Industry sources said they were “staggered” by the ruling, which if confirmed will close down one of the world’s largest breaking industries just as scrapping activity peaks.

“None of the 36 shipbreaking yards in Chittagong currently have an environmental clearance,” said the NGO Platform on Shipbreaking. “The decision therefore effectively shuts down an industry that has been highly criticised by environmentalists and human rights activists for many years for operating with complete disregard for the law, human health and the environment.”

The scrapping industry, which claims to employ 250,000 either directly or indirectly in Bangladesh, is expected to appeal.

The court was ruling on a petition filed by the Bangladesh Environmental Lawyers Association. Judges ordered that no ship on the Greenpeace “dangerous ships list” be allowed into the country, according to reports by the platform and local media.

They also banned end-of-life vessels from being imported without having been pre-cleaned of hazardous materials such as asbestos, PCBs, heavy metals and oily sludges. Other government departments were chided for letting the trade take place unhindered despite the absence of permits.

“This decision to finally enforce existing international and Bangladeshi law on this very dangerous and damaging industry is long overdue,” said Rizwana Hassan of lawyers’ association. “There are ways to import and recycle steel without having to accept the gross pollution of our fragile coastal zone, nor the exploitation and extremely dangerous working conditions that have killed so many of our young men.”

The decision comes as the International Maritime Organization finalises work on a worldwide Convention on Ship Recycling. Environmentalists claim the convention has been watered down to the extent that it is meaningless, while industry says only a global deal has any chance of being respected.

Industry sources immediately raised concerns about what would happen to ships already in Chittagong.

“It’s staggering news,” said John Stawpert, secretary to the industry working group on ship recycling. “It seems that this completely closes the industry down. It’s quite a severe judgment. Ships in Bangladesh will have to be dealt with somehow. It’s not a particularly progressive decision. We are in favour of an improvement of recycling capacity to acceptable standards in line with the IMO convention.”

There has been a surge in scrapping of older ships over the last five months in response to the financial crisis, the vast majority in south Asia. The Bangladeshi industry is thought to be the largest in the world, roughly the equivalent of India’s.

While there have been reports of increased activity in China and talk of reactivating Europe’s largely non-existent industry, there is currently no alternative to the south Asian yards, the industry says.

“This ruling sends an unmistakable signal that Bangladesh will no longer compromise the welfare of its poorest workers, nor its environment for the sake of narrow industrial interests that refuse to recognize that it is impossible to safely dismantle ships containing toxic wastes on a tidal beach,” said platform co-ordinator Ingvild Jenssen.

“It is indeed time for the rest of the world and in particular the IMO to similarly draw a line in the sand and once and for all demand an end to the dumping of toxic ships on the beaches of the poorest countries of the world.”

Much of the criticism aimed at Bangladeshi yards is connected to the practice of beaching, whereby ships are run aground at low tide.

They are then pulled apart by hand by teams of itinerant workers in poor conditions, often without gloves or footwear, for little pay. Pressure groups also claim children are regularly employed in the yards.