Managing Conflicts of Interest in Bangladesh’s Ship Recycling Sector

Bangladesh’s ship recycling industry operates under intense national and international scrutiny. The sector is economically vital, supplying a significant share of the country’s steel and supporting thousands of jobs, yet it also sits at the center of global debates over environmental protection, labor safety, and regulatory credibility. As Bangladesh seeks deeper integration into international maritime markets, the strength and independence of its regulatory institutions have become as important as technical compliance itself. The Ship Recycling Act 2018 established the Bangladesh Ship Recycling Board (BSRB) as the statutory authority responsible for licensing, monitoring, supervision, and enforcement across the industry. The creation of a centralized regulator marked a significant policy step toward modernization and alignment with global standards. However, one structural feature of the Act has generated growing governance concerns: the inclusion of representatives from the regulated industry itself within the regulator’s decision-making body.

Under the Act, three representatives from ship recycling yard owners, including the President of the Ship Recycling Association, serve as members of the fourteen-member Board. At the same time, the quorum requirement for Board meetings is set at only four members. This institutional design raises difficult questions under constitutional principles, administrative law norms, international governance standards, and the expectations of key trading partners, particularly the European Union. The quorum rule reveals a significant institutional vulnerability. Because only four members are required for a valid meeting, it is theoretically possible for the three industry representatives, together with a single additional member, to constitute a quorum capable of influencing regulatory decisions. Even if such a situation never materializes in practice, the structure itself creates the possibility of disproportionate influence by regulated entities over regulatory outcomes.

This risk reflects what governance scholars describe as regulatory capture, a condition in which regulators become overly influenced by the interests they are meant to oversee. Capture does not necessarily imply misconduct or bad faith. Rather, it arises when institutional arrangements blur the boundary between regulator and regulatee, weakening public confidence and potentially shifting regulatory priorities away from the broader public interest. In sectors involving environmental protection and worker safety, perceptions of independence are often as important as actual enforcement outcomes. Regulatory legitimacy depends not only on competence but also on visible impartiality.

From a constitutional perspective, Bangladesh’s governance framework places strong emphasis on equality before law, fairness, and public accountability. Article 27 guarantees equality before law, while Article 31 protects the right to lawful and fair treatment. When regulated entities hold formal decision-making roles within the regulatory authority, questions arise about whether all industry participants are subject to oversight on equal terms. Article 21 further establishes that persons exercising public authority must serve the Republic and its citizens. Members of a statutory regulatory board clearly exercise public power. Embedding individuals with direct commercial interests within such a body risks institutional tension between private incentives and the constitutional expectation of impartial public service. Bangladesh’s administrative law tradition, rooted in common law principles, reinforces this concern through the doctrine of natural justice. The maxim nemo judex in causa sua prohibits anyone from acting as a judge in their own cause. Importantly, the rule does not require proof of actual bias. A reasonable apprehension of bias is sufficient to undermine the legitimacy of decisions.

Where ship recycling yard owners participate in decisions affecting licensing conditions, inspections, compliance requirements, or enforcement priorities that influence their own operations or those of competitors, the conflict becomes structural rather than incidental. The issue is compounded by the absence of explicit statutory safeguards. The Act and accompanying rules contain no comprehensive provisions requiring disclosure of financial interests, mandatory recusal thresholds, or prohibitions on participation in decisions involving direct pecuniary stakes. In modern regulatory governance, such omissions are widely viewed as design weaknesses rather than procedural gaps.

Government authorities often argue that stakeholder representation is common across statutory bodies in Bangladesh. Examples are drawn from organizations such as Water Supply and Sewerage Authorities (WASA), where consumer representatives may participate, or the University Grants Commission (UGC), where academics serve as members. However, these comparisons are imperfect. Consumer representatives typically do not derive direct financial gain from tariff decisions, nor do academics on higher-education bodies receive immediate commercial benefits from regulatory outcomes. The relationship between participation and personal economic interest is fundamentally different.

The ship recycling sector is relatively small and economically concentrated. Ownership groups are limited in number, and regulatory decisions can have direct commercial consequences for individual operators. In such a setting, embedding industry owners within the regulator increases the intensity of influence in ways not present in more diffuse sectors. Stakeholder input remains valuable, but international governance practice generally distinguishes consultation from decision-making authority. Expertise may inform regulation without compromising institutional independence.

Comparative experience supports this distinction. In India, ship recycling activities at Alang operate under the Gujarat Maritime Board and related regulatory frameworks. Industry consultation plays an important role through advisory processes and structured engagement mechanisms. However, ship recyclers themselves are not mandated members of the regulatory authority responsible for enforcement decisions. This separation reflects a governance principle widely adopted across jurisdictions: industry knowledge should guide policy discussions, but regulatory authority must remain institutionally independent to maintain credibility.

Bangladesh is a party to the Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships, 2009. The Convention requires states to establish competent authorities capable of objective authorization, inspection, and enforcement. While it does not explicitly forbid industry participation in regulatory bodies, its framework assumes impartial oversight mechanisms capable of enforcing standards without conflicting incentives.

Global governance standards reinforce this expectation. The Organisation for Economic Co-operation and Development (OECD) identifies structural conflicts of interest as among the most serious governance risks because they arise from institutional design rather than individual conduct. Such conflicts cannot be managed solely through goodwill; they require clear legal separation between regulatory power and regulated interests.

The most immediate implications may arise from European Union regulation. Under the EU Ship Recycling Regulation (Regulation (EU) No. 1257/2013), recycling facilities worldwide must meet strict environmental, safety, and governance requirements to be included on the European List of approved ship recycling facilities. Approval depends not only on physical infrastructure or operational standards but also on the credibility and independence of the regulatory system overseeing those facilities. European Commission assessments consider whether monitoring and enforcement structures operate free from conflicts of interest. EU administrative law places strong emphasis on impartial decision-making. Jurisprudence of the Court of Justice of the European Union consistently holds that both actual bias and the appearance of bias can undermine regulatory legitimacy. This principle carries particular weight in areas involving environmental protection and worker safety, which are central to ship recycling oversight.

European corporate governance norms further emphasize fiduciary responsibility. Decision-makers in public or private bodies are expected to act in the interest of the institution as a whole rather than advancing sectional or personal interests. Allowing individuals with direct commercial stakes to participate in regulatory decision-making challenges this foundational governance expectation. Failure to address structural conflicts of interest could carry tangible economic consequences. A negative assessment of regulatory independence may affect the inclusion of Bangladeshi facilities on the European List, potentially limiting access to EU-flagged vessels and affecting the sector’s global competitiveness.

For an industry seeking long-term stability and international recognition, governance credibility is increasingly a market requirement rather than a purely legal concern. Stakeholder participation remains an essential component of modern regulatory systems. Industry expertise can improve rulemaking, enhance practicality, and strengthen compliance. The challenge lies in designing participation mechanisms that preserve independence. Advisory councils, consultation forums, and technical committees offer avenues for meaningful engagement without conferring regulatory authority on regulated entities. Strengthening disclosure requirements, recusal rules, and conflict-of-interest safeguards would further reinforce institutional integrity.

The Bangladesh Ship Recycling Board is not a trade association or industry forum. It is a statutory regulator exercising public power. Its legitimacy rests on independence, impartiality, and alignment with constitutional, administrative, and international governance principles. Revisiting board composition while expanding structured consultation mechanisms could strengthen confidence in Bangladesh’s regulatory framework without diminishing industry participation. Such reforms would support both domestic governance objectives and international recognition, helping ensure that Bangladesh’s ship recycling sector continues its transition toward global best practice.

Dr. Ishtiaque Ahmed is a Professor and Chair of the Department of Law at North South University, Bangladesh. A former Merchant Marine Engineering Officer, he holds a J.S.D. (Doctor of the Science of Law) from the University of Maine School of Law, USA, where he specialized in International Ship recycling laws and policy. He contributed to the drafting of Bangladesh’s Ship Recycling Rule 2025 (proposed) and revising Bangladesh Ship Recycling Act 2018 as the sole Legal Consultant. Dr. Ahmed is also a qualified Barrister of England, an active member of Chartered Institute of Arbitrators (MCIArb) in London and an Advocate of the Supreme Court of Bangladesh. His expertise lies at the intersection of maritime law, environmental regulation, and sustainable ship recycling practices. He can be reached at [email protected].

The opinions expressed herein are the author's and not necessarily those of The Maritime Executive.