Academic lawyer Tom Appleby lifts the lid on 50 years of the muddy mismanagement of a public resource.

Quota in the fishing sector is a thorny issue. Recently, Tory backbencher Amber Rudd asked the UK Fisheries Minister Richard Benyon whether there would be a reallocation of VIID cod quota in the light of a failure by the over 10 meter sector to use all of theirs year on year.  Benyon responded that quota hadn’t been reallocated traditionally for a variety of reasons:

• Quota holders may be retaining their quota to fish later in the year, or to use as swap currency to acquire different quota.

• The prospect of such reallocation can encourage a race to fish, which could mean that a fish stock is targeted out of season, thus increasing effort and discards of other stocks.

• Such reallocation may also impact on prices due to a surplus of fish on the market.

All these answers raise different issues: firstly, quota holders have come to view quota as their own property and so, even when they have not used it, they will still hold onto it to see what they can get for it; secondly, releasing more quota into the market will weaken restrictions on fishing and so lead to a free for all; and thirdly that more landings will affect prices. I will glibly dismiss the last two: the whole purpose of quota (at least in theory) is to tame the race for fish, and if it means that too much stock is targeted, then the quota has been set at the wrong level, while if the Minister wishes to try to control fish prices then good luck to him. The first answer raises a much more interesting issue: what is quota?

To begin answering the question it is important to get a little context.  Traditionally, there was (and still is) a public right to fish in UK waters.  This right belongs to the Crown on behalf of the public and fishermen could fish commercially and recreationally simply because they were UK citizens.  In the 1960s it was recognized that there was a need to license fishing vessels, and so legislation was passed in the form of the Sea Fish (Conservation) Act 1967, which allowed the Ministry to do that and put conditions on those licences.  At the time that was fine, as everyone who applied for a licence could get one.  It was not until the mid 1980s as part of effort control measures that the Ministry decided to issue no new licences, but to continue to reissue licences to existing holders.  At almost the same time, in an effort to control fishing of certain species, maximum limits were placed on landings of certain species. The Ministry probably didn’t realize what it was doing, but both capping vessel numbers and introducing quota was effectively creating an exclusive fishing right for those with enough foresight to complete the paperwork.

To minimize the disruption to the fleet, quota was distributed according to the recorded activities of fishermen before quota was introduced, using the concept of track record.  Whilst initial allocations were generous, the increasing imposition of more restrictive quantities must have been hateful for those affected and this allocation method probably came about from the political expediency of being the least  unpopular option. There are however legal problems with this method of allocation, but they are the sort that emerge over time rather than appearing immediately. 

One of the key issues is exemplified by what happens when people want to retire or leave fishing: does the goodwill in their business evaporate or should they be able to sell not just their boat but their licence and quota to someone else, particularly if they are passing their business on to a family member?  It seems a little harsh to simply extinguish their business and so over time these licences and quota attached to them have been traded. There are other equally sensible reasons for a trade in vessel licences and quota. In law though, there are a number of problems with the development of what amounts to a secondary market in the licensing paperwork.

The first issue is whether the public right to fish has been privatized. For the sale of a right to commercially exploit the public fishery some sort of privatization needs to take place.  This has happened in some ancient estuarine fisheries and in some ‘several’ shellfisheries.  Generally, a privatisation would need a new Act of Parliament, not the least because according to the case of Malcolmson v O’Dea the right is preserved for the public in the Magna Carta.  Also and perhaps more comprehensibly, government departments are not permitted to dish out valuable public rights to individuals without going through due process: this usually involves statutory checks and balances of either ensuring a full market value or some other easily discernible public benefit. The mechanism for a privatization is not contained within the Sea Fish (Conservation) Act.  To remain, at least within hailing distance of their powers, UK fisheries authorities have tended to rely on wording in vessel licences and guidance notes instructing that licences are only temporary and at the discretion of the Minister.   Fine so far as it goes, but the practice of fisheries authorities has often been different.  Readers of Fishing News may have more information, but I am not aware of quota being habitually reallocated or vessel licences being cancelled by the fisheries authorities except perhaps over issues of criminality or for paid decommissioning.

This puts the current arrangements in the equivalent of legal outer space.  Do ‘quota holders’ have a right to the continuation of the practice or not.  There are all sorts of legal arguments behind this, but ultimately quota almost certainly remains at the discretion of fisheries authorities and it is only current fisheries policy that consistently allocates quota to the same people.  One difficulty arises when quota is sold or used as security: what is it that is being bought or sold or used as collateral by the bank?  The answer, on the face of it, is that quota holders really only have goodwill and what might be called 'hope value' that the current practice will continue into the future.  They do not have a proprietary interest; they don’t ‘own’ quota.

That, in itself, would be fine, but continuing to allocate quota to the same people brings with it other legal problems.  The system may have been fair in the year of its introduction, but over time it has acted as a bar on new entrants to the market? to those who weren’t fishing in the magic years when track record sufficed, or who were otherwise excluded from the process. In the United Nations Human Rights Committee decision of Haraldsson & Sveinson v Iceland the Icelandic quota allocation system was held to illegally discriminate against fishermen who had not been allocated quota because they did not have sufficient track record. The UK uses a similar system and is a signatory to the same United Nations Covenant, so it is does not stretch things too far to raise the spectre that the UK is in breach of the same international law.

Another major issue is that the management of quota on behalf of its members has put Fish Producer Organisations in a strange position.  FPOs have some recognition under EU law, but that is to do with the markets of fishery products.  However, managing domestic catch quota is a UK rather than an EU function, which has been foisted onto FPOs by the UK authorities. The Sea Fish (Conservation) Act gives powers to the Minister and now the devolved administrations and the Marine Management Organisation to impose restrictions on vessel licences regarding the amount of fish that a boat can take, but it does not obviously authorize FPOs to undertake quota management on behalf of the UK fisheries authorities.  It would be extremely rare for private enterprises to undertake the task of managing public resources and would usually need express statutory authority, which does not seem to be present in the case of UK fisheries.  Furthermore, because some of the FPOs are extremely powerful business entities in their regional markets, there is potential for claims of abuse of a dominant position under competition legislation, particularly from non-sector fishermen who cannot easily access quota managed by FPOs.

From an outsider’s perspective what emerges is a pattern where the UK fisheries authorities have consistently sought to preserve the status quo despite their legal obligations.  The result is, to put it mildly, a legal mess.  This is a shame. Rights based management was, and is, one of the key corner stones of the reforms of the EU’s common fisheries policy.  The UK has one of the best organized fisheries in the EU and is probably one of its most enlightened member states when setting quota at the international level. Yet a number of important issues remain outstanding, and some of those weaknesses are so grave that the whole edifice of UK fisheries management could come tumbling down. It is vitally important that the UK Government and the devolved administrations turn their attention to the issues of illegal delegation, anti-competitive practice and unauthorized privatization before some seismic court case rips the system apart. In the process the UK Government and the devolved administrations will have to finally answer the difficult questions of who really should be getting the UK’s quota, what are the terms of its disposal, and what exactly quota is.