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Seatrade Found Liable for Shipbreaking Practices

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By MarEx 2018-03-16 19:48:00

On Thursday, the Rotterdam District Court fined Dutch shipowner Seatrade and two executives $925,000 for selling vessels to South Asian shipbreakers. For the executives, the fine was accompanied by a one-year ban on employment in the shipping industry. According to NGO Shipbreaking Platform, it is the first time that an EU company has been found criminally liable for selling vessels to a shipbreaking yard that employs beaching. 

The prosecution had called for a fine of $2.9 million, the confiscation of the profits Seatrade made on the sale and a six month prison sentence for three of Seatrade’s executives. One of the three was acquitted, and the court declined to impose any prison terms as the case was the first of its kind. Seatrade is expected to appeal the ruling. 

As is usual for a demolition sale to South Asian recyclers, the transaction took place through an intermediary, known as a cash buyer. This method of disposal is a financially attractive option: demolition values in Pakistan, Bangladesh and India are currently in the range of $450 per lightweight tonne, about twice as much as the $225 per LDT found in China and $275 per LDT in Turkey. Just one Handysize bulker can be worth $3 million more at a South Asian beaching yard than at facilities elsewhere. This contribution to the shipowner's bottom line helps make South Asian shipbreakers the preferred end-of-life destination for 80 percent of all vessels worldwide.

The prosecution noted the financial incentive to sell to a beaching yard, but the court's decision did not hinge on pricing. It found that the methods used to recycle the Seatrade vessels "endanger the lives and health of workers and pollute the environment." The finding echoed allegations that labor and environmental advocates have made for some time. “We strongly welcome the judgement of the Rotterdam Court. The ruling sends a clear-cut message that dirty and dangerous scrapping will no longer be tolerated”, said Ingvild Jenssen, founder and director of the NGO Shipbreaking Platform.

Cash buyer GMS told Maritime Executive last month that the Seatrade case could potentially reduce the competitiveness of European shipowners. “The Seatrade court case is an important, if not bleak, development which underlines how vital it is to adopt realistic and achievable regulations in the first place," said Dr. Nikos Mikelis, Non-Executive Director for GMS. "The Seatrade prosecution relies on the enforcement of the European Waste Shipment Regulation, which was not developed to regulate end-of-life ships and which has been proven to be the wrong instrument for ship recycling. After all, this is why the European Union is replacing this legislation with the new European Regulation on Ship Recycling for European flagged ships in less than one year’s time.”