Background: the EWSR
In March 2018 the Rotterdam District Court found reefer operator Seatrade and two of its directors criminally liable for breach of the EU Waste Shipment Regulation (EWSR). The decision was the first time that a shipowner has been held criminally liable under the EWSR for the illegal export of vessels for demolition. It has thus placed focus on the EWSR, its restrictive terms and their implications for the scrapping of vessels.
The EWSR lays down rules for controlling the shipment of waste. It places a trade ban on:
a) exports of waste for disposal to non-EU countries;
b) exports of hazardous waste for recovery or disposal to non-OECD countries; and
c) imports of waste from states that are not part of the EU or OECD.
It also imposes restrictions and control procedures on exports of waste for recovery to non-EU countries.
The EWSR defines its scope territorially. Whether or not it applies to a shipment of waste depends on the “origin, destination and route of the shipment”. However, after 31 December 2018 this will no longer be the case for ships flying the flag of an EU Member State.
What is about to change?
A further Regulation, which will come into application on 31 December 2018, will specifically regulate the scrapping of ships flying the flag of an EU Member State, and exempt them from the EWSR.
From 31 December 2018, Regulation (EU) No. 1257/2013 of the European Parliament and of the Council on ship recycling of 20 November 2013 (ESRR) will become applicable and a ship’s flag, rather than its location, will become of prime importance.
Under the ESRR, ships flying the flag of an EU Member State which fall within the scope of the ESRR will be excluded from the scope of the EWSR. Who will be affected?
The ESRR is applicable to EU Member State vessels of 500 gross tonnage or more operating in international waters on commercial service. Article 12 of the ESRR will apply to ships of the same specification flying the flag of a third country and calling at a port or anchorage of a Member State.
What do the new rules say?
The ESRR provides for the prohibition or restriction on the use or installation of certain hazardous materials. These substances include asbestos, ozone-depleting substances, polychlorinated biphenyls, perfluorooctane sulfonic acid, and anti-fouling compounds and systems.
It provides for each new ship to have on board an Inventory of Hazardous Materials (IHM) identifying certain hazardous materials contained in the structure or equipment of the ship, along with their location and approximate quantities.
New ships (ships substantively built after 31 December 2018) must have an IHM on board before going into service. Existing ships must as far as possible have an IHM on board from 31 December 2020 identifying at least the hazardous materials specified under Annex I of the ESRR.
Non-EU flagged vessels will be required to have an IHM on board from 31 December 2020 if calling at a port or anchorage of an EU Member State. They must also carry a statement of compliance issued by the authorities of the third country whose flag the ship is flying (and modelled on Appendix 3 to the Hong Kong Convention).
The ESRR provides for a number of steps to be completed before a ship can be properly recycled, including the development of a ship recycling plan, the completion of a number of surveys, the making of all necessary notifications, and the issuance and endorsement of inventory certificates. However, the most onerous requirement is that ships may only be recycled in facilities that are set out in what is referred to as the ‘European List’.
The European List
For a ship recycling facility in an EU Member State to be included in the European List, strict requirements for inclusion must be met. The grant of authorisation to feature on the European List must be renewed every five years. Ship recycling facilities in third countries must also meet a number of requirements to be on the European List. In particular they must not accept any ships for recycling unless they are a ship flying the flag of an EU Member State. That is, they must be exclusively for the recycling of EU ships.
There are 21 shipyards included in the List at present. These are all located in the EU and will have exclusive access to the recycling of ships flying the flags of Member States of the Union. However, the European Commission has also received applications from yards located in third countries. The applications are being reviewed and site inspections will be conducted to check their credentials. The Commission will then decide on their inclusion in the List.
What is next?
We will have to see in due course how the new Regulation will be applied in practice. It would appear that if shipowners wish to scrap vessels, they will need carefully to consider the EWSR and ESRR if there is any European connection.
If they wish to scrap their ships in yards outside the EU without restriction, they will now not only need to avoid sailing their vessel within EU waters at the end of its life, but also have to avoid a European flag.
Moreover, European flagged vessels will need to maintain an inventory of hazardous materials from 2020, irrespective of the age of the vessels.