Who owns the Kirkella?

I had not intended not to write further on the vexed subject of fish quota, mainly because I felt that the subject had been talked to death and that rather than engaging in arguments with hard line Brexiters it would be better just to wait for the alleged “benefits” to start kicking in. Quota isn’t mainly a West coast issue, but my interest had been fired up some years ago, following a conversation with a fellow who had been on one of the supertrawlers and told me, to my astonishment, that the ship had caught her entire year's share of quota in just three lucky weeks. He assured me that the ship spent the rest of the year out of action, something I found hard to believe. Surely, with an investment of millions, you would simply sail off to another corner of the World?

The piece that appeared on the BBC website the other day changed my mind, so here goes with my last contribution of 2021. The story starts:

“The owners of the UK's biggest trawler have described a new government deal to win back fishing rights following Brexit as "too little, too late".

Hull-based Kirkella has been mothballed since December 2020 after the UK lost the right to fish in Norwegian waters.

UK Fisheries said they were "absolutely devastated for the crew" as the new quotas offered just one week's work.

The government said the deal, announced earlier, struck a "strong balance" for the UK and Norwegian fleets.

The fishing access will see fleets from both countries be able to fish up to 30,000 tonnes of cod, haddock and hake in respective waters in the North Sea, the government stated.

Kirkella has been moored for a year at Hull Docks with the crew unable to work while post-Brexit negotiations have been ongoing.”

Comment: Those with reasonable memories will remember Liz Truss a year or so ago expressing her great joy that she had concluded a deal with Norway. I spent some time looking unsuccessfully online for the text, rather than mere puff. I then contacted Mike Russell, who informed me that the Scottish Government had not been involved and did not have a copy. The BBC piece confirms that one important point had not been agreed, the actual quantities that UK vessels would be allowed to catch in Norway’s (nonEU) waters! Before Brexit, of course, the UK was covered by what the EU, with the massive muscle of a giant trading bloc, had negotiated with Norway on our behalf.

The piece continues:

“The self-employed, 30-strong crew of the 81m (266ft) freezer trawler were paid per trip and have been ‘sold down the road’, according to first mate Charlie Waddy.

‘I feel for the men,’ he said. ‘Their lives have been fishing since they left school. All they wanted to do was come fishing. They loved the job.’

Mr Waddy said he felt the government had encouraged fishermen to back Brexit, but he was now worried for the future of the industry.”

Comment: That the crew are/were all self employed is utterly scandalous in the modern world. This means that they presumably have no entitlement whatever to any of the normal employee protections that our law, to date in line with the EU, provides, things like sick pay, redundancy and pensions. It’s a traditional model that worked fine in small fishing communities, but should have no place whatever in an industry that is otherwise very modern and industrialised.

The article then finishes:

“Jane Sandell from UK Fisheries, which claimed Kirkella supplied between 8-12% of all fish sold in UK fish and chip shops, said the latest deal had left the company ‘more than disappointed’.

She believed the new fishing deal offered just one week's work for the Hull-based crew.

‘We're absolutely devastated for the crew. The government was fully aware of what we need to operate a viable business and frankly these kind words were just platitudes.’

The government said the deal would see UK fishing vessels be allowed to fish more than 7,000 tonnes of cod in the arctic - an increase of 1,500 tonnes compared with 2021.

Fisheries Minister Victoria Prentis said the arrangements ensured a strong balance, that would benefit the fishing industry and ‘the protection of the marine environment’.”

I have in the past researched the ownership structures of some of the principal vessels involved in what is described as the UK fishing fleet. Frequently the results show only the most marginal connection. The Kirkella seems to be no exception, despite the message painted on her bow

The Kirkella is the property of her own dedicated limited company, Kirkella Limited, registered in England and Wales and based at the Orangery in West Yorkshire. The company is financed by a Dutch bank. The directors of the company are:

Diederik Parveliet (“ Mr P”), a Dutchman.

Jane Sandell (“Ms S”) an Englishwoman.

Balvin Thorsteinsson (“Mr T”) an Icelander.

Jan Cornelis Van Der Plas )”Mr VdP”) a Dutchman.

But who owns Kirkella Limited?

The sole shareholder is J Marr Fishing Limited, another English company. Its directors are Mr P, Ms S, Mr T and Mr VdP.

And who owns J Marr Fishing Limited?

The sole shareholder is UK Fisheries Limited, another English company. Its directors are, surprise, surprise, Mr P, Ms S, Mr T and Mr VdP.

So, who owns UK Fisheries Limited?

The shareholders are Onward Fishing Company Limited, 50% and

B V Tory, 50%

You can search until the fish come home, or Brexit delivers a bonus, before you will find anything more about B V Tory, although one suspects it may be a Dutch registered entity, because from now on Mr VdP drops out of the story.

Re Onward Fishing Company Limited, the directors are Mr T plus a new Icelander, Gustav Baldvinsson.

This company belongs entirely to Samherji HF, which looks suspiciously like an Icelandic registered entity. Again, finding which actual people are the ultimate beneficiaries is impossible.

To conclude on a not very happy note, Liz Truss and Victoria Prentis have been fighting the corner on behalf of a gigantic supertrawler that ultimately belongs to what appear to be Dutch and Icelandic entities, fishes UK quota and uses the services of a crew who, if they are British residents, are presumably currently being looked after by UK taxpayers while their services are not required.

Images from the BBC website.

Scottish Government fish quota consultation response

I am not qualified to offer a meaningful response to the specific questions asked, but would like to offer some general comments. When I started out in legal practice in 1970 the concept of quota, be it for fish, milk or any other commodity, was unheard of, and as time went on we had to get used to it as a newly created right of property, in various areas of practice, such as insolvency work. Since the Brexit referendum I have spent time researching the implications of this specifically with regard to fish quota. I hope these comments will be of assistance in the longer term, perhaps after Scotland has got complete freedom to form her own policy in these matters.

I think it would come as a considerable surprise to most lay people that allocations that were originally given out free came to acquire status as items of property capable of being bought and sold and, as such, entitled to protection under the European Convention on Human Rights. People would, I think, also be disturbed to find that this result does not arise from anything intrinsic in the original allocations, nor from anything that the EU has imposed on the UK, but purely and simply from decisions taken by successive UK governments in pursuance of neo-liberal agendas allowing quota sales. We have now arrived at a position where virtually nobody currently fishing got their quota for nothing; everyone has had to buy it and fishermen treat it as a major component in their retirement funds. Other odd aspects are the fact that it often costs more to buy quota than to buy the boat needed to exploit it, and the presence on the scene of what Canadians call “slipper skippers”, who never go to sea.
For authority on quota as a right of property, a “possession”, see the remarks of Mr Justice Cranston in the case of UK Fish Producers Association v Secretary of State for Environment Food and Rural Affairs, at paras 109 et seq in the English High Court in 2013, Law Report
It’s important to recognise that matters did not need to be thus. Not all European States permitted quota sales, for example the Republic of Ireland didn’t. See the following, from their Government:
“Fishing quotas are managed as a public resource which, according to Irish policy documents, means that quotas cannot be bought, sold or leased in any form. It is the minister’s prerogative to manage fishing quotas and they cannot be considered a property right. In order to manage quota utilisation in a non-tradable system, interventions take place to adjust quota allocations. In the case of whitefish, QMAC holds monthly meetings and can make allocation changes to maximise utilisation. This is more difficult for pelagic quotas, which are often set over longer time-periods. As quota management responsibility lies with the minister on the advice of QMAC, there is little direct, devolved role of POs or individual fishers in handling quotas.”
As the UK Government learned to its cost in the well known case of Factortame, once you permit the sale of quota you can’t control the nationality of the purchaser. As a result we know that 80% of English quota and a smaller, but unknown percentage of Scottish quota is now foreign owned. Apart from this, of course, the ships themselves may be British flagged, but they can be, and are, owned through limited companies which often have complex shareholdings including owners registered in various tax havens.
To summarise the above, that any attempt to do anything other than tinkering with existing rights of property will be met with very substantial claims for compensation under the ECHR. Nothing that I have seen in anything published about the agreements concluded so far, with Norway and the EU, suggests anything else.
The choice going forward, with the prospect of additional quota becoming available, is between allowing the new quota to be sold, or to render it unmarketable. To do the latter would not resolve the existing problems, but would at least stop compounding them. It would also preserve some freedom of manoeuvre for future governments in an independent Scotland.
Ewan G Kennedy
Kilmelford, Argyll, 14 January 2021

Fish Quota yet again!

I haven't written about fishing quota for a while, because basically nothing has been happening regarding the political hot potato of fishing rights after 31 December 2020.

The last round ended with the continuing failure of the UK negotiator "Lord" Frost to disclose the terms that he wishes to secure. Monsieur Barnier ended the round by pointing out that while the UK would have sovereignty over a section of the seabed, this would not confer ownership of the fish swimming through the water column above it. He is absolutely correct in terms of law, domestic Scots, English or, for that matter, French law or International law. Wild fish, fera natura, belong to nobody until they're caught.

I have repeatedly stated before that successive UK Governments, in pursuit of neo-liberal agendas, have allowed both the sale of fishing quota to non-nationals and the ownership of fishing vessels by non UK owners, often corporations whose owners are in turn based outside the UK or the EU, frequently in tax havens. Long ago the position was reached in terms of which it cost more to buy quota than to buy the boat to catch it. Quota is also used as security for the loans taken out to buy it, or indeed to buy the vessel.

This means that quota is private property and entitled to protection under the ECHR, with no dispossession without compensation.

So, where does this all end up if, as seems likely, 31 December passes with no deal? The existing fishers will want to fish in the existing vessels, using the existing quota and selling to the existing markets. My guess is that they will simply do so and that it will be foolish in the extreme for the UK Government, whoever is in charge, to try to stop that. The large Scottish and English vessels that catch quota stocks may need to land their catches in mainland EU, so it won't exactly be business as usual on the UK side. Many of these owners, in contrast to much of the non-quota fleet, were great cheerleaders for Brexit. It's very likely that they knew their stuff!

Quota Again

We are now in the final week of the Brexit talks on fishing before the UK Government’s self-imposed guillotine comes down.

I won’t speculate on whether or not there’s going to be a deal. In the event of there not being one the legal position of the two sides can be quite simply stated. It would mean that (a) the UK has exclusive control over fishing in the UK's part of the EEZ and the EU in their part but (b) excluding foreign owners of quota is likely to trigger claims for compensation by the owners against the UK Government. Here are two pieces of legal opinion that support these statements.

Regarding fishing: Opinion of Professor Robin Churchilll, Emeritus Professor of International Law, University of Dundee for the Scottish Fisheries Federation.

“My answer to Question 2 can be simply and unequivocally stated. Other EU Member States have not accrued any rights to fish in the UK’s EEZ that will survive the UK’s departure from the EU. If it can be shown that the EU will suffer economic dislocation when its vessels that have habitually fished in the UK’s EEZ are no longer able to do so post Brexit, the UK should consider giving the EU access to that part of the allowable catch surplus to the UK’s harvesting capacity. The same will apply, mutatis mutandis, to fishing by UK vessels in the EEZs of other EU Member States. 24. Of course, post Brexit it would be always open to the UK to permit EU vessels to fish in its EEZ in exchange for the access of British vessels to the waters of other EU Member States. However, that is a completely different matter from the issues in Question 2, and accordingly I will not speculate on the likelihood or desirability of such a possibility.”

This, of course, is precisely the position put out in UK Parliamentary briefing papers, but it’s useful to have an independent opinion backing it.

Regarding Quota as a “possession”: In the case of UK Fish Producers Association v Secretary of State for Environment Food and Rural Affairs, in the English High Court in 2013, we find

Mr Justice Cranston saying:

“109 Are fixed quota allocations possessions?The concept of a possession for the purposes of article 1 of protocol 1 of the ECHR has an autonomous meaning and is not limited to ownership of physical goods. "[C]ertain other rights and interests constituting assets can also be regarded as "property rights", and thus as "possessions", for the purposes of this provision": Centro Europa 7 Srl v Italy (2012) 32 BHRC 417, [171]. There a legitimate expectation of being allocated a broadcast frequency, linked to the property interest of a broadcast licence, was held to be a possession: [179]. A seminal decision in the Strasbourg jurisprudence is Tre Traktörer AB v Sweden (1989) 13 EHRR 309, where the court found that the withdrawal of a liquor licence had had an adverse effect on the goodwill and value of a restaurant. These economic interests connected with the running of the restaurant were possessions within article 1 of the first Protocol: [43], [53]. There must be a reasonable and legitimate expectation as to the lasting nature of the right: Gudmunsson v Italy (1996) 21 EHRR CD 89, 89.

110 In a well known passage in R (Nicholds) v Security Industry Authority [2006] EWHC 1792 (Admin); [2007] 1 WLR 2067, Kenneth Parker J (as he now is) invoked as a test whether licences or permissions have a monetary value and can be marketed for consideration, either through outright sale, leasing, or sub-licensing. Thus milk quotas and certain spectrum licences fell within the concept of possessions in article 1 of protocol 1, but not licences or permissions which were neither marketable nor had been obtained at a market price, even though they had a value to the holder because, without them, it could not carry on the licensable activity: [74]-[75]. That approach has been approved in both the Court of Appeal in R (Malik) v Waltham Forest NHS Primary Care Trust [2007] EWCA Civ 265; [2007] 1 WLR 2092, [42]-[44] and the House of Lords in R (Countryside Alliance) v Attorney General [2008] 1 AC 719 [22], per Lord Bingham. In Malik a medical practitioner was suspended from the performers' list entitling him to practice within the NHS. The Court invoked the distinction between goodwill, which is a possession, and an expectation of future income, which is not. In that case there was a legal prohibition on selling the goodwill in a doctor's practice. Thus it had no economic value, so that the personal right of the doctor to practice through inclusion on the performers' list was not a possession: [29], [40], [65], [73], [86].
111 In its submission that neither quotas not fixed quota allocation units could be possessions under the Convention or the Charter, the Interveners invoked the principle that fishing stock is a right held by the public. It necessarily follows, in their submission, that permissions to fish cannot be privately enjoyed as a property right and therefore cannot constitute a possession, especially when they have been conferred on fishermen free of charge. While accepting that fishing licences and, once allocated, fishing quota, may be possessions for the purposes of article 1 of the protocol 1, the Secretary of State contended that fixed quota allocations do not qualify. They are no more than a tool, an abstract unit of measurement, and do not give rise to an entitlement to a precise amount or share of quota. Given their design they are no more than a representation of a vessel's track record for quota species caught between 1994 and 1996. In these submissions fixed quota allocations may represent a hope of a future allocation of quota, which falls within the scope of administrative discretion. The trade in fixed quota allocations occurs outside the Rules; the reconciliation exercises are in effect a pragmatic policy in the nature of an amnesty; and however banks, tax authorities or others might treat fixed quota allocations, that had nothing to do with their legal character or the legality of a transaction involving them.
112 For better or worse the concept of possessions has been given an expansive interpretation. The claimant's analogy with the English law notion of profit a prendre does not hold up since no one can own the fish of the sea. Moreover, the term possessions had an autonomous meaning in European law so reference to English law concepts is not helpful. However, Rule 3.3 recognises, albeit in limited circumstances, that fixed quota allocation units can be transferred separately from a fishing licence entitlement. The reconciliation exercises have given recognition to the trade in fixed quota allocation units occurring outside the ambit of the Rules.
113 And the reality of the situation is that, albeit built very much of sand, there is a trade in fixed quota allocation units. As seen earlier in the judgment this has attracted official recognition time and again. Units are not only traded but also used as security for bank finance. Valuers place a figure on them even if the methodology is relatively opaque. The tax authorities have seized upon the economic reality to treat them as a capital asset where disposal is capable of generating a capital gain. To use the language in Nicholds, fixed quota allocation units have a monetary value and can be marketed for consideration. In my view fixed allocation quota units are possessions falling within Article 1, Protocol 1 of the Convention and article 17 of the Charter.”
Having stated what the law seems to say, let’s think about what may happen in practice.

Despite all the rhetoric about “Getting back Control” will the UK Government expose itself to claims for compensation from the owners of quota, who can no longer legally fish? I don't see the latter taking that risk, given that much quota is owned by the strongest supporters of Brexit.

If these, mainly very large, vessels continue to fish as before, does the UK possess ships to police and perhaps stop them? We don’t any longer have the fast Customs cutters we had pre-EU.

Does the UK possess the will to stop them? Matters may well continue pretty much as before, but perhaps with product destined for EU consumers being landed on their side of the North Sea.

Will the UK Government permit EU vessels to land here the cod, caught mainly outwith the UK sector, that the British public like to eat? It takes time for ingrained eating habits to change.

There are strong incentives on both sides to turn mutual blind eyes and simply allow business as normal. We could then be heading towards a form of anarchy on the high seas, leading to nasty conflicts in some areas, such as the English Channel.

"Sherpa" Frost reveals all - But doesn't!

Yesterday “Sherpa” Frost finally lifted the veil of secrecy that had prevented all those apart from a magic circle of the High and Mighty to see the draft legal texts for the implementation of Brexit. Those deliberately kept in ignorance had included not only the Scottish Government and our friends in Northern Ireland and Wales, but the actual EU member states themselves, whose diplomats the Johnson regime was not prepared to trust to keep a secret.

I’ve been following developments on fishing and trying to understand the issues, with no great confidence that I’ve got things right. Accordingly any informed and referenced comments are most welcome. For the full text on the “Fisheries Framework Agreement” click this link:

Draft Fisheries Framework Agreement

Regarding fisheries the aim has been to have an agreement in place by the end of June, i.e. just under six weeks from now. I’m rather shocked to be able to say that both sides could probably sign up to this paper tomorrow without compromising the interests of either in any material way whatsoever. The reason why is quite simple; what has been advanced isn’t in any meaningful way a draft legal agreement at all. Virtually everything likely to cause dissent has been left out.

In the first year at law school students are taught that an “agreement to agree” will never constitute a binding legal contract. The law reports are full of cases of “contracts” where wishful thinking, woolly phrases and “Heads of Agreement” have enabled people to duck out of points of contention. Scots lawyers and, I think, the Scottish public don’t trust things such as selling our house “subject to contract”. This document is very much like that.

One’s first impression on looking at the fisheries draft is that it’s so short. Out of the eleven pages offered three are blank, the empty schedules. We then turn to the “Disclaimer” page, which at once gives the game away.

“The UK proposes the following legal text to form the basis for discussions with the EU on a Fisheries Framework Agreement.” An agreement to agree? Let’s look further.

Page 2 starts with a header that again gives the game away, this isn’t a draft contract or a treaty, it’s a “DRAFT UK NEGOTIATING DOCUMENT” The rest of this page is pure narrative with no meat in it. There follow twelve “Articles” of which I suggest that no fewer than nine are entirely non-contentious, more or less “boilerplate” text that nobody will seriously take exception to. The remainder are Articles 1, 2 and 12. Within those the bones have a little meat on them but only a tiny amount of gristle.

Article 1 on Page 3, “Definitions”, does what it says, but curiously and no doubt deliberately does not define or even refer to quota, a word I failed to spot at any point in the document.

One definition is very important, in the context of quota and “getting back control”. The definition of a UK or an EU fishing vessel is simple: it’s one flying the flag and licensed by one or the other side. As we all know, you don’t need to show your passport to obtain a flag. Many, perhaps most, fishing vessels, certainly the big ones and the supertrawlers, are owned via companies, the shareholders of which are often other companies, often offshore. Many vessels are acquired with mortgages from UK institutions, including the Royal Bank of Scotland, which we the taxpayers own almost in its entirety.

Those vessels with their complex ownership structures fish on the basis of quota which will have been purchased on the market like any other item of property. This is because there are surely no longer any significant numbers of fishers who got an original grant of quota free and who are still in the trade. A share of quota can cost more than the actual boat and we can assume that owners will not happily see it trashed. Anyone who thinks they won’t still be seeing “foreigners” catching “our fish” after Brexit should stop reading now.

Article 2 provides that “fishing opportunities” will be kept under review and negotiated annually on the basis of the best science. The parties respective permitted “amounts” will be adjusted proportionately. As noted, the word “quota” does not appear and this would have been the place to insert some mechanism for avoiding disputes re quota issues.

Finally, Article 12 is the bombshell. Using a cunning system of double negatives a textual smokescreen has been created to conceal the dates on which anything material might happen. Paragraph one reads:

“Each Party shall notify the other Party in writing through diplomatic channels of the completion of its domestic requirements for entry into force of this Agreement. This Agreement shall enter into force on a date to be mutually agreed and specified in these notifications.”

Paragraphs 2 and 3 list respectively the parts that will come into force on that future date, in fact virtually everything of importance and the parts that take effect on 1 January 2021, basically policing, management and data sharing. Incidentally there seems to be a drafting mistake, because to be effective Paragraph 1, delaying things, should come into effect on the latter as otherwise it all happens now and “we’re all doomed”.

Paragraph 4 allows either party to terminate on two years’ notice, but along with all the material stuff this doesn’t come into effect now.

Paragraph 5 states that the “Agreement” supersedes all previous ones, but of course when read along with Paragraph 1 it simply doesn’t, in practical terms.

Overall the text looks like something worthy of Baldrick, that will enable our illustrious Prime Minister to claim another great victory over Johnnie Foreigner while leaving the mess for someone else to sort out later.