JC & Ors v R. [2015] EWCA Crim 210

[2015] EWCA Crim 210Case No 201401617B5. 201401618B5. 201401619B5
IN THE COURT OF APPEAL (CRIMINAL DIVISION)
ON APPEAL FROM THE CROWN COURT AT CHELMSFORD
HHJ TURNER QC
T20120250. T20120252. T20120253
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 26/02/2015
Before
LORD JUSTICE DAVISMR JUSTICE SIMONMR JUSTICE HOLGATE
Between
(1) JCAppellants(2) TSAppellant(3) DSAppellantTHE CROWNRespondent
RHODRI THOMPSON QC and JAMAS HODIVALA and NICHOLAS GIBSON (instructed by Levy & Co Solicitors) for First Appellant.ROBERT O’DONOGHUE and LEE FISH (instructed by Marine Management Organisation) for Respondent. for The second and third appellants were not represented.Hearing Hearing date: 23 January 2015
Judgment

Introduction

[1]In April and May 2011 the Marine Maritime Organisation (“MMO”) received information indicating that the first appellant, the owner of a fishing vessel under 10 metres in length, had landed quantities of skate and rays caught in the North Sea in excess of the amounts permitted under his vessel licence. When this was put to the first appellant, his robust response, as it is alleged, was to the effect that the Common Fisheries Policy had no jurisdiction within a 6 nautical mile limit; that fishing vessels Were not required to comply with quotas set out by the MMO; and that he intended to fish outside the quota system and land everything he caught.[2]In due course he was charged with an offence of exceeding the monthly catch limit contrary to s.4(6) of the Sea Fish (Conservation) Act 1967 as amended, read with Article 3 of the Sea Fish Licensing Order 1992 as amended.[3]The second and third appellants are also owners of fishing vessels under 10 metres in length. Proceedings were brought against them likewise alleging over-fishing in breach of the conditions of their respective licences.[4]The proceedings were joined. At an early stage the appellants raised an issue, asserting that it was an abuse of process to prosecute them. It was said that the licence conditions attaching to their vessels, limiting the amount of fish they could land, were contrary to European Union law. The burden of establishing such a contention lay on the appellants; but it was accepted by the MMO that if it was established then the prosecution must fail. There is, for this purpose, no distinction between the positions of the three appellants.[5]The matter was dealt with at a preparatory hearing, pursuant to the provisions of the Criminal Procedure and Investigations Act 1996, by His Honour Judge David Turner QC sitting in the Chelmsford Crown Court. A good deal of expert evidence was adduced and elaborate legal arguments were advanced before him. By a ruling delivered on 20 March 2014 he rejected the appellants’ arguments and declined to stay the proceedings. We would at the outset pay tribute to the manifest thoroughness and care which the judge had given to his ruling: on a matter which can hardly be said to be the usual fare of the Crown Courts.[6]The judge gave permission to appeal from his ruling. We are satisfied that this court has jurisdiction to entertain the appeal.[7]Two points had been argued before the judge. The first, in summary, was that the system by which fishing quotas were allocated in England breached the EU law principle of equal treatment. The second was that such system was operated in breach of Articles 107 and 108 of the Treaty on the Functioning of the European Union relating to state aid.[8]Grounds of appeal were advanced in respect of the judge’s decision, which had been adverse to the appellants on both points. In the event - and in circumstances we will need to come on to explore - the appeal hearing before us was confined to the second point: that is, the state aid point.[9]The first appellant was represented before us by Mr Rhodri Thompson QC (who did not appear below) leading Mr Hodivala and Mr Gibson. The second and third appellants did not appear but had previously made clear that they adopted the first appellant’s arguments. The respondent (the MMO) was represented by Mr O’Donoghue and Mr Fish. The legal background[10]The position has to be assessed at the time of the alleged offences. We gather that there have since been a number of changes and revisions to the regulations and procedures applicable.[11]The legislative background is highly complex. It involves consideration of various Council Regulations as well as domestic legislation. It is not, however, necessary to engage in an exhaustive review of all such legislation (which in any event can be found set out in other legal decisions in this context, as we mention below). We will highlight only those which seem to us to be central for present purposes.[12]The context for the legislation is, of course, the scarcity of fish. Demand greatly exceeds supply and has done for many years. Without some restraints being imposed, fish stocks would become exhausted and there would be profound environmental consequences. It is right to say that, notwithstanding the vigorous initial response of the first appellant himself, as reported, the defence has not sought in these proceedings to say that unlimited quotas are required to be allocated either to all fishing vessels or to all under 10 metre vessels (more strictly, vessels which are 10 metres in length or under). The objection is as to how the restrictions had been achieved by the then applicable scheme with regard to under 10 metre vessels, having regard to the need for compliance with EU law.[13]For this purpose, the allocation of fishing quotas for Member States is laid down by the EU through the Common Fisheries Policy. Council Regulations for this purpose have been made and amended from time to time. For the purpose of these appeals that of prime importance is Regulation 2371/2002/EC. Such Regulation, of course, has direct application in the UK. Its objectives are, as is usual for such Regulations, set out in detailed recitals. Sustainable exploitation of fish stocks “in the context of sustainable development, taking account of the environmental, economic and social aspects in a balanced manner” is a key objective. For present purposes, Article 20 is central: “1. The Council, acting by qualified majority on a proposal from the Commission, shall decide on catch and/or fishing effort limits and on the allocation of fishing opportunities among Member States as well as the conditions associated with those limits. Fishing opportunities shall be distributed among Member States in such a way as to assure each Member State relative stability of fishing activities for each stock or fishery. 2. When the Community establishes new fishing opportunities the Council shall decide on the allocation for those opportunities, taking into account the interests of each Member State. 3. Each Member State shall decide, for vessels flying its flag, on the method of allocating the fishing opportunities assigned to that Member State in accordance with Community law. It shall inform the Commission of the allocation method. 4. The Council shall establish the fishing opportunities available to third countries in Community waters and allocate those opportunities to each third country. 5. Member States may, after notifying the Commission, exchange all or part of the fishing opportunities allocated to them.” (Subsequent Articles in that Regulation provide for enforcement of the rules of the Common Fisheries Policy, with ultimate evaluation and control bestowed on the Commission.) It is to be noted that, by Article 20.3, it is for each Member State to decide on the method of allocation of the overall quota assigned to it. But it must do so “in accordance with Community law”.[14]So far as domestic legislation is concerned, the principal provision which is relevant for present purposes is s.4 of the Sea Fish (Conservation) Act 1967, as amended. In particular, s.4 provides for the licensing of fishing boats. By s.4(6) and (11) this is provided: “4(6) A licence under this section may authorise fishing either unconditionally or subject to such conditions as appear to the Minister granting the licence to be necessary or expedient for the regulation of sea fishing [(including conditions which do not relate directly to fishing)] and in particular a licence may contain conditions -(a) as to the landing of fish or parts of fish taken under the authority of the licence (including specifying the ports at which the catch is to be landed); or(b) as to the use to which the fish taken may be put; [or(c) restricting the time which a vessel named in the licence may spend at sea (whether for the purpose of fishing or otherwise)] and if a licence condition is broken the master, the owner and the charterer (if any) of the vessel named in the licence are each guilty of an offence under this subsection. … 4(11) The Ministers may make arrangements for any of their licensing powers under this section (but not the power to make orders under subsection (1)) to be exercised by other persons on their behalf.” (a) as to the landing of fish or parts of fish taken under the authority of the licence (including specifying the ports at which the catch is to be landed); or (b) as to the use to which the fish taken may be put; [or (c) restricting the time which a vessel named in the licence may spend at sea (whether for the purpose of fishing or otherwise)][15]The MMO itself was constituted under the Marine and Coastal Access Act 2009. It is common ground that the MMO is authorised to grant licences for relevant fishing vessels registered in English ports (it is not necessary, for present purposes, to deal with the separate position of Scottish, Welsh and Northern Irish fisheries administrations - albeit all the fishery administrations work to shared aims under a written Concordat) and is authorised to include conditions in such licences as to quota restrictions. The MMO allocates the fishing quota for vessels within the under 10 metre category - in effect, the inshore fishing fleet. As explained in the evidence before the judge, the quota for the under 10 metre vessels is held centrally, as it were, on behalf of the under 10 metre fleet. Quota is not allocated to vessels individually, as is generally the case with the over 10 metre fleet. Producer organisations[16]Within a fishing fleet there can be involved - and in the English fishing fleet there are involved - collectives known as producer organisations (“POs”). POs are the subject of Regulation 104/2000/EC relating to the common organisation of the markets in fishery and aquaculture products. Again, the recitals are instructive. Recital (9), for example, states that “producer organisations form the backbone of the common market organisation” and that “concentration of supply through these organisations is more than ever an economic necessity”. POs thus are acknowledged as having, as it were, their own special status.[17]Article 5 of the Regulation prescribes conditions for, grant of and withdrawal of recognition of POs.

(c) 2 to have rules which require their producer members:

“2. Where the Member State concerned has decided that some or all of its catch quota or quotas and/or application of fishing effort measures are to be managed by producer organisations, to apply the measures adopted by the organisation to that end.”
In addition there is a requirement imposed by Article 5.1(d)5 that such rules provide for the imposition of penalties for the infringement of obligations under the rules.[18]In point of practice, as explained in the evidence before the judge, most of the over 10 metre vessels in the English fishing fleet are members of a PO (sometimes known as “the sector”). Such POs may, as between themselves, have different rules - for example, some may set their quotas on an annual basis, others on a monthly basis. However, there are some over 10 metre vessels which are not members of a PO (they are sometimes called “non-sector” vessels). Very few under 10 metre vessels are members of a PO — there is, for one thing, considerable expense involved - but it is nevertheless of some importance to note that under 10 metre vessels are free in principle to apply to join a PO.[19]It is also to be noted that, under other Regulations, it is both contemplated and provided that there be differences for under 10 metre vessels as compared to over 10 metre vessels. By way of example, under 10 metre vessels are not required to keep log books as to their catches: see Article 14 of Regulation 1224/2009/EC. There are other requirements, which we need not here enumerate, contained in various Regulations likewise differentiating between under 10 metre vessels and over 10 metre vessels. Thus some prospective differences in treatment between over 10 metre and under 10 metre vessels are inherent in the overall regime, sanctioned under EU law.[20]The evidence before the judge was that over 95% of the total allowable catch was allotted to over 10 metre vessels (and almost all of that to POs).[21]As further explained to the judge, all catches of a relevant fish stock (be they catches by a PO vessel, a non-sector vessel or an under 10 metre vessel) are allotted to the total allowable catch available, as set annually by the Council, to the UK. Hence restrictions for all three groups are needed. These are achieved by the use of fixed quota allocations (“FQA”), the units of which being generally based on the relevant vessels’ landings in a fixed reference period: typically, 1994 to 1996. For over 10 metre vessels the FQA units are attributed (via the POs, in the case of PO vessels) to the licences of individual vessels; whereas for under 10 metre vessels such FQA units are held centrally by (for English vessels) the MMO.[22]The responsibility for managing quota allocations, and ensuring that they are not exceeded, lies with the PO for the relevant PO vessels: with the sanction of penalties (as required by Regulation 104/2000) in case of breach by a PO member and with the further available sanction of prosecution and fines. The responsibility for managing quota allocations, and ensuring that they are not exceeded, in the case of under 10 metre vessels (or non-sector vessels) lies with the relevant fisheries administration - here, the MMO. For under 10 metre vessels, the limits set are always on a monthly basis. Each such vessel, on setting out from port, is able to ascertain in advance - as explained to the judge - the amount of stock available to it to land by reference to its licence. The potential sanctions for breach are prosecution and fines.[23]A system of swaps, acquisition and transfers of FQA units is permitted and occurs. So far as under 10 metre vessels are concerned, there are also procedures available such as “underpinning” or “top-slicing”, designed to maintain, in effect, a guaranteed minimum level of quota. It is not necessary here to go into further detail.[24]As we have said, under 10 metre vessels are free to join a PO. This however is relatively expensive, as such a vessel needs to acquire FQA units to enable it to do so: consequently, few have joined a PO, as the evidence showed. For an over 10 metre vessel, on the other hand, the relevant units are allocated without any requirement for payment. In addition, there is the ability to buy or lease further FQA units from others holding such units.[25]For those interested, a masterly and most detailed exposition of the operation of quota differences applicable to under 10 metre vessels as compared to over 10 metre vessels and of the working of the FQA system generally can be found in the judgment of Cranston J in United Kingdom Association of Fish Producer Associates v Secretary of State for the Environment, Food and Rural Affairs & Ors [2013] EWHC 1959 Admin. The Judge’s Ruling[26]Numerous proposed objections, all by reference to EU law, had previously been mooted in these proceedings by the defence. But by the time the matter came on for hearing before the judge they had reduced to the two we have mentioned.[27]Although the appellants no longer pursue in this court a challenge to the judge’s ruling on the equal treatment (or non-discrimination) point raised below we should deal with it. This is because it was conceded before the judge - as he records - that the requirement of “selectivity” for the purposes of the state aid argument (which we discuss below) was essentially the same point as “comparability” for the purposes of the equal treatment/non-discrimination argument. The judge had rejected the comparability argument; and that being so, one might wonder how the second ground of challenge could succeed when the first ground of challenge failed and is no longer the subject of appeal. Principle of equal treatment[28]For the appellants, it had been argued before the judge that the regime applicable to POs was significantly different from that applicable to non-PO vessels, including under 10 metre vessels, and to the detriment of the latter. It was then said, by reference to the principle of equal treatment, that: i) The POs and under 10 metre vessels were in a comparable position; ii) There was a difference in treatment of the two groups; and iii) That difference in treatment lacked objective justification.[29]This was an ambitious submission. True it is that there is the common factor of those involved being fishing vessels between them aiming to fish within the total allowable catch. But thereafter, in terms of comparability, the differences are legion: indeed we emphasise that these differences include the point that the two categories (PO vessels and under 10 metre vessels) operate under regimes having significant differences which various Council Regulations had themselves expressly contemplated and addressed.[30]What was maintained, nevertheless, was that the differences as to the allocation and treatment of the quota between the over 10 metre vessels within a PO and the under 10 metre fleet were unfairly discriminatory and objectively unjustifiable. These asserted differences included, among other things, the fact that the under 10 metre fleet was allotted quota solely on a monthly basis; that over 10 metre vessels had an individual quota allocation unlike under 10 metre vessels which had no individual allocation; that over 10 metre vessels within a PO could share their quotas and could carry over quota to other months, unlike under 10 metre vessels; and that over 10 metre vessels within a PO were not in internal competition for quota, unlike under 10 metre vessels. It was said overall that the under 10 metre fleet was put at a material competitive disadvantage by the differential treatment.[31]The judge would have none of this. It is a fundamental part of any challenge based on the principle of non-discrimination or equal treatment that comparable situations are not to be treated differently and different situations are not to be treated alike (absent objective justification). Shortly put, in the present case the two situations were, as he found, not comparable in fact or in law. The two regimes - consistently with what was contemplated by various Council Regulations - are different. Further, it can be observed that some of the differences can be said to “favour” under 10 metre vessels. For example, PO vessels could only fish for quota stocks whereas under 10 metre vessels could fish both for non-quota and for quota stocks (the evidence was that many fished only for non-quota stocks and some for both non-quota and quota stocks: very few indeed fished for quota stocks only). Further, PO vessels were required to submit to certain regulations - for example, but by no means limited to, the keeping of log books and other detailed records - when under 10 metre vessels were not. Moreover, since the operation and management of a PO is expensive, a PO vessel has to pay an annual fee - typically a percentage of gross annual turnover - whereas under 10 metre vessels have no such obligation.[32]The arguments advanced on this issue on behalf of the appellants were also not easily reconcilable with the approach of the Court of Appeal in R v Ministry of Agriculture, Fisheries and Food ex p. Astonquest Limited [2000] EuLR 371.[33]In that case the applicant, the owner of a “non-sector” vessel (that is, not within a PO) challenged the quota restrictions set in 1997 for its vessel, arguing that the system of catch restrictions discriminated against non-sector vessels and favoured PO vessels. That is an argument broadly similar to that raised in the present case, even if in Astonquest the comparator groups strictly were sector and non-sector vessels, not (as here) over 10 metre PO vessels and under 10 metre vessels. In the course of his judgment, and after a valuable review of the then regime of fishing quotas and Community law principles, Robert Walker LJ acknowledged that there were differences between the sector and non-sector regimes. He referred to the judgment of Hobhouse J in Milk Marketing Board v Cricket St Thomas Estate [1991] 3 CMLR 123, in the course of which Hobhouse J had said:
“Provided that the scheme is non-discriminatory in principle and fair, there is no principle...which requires complete equality.”
Robert Walker LJ then went on to say this, at p.390:
“As Schiemann LJ pointed out in the course of argument, discrimination usually consists of one decision-maker treating one class in one way and another class differently, not in two decision-makers according different treatment to two respective classes. Astonquest’s real complaint is that POs have worked out better schemes for division of their shares of quota, and that MAFF has failed to follow them. …. The Community legislation contemplates and, indeed, requires, that management and control of the sector (vessels in POs) and the non-sector (vessels not in POs) should be organised in different ways.”
Schiemann LJ at p.391 said this; “Community law clearly permits the establishment of a system of fishing control which is in part under the detailed control of POs and in part under the control of MAFF. They have, broadly speaking, established separate regimes to ensure that they stay within their sectoral allocations. MAFF and some of the POs chose the MAFF system. The bulk of the POs chose another system. I think that the appellants accept that either of these regimes would comply with the law were it not for the other. The complaint is essentially that the co-existence of these regimes results in discriminating against those who opt to move into the non-sector regime. It seems to me to follow from the fact that Community law permits the establishment of two regimes, one to be administered by the state and one of which can be administered by POs, that it cannot be a legitimate ground of complaint that the system administered by MAFF differs from the system administered by the majority of POs. The law does not require MAFF to conform with what the POs have done; nor does it require the POs to conform with what the MAFF has done; nor does it require them both to conform with each other. They are each entitled to make their own judgment.”[34]As Mr O’Donoghue pointed out to the judge, a like approach was predicated in the case of R v Bossom and Joy [2006] 4 All ER 995, [2006] EWCA Crim 1489. Indeed the whole basis of the argument in that case was that PO vessels and under 10 metre vessels were not comparable and so should not be required to be treated in the same way in respect of which complaint was made - the very converse of the argument now being advanced. We further note that - whilst the case was directed at somewhat different points - the overall approach of Cranston J in paragraphs 120-126 of his judgment in the United Kingdom Association case (cited above) also does not fit at all well with the appellants’ approach in the present case. Yet further, the European Court has emphasised that allocations of fishing quotas within a national fleet are very much for member states to determine: see Case C 372/08 Atlantic Dawn Limited v Commission [2009] ECR 1.[35]In our view, the judge was justified in the circumstances of this case, overall, in rejecting the argument based on the principle of equality for the reasons he gave. If it be relevant, we add that we also see no reason to doubt his further conclusion that in any event the differences in treatment could be objectively justified. We need say no more on this whole issue, however, as there is no longer an appeal pursued on this ground. The legal principles relating to state aid[36]We then turn to the ground relating to alleged unlawful state aid.[37]It is not necessary for us to set out Articles 107 and 108 of the Treaty. We bear them in mind. So far as the relevant elements of state aid are concerned, these are, as was accepted before us for the purposes of this case, conveniently and accurately summarised in paragraph 28 of the judgment of Robert Walker LJ in Professional Contractors Group v Commissioners of Inland Revenue [2002] 1 CMLR 46, [2001] EWCA Civ 1945. The required elements are as follows:
“(1) An “aid” in the sense of a benefit or advantage which (2) is granted by the State or through State resources, (3) favours certain undertakings over others (the “selectivity” principle) (4) distorts or threatens to distort competition, (5) is capable of affecting trade between Member States and (6) has not been notified to the Commission.”
In point of practice, elements (1) and (3) often tend to be run together. It was common ground before us that all elements are required to be satisfied if a state aid objection is to be made out. Submissions and disposition[38]The main - albeit not sole - argument before us centred on the selectivity principle.[39]We should record that in a number of respects Mr Thompson sought to reopen or reargue the facts. He took us through details of some of the evidence, both written and oral, adduced before the judge. However we see no justification in reopening the evidence and have no reason for thinking that the judge overlooked or misunderstood aspects of the evidence.[40]Given the basis on which the judge had rejected the discrimination argument (essentially on the footing that like was not being compared with like) and given further the concession made below to the effect that selectivity for the purposes of state aid involved essentially the same point as comparability under the principle of non-discrimination - a concession which seems to us, in the circumstances of this case, to have been pragmatic and which in any event was one which Mr Thompson did not seek to withdraw - there appeared to be an initial difficulty, as we have already indicated, in the appellants’ pursuing this appeal on the state aid ground whilst abandoning the appeal on the discrimination ground.[41]A further difficulty then emerged. The list of issues placed before the judge indicated that the appellants’ stance was that a system which, as it was alleged, results in the state foregoing the collection of fines amounts to an aid from state resources; and that the method of allocation of quota to the over 10 metre PO fleet as compared to the under 10 metre fleet involved a reduced likelihood of PO members being prosecuted (and so fined) by the state as compared to under 10 metre vessels.[42]But on the morning of the hearing before us Mr Thompson produced a document headed “Core Propositions of the Appellant”. Paragraph 1 reads as follows:
“1. The allocation by the UK authorities of the ‘total allowable catch’ for 2011 (‘the 2011 Allocation’) conferred a ‘selective benefit’ on operators of >10 metre vessels as against operators of <10 metre vessels: a) The former received a valuable tradable asset free of charge, in the form of a fixed quota allocation for 2011 (‘FQA’) based on the historic level of catch (‘track record’) of their >10 metre vessels between 1994 and 1996; whereas the latter were given only a monthly, non-transferable flat rate licence based on a pooled assessment of the historic levels of catch of the entire <10 metre fleet. b) The former were able to use their FQA to join Producer Organisations (‘POs’) without further payment, enabling them (i) to avoid prosecution for overfishing altogether and (ii) to benefit from the significantly more flexible management arrangements available to PO members; whereas the latter could not become members of POs without purchasing FQAs from operators (or former operators) of >10 metre vessels and were therefore exposed to prosecutions on a monthly basis.”
When further asked by the court he then explained - which was not obvious from the document - that (a) and (b) were intended to be disjunctive, not conjunctive. Thus it was in effect now being asserted that the very fact (as alleged) that the FQA applicable to over 10 metre vessels was “a valuable tradable asset” received “free of charge” in itself constituted selective benefit. That was not the case presented below. Although it had there been stated that the FQA units for over 10 metre vessels were allocated without charge and were a tradable asset that was in the context of illustrating the differences under the two regimes; and then was linked to an argument as to the asserted capability on the part of over 10 metre vessels, by reason of the flexibility made available to them in acquiring further FQA units, to avoid prosecution and fines: the point raised in paragraph 1(b) of the Core Propositions. The whole focus of the argument below had been by reference to the argument that under the two regimes, the over 10 metre PO vessels were in effect able to exempt themselves from prosecution and fines whereas under 10 metre vessels were not. a) The former received a valuable tradable asset free of charge, in the form of a fixed quota allocation for 2011 (‘FQA’) based on the historic level of catch (‘track record’) of their >10 metre vessels between 1994 and 1996; whereas the latter were given only a monthly, non-transferable flat rate licence based on a pooled assessment of the historic levels of catch of the entire <10 metre fleet. b) The former were able to use their FQA to join Producer Organisations (‘POs’) without further payment, enabling them (i) to avoid prosecution for overfishing altogether and (ii) to benefit from the significantly more flexible management arrangements available to PO members; whereas the latter could not become members of POs without purchasing FQAs from operators (or former operators) of >10 metre vessels and were therefore exposed to prosecutions on a monthly basis.”[43]Mr O’Donoghue protested at this new stance adopted by the appellants. He emphasised that this was not the case presented below. Further, having only received Mr Thompson’s document on the morning of the hearing before us, he said that he had had no proper opportunity fully to consider or research authorities relevant to the new argument. Mr Thompson’s riposte was to the effect that Mr O’Donoghue should have to bear the consequences of his failing to discern the appellants’ argument from their skeleton argument. We were not much impressed with this riposte: if only because, having previously read the judge’s ruling and the appellants’ grounds of appeal and written arguments, none of the three members of this court had foreseen that the case might be presented in this new way.[44]In such circumstances we consider that the appellants must be held both to the concession made below and to the way the case was presented below.[45]On no view can direct state aid be said to arise here. (The position is quite different from, for example, the subject of the Commission decision in re Orkney Islands [2003] OJL 211/63.) If, therefore, there was state aid here it has to be indirect. Of course if there is indirect state aid it is in principle as objectionable as direct state aid. But Mr O’Donoghue was at least justified in observing that from the outset the appellants can identify no state measure which positively exempts over 10 metre or PO vessels from penalties, prosecution or fines.[46]Further, if the appellants’ argument is right it is, to say the least, surprising that no such objection of the present kind has been raised before, either with regard to the United Kingdom or with regard to other Member States where broadly similar schemes with regard to fish quota are operated. If the argument is right, moreover, it could also have profound implications for the very operation of such schemes and the ability meaningfully to impose enforceable conditions on licences for relevant vessels of different categories. Mr Thompson is of course entitled to say that those considerations can be no bar to compliance with EU law (as mandated by Article 20.3). Even so, an initial wariness as to the viability of these arguments at the least operates as a reminder as to who bears the burden of argument and proof.[47]Put shortly, we simply do not accept, for the purposes of this appeal and in the light of the concession made below, the submission of the appellants that over 10 metre PO vessels and under 10 metre vessels are to be taken to be in a “comparable factual and legal situation”. The judge’s findings below - eminently justified findings, not now challenged - dispose of that. That, in the circumstances of this case, is fatal to the argument. It is the general principle that a measure is selective only if it is such as to favour certain undertakings over other undertakings which are in a comparable legal and factual position: see, for example, Bellamy & Child on the European Union Law of Competition (7th ed.) at paragraphs 17-022 and 17-023. Here, as found, they were not. That was a matter for the judge; and he could properly so find on the evidence. We also add that the judge’s general approach was entirely in accordance with the approach indicated as available to the national court by the Court of Justice in Eventech (cited below) at paragraphs 58 to 61 of the judgment in that case. That was a case with its own facts and context, it is true; but it is noteworthy all the same. If it is permissible to style black cabs and mini cabs as not being in a comparable factual and legal position for the purposes of that case, then on one view it is no stretch at all to say that under 10 metre vessels and over 10 metre vessels, with their different regulatory regimes, are not comparable either, for the purposes of this case.[48]Mr Thompson protested that over 10 metre PO vessels were “greatly favoured” as compared to under 10 metre vessels who were “hard done by”. But that, ultimately, is assertion. Given the inherent differences between the respective regimes, striking the balance - a matter for the discretion of the Member State under Article 20.3 - is always going to be difficult: and indeed the Member State may, in consequence, and having regard to representations from the competing groups, adjust that balance from time to time.[49]The assertion of state aid in the present case is, we note, all a very long way from the kind of situation envisaged by the Court as constituting unlawful state aid in cases such as Piaggio v International Factors Italia Case C-295/97 (see also the approach taken in Preussen Elektra AG v Schleswag AG Case C-379/93). Be that as it may, in the present case these arguments fall foul of the judge’s findings and the concession made. In effect, in our view, they rule out any application of the selectivity principle.[50]That in itself is sufficient to dispose of these appeals. But there are in any event, as we see it, further difficulties in the way of reliance on a state aid argument: not least in the requirement that there be aid involving use of state resources.[51]Mr Thompson relied heavily on the decision of the Court in Commission v The Netherlands [2011] ECR 1-7671. The facts of that case are complex and not easily summarised. In essence, large industrial organisations were able, under a statutory scheme, to purchase emission allowances (issued without charge by the state to such organisations) which would enable them to avoid fines for exceeding emission limits otherwise applicable to them. Smaller organisations did not have such a facility available to them. There are many facets to the judgment of the court. But the paragraph on which Mr Thompson most relied was paragraph 106 of the judgment, which reads as follows:
“106. In the present case, an advantage granted by the national legislature, that is, the tradability of NO emission allowances, could entail an additional burden for the public authorities in the form of an exemption from the obligation to pay fines or other pecuniary penalties (see, to that effect, Case C-295/97 Piaggio [1999] ECR 1-3734 paragraph 42). By establishing the ‘dynamic cap’ scheme, the Kingdom of the Netherlands gave to the undertakings covered by the measure in question the possibility of buying emission allowances in order to avoid the payment of fines. In addition, the consequence of that system is the creation, without real consideration supplied to the State, of emission allowances which, because of their tradable character, have an economic value. It must be concluded that the Member State could have sold such rights, or where appropriate put them up for auction, if it had structured that scheme differently (see, in that regard, paragraphs 63, 64 and 86 to 96 above).”
So here, he says.[52]As we have indicated, we are not prepared to entertain an argument (viz in reliance on the assertion that the fact that the FQA units were issued to PO members “for free” and were tradable assets in itself amounted to state aid) not advanced below and not clearly flagged up in advance of the appeal. But to the extent that the argument in the present case was linked to the assertion that the state stood to forego fines by reason of over 10 metre PO vessels being afforded flexibility such as to enable them to acquire tradable FQA units and so avoid prosecution and fines, we do not think Netherlands is a truly comparable case or could bind us to reach such a conclusion in the present case. This is for a number of reasons. iv) In Netherlands, allowances, initially issued without charge to large organisations, could be purchased to avoid a large organisation paying a fine for exceeding the emission limits. Accordingly such an organisation could assess whether it profited it to pay a fine or acquire emission allowances. That was a direct consequence of the scheme. Here, while the PO has the right to impose penalties for any breach by a member vessel nevertheless prosecution by the state remains available (even if, in practice, as the evidence suggested, very rarely sought against PO members) for those who chose deliberately to overfish. Indeed, it can be said that prosecution of a PO member is in practice rare just because of the power of the PO to impose penalties: a scenario implicitly contemplated by Regulation 104/2000 itself. v) It is at least debatable in this case whether the availability of FQA units as tradable assets can be said, for this purpose, to result from them being “issued [by the state] for free” (as was the position in Netherlands). Such quotas were based on a three year historic performance: as Mr O’Donoghue submitted, they could be said to have been “earned”. Since the point on state aid had not been raised by the appellants in this particular form below, this aspect was not fully considered below on the evidence: but this was at least a point of potential difficulty for the appellants. vi) The judge expressly found in the present case that there was no sufficiently direct connection between any measure and any loss of state resources. There is, in our view, no sufficient basis for interfering with that finding. As made clear in paragraph 111 of Netherlands, for there to be unlawful state aid there has to be a “sufficiently direct connection between the measure in question and loss of revenue”. That finding of the judge is directly counter to the present argument on state aid. vii) In Netherlands, it does not appear that there were separate regimes applicable to such organisations (large and small) of a kind applicable to the present fishing quota scheme relating to PO vessels and under 10 metre vessels. viii) In Netherlands, a large organisation could calculate at the end of the relevant period whether to buy itself, in effect as a business cost, out of a fine by acquiring emission allowances. However, in the case of fishing vessels, a PO member is not able to buy his way out of a penalty or fine for breach at the end of the year: even if he does have room to manoeuvre during the year. ix) In contrast, it appears, with Netherlands (where small undertakings apparently were not issued with, or permitted to acquire, emission allowances) under 10 metre vessels are permitted in principle to join a PO. Further, as we have said, some degree of flexibility facilitating avoidance of breach of quota limits was also available to under 10 metre vessels, through the MMO, by reason of the availability of acquisition, underpinning and top-slicing and so on.[53]We further add that the extremely broad use to which Mr Thompson sought to put the Netherlands case in this context sits not at all well with the very recent decision of the Court in R (Eventech Limited) v The Parking Adjudicator Case C-513/13. In that case, Transport for London had adopted a bus lane policy permitting licensed black cabs during periods of the day to use without charge bus lanes reserved for buses. Others, including private hire vehicles, were not permitted to do so and stood to be fined if they did. The licensing of black cabs and minicabs operated under separate schemes. Two of the issues arising, which were subject to a reference, were(1) whether such policy involved a transfer of state resources and(2) whether such policy breached the selectivity principle. The Court in terms in the course of its judgment on the issue of use of state resources - and reflecting what was said in paragraph 111 of the judgment in Netherlands on this point - decided (at paragraph 34) that:
“For the purposes of determining the existence of state aid it is necessary to establish a sufficiently direct link between, on the one hand, the advantage given to the beneficiary and, on the other, a reduction of the state budget or a sufficiently concrete economic risk of burdens on the budget.”
The Court then went on to distinguish the Netherlands case. It referred expressly to paragraph 106 of that case, saying this at paragraphs 38-40 of the judgment:
“38. To the extent that Eventech bases its argument on the alleged similarity of the factual and legal circumstances of this case to those of the case which gave rise to the judgment in Commission v Netherlands (C-279/08 P, EU:C:2011:551), it is clear that the circumstances of that case are distinguishable from those of the main proceedings. 39. In paragraph 106 of the judgment in Commission v Netherlands (EU:C:2011:551) the court held that the measure at issue could entail an additional burden for the public authorities in the form of an exemption from the obligation to pay fines or other pecuniary penalties because the Kingdom of the Netherlands had given to the undertakings covered by the measure in question the possibility of buying emission allowances in order to avoid the payment of fines which, if such allowances had not been available, would have been payable because the undertaking concerned had exceeded the statutory limits on their emissions of nitrogen oxide. 40. However, in the main proceedings, it is undisputed that each unauthorised use of the bus lanes constitutes an offence punishable by a fine and that the competent public authorities have not put in place any means of evading payment of such fines. Further, it follows from the finding made in paragraph 37 of this judgment that the reason why Black Cabs can use those bus lanes without being subject to fines is not that the public authorities have made a decision not to collect fines which are payable, but that taxis are permitted to use those bus lanes.”
This plainly has resonance with the present case.[54]Also potentially against Mr Thompson’s argument is the broad statement of principle in Eventech (at paragraph 49) that national authorities:
“...must have a degree of discretion both as regards whether it is necessary, in order to achieve the regulatory objective pursued, to forego possible revenue and also as regards how the appropriate criteria for the granting of the right...are to be identified.”
That too has resonance in the present case.[55]As already noted, the Court in Eventech also went on rather pointedly to observe (at paragraph 61) that “black cabs and minicabs are in factual and legal situations which are sufficiently distinct to permit the view that they are not comparable...”.[56]Overall, the judgment in Eventech is at the least indicative of Netherlands being required to be treated as a case decided on its own facts and circumstances. Conclusion[57]We do not propose to say more, notwithstanding the elaborate nature of the arguments advanced to us. Having regard to the way in which the case was presented below and having regard to the concession there made, we think that the judge’s unappealed conclusion that there was no discrimination and no breach of the equality principle is in effect, in the circumstances of this particular case, dispositive on the issue of state aid. Put shortly, there was no breach of the selectivity principle. In addition, there were, at the least, formidable obstacles in the way of establishing that any aid had been granted by the use of state resources. Indeed, we have only said as much as we have in this regard to dispel any feeling that, had only the concession not been made in the Crown Court, the appellants would and should necessarily have succeeded on the state aid point.[58]In our judgment, therefore, the judge, on the evidence, reached the right conclusions and for essentially the right reasons. We dismiss these appeals. We also decline to direct a reference to the Court of Justice.