Facts
The EU's Common Fisheries Policy, which began in 1970, aimed at creating a common market for fisheries products by providing for free access to the waters of all Member States and introducing structural funds to ensure modernisation of the sector. In 1976 it was agreed that, as from 1 January the following year, Member States would extend the limit of their fishing zones to a distance 200 nautical miles (370 km) from their coastlines. In 1980 the EU concluded a fisheries agreement with Spain which gave the latter (which had the largest fishing fleet in Europe) limited rights to fish in the waters of the Member States. In 1983 concerns over the effect that equality of access might have on fishing stocks led to the introduction of certain controls, notably the concept of "total allowable catches" which set maximum quotas of fish which could be caught by each Member State.
Meanwhile, from 1980 Spanish fishermen began to infiltrate the UK fishing market by taking advantage of lax fishing vessel registration requirements contained in the Merchant Shipping Act 1894 which, although prohibiting ownership of vessels by non-UK nationals, allowed UK registered companies to be registered as the owners. Amongst the early beneficiaries of the 1894 Act was Factortame Limited, a company whose directors were Joseph J L Couceiro, John A Couceiro and Ken L Couceiro, all Spanish nationals resident and domiciled in Spain. The company, together with others whose directors and shareholders were mostly Spanish nationals, re-registered 53 vessels which had formerly flown the Spanish flag as British fishing vessels under the 1894 Act. They also acquired 42 existing British vessels with a view to using them in the fishing zone. Most of these vessels landed their catches in Spain, but as the fish were caught in UK waters, they counted against the UK fishing quota – a practice known as "quota hopping".
The British government sought to put an end to this practice and enacted a series of measures which proved largely ineffective. In 1988 the Merchant Shipping Act 1988 and the Merchant Shipping (Registration of Fishing Vessels) Regulations were introduced, replacing the system of registration contained in the 1894 Act with a new system under which a vessel could only be registered if it had "a genuine and substantial connection" with the UK. For this to be the case, three conditions had to be fulfilled: (i) the vessel must be British-owned; (ii) the vessel had to be managed and its operations had to be directed and controlled from the UK; and (iii) any charterer, manager or operator had to be a qualified person or company. A "qualified person or company" was a person who was a British citizen resident and domiciled in the UK or a company which was incorporated in the UK and had its principal place of business there having at least 75% of its shares owned by, and at least 75% of its directors being, "qualified persons".
As from 31 March 1989, fishing vessel registrations under the 1894 Act would lapse and the owners would be required to re-register under the 1988 Act. None of Factortame's vessels could satisfy the new requirements and an action for judicial review was brought in the Divisional Court in December 1988.
Read more about this topic: Factortame Litigation
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