “The Hong Kong Convention will ultimately provide the clarification and answers we need.