EU ship recycling regulation at critical crossroads as HKC comes into force

"We are living in times of change, and we start with very good news because we are only six weeks ahead of the Hong Kong Convention (HKC) coming into force," Norton Rose Fulbright partner Michael Jürgen Werner told delegates during his keynote address at the 14 May Responsible Ship Recycling Forum 2025 in London. "It took a long time to get the ratifying states together, but now we’re here."

The implementation represents the culmination of efforts dating back to 2009, yet Mr Werner highlighted the complex regulatory entanglement facing the industry. The European Union’s approach to ship recycling sits uncomfortably between the Basel Convention on waste shipment and the incoming HKC, creating significant legal uncertainty.

At the heart of this tension lies the EU’s self-imposed restriction under its Waste Shipment Regulation that prohibits waste exports to non-OECD countries. This presents a fundamental challenge since the majority of global ship recycling capacity exists outside the OECD, particularly in South Asia.

"The EU put themselves into a straitjacket with this because it promised waste shipping only to OECD countries," Mr Werner explained. "But what about the rest of the world, the non-OECD countries? Only a minority of countries are part of the OECD."

While the EU Ship Recycling Regulation (SRR) was developed as a specific framework for vessels, Mr Werner identified a critical roadblock in its implementation. Article 11 of the SRR theoretically allows recycling in non-OECD countries through equivalent agreements, but progress has stalled.

"There needs to be an equivalent agreement between individual non-OECD countries and the EU," Mr Werner said. "I’m not aware that we have any kind of agreement yet. There have been discussions, but we are not there yet, particularly with the three big countries on ship recycling: India, Bangladesh and Pakistan."

Despite nearly 50 facilities from non-OECD countries having applied for EU approval, Mr Werner characterised the Commission’s response as "relatively silent." This regulatory impasse has left shipowners caught between long-established political decisions and practical economic realities.

The implications for non-compliance are becoming increasingly serious. Mr Werner warned of a growing trend of criminal prosecutions in EU member states, citing recent cases in the Netherlands and Germany targeting ultimate beneficial owners of vessels recycled outside approved facilities.

"Both the Netherlands and most recently Germany, out of frustration about what they see as circumvention, started prosecutions," Mr Werner cautioned. "The threat is on the individuals who are the ultimate business owners of ships."

With new EU environmental crime directives strengthening enforcement mechanisms, Mr Werner urged the industry to engage proactively with the incoming EU institutions while preparing for heightened regulatory scrutiny.

"Let’s hope for the best and prepare for the future," Mr Werner concluded. "The EU needs to do its homework now that Hong Kong is in place."