Icelandic State Must Pay Compensation for Misallocating Quota Skip to content

Icelandic State Must Pay Compensation for Misallocating Quota

By Yelena

The Icelandic state must compensate seafood companies Vinnslustöðin and Huginn due to the misallocation of mackerel quota from 2011 to 2018, RÚV reports. The state has been ordered to pay ISK 1 billion [$7.1 million, €6.6 million] plus legal costs of ISK 25 million [$178,000, €166,000]. Vinnslustöðin CEO Sigurgeir Brynjar Kristgeirsson says the state could have avoided the expense by negotiating directly with the company but showed no interest in doing so.

“We were pioneers in this mackerel fishing, we found the mackerel and utilised it, and in legislation, it simply says that those who start and who find the fish, should get a larger portion when it comes to allocation and setting quota,” Sigurgeir stated. Both the Parliamentary Ombudsman and the Supreme Court of Iceland came to the same conclusion. “The conclusion was that it was taken from us and given to others, who hadn’t contributed from the beginning.”

The Reykjavík District Court ruled in favour of the seafood companies in the case on Monday morning. Seven companies had originally submitted the claim for damages but five withdrew their lawsuits.

The mackerel quota which the case addresses was allocated by then-Minister of Fisheries Jón Bjarnason in 2010. Rather than allocating the entire quota to those who had experience, some was allocated to small boat fishermen and others in a pool for mid-size ships. Many immediately cast doubt on the legality of the allocation and the Supreme Court ruled that the state had broken the law: only those with previous experience fishing mackerel should have received quota.

Growing profits in few hands

During the height of the coronavirus pandemic, the seven companies who had initially sued were criticised by government officials for demanding ISK 10 billion in compensation from government coffers in the midst of a recession. As a result, five of the seven companies dropped their cases in 2020.

In a Facebook post about this week’s Reykjavík District Court ruling, Minister of Finance Bjarni Benediktsson confirmed the state would appeal. If the seafood companies were to win the case, Bjarni added, he asserted that the compensation would be extracted from the seafood industry rather than taxpayers (presumably through raising taxes on seafood companies or similar measures).

The profits of Iceland’s 10 largest seafood companies grew by 50% in 2019 and continued growing throughout the pandemic, with the price of fish rising dramatically in the wake of the Russian invasion of Ukraine. Vinnslustöðin bought Huginn in 2021 and is among Iceland’s ten largest seafood companies. Just four companies hold around 60% of Iceland’s fishing quota, which has sparked debate on the distribution of wealth in recent years.

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