By: Maria Madalena das Neves
PDF version: EFTA Surveillance Authority Rejects Complaint Against Norway Related to Snow Crab Fisheries
Decision commented on: EFTA Surveillance Authority Decision of 4 October 2017 closing a complaint case against the Norwegian Government concerning restrictions on commercial fishing or catching of snow crab (Decision No. 173/17/COL).
On 30 September 2016, a group of enterprises of EU Member States engaged in snow crab fisheries in the Barents Sea, submitted a complaint against Norway to the EFTA Surveillance Authority (ESA) (see complaint here). The complainants, whose identification has been not been made public (but likely including at least one Lithuanian enterprise), argued that Norway’s Regulation on Prohibition of Snow Crab Catching of 19 December 2014 and Act on the Right to Participate in Fishing and Catching of 26 March 1999 conferred an unjustified privileged access to vessels owned by Norwegian citizens and to Russian vessels to catch snow crab in the maritime zones of Norway (particularly in the Svalbard Fisheries Protection Zone and on the Norwegian Continental Shelf), and that said legislation was, consequently, inconsistent with Articles 4, 31(1), 34, 36(1), 124 of the European Economic Area (EEA) Agreement and with Article 5 of Protocol 9 of the EEA Agreement. More specifically, the complainants argued that Norway’s secondary legislation regulating the catch of snow crab, which prevents nationals from other EEA Member States from establishing a company in Norway in order to be able to engage in fisheries or catching of crab, was inconsistent with the right of establishment, the freedom to provide services, the principle of non-discrimination, and the principle of proportionality prescribed by the EEA Agreement.
This case stemmed from what can be dubbed as the ongoing ‘EU-Norway snow crab row’ beginning when the European Commission authorized vessels of Lithuania, Latvia, Poland and Spain to catch snow crab in the Barents Sea under the terms of the Convention on Future Multilateral Cooperation in North-East Atlantic Fisheries (NEAFC Convention). Norway responded by seizing Latvian and Lithuanian vessels engaged in catching snow crab – the Senator and the Juras Vilkas – claiming its exclusive sovereign right over the resources of its continental shelf (which includes snow crab – a sedentary species of the continental shelf). It is noteworthy that EU’s conferral of authorizations for snow crab catch in December 2015 and December 2016 represented a spectacular volte-face in relation to a previous letter of 5 August 2015 by former Director-General of Maritime Affairs and Fisheries of the European Commission, Lowri Evans. In this letter the Director-General acquiesced that only Norway and Russia were entitled to exploit snow crabs in the ‘loop-hole’ of the NEAFC area, requested EU Member States to stop issuing licenses for snow crab, and informed of the need to obtain consent from Norway and Russia to engage in these activities.
This ‘row’ is also inextricably linked to the legal status of the maritime zones adjacent to Svalbard and to the interpretation of the 1920 Svalbard Treaty. Indeed the complainants noted that by not allowing vessels from parties to the Svalbard Treaty to catch snow crab in the continental shelf around the Svalbard Archipelago, Norway had also breached its obligations under the treaty to grant equal and non-discriminatory access to engage in a commercial activity, i.e., catching snow crab (see pages 4 and 5 of the complaint).
Moreover, this ESA complaint is just one of a number of different legal avenues examining the legality of Norway’s legislation and enforcement measures concerning the catch of snow crab. It must be mentioned here the Case 16-127201 MED-OSFI of the Øst-Finnmark District Court concerning the Juras Vilkas (see previous blog by Irene Dahl and Elise Johansen commenting on the Court’s decision here). In this case the Øst-Finnmark District Court erroneously found in favour of the defendants (captain and shipping company) concluding that Norway’s snow crab prohibition was inconsistent with Norway’s obligations under the NEAFC Convention and the NEAFC Scheme of Control and Enforcement. The Hålogaland Court of Appeal reversed that decision on the basis of the continental shelf regime enshrined in the Law of the Sea Convention (UNCLOS) Article 77(4), (see the Court of Appeal’s decision here). The Hålogaland Court of Appeal clearly stated that Norway has jurisdiction to enforce its sovereign rights on the continental shelf, including prosecuting foreigners who violate these rights. A similar case concerning the Senator was also assessed by the Øst-Finnmark District Court in Case TOSFI-2017-57396, but here, since the vessel was caught fishing snow crabs in the Svalbard’s Fisheries Protection Zone and Continental Shelf, the Court was adamant that it was in breach of Norwegian Law (see the Court’s decision here).
Arguments of the Complainants
The complainants referred to Articles 1, 2 and 3 of the Regulation on Prohibition of Snow Crab Catching. These provisions establish a general prohibition for Norwegian and foreign vessels to catch crab in Norway’s territorial and internal waters, and on the Norwegian continental shelf, but allow, at the same time, derogations to said prohibition in favour of Russian vessels and vessels that have a permit to fish and catch outside territorial waters in accordance with the Act on the Right to Participate in Fishing and Catching. The complainants also take issue with Articles 4, 5 and 6 of the Act on the Right to Participate in Fishing and Catching. According to these provisions, vessels can only engage in fishing or catching after being granted a business permit which are available exclusively to Norwegian citizens, persons who have the same rights as Norwegian citizens, and permanent residents in Norway. In addition, it is also prohibited to use vessels in fishing and catching if less than half of the crew, the fishermen and the captain are not Norwegian citizens or do not reside in Norway. In view of the above mentioned legal provisions, the complainants considered that enterprises of EEA Member States are altogether precluded from establishing a company in Norway with the purpose of engaging in fishing and catching snow crab in Norway’s administered maritime zones. Only Norway and Russia (non-EEA) can perform these activities.
The complainants go on to explain that Norway’s secondary legislation violates: i) the principle of non-discrimination (Article 4 of EEA Agreement); ii) the obligation of non-discrimination towards nationals as regards participation in the capital of companies (Article 124 of the EEA Agreement); iii) the prohibition of establishing restrictions on the freedom of establishment and on the freedom to provide services (Articles 34 and 36 respectively of the EEA Agreement); iv) the prohibition of discriminating against fishing vessels flying the flag of EEA Member States (Article 5 of Protocol 9 to the EEA Agreement); and v) the principle of proportionality as the restrictive measures adopted by Norway are not proportionate to the aim they intend to attain, an aim that is, in itself, “incoherent and not clear”.
For the purpose of demonstrating the breach of the above-mentioned provisions, the complainants refer to previous decisions by the EFTA Court and the CJEU. The only case mentioned that bears a resemblance to the facts discussed in the complaint was the Factortame II case in which the CJEU analysed United Kingdom’s legislation that similarly established restrictions on ownership and operation of fishing vessels by non-nationals.
The initial reasoning of the complainants was not particularly convincing. Apart from the fact that their arguments were supported only by superficial considerations and explanation of case law, the complainants did not discuss in any way how the subject of fisheries is covered by the EEA Agreement. In particular, the complainants failed to address the issue of the permissible derogations to the EEA Agreement concerning fisheries contained in the Annexes to the Agreement. They relied heavily on the Factortame II case but failed to see that in relation to fisheries the Annexes to the EEA Agreement allow Norway certain derogations. That the restrictions applied by Norway are discriminatory is evident. Hence, what the complainants needed to raise with the ESA that the grounds for permissible derogations to the EEA Agreement in relation to Norway were not met. It is true that the nature of a complaint submitted to the ESA is non-adversarial, i.e., the complainants did not need to make a case against Norway but only bring to the attention of the ESA the potential infringement of the EEA Agreement. Still, it seemed like a lost opportunity for the complainants to strengthen the merit of their grievance with Norway from the start. The complainants did eventually address the issue of the permissible derogations to the EEA Agreement in a letter submitted to the ESA on 27 March 2017 following Norway’s response to the complaint. This letter is not available for consultation but the text of the ESA’s decision briefly informs that the complainants did claim that the exemptions were not applicable to the disputed secondary legislation as the latter was adopted after the signature of the EEA Agreement. However, without the complainant’s letter and with only this brief information provided in the decision of the ESA, it is not possible to assess the strength of the eventual arguments made by the complainants.
In its turn, by letter dated 13 January 2017 (see letter here), Norway observed, inter alia, that: i) fishery policy and snow crab fall outside the scope of the EEA Agreement; ii) point 10 of Annex VIII of the EEA Agreement on freedom of establishment and point 1(h) of Annex XII of the EEA Agreement on free movement of capital expressly allow Norway to continue to discriminate and apply restrictions existing on the date of the signature of the EEA Agreement in relation to establishment of non-nationals in fishing operations and in relation to companies owning or operating fishing vessels; iii) Article 5 of Protocol 9 to the EEA Agreement regulates access to prots and first-stage marketing installations and bear no relevance in relation to snow crab catching; and iv) the complainants’ reference to the NEADC Convention, of the Svalbard Treaty, and of the UNCLOS was irrelevant as ESA can only consider issues arising under the EEA Agreement. Norway also provided, by e-mail, additional clarifications to the ESA outlining in detail the history and content of the relevant secondary legislation. However, this e-mail is not available for consultation.
It is interesting, that considering the location of snow crab activities, and that the above mentioned legal instruments are also affecting activities taking place on Norway’s continental shelf and exclusive economic zone, Norway made no attempt to argue the inapplicability of the EEA Agreement. In other fora Norway has taken the view that the geographical scope of the EEA Agreement, enshrined in Article 126, only encompasses land territory, internal waters, and territorial waters thus excluding the exclusive economic zone and the continental shelf (see, for example, Meld. St. 5 (2012-2013) EØS-avtalen og Norges øvrige avtaler med EU). Perhaps Norway wanted to avoid touching the subject for two main reasons. For one Norway is well aware that the ESA favours a functional approach to the interpretation of the EEA Agreement which considers that the latter is applicable to Norway’s continental shelf and exclusive economic zone. For another, the ESA has previously articulated this view in a letter of formal notice to Norway concerning Norwegian nationality requirements for crew on board fishing vessels (see letter here under Annex 1), a case that would not have been in the interest of Norway to revive in the context of the present complaint, since the ESA concluded in that case that certain of Norway’s nationality restrictions were inconsistent with the EEA Agreement.
Decision of the EFTA Surveillance Authority
Upon weighing the arguments and disputed secondary legislation the ESA decided to close the complaint against Norway. The decision is short and to the point (the assessment itself comprises only 3 of the 8 pages of the decision). ESA’s analysis focused on Annexes VIII and XII of the EEA Agreement, specifically on the interpretation of point 10 of Annex VIII and point 1(h) of Annex XII. These points state that notwithstanding Articles 31 to 35 and 40 of the EEA Agreement and the provisions of both Annexes, “Norway may continue to apply restrictions existing on the date of the signature of the Agreement on establishment of non-nationals in fishing operations or companies owning or operating fishing vessels” (emphasis added by the author).
The key aspects to determine were: i) if catching snow crab can be classified as ‘fishing operations’ for the purpose of the operation of the derogations laid out in the above-mentioned Annexes; ii) if the fact that the disputed legislation is posterior to the EEA Agreement precludes the operation of the derogations of said Annexes because it did not ‘exist at the time of the signature of the Agreement’; and iii) if or to what extent Norway can continue to apply restrictions on the freedom of establishment and free movement of capital in the fisheries sector.
In relation to the terms ‘fishing operations’ the ESA noted that neither of the Annexes provides a definition or indication of what type of activities are comprised by these terms. More to the point of this case, the Annexes do not clarify whether operations of catching snow crab are included or excluded in the terms ‘fishing operations’. The ESA considered that catching snow crab was covered by the terms ‘fishing operations’ as these terms can be interpreted broadly. In effect, and as pointed out by the ESA, when applied in the context of commercial fisheries, the term ‘fishing’ normally refers to the commercial exploitation of the general category of living marine resources, which inherently includes snow crab. The distinction of the technical concepts of ‘fishing’ or ‘catching’ seems inconsequential for the purposes of the application of the Annexes.
As for the second issue, the assessment of whether the fact that the disputed secondary legislation was posterior to the signature of the EEA Agreement precluded the operation of the derogations, the ESA had to consider two aspects. For one the interpretation of the phrase “restrictions existing on the date of the signature of the Agreement”; for another the ESA also had to assess whether the disputed secondary legislation had changed in any way the restrictions on the freedom of establishment and free movement of capital in the fisheries sector that existed at the time of the signature of the EEA Agreement. That is, the ESA had to assess whether the Regulation on Prohibition of Snow Crab Catching of 10 December 2014 and the Act on the Right to Participate in Fishing and Catching of 26 March 1999 modified or increased the restrictions already existing in the Norwegian Act of 16 June 1972 (No.57) relating to participation in fisheries.
The ESA underlined that the phrase “restrictions existing on the date of the signature of the Agreement” cannot be understood to require that the description of the restrictions or the legislative form or act under which they were established must remain exactly the same ad eternum. This understanding seems reasonable. If the parties to the EEA Agreement had intended to limit derogations to an expressly determined legal instrument that would have to remain frozen in time, they could have simply listed that legislation in the Agreement. What seems to matter is that, irrespective of the legal instrument in which they are included, the restrictions themselves must de facto be the same.
In the analysis of the restrictions included in the Regulation on Prohibition of Snow Crab Catching of 19 December 2014, and in the Act on the Right to Participate in Fishing and Catching of 26 March 1999, the ESA concluded that the said restrictions were equivalent to those already previously contained in the Act of 16 June 1972 (No. 57) relating to participation in fisheries. The ESA did not limit itself to a comparison of the provisions of the different legal instruments, but also conducted an anlysis of the preparatory works, namely those concering the 1999 Act on the Right to Participate in Fishing and Catching. These preparatory works showed that the purpose of the Act was to merge five other acts so as to clarify and simplify the legislation applicable to fisheries sector, and to provide a continuation and consolidation fo the previous legislation. In short, the disputed secondary legislation did not create any new restrictions it merely restated, albeit not verbatim, the same restrictions that had already been established by the Act of 16 June. Moreover, the ESA also confirmed that the Norwegian legislation has applied and continues to apply the restrictions to the fisheries sector without making any distinction in relation to the species that are fished or caught. Hence, the fact that the Regulation on the Prohibition of Snow Crab Catching was adopted in 2014 is also inconsequential as restrictions have always been for fisheries in general. A reading of the provisions of the different legal instruments mentioned above shows that ESA’s assessment was right.
Considering the various arguements, ESA concluded that Norway could continue to apply the restricitons concerning the establishment of non-national in fishing operations or companies owning or operating fishing vessels, and decided to close the complaint against Norway.
ESA’s decision to close the complaint case against Norway is sound. ESA’s interpretation of the terms ‘fisheries’ and ‘existing restrictions’ contained in Annexes VIII and XII to the EEA Agreement was, in this author’s opinion, correct. It is clear that Norway has had restrictions in place concerning nationality requirements for any type of commercial fishing activities since before the signature of the EEA Agreement, and it is also reasonable to affirm that the subsequent disputed secondary legislation did not add new or different restrictions that would preclude the operation of the derogations of the above-mentioned Annexes.
Finally, it must be added that this case, and particularly the complaint submitted by the complainants, also makes for ‘interesting’ reading in relation to some of the background of the so-called ‘snow crab row’. It is sufficient to point out here the bizarre note of the Lithuanian Fisheries Service stating that “Pursuant to Articles 77(1) and 77(2) of the UNLCOS, it may be construed that if the coastal State does not exercise its sovereign rights for the purpose of exploring it and exploiting its natural resources on the continental shelf, it forfeits its sovereign rights for the purpose of exploring it and exploiting its natural resources on the continental shelf. In such case, the right to exploiting natural resources may arise without explicit consent of the coastal State” (emphasis added by the author). Such interpretation of Article 77 of the UNCLOS is simply wrong. It must be recalled that Article 77(2) clearly states that “The rights referred to in paragraph 1 [coastal State’s sovereign rights for the purposes of exploring and exploiting the natural resources of the continental shelf] are exclusive in the sense that if the coastal State does not explore the continental shelf or exploit its natural resources, no one may undertake these activities without the express consent of the coastal State” (emphasis added by the author). The contradictory views of the European Commission (letter from Lowri Evans and the subsequent authorization of licenses for snow crab) and the plainly incorrect interpretation of Article 77 of the UNCLOS offered by the Lithuanian Fisheries Service call into question the soundness of some of the legal arguments that are being invoked against Norway in the context of the ‘snow crab row’.
This post may be cited as: Neves, Maria Madalena das, EFTA Surveillance Authority Rejects Complaint Against Norway Related to Snow Crab Fisheries, 16 October 2017.
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One reply on “EFTA Surveillance Authority Rejects Complaint Against Norway Related to Snow Crab Fisheries”
Made me know about Decision of the EFTA Surveillance Authority, thanks