ARTICLE
11 March 2024

BIMCO Submits Document To IMO Regarding Inconsistencies Between Hong Kong And Basel Conventions

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The Baltic and International Maritime Council ("BIMCO"), in conjunction with Bangladesh, India, Norway, Pakistan and the International Chamber of Shipping (ICS)...
Brazil Environment
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The Baltic and International Maritime Council ("BIMCO"), in conjunction with Bangladesh, India, Norway, Pakistan and the International Chamber of Shipping (ICS), submitted a document to the International Maritime Organization ("IMO") on the need to analyze legal inconsistencies between the Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships ("Hong Kong Convention") and the Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and their Disposal ("Basel Convention"). This document was submitted in the scope of the 81st meeting of the Marine Environment Protection Committee (MEPC), which will be held from March 18 to 22, 2024.

Subscribers and BIMCO's concern about possible inconsistencies is based on the fact that hulls of old ships are classified as waste under the Basel Convention and, depending on the flag of the ship, possibly subject to the Hong Kong Convention. However, each convention has a different approach, criteria and applicability to different countries, which can make compliance with both laws challenging.

The Basel Convention was concluded in Basel, Switzerland, on March 22, 1989. The convention was fully internalized by Decree No. 875 of July 19, 1993, and was also regulated by Conama Resolution No. 452 of July 2, 2012, and ratified by Decree No. 4,581/2003.

The main goal of the Basel Convention is to protect human health and the environment from the effects of hazardous waste by prohibiting the transport of hazardous waste between countries, except in cases where both countries are members of the convention, and the transport has been authorized by the importing country and, if applicable, transit countries, in accordance with the convention's procedures. Therefore, it is forbidden to transport waste to countries that are not party to the Basel Convention, or that have not been authorized to do so in accordance with the convention's procedures. In this respect, the procedures for obtaining export authorization from the exporting country depend on the approval of the importing country and transit countries, which can take many months to be issued.

Thus, the Basel Convention focuses on the location of waste, emphasizing the obligations of the exporter of the waste in the exporting country, as well as the importer in the importing country, regardless of the ownership or nationality of the waste. In the case of ships or former ships, it is possible that the exporting country is not associated with the headquarters of the company that owns the ship, nor the flag flown by the ship.

The Hong Kong Convention was adopted at a diplomatic conference held in Hong Kong in 2009, and will come into force on June 26, 2025. At present, Brazil has not ratified the convention, to which Bangladesh, Belgium, Republic of the Congo, Croatia, Denmark, Estonia, France, Germany, Ghana, India, Japan, Liberia, Luxembourg, Malta, Kingdom of the Netherlands, Marshall Islands, Norway, Pakistan, Panama, Portugal, São Tomé and Príncipe, Serbia, Spain, and Turkey are parties.

The aim of the Hong Kong Convention is to reduce unnecessary risks to the environment and human health and safety in the process of recycling ships at the end of their operational lives. In this respect, the environmental and safety aspects of ship recycling are comprehensively addressed, from maintaining an inventory of hazardous products on board and issuing an International Ready for Recycling Certificate ("IRRC") to certifying facilities capable of carrying out recycling in a safe and environmentally correct manner.

Thus, when the Hong Kong Convention enters into force, ships flying the flag of a state that is party to it, or who are operating under its authority: (i) shall carry an inventory of hazardous materials; and (ii) may only be recycled in recycling facilities authorized in accordance with the convention and after obtaining an IRCC, issued by the authority of the state in which the recycling facility is located, and based on a Ship Recycling Plan and an inspection carried out by the administration verifying, among other things, that: (i) the Inventory of Potentially Hazardous Materials is in accordance with the convention; (ii) that the Ship Recycling Plan correctly reflects the Inventory of Potentially Hazardous Materials; and (iii) that the recycling facility to which the ship is destined has a valid authorization.

Therefore, since the Hong Kong Convention is specific to the recycling of ships, it applies to ships flying the flag of, or operating under the authority of, states that are parties to the convention, as well as to recycling facilities located in states that are parties to the convention, without any regard for the point of origin of the ship's final voyage.

At this point, the document submitted by BIMCO and other signatories points out that there is a risk that a ship, upon receiving the IRCC under the Hong Kong Convention, will simultaneously be also considered hazardous waste under the Basel Convention, depending on the location of such former ship.

In these instances, a challenging schedule is imposed. While export authorizations issued on the basis of the Basel Convention may take several months to be issued, the IRCC will be valid for no more than three months. Thus, if it is necessary to obtain an authorization under the Basel Convention, it will be very difficult to obtain such authorization within the valid period of the IRCC.

Another question raised in the document is whether the mere issuance of the IRCC could be understood as classifying the ship as a "former ship," and therefore subject to the Basel Convention. In this case, if the ship is still carrying out voyages and services after the issuance of the IRCC, but before its final arrival at the recycling facility, it could lead to sanctions under the Basel Convention. It is important to note that the procedures of the Basel Convention do not apply to ships in ordinary operation, in accordance with Article 1 of the Convention. In Brazil, Ordinance No. 2/16 clarifies that the procedures of the Basel Convention only apply to the hulls of old ships. The clarification sought by BIMCO and the other signatories is that the issue of the IRCC should not be considered a determining factor for classification as a "former ship".

Finally, the document questions how the application of both conventions can have significant impacts on the same ship depending on where it begins its voyage for recycling. The example used was a Japanese-flagged ship to be recycled in an Asian country, with the IRCC issued by Japan as a state that is party to the Hong Kong Convention. However, it could apply to ships flying the flags of a large part of the fleet in operation today, such as the Marshall Islands, Liberia and Malta. If the country where the ship is located is a member of the Basel Convention— and has adhered to the prohibition on exports to countries that are not members of the Organization for Economic Co-operation and Development (OECD), such as France and Chile—an export permit under the Basel Convention will not be issued. Thus, even if the shipowner has sent the ship for safe recycling and complied with the procedures of the Hong Kong Convention, it would be subject to sanctions under the Basel Convention.

The aim of the document sent by BIMCO to IMO is to clarify the applicability of both conventions, in order to avoid different interpretations by distinct jurisdictions, as well as the application of unreasonable sanctions or the adoption of procedures to circumvent the application of the conventions.

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© Copyright 2024. Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. All rights reserved.

This article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.

ARTICLE
11 March 2024

BIMCO Submits Document To IMO Regarding Inconsistencies Between Hong Kong And Basel Conventions

Brazil Environment

Contributor

Mayer Brown is a distinctively global law firm, uniquely positioned to advise the world’s leading companies and financial institutions on their most complex deals and disputes. We have deep experience in high-stakes litigation and complex transactions across industry sectors, including our signature strength, the global financial services industry.
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