As well as puffins, sand eels are an important food source for kittiwakes and other seabirds, marine mammals and whitefish, and therefore a crucial element of the marine ecosystem. They are also commercially important for the production of fish meal which is used to feed livestock and farmed fish.

Earlier this year, DEFRA published its decision to permanently close all sand eel fisheries in English waters in the North Sea from 26 March 2024, before the start of the next fishing season. The closure is accompanied by the Sandeel (Prohibition of Fishing) (Scotland) Order 2024 SSI 2024 No 36, which prohibits fishing for sand eel within the Scottish zone (namely the sea adjacent to Scotland up to the 200 nautical miles limit).

Request for consultations

On 16 April 2024 the EU Commission announced that it had that day

requested consultations with the United Kingdom under the dispute settlement mechanism of the EU-UK Trade and Cooperation Agreement (TCA) regarding the United Kingdom's decision to prohibit the fishing of sandeel, with the aim of reaching a mutually agreeable solution. 

While the details of the request for consultations have not been made public, the EU press release notes that the measure “significantly restricts access for EU vessels to this fishery”. It further states that the EU “questions the compatibility of the full and permanent closure of the fishery with the principles and obligations under the TCA”.

The dispute procedure set out in Articles 738 and 739 TCA provides that if consultations do not result in a mutually agreed solution being reached within 30 days or such longer period agreed by the EU and the UK, the EU (as the complaining party) may request the establishment of an arbitration tribunal to adjudicate on the compatibility of the UK’s measures with the TCA.

The consultation period therefore ended on 16 May 2024. At the time of writing, neither the EU Commission nor the UK Government have made public whether consultation has been extended by agreement or whether any mutually agreed solution has yet been reached.

History of the regulation of sand eels

While international furore around the closure of the UK sand eel fishery is relatively recent, a policy of restricting sand eel fishing in UK waters is not a new one. A major sand eel fishing area adjacent to the northeast coastline of the UK has been closed to UK and EU vessels since 2000, following a request from the UK to the EU to establish a moratorium on fishing and advice from the International Council for the Exploration of the Sea (ICES). That closure remains in place in the EU and the UK as part of EU and assimilated law.

Further, since 2021 UK fishermen have not been permitted to take up the UK’s quota for sand eel fishery in the North Sea. However, this measure has limited effect on the extent of sand eel fishing in UK waters, given the vast majority of the total allowable catch for sand eel is allocated to the EU (roughly 97%). The majority of that share is allocated to Danish vessels, which fish sand eel for the production of fish meal which is in turn used as a feedstuff in farming. 

Nature organisations have long been campaigning for an end to sand eel fishery in UK waters, although a complete ban did not appear possible while the UK was still a member of the EU. In 2021, DEFRA announced a call for evidence on the future management of sand eel in UK waters. That was followed by consultations by the UK and Scottish Governments in 2023 on a proposed closure of fishing for sand eel in UK waters. The response to those consultations was overwhelmingly in favour of a full closure – over 95% in both cases. This is perhaps unsurprising given the consultation was undertaken at UK level and it is Danish fishermen (and correspondingly, the Danish economy) which will bear the brunt of the measures. By contrast, UK fisheries are likely to benefit as a result of the measure, given sand eels are an important food for commercially fished species such as haddock.

The TCA dispute settlement process

This is the first time that the dispute settlement process in the TCA has been triggered, and is an important test case for the post-Brexit EU-UK relationship and the ability of the TCA process to mediate disagreements between the Parties. Title 1 of Part Six of the TCA, entitled “Dispute settlement”, sets out a procedure for resolving inter-Party disputes which applies to many of the provisions in the TCA, including those governing fisheries under Heading 5 of Part Two to the agreement.  Article 736 TCA provides that disputes under the agreement are exclusively to be settled in accordance with the provisions of the TCA, and not via any other settlement mechanisms.

In brief, the procedure in Part Six of the TCA provides that:

• Both Parties shall endeavour to resolve the dispute by entering into consultations in good faith, with the aim of reaching a mutually agreed solution (Article 738(1)).
• The complaining Party may seek consultations by way of a written request: such a request should identify the measures at issue and the legal basis for the request, and the applicable provisions of the TCA (Article 738(2)).
• The respondent Party must reply to the request promptly and within 10 days of its delivery.
• Consultations shall be held within 30 days of the date of delivery of the request in person or by any other means of communication agreed by the Parties (Article 738(3)).
• Unless the Parties agree otherwise, consultations are deemed to be concluded within 30 days of the delivery of the request (Article 738(4)).
• Each party shall provide “sufficient factual information to allow examination of the measure at issue, including examination of the how the measure could affect the application of this agreement” (Article 738(6)).
• Consultations and positions taken by Parties are confidential and without prejudice to the rights of either Party in further proceedings (Article 738(8)).
• Where the consultation period expires without a mutually agreed solution being reached, the complaining Party may request the establishment of an arbitration tribunal (Article 739(1)).
• The Parties then have 10 days to agree the composition of the tribunal, or in default of agreement, to appoint arbitrators or chairpersons from lists previously established pursuant to Article 752 (Article 740).
• A specific procedure for arbitrations is set out in Annex 48 to the agreement, which provides for written submissions and hearings. Information on the date, time and venue of any hearing is to be made publicly available, unless the hearing is to be held in private.
• The arbitration tribunal must deliver its interim report within 100 days of the date of the establishment of the tribunal (Article 745(1)).
• Following this there is an opportunity for the Parties to comment on precise aspects of the interim report, and subsequently to comment on the other Party’s comments (Article 745(2)).
• The final report must be issued within 130 days of the date of the establishment of the tribunal (Article 745(4)). Article 745(1) and (4) permit an additional 30 day slippage period for the interim and final reports as an absolute deadline. 
• Where the arbitration tribunal finds the respondent Party in breach, that Party must take the necessary measures to comply with the ruling (Article 746(1)).
• Where a Party fails to comply with the ruling of the arbitration tribunal, the complaining Party may request temporary compensation or suspend obligations under the TCA at a level equivalent to the harm caused by the responding Party’s breach, until the breach has been remedied (Article 749).
• The rulings and the decisions of the arbitration tribunal must be made publicly available by the Parties (Article 754(6)).

Comment

The positions of the Parties

There is currently very little information in the public domain regarding the respective positions of the EU and the UK – likely in large part due to the confidentiality provision in Article 738(8). Such confidentiality may well help the Parties reach a mutually agreed solution through enabling free and frank discussions and minimising the political dimension of any conflict. However, it is concerning in terms of the lack of access to information on disputes under the agreement which have broader effects that the public will be interested in, for example (in this case) on the environment and economies of the UK and Member States. 

To some extent, the lack of publicly available information at this stage of the process is cured later in the process by the ability of members of the public to attend arbitration hearings and the requirement for arbitral decisions to be published. However, where a mutually agreed solution is reached without the need for arbitration, there will be little transparency as to how any compromise was reached. 

The EU’s published position is limited to that in its press release. As set out above, that only states that the EU questions the compatibility of the closure of sand eel fishery with the TCA. In terms of the UK position, a UK spokesperson has been quoted as saying that the sand eel closure is “fully compliant with our obligations under the EU-UK TCA and applies equally to UK and non-UK vessels”.

Some informed speculation is however possible on the positions that the EU and the UK are taking. Article 494(3) specifies certain principles which the Parties shall have regard to in relation to fisheries management, including at (c): 

basing conservation and management decisions for fisheries on the best available scientific advice, principally that provided by the International Council for the Exploration of the Sea 

The EU press release makes explicit reference to ICES, stating that fishing opportunities for sand eel are based on ICES advice and that:

For species such as sandeel, ICES takes into direct account the consumption of sandeel by other predators such as seabirds and marine mammals directly in its advice, as quantitatively based predation is routinely included in the assessments.

The EU press release also draws attention to the fact that total allowable catch (TACs) for sand eel was agreed pursuant to Article 498 between the UK and the EU through consultations which took place on 7 and 8 March 2024. Article 498(2)(a) requires TACs to be agreed on the basis of best available scientific advice, as well as other relevant factors including socio-economic considerations. The written record of the March 2024 consultations specifies a total allowable catch of 169,411 tonnes, to be divided between the UK and the EU in roughly 3% and 97% shares respectively. It does not mention the proposal to close the sand eel fishery in UK waters at the end of that month. Article 500(1) provides that where TACs are agreed, each Party shall grant vessels of the other Party access to fish in its waters, at a level and on conditions determined in the TAC consultations.

The UK is likely to rely on the provisions in the TCA which emphasise the rights and regulatory freedom of independent coastal states (Articles 493, 494(1) and 496(1)). It may draw support from the following principles in Article 494(3):

(a)    the precautionary approach to fisheries management;
(c)    best available scientific advice, which need not exclusively be that of ICES;
(e)    taking due account of and minimising harmful impacts of fishing on the marine ecosystem and taking due account of the need to preserve marine biological diversity; and
(f)    applying proportionate and non-discriminatory measures for the conservation of marine living resources and the management of fisheries resources, while preserving the regulatory autonomy of the Parties.

The business and regulatory impact assessment published by the Scottish Government alongside the 2024 Order notes that the proposed closure “is aligned with the EU’s overall approach of managing fish stocks in a sustainable manner” and refers to the current sand eel management measures in place since 2000 under EU and assimilated law. It also relies on the precautionary approach to supporting the protection of marine ecosystems as expressed in the Common Fisheries Policy.

Wider effects of the measure

Notwithstanding the closure, it appears that Denmark will be able to achieve its sand eel quotas by fishing in non-UK waters. However, this could lead to greater carbon emissions and negative effects on profitability due to the lower quality of fishing grounds outside the North Sea areas. 

A further potential effect is the inability to rely on future closure of sandeel fishery in the UK as a compensatory measure to facilitate offshore wind development (for example by mitigating the reduction in foraging space for seabirds or increased mortality risks). This concern was largely dismissed as irrelevant in the Scottish Government’s impact assessment, although it noted that the closure might be relied on as a compensatory measure under section 291(3) of the Energy Act 2023 (discussed here on this blog) if scientific evidence supported that position in the future.

The choice of dispute settlement mechanism 

Interestingly, in the present case the EU has chosen to initiate the request for consultations process under Article 738 TCA rather than the bespoke dispute settlement mechanism set out in the fisheries Heading at Article 506. Under Article 506(1), where a complaining Party alleges a failure to comply with the fisheries Heading, it may suspend access to its waters and the preferential tariff treatment which is otherwise granted to fishery products (and take other compensatory measures, depending on the economic and societal impact of the alleged failure). Applying such a suspension requires a complaining Party to refer the dispute to arbitration pursuant to Article 739 without prior recourse to consultations under Article 738 (see Article 506(5). 

Suspending access to waters and imposing tariffs – the drastic option – appears to have been the preferred approach of Danish fisherman. The EU’s choice of action instead shows reluctance to escalate this first dispute too quickly – or perhaps a lack of confidence in the strength of its case. Either way, it should not be too long before the outcome of this first test of the provisions of TCA – and of the future UK-EU relationship – is known.

Esther Drabkin-Reiter is co-commissioning editor of this blog and a barrister at Francis Taylor Building specialising in environmental, planning and public law.

Ned Westaway is advising the UK Government on this matter. He has had no involvement in the drafting of this post.