Insurance aspects of wrecks and recycling of ships from an environmental sustainability perspective

Abstract: This thesis is about, as the title reveals, wrecks and recycling of ships. The selected angles are economic and legal aspects of the ship that has become a wreck or sent for recycling. When it comes to wreck the thesis is primarily based on the legal status of the wreck and how the shipowner can get indemnified through their insurance for a total loss. This paper concerns the two subsections of total loss, actual total loss and constructive total loss under the Marine Insurance Act 1906 and associated rules for abandonment and notice of abandonment. The conclusions on the legal definition of the wreck when compared to the definitions of total loss is that they do not entirely match, this is described by the relevant case law in this area, resulting in the conclusion that it depends on the circumstances of each case. In connection with the facts of each case, one can get the guidance from the old definition of a total wreck said to be the difference between whether there is a total loss or partial loss. The part about the ship recycling mainly concerns the possibilities of an environmentally sustainable recycling. The Convention used today is the Basel Convention even though this convention was construed to deal with transboundary movements of hazardous waste, but there is also a convention designed exclusively for ship recycling called the Hong Kong Convention that has not yet entered into force. The Hong Kong Convention sets higher technical requirements for recycling facilities, which are contended to be needed for recycling to be environmentally sustainable. The EU is concerned about the negative aspects linked to the recycling of European ships, its Waste Shipment Regulation does not have the desired effect, and therefore work have commenced with a new regulation on ship recycling. This new proposal seeks to introduce the technical requirements from Hong Kong Convention by establishing an EU list of facilities that meets these and even further requirements. Under the current Waste Shipment Regulation, European ship are not allowed to be recycled outside of the OECD, but this would be allowed in the new proposal as long as they are recycled at a facility that are obtained on the EU list, In working with the new proposal, there have been proposals to include a financial mechanism with the objective to make the environmentally sustainable recycling competitive. The options fund and insurance as a financial mechanism is therefore looked into even though the European Parliament recently voted down to have a financial mechanism in the regulation on ship recycling.