The dispute of Agreement of Transfer of Fishing Net Quota and Fuel Subsidies

【Introduction】

On 20th Dec 2010, Mr. Li Tiansheng and Mr. Liang Chaben agreed that Mr. Li Tiansheng transferred the fishing net quota and signed an agreement.

On 6th Jun 2011, Mr. Jiang Maogang and Mr. Liang Chaben agreed that Mr. Liang transferred the fishing net quotas of two pairs of fishing vessels to Mr. Jiang and singed the Transfer of Fishing Net Quota Agreement (hereinafter named as “Agreement”). Mr. Jiang built two new pairs of fishing vessels with such quotas.

Mr. Li delayed to transfer the quota to Mr. Liang which caused Mr. Liang could not transfer the quota to Mr. Jiang according to the agreement. Such delay has also caused the loss of Mr. Jiang. On 4th Jun 2012, Mr. Jiang and Mr. Li signed Addendum I and agreed the fuel subsidies of 2011 and 2012 for the relevant fishing vessels would belong to Mr. Jiang.

On 6th Jun 2012, Mr. Jiang, Mr. Liang and Mr. Li who was the original owner of fishing net quota signed Addendum II. Mr. Li confirmed he knew and agreed to perform the Agreement and Addendum I and he would pay the fuel subsidies to Mr. Jiang directly.

Mr. Jiang invested to build two new pairs of fishing vessels. Mr. Li transferred the ownership of fishing vessels to Mr. Jiang’s mother Ms. Li Shifen and registered to her name. These two new pairs of fishing vessels were actually operated by Mr. Jiang.

Mr. Li got the fuel subsidies for two pairs of fishing vessels identified to the Agreement in 2012 and 2013 respectively, but he did not give it to Mr. Jiang in accordance with the Agreement.

Mr. Xu Guangyu and Ms. Xu Xiaobing were appointed by Mr. Jiang to handle this case. Mr. Jiang’s claim was supported by Guangzhou Maritime Court’s first trial and Guangdong Higher People’s Court’s second trial.

【Focus of Disputes】

1. Whether the Agreement, Addendum I and Addendum II violated fishing license system and fishing quota system which was ruled in Article 23 of fisheries Law of PRC and Article 3,9,13,14 of Provisions on the management of fishing permit?

2. Fuel subsidies was granted by the State to particular fishing vessel owners. Could ownership of subsidies be decided with agreement?

The defendant Mr. Li held that:

1. According to Fisheries Law of PRC and Provisions on the Management of Fishing Licensing, the fishing net quota was strictly controlled by the State. Attaching to the ownership is the only way to transfer the quota and it was forbidden to transfer alone. The transfer of the quota in this case did not attach to the ownership of vessel and therefore the Agreement, Addendum I and Addendum II have violated compulsory provision of the State and became null and void.

2.  According to Interim Measures for the Administration of Special Funds for the Price Subsidies of Fishery Products, the distributed object shall be particular, has the legal certifications of vessel, engage in the fishing not less than three months. In 2011-2012, Mr. Li was the registered owner of vessel and legal party to receive the fuel subsidies. Mr. Jiang has no right to get such subsidies.

Aiming at the above problems, Mr. Xu and Ms. Xu did lots of research on relevant laws, provisions, cases, and visited to fishery department to defend for Mr. Jiang. For the first problem, Mr. Xu and Ms. Xu held the opinion that the actual performance of the Agreement shall be considered to determine whether the quota was transferred attaching to the ownership of vessel. In this case, after those five old fishing vessel which owned by Mr. Li originally was eliminated, Mr. Jiang invested to build two pairs of fishing vessels with similar power. All these two pairs of fishing vessels were registered with the name of Mr. Li which was in accordance with the Provisions. Later, these two pairs of fishing vessels and their quotas were transferred to Mr. Jiang’s mother which was in accordance with the rule “quota shall be transferred attached to ownership of the fishing vessel”. Such transfer was approved by fishery department with formal documents. Unless Mr. Li produced the proof to the contrary, the transfer of quota shall be taken as legal. For the second problem, Mr. Xu and Ms. Xu held the opinion that “the administration granted the subsidies to whom” and “pay the subsidies to contract party according to the contract” were two different separate legal relationship. Mr. Li signed the contract to pay fuel subsidies to Mr. Jiang was an expression to dispose his civil right. After the administration granted the subsidies to Mr. Li, he had no right to possess it and shall pay to Mr. Jiang according to the contract.

Guangzhou Maritime Court and Guangdong Higher People’s Court agreed Mr. Xu and Ms. Xu’s opinion, held that the Agreement, Addendum I and Addendum II though named fishing net quota transfer contract and their clauses contain the quota transfer content, the contract stipulated Mr. Jiang built two pairs of new fishing vessels before transferred the quota. Mr. Jiang did build those vessels with Mr. Li’s quota, got the approval from the fishery department and transferred the ownership of vessels during the performance of contract. The quota has been transferred attaching to the ownership of vessels which follow laws and regulations. Moreover, since the Agreement was valid, Mr. Li shall perform his obligation according to the Agreement.

【Significance】

In fishing industry, our country carries out fishing net quota control system, fishing license system and catch limit system. The quota of each province is fixed and the law provides that the only way to gain the quota is to build the new vessel to replace the eliminated old vessel. In practice, for the purpose of raising the productivity and financing, the flow of fishing net quota is very common. The quota control system restricts the free flow of fishing productivity to a certain extent. No precedent to decide what is legal transfer of fishing quota before. The judgments from first trial court and the appeal court have expound what is “transfer the quota attaching to the ownership of vessel legally” from the aspect of content for the transfer quota contract and the performing process. It will be an important reference for similar cases. The Agreement and its performance in this case is a typical example for free flow of fishing productivity.