CFP consultation reignites the debate on quota ownership

01 Dec 2009

Credit: Roger Kidd/Wikimedia

The consultation saw an increasing number of calls for the UK Government to take back control of national quotas and to distribute these to the industry on a geographical or regional basis. Such a course of action would be consistent with the official Governmental position that quotas are a national resource and are issued at the discretion of ministers on the basis that there are no property rights in quotas. 

Whilst the official position would allow ministers to distribute quota on a regional or geographical basis, the reality of the situation is much different. Over the last 20 years a thriving market has developed in both fishing licences and fishing quota and, more recently, in respect of effort and engine power. Not only has a thriving market developed in respect of such "commodities", but the financial institutions have also agreed to take mortgages or charges over such assets. Reductions in TACs have resulted in increasing prices for quota which has fuelled this market. Indeed the UK Government has itself fuelled the market with the policies adopted by them in respect of various rounds of decommissioning. They have encouraged the retention of licences and quota which have then been traded within the industry. 

Concentrated ownership

The result of all of this is that we have seen quota and effort being concentrated into the ownership of fewer and fewer people. Concentrated ownership of quota and effort is of course what those responding to the CFP consultation are complaining about. However, in reality, this is no fault of those quota holders, but a consequence of the UK Government's policy of not interfering in quota and licence trading.

In the writer's view it is impossible to see how resources such as quota, effort and engine power could now be reclaimed back into public ownership and distributed on a regional or geographical basis. This view is fortified by the legal principle of "legitimate expectation". This principle states that if an individual has relied upon assurances given to him by a public authority to his detriment and the public authority then reneges on those indications or assurances, he will have a legal claim. In the context of quota trading then the UK Government has tacitly accepted that a market in quotas, licences etc exists. Indeed, its own actions have encouraged such a market to develop. As a result vast amounts of money have been invested in quotas and huge liabilities to financial institutions have been incurred. It may even be argued that over and above the individual quota holders those financial institutions may have a claim of legitimate expectation. 

Buyback scheme

It would therefore seem that if there was an attempt to recover quota, effort, licences and engine power back into public ownership, this would have to be linked to a buyback scheme to compensate the current owners of those assets. The large majority of transactions between holders of quota are documented in legal agreements, and it would seem that any scheme of compensation would have to take into account the terms of those legal agreements which may well result in further compensatory payments between quota holders and those from whom they purchased those quotas. It really does seem that any attempt at such an exercise would be a case of trying to put the "genie back in the bottle". If realistic compensation was to be paid to quota holders then the costs would be massive.

Legitimate expectation

Furthermore, the ensuing litigation would be an expense and diversion the industry does not need. Given the difficulties raised by the principles of legitimate expectation, it may well be that the easiest option for Government would be to forget any notion of reclaiming quotas back into public ownership, but to actually formalise the situation that exists in reality, and to recognise the possibility of private ownership of quota, but to do so in such a way that sets up the regulating market to ensure that the UK's national resource of quotas benefits all, rather than a few.