Insights

Co-authored with Dr Rachel Genovese.

Ship recycling has recently taken a front seat both from a commercial perspective and a legal perspective. With an increasing number of ship owners choosing to recycle their vessels, recycling regulations continued to receive more attention.

The regulation of ship recycling in Europe has come a long way since the EU brought into force rules and regulations modelled on the Hong Kong Convention,^[1]. The Hong Kong Convention^[2] and likewise EU legislation is aimed at ensuring that ships, when being recycled after reaching the end of their operational lives, do not pose any unnecessary risks to human health, safety and to the environment^[3]. The EU’s rules and regulations specifically tackling ship recycling are contained in the EU Ship Recycling Regulation^[4] which came into force only recently in December 2019. With the regulation of ship recycling becoming more complex, ship owners seeking to recycle their vessels should ensure strict compliance with all applicable provisions, given that violations in this legal sphere can lead to severe consequences.

The EU Ship Recycling Regulation has full legal effect in Malta as a member state of the EU. However, it is not the Law alone that makes Malta an ideal location from which to organise and facilitate the recycling of ships. The islands’ geographical location in the centre of the Mediterranean together with the business-friendly, can-do approach of the local authorities also plays an important part. Indeed, some may say that it all starts with geography and not with the Law.

Recycling of ships consists in a “chain of events” starting with the consideration and decision of the owner to scrap a vessel to the final event when the vessel is broken up by the scrapyard and the constituent parts of the ship recycled, disposed, demolished, or reused, according to set rules. Although the Maltese Islands themselves do not provide facilities for the recycling of vessels, Malta nevertheless has a role to play, in that the Islands serve as a platform from where the recycling process can be “launched”.

Two Distinct Scenarios

There are two distinct scenarios, very different from each other, where Malta plays a key role in the recycling process. These scenarios have different legal treatments. One scenario relates to those owners that operate non-EU flagged vessels that are in Maltese waters^[5] at the point when the decision is taken to recycle the vessels. The second scenario relates to owners of Malta-flagged vessels, generally, wherever they happen to be, that intend to scrap their vessels.

Non-EU Flagged Vessels situated in Maltese Waters  

In the first category of cases, ship owners of non-EU flagged vessels in Malta are to submit a notification to the competent authorities in the vessel’s (last) port of call (Malta), being the port where the decision to recycle takes place. Owners will be subject to the rules established under the Maltese Waste Management (Shipments of Waste) Regulations^[6] as well as the Waste Shipment Regulation^[7] which is directly applicable in Malta in view of it being an EU Member State. Both Maltese Law and the relative EU legislation adopt or derive inspiration from the Basel Convention^[8]. The process of recycling vessels under the waste management rules, sees the vessels change their designation in Malta from seagoing vessels into ‘waste’, to be afterwards shipped to their final destination outside Malta for demolition, reuse, recycling, and disposal.

Exporting waste from Malta in accordance with the said legislation ensures that ships are demolished conscientiously and with high regard to the protection of the environment and this, in turn, serves to safeguard a companies’ international reputation at a time when environmental responsibilities are high on the agenda. The entire process happens under the careful watch of the Maltese environmental authorities who have, along the way, adopted a favourable approach that is very welcome in a somewhat complex cross-border regulatory environment.

The Basel Convention is internationally accepted by the industry and adopted by a large number of states, most notably Turkey, which provides the main breakage facilities in this part of the world, having built, especially in recent years, a reputation for itself based on reliability and environmental protection. Given that, insofar as the legal process is concerned, both Malta and Turkey derive their respective rules from the same source (the Basal Convention), allowing the interfacing necessary between the two countries to be fluid and healthy: this allows the process to take place in a reasonable time and at a reasonable cost.

On Malta’s part, the islands score high with those owners with vessels in Malta’s vicinity not only because the islands offer good anchorage, but more importantly because the competent Maltese authorities have the required expertise to handle the procedures laid down by the applicable international instruments governing the disposal of waste.

Malta Flagged Vessels

Malta plays a role in the second category of cases not because the vessels would be located in Malta when the decision to recycle them is taken, but because they would be flagged here. In other words, owners of Malta flagged vessels aiming to recycle their vessels must abide with the EU Ship Recycling Regulation. In this scenario, the place where the vessels happen to be when the owners take a decision to recycle them is irrelevant. Under the said regulation, owners who decide to scrap their vessels will be required to notify the Malta Flag Administration and obtain prior Flag approval in accordance with Merchant Shipping Notice 147 of December 2018 and Merchant Shipping Notice 154 of 2019.

The applicable EU Ship Recycling Regulations contain important requirements relating to:

the European List of Approved Ship Recycling Facilities which has been recently updated pursuant to Commission Implementing Decision (EU) 2020/95 of 22 January 2020;

the notification that would need to be sent to the Merchant Shipping Directorate regarding the intended recycling operations;

conducting the Inventory of Hazardous Materials (IHM) Report and having onboard an Inventory Certificate or a Ready for Recycling Certificate (depending on the circumstances); and the development of a Ship Recycling Plan and the surveys that need to be conducted at different intervals prior to the vessels being taken out of service for their eventual recycling.

Conclusion

Gone are the days where vessels are sent to scrap in an unregulated fashion with complete disregard to the environment. True, the procedures are now somewhat complex and occasionally cumbersome but surely that’s a small price to pay when considering the irreparable environmental damage that would otherwise be caused had the industry been permitted to continue to operate in unregulated cocoon.

Dr Jotham Scerri-Diacono is a Partner at Ganado Advocates and Dr Rachel Genovese is a Regulated Industries Advisor at CSB Group.

This article was first published on Ship Management International, on 5 August 2020.

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[1]Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships, 2009.

[2]At time of writing, the Hong Kong Convention has not obtained sufficient ratifications to come into force.

[3]The Hong Kong Convention addresses various issues surrounding ship recycling, including the fact that ships sold for scrapping may contain environmentally hazardous substances such as asbestos, heavy metals, hydrocarbons, ozone-depleting substances, and others. It also addresses concerns raised about the working and environmental conditions at many of the world’s ship recycling locations.

[4]EU Regulation No 1257/2013 of the European Parliament and the Council, of 20 November 2013 on ship recycling and amending Regulation (EC) No 1013/2006 and Directive 2009/16/EC.

[5]Within Maltese territorial seas or internal waters, vide the Law of the Sea Convention, UNCLOS III and Territorial Sea and Contiguous Zones Act, Chapter 226 of the Laws of Malta.

[6]Legal Notice 285 of 2011, as amended by Legal Notice 440 of 2011, which is based on the Basel Convention and transposes the provisions of Council Regulation (EC) No 1013/2006 on shipments of waste “in order to establish a system of supervision and control of shipments of waste, so as to guarantee protection of human health and the environment”.

[7]Regulation (EC) No 1013/2006 of the European Parliament and of the Council of 14 June 2006 on shipments of waste.

[8]The Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and Their Disposal, of 22 March 1989. The Basel Convention has been ratified in Malta.