Lloyd’s List – Indian Supreme Court ruling roils shipbreakers and cash buyers

(Written by Tom Leander)

10 July 2012 - Pollution Control Board in Gujarat holding clearance of vessels until appeal is heard on July 19

INDIA’s Supreme Court adjourned an appeal over the fate of Oriental Nicety, formerly Exxon Valdez, until July 19, delaying a decision that could ultimately deliver a blow to India’s ship recycling industry.

The case is being closely watched by cash buyers and shipbreakers. On Friday, the Supreme Court ruled in favour of an environmentalist plaintiff seeking to block the arrival of the vessel into Indian waters until its owners cleaned all hazardous substances from the ship. The ruling, if upheld, would require that all ships bound for Alang in the state of Gujarat would have to take similar action.

Until the court makes its final decision, Gujarat’s Pollution Control Board has decided to bar any new applications and will only to process those ships that have already received clearance, local sources told Lloyd’s List.

The case was brought to the court by a non-governmental organisation called Research Foundation for Science, Technology and Natural Resource Policy. The Supreme Court directed the government to “ban import of all hazardous/toxic wastes which had been identified and fit under Basel Convention and its different protocols”. It also stated that the ships bound for Alang would have be cleaned “before entering Indian waters”.

The convention is a treaty that bans transboundary movement of hazardous material, and calls for vessels to be cleaned in the country of origin.

The prospect of the court upholding Friday’s decision has both cash buyers and ship recyclers deeply concerned.

Keyur Dave, chief financial officer for cash buyer Wirana in Singapore, said the industry would kick back if the court decided against it.

“If, on July19, the Supreme Court upholds its decision, the shipbreaking industry will put up a strong fight,” he said. “This is a big industry supplying significant employment and revenues.”

He added that the Gujarat state government would “definitely take it up”.

Even if the central government follows the Supreme Court on the decision it would take some time to implement, as no guidelines have been established.

“There’s a lack of clear directions and the respective government authorities — the Pollution Control Board and Customs — will be at a loss at how to implement,” Mr Dave said.

“They just can’t stop everything overnight. Shipowners, ship recyclers and the Gujarat state government will apply pressure.”

Mr Dave said that talks between these groups and government officials are already under way.

The case has already had several twists. The Supreme Court first barred the ship in May after a plea by another NGO, Toxicwatch Alliance, on the basis that its entry violated the Basel Convention.

Nevertheless, the Gujarat Maritime Board gave Oriental Nicety permission to enter and the ship arrived at Bhavnagar in Gujarat on June 30.

The ship’s arrival followed an affidavit filed by the central government’s environmental ministry to the Supreme Court while it was on vacation that the Gujarat state authorities should have final say on the whether the ship could land.

The plaintiff in the latest case argued to the court that Gujurat state officials had no right to allow entry until the state’s high court ruled on the government’s affidavit.