In this blog post, Professor Panos Koutrakos discusses the first UK-EU arbitration ruling under the Trade and Cooperation Agreement.
On 28 April 2025, an Arbitration Tribunal handed down its final ruling in PCA Case No. 2024-45, the first dispute about the application of the EU-UK Trade and Cooperation Agreement (‘TCA’) .
The ruling is interesting for a number of reasons: it interprets a number of important TCA substantive provisions; it is the first time that the dispute-settlement provisions laid down in Title I of Part Six of TCA have been applied; and the dispute is about fisheries, which is an area that not only exercised the TCA negotiators considerably but is also still a source of controversy in the UK-EU relations.
The subject-matter of the dispute is technical and complex. The ruling 263 page long. This blog post will provide a short outline and makes a number of points that pertain to the interpretation of the TCA.
The legal framework and the subject matter of the dispute
The rules on fisheries are set out in Heading Five of Part 2 TCA. Article 493 TCA acknowledges the sovereign rights of coastal States and requires that the Parties exercised them in accordance with international law:
The Parties affirm that sovereign rights of coastal States exercised by the Parties for the purpose of exploring, exploiting, conserving and managing the living resources in their waters should be conducted pursuant to and in accordance with the principles of international law, including the United Nations Convention on the Law of the Sea.
The objectives of the TCA Fisheries provisions are set out in Article 494(1)-(2) TCA:
The Parties shall cooperate with a view to ensuring that fishing activities for shared stocks in their waters are environmentally sustainable in the long term and contribute to achieving economic and social benefits, while fully respecting the rights and obligations of independent coastal States as exercised by the Parties.
The Parties share the objective of exploiting shared stocks at rates intended to maintain and progressively restore populations of harvested species above biomass levels that can produce the maximum sustainable yield.
Article 494(3) TCA sets out a number of principles to which the parties ‘shall have regard’, two of which are relevant to this dispute:
(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 (ICES);
…
(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 dispute was about sandeel fishing in the North Sea. Sandeel are small eel-like fish that feed on plankton. As they constitute a substantial proportion of the diet of a number of marine mammals, seabirds, and fish, they are important for the marine ecosystem in the North Sea.
Sandeel are a shared stock within the meaning of Article 495(1) TCA i.e. they are found in waters for which the EU and UK agree on shares of total fishing quotas per year. In accordance with Annex 35 TCA, sandeel fisheries have been managed on the basis of a strategy whereby the annual maximum quantity that may be caught is set so that the stock may replenish the following year. When agreeing the above quantity, the UK and the EU rely on scientific advice provided by an intergovernmental marine science organisation known as the International Council for the Exploration of the Sea.
While Norway, Sweden, Germany and Denmark participate in the sandeel fishing in the North Sea, it is the latter that is the primary holder of the EU-allocated sandeel quotas.
On 26 March 2024, following public consultation, the UK imposed a ban on sandeel fishing in the English waters of the North Sea and in all Scottish waters. The former was imposed, in accordance with the Fisheries Act 2020, under Statutory guidance setting out variations to licences granted to fishing vessels by the Marine Management Organisation; the latter was imposed under the Sandeel (Prohibition of Fishing) (Scotland) Order 2024, which was adopted under Section 5(1)(a) of the Sea Fish (Conservation) Act 1967.
The objective of the ban was to increase sandeel stocks in order to increase the food availability for seabirds, marine mammals and other fish species and, therefore, bring about wider environmental and ecosystem benefits.
On 16 April 2024, the EU requested consultations with the UK under Article 738 TCA. On 25 October, the EU served on the UK a request to establish an arbitration tribunal under Article 739 TCA.
The EU claimed that the above ban violated the TCA on three grounds.
The first claim was about the best available scientific advice obligation: the EU argued that the ban was contrary to Articles 496(1) and (2) TCA, read together with the principle set out in Article 494(3)(c) TCA:
Each Party shall decide on any measures applicable to its waters in pursuit of the objectives set out in Article 494(1) and (2), and having regard to the principles referred to in Article 494(3).
A Party shall base the measures referred to in paragraph 1 on the best available scientific advice.
The second claim was about proportionality and non-discrimination: the EU argued that the ban was contrary to Articles 496(1) and (2) TCA, read together with the principles of proportionality and non-discrimination set out in Article 494(3)(f) TCA.
The third claim followed from the above: the EU argued that that ban was contrary to the obligation to grant full access to its waters to fish in accordance with Article 2(1)(a) of Annex 38 TCA (Protocol on Access to Waters):
By way of derogation from Article 500(1), (3), (4), (5), (6) and (7) of this Agreement, during the adjustment period each Party shall grant to vessels of the other Party full access to its waters to fish:
stocks listed in Annex 35 and in tables A, B and F of Annex 36 at a level that is reasonably commensurate with the Parties’ respective shares of the fishing opportunities;
The ruling of the Arbitration Tribunal
The Arbitration Tribunal consisted of Hélène Ruiz Fabri, David Unterhalter and Penelope Ridings (who chaired it). Its ruling was unanimous.
The first claim was rejected: the Tribunal concluded that the EU had failed to demonstrate that the sandeel fishing ban had been imposed without having regard to the best available scientific advice. While it acknowledged certain flaws of the document relied upon in the English Sandeel Consultation, the Tribunal concluded that they were not such as to undermine its reliability. Paragraph 534 of the Ruling is indicative of the Tribunal’s approach:
Although the Natural England/Cefas/JNCC Advice might have adopted an alternative, more methodologically rigorous, approach to calculating sandeel fishing mortality, the alleged flaw is not an error of such materiality as to call into question, on its own, that the Natural England/Cefas/JNCC Advice constitutes “best available scientific advice”.
On the first part of the second ground (the proportionality claim), the Tribunal pointed out the failure of the UK to take account of the adverse effects of the ban on the rights of interests of the EU. This was not the case with the ban in Scottish waters which was adopted after the decision-maker had considered not only the benefits of the sandeel prohibition but also the economic cost to the UK and EU fishing and processing industries and the impairment of the rights of the EU during the adjustment period.
The discrimination claim was rejected, as the Tribunal found a clear nexus between the differential treatment and the legitimate objective of the ban, which was to close all UK waters to all UK and EU vessels in order to provide ecosystem benefits.
Finally, the third claim was upheld without analysis: by failing to take into account the principle of proportionality in banning sandeel fishing in the English waters of the North Sea, the UK also failed to grant access to EU vessels in accordance with Article 2(1)(a) of Annex 38 to the TCA.
Comments
First, from the date of its establishment, it took the Tribunal 160 days to deliver its ruling. While Article 745(4) TCA imposes a 130-day deadline as a rule, it allows for 160 days provided that the Tribunal states in writing the reasons it would need this longer deadline (in this case, it was due to the complexity of the dispute and the volume of submissions). This speed is impressive.
Second, the Arbitral Tribunal was loath to rule on issues raised by the parties unless they were essential for its ruling. Examples of this pragmatic approach include the rule about the burden of proof set out in the WTO Appellate Body Decision in Wool Shirts And Blouses (para. 473), the precautionary approach to fisheries management in the abstract (para. 500), and the relevance of specific WTO Panel or Appellate Body decisions (para. 632).
Third, from a substantive point of view, the ruling makes it clear that the principles in accordance with which the TCA Parties may exercise their regulatory autonomy are not merely rhetoric. They impose obligations which the Parties must show that they take seriously. In relation to the principles of proportionality (which was held to be violated by the fishing ban in the English waters of the North Sea) and the principle of non-discrimination, laid down in Article 494(3)(f) TCA, the Tribunal held as follows in paras 604-605:
The Arbitration Tribunal considers that “having regard to” in the context of the TCA cannot be relegated to a purely procedural obligation with no connection between the decision-maker turning its mind to the principles listed in Article 494(3) and the outcome of the decision. The process of decision-making, which takes into account the principles in Article 494(3), must lead to a reasoned outcome, namely the decision on fisheries management measures. As suggested by the European Union, the principles inform that decision-making process. [fn omitted]
What then is the relationship between the process of decision-making that must have regard to the principles and the decision that results from this process? The decision-maker is required to have regard to the principles and will enjoy the benefit of that consideration. In then deciding on a measure, the consideration will be informative but not determinative of the decision to adopt a measure. The decision need not comply with the yield derived from taking account of the principles. But neither is the duty to have regard a matter of notional or merely formal procedural observance. Rather, the duty to have regard may yield relevant considerations with which the decision-maker must engage in coming to a decision as to a measure. Such considerations may, ultimately, be unavailing, but they cannot be ignored. Nor, however, does the duty to have regard to the principles determine what measure a Party may take. There should be a reasoned engagement with the yield of the application of the principles. This interpretation neither consigns the duty to empty procedural formalism, nor does it render the measure subject to a test of conformity to the principles.
Third, in carrying out its power to review compliance with proportionality, the Arbitration Tribunal is not intrusive. Its approach is to ascertain whether the decision to impose a fishing ban amounted to a “reasonable conclusion in line with” the relevant scientific advice (para. 571). In fact, in various parts of the ruling, the Tribunal appears keen to stress the limits of its role. For instance, in para. 684 it states as follows:
The standard the Arbitration Tribunal adopts is to review whether the various factors bearing on the proportionality of a measure were considered and whether these considerations were applied in the actual weighing and balancing such that what was done satisfies the requirement to “have regard to” the principle of applying a proportionate measure. In doing so, the Arbitration Tribunal does not seek to review the weighing and balancing to see if it would have come to a different decision on the balancing. Rather, the Arbitration Tribunal must assess whether there has been a failure to have regard to some weighty element of the costs and benefits such that the weighing and balancing becomes distorted due to deficiencies which affect the weighing exercise and gives rise to the risk that the disparity between costs and benefits may be significant. In doing so, the Arbitration Tribunal will make an objective assessment of the record and will not seek to remake the decision or stand in the shoes of the decision-maker.
Fourth, from a broader perspective, the ruling is, in essence, about the scope of regulatory autonomy and the conditions under which the TCA Parties may exercise it. This is not just about fisheries (in the context of which it is mentioned in Article 494(3)(f) TCA) but also about the entire scope of the TCA. After all, regulatory autonomy is referred to in recital 7 of the Preamble to the TCA (“recognising the Parties’ respective autonomy and rights to regulate within their territories in order to achieve legitimate policy objectives …”) and in Article 1 TCA where it is viewed as central to the EU-UK relationship.
In fact, so central is the role of regulatory autonomy that the Arbitration Tribunal should stress in para. 687 of the ruling that its conclusion about the violation of the principle of proportionality by the UK should not be viewed as encroaching upon the latter’s regulatory autonomy:
The Arbitration Tribunal understands that the Ministerial Submission referred to the views of Birdlife International that there ‘is an urgent need to build resilience’ in seabird populations. [fn omitted] However, the record does not show any analysis as to why the matter so urgent that it required action during the adjustment period. This is not to say the rights of the European Union during the adjustment period should have primacy. Indeed, they should be weighed in light of the regulatory autonomy of a Party to stop fisheries management measures in accordance with the requirements of the TCA. However, the failure to take into consideration the rights and interests of the European Union during the adjustment period is a factor that calls into question whether regard was had to the principle of applying a proportionate measure.
What the above suggests about the decision-making process that led to the imposition of the fishing ban in the English waters of the North Sea is that there was something egregious about the absence of any consideration for the rights and interests of the EU.
What now?
In accordance with Article 746(1) TCA, the UK “shall take the necessary measures to comply immediately with the ruling of the arbitration tribunal in order to bring itself in compliance with the covered provisions”.
The UK has 30 days after the delivery of the ruling to notify the EU “of the measures which it has taken or which envisages to take in order to comply” (Article 746(2) TCA).
In their response, the Cabinet Office and the Department for Environment, Food and Rural Affairs state that the ruling does not mean the UK is “legally obliged to reverse the closure of English waters” and that the Government “will undertake a process in good faith to bring the UK into compliance”.
Share this post on social media: