Merchant Shipping Act 1988

Why was it introduced (political/sociological context)?

Part II of the Merchant Shipping Act 1988 was enacted to tackle quota hopping by foreign-owned fishing vessels registered in the UK, a practice that had appeared from the 1970s onwards. In 1970, before the UK joined the European Economic Community (EEC), the EEC introduced the first elements of the Common Fisheries Policy. This was to initiate a common market for fishing that all the countries could enjoy. This established a principle of equal access to fishing waters for vessels of Member States, subject to exceptions for coastal waters. Although the UK was not happy with this policy in negotiation, they agreed to become part of it in 1973 when officially joining the EEC.

In 1976, it was agreed that, from 1 January 1977, Member States would extend their fishing zones along the North Sea and North Atlantic coasts to 200 nautical miles, or the median line with another coastal state where closer. However, the EEC did attempt to regulate and introduce controls on fishing soon after. This was due to growing concerns about the fish stocks and population and overfishing in some countries more than others. Changes were made to the Common Fisheries Policy in 1983, which involved assigning each Member State a share of the total allowable catches for regulated stocks.

However, while the controls were aiming to achieve fairness in fishing between the Member States, as well as allowing fish populations to grow, there emerged a loophole of quota hopping. The Government considered this loophole harmful to British fishing communities. Particularly in the 1980s, Spanish fishermen were using UK-registered vessels to fish against the British quota under the registration arrangements of the Merchant Shipping Act 1894. This Act imposed ownership qualifications, but a qualifying British company could own a vessel even where its shareholders were foreign nationals. During this period, Spanish operators registered ships through qualifying companies or acquired British-registered vessels, so that catches of quota stocks were counted against the British quota; catches were landed and sold in Spain.

Once it was realised what was going on with quota hopping, the British became increasingly unhappy about the situation that was at the country’s expense. People saw this as foreign-owned vessels using the UK quota without benefiting local fishing communities. This meant that the Conservative Government looked for ways to mitigate this problem for a number of years. This was why the Merchant Shipping Act 1988 was finally introduced.

What was the aim of the Act (legal context)?

The aim of Part II of the Merchant Shipping Act 1988 was to stop foreign-owned fishing vessels registering in the UK to take advantage and partake in quota hopping. The Conservative Government introduced this new piece of legislation to protect the British quota under the EEC’s Common Fisheries Policy and British fishing businesses.

The Merchant Shipping Act 1988 replaced the previous fishing-vessel registration arrangements under the Merchant Shipping Act 1894; it did not replace the whole 1894 Act. The earlier arrangements had allowed foreign-owned qualifying companies to register vessels in the UK and fish against the British quota, subject to licensing. The new Act restricted registration of British fishing vessels through ownership, residence, domicile and management requirements.

What main changes did it make to the law?

The shipping law in the UK and registration of fishing boats were changed dramatically by the Merchant Shipping Act 1988. The new Act created a separate register of British fishing vessels under s13 and new ‘qualified person’ requirements under s14. Section 14(3) also allowed further requirements to secure ‘a genuine and substantial connection’ to the UK. Registration was separate from the licensing needed to fish against the UK quota. This new approach to the law was a direct attempt to prevent quota hopping by operators from other EEC countries.

The Merchant Shipping Act 1988 outlined that to be classed as a British fishing vessel, its legal title had to be wholly vested in qualified persons or companies. Beneficial ownership had to be wholly in qualified companies, at least 75 percent in qualified persons, or a mixture of qualified companies and qualified persons holding at least 75 percent of the remaining interests. A qualified person had to be a British citizen resident and domiciled in the UK, or a UK local authority. A qualified company had to be incorporated in the UK and have its principal place of business in the country. There were strict regulations introduced to limit the number of foreign companies that could register their vessels as British only for the purpose of quota hopping and fishing. For example, at least 75 percent of the company’s shares, including each class of shares, had to be legally and beneficially owned by qualified persons or companies, and at least 75 percent of its directors had to be qualified persons. The vessel also had to be managed, directed and controlled from the UK, and any charterer, manager or operator had to qualify. Section 14(4) permitted the Secretary of State to waive British citizenship in specified cases involving residence and participation in the UK fishing industry.

The Act also dealt with matters beyond fishing-vessel registration, including financial assistance for seafarer training and crew relief costs, a Merchant Navy Reserve, shipping safety, oil-pollution liability and compensation, and lighthouse financing and administration.

Factortame and the current position

The Merchant Shipping Act 1988 remains historically significant because it attempted to restrict the registration of British fishing vessels to those with a genuine connection to the United Kingdom, in order to prevent the practice of “quota hopping”, where foreign operators registered vessels under the UK flag to benefit from UK fishing quotas.

However, key provisions of the Act became the subject of the constitutional litigation in the Factortame cases. In Case C-213/89 [1990] ECR I-2433, the European Court of Justice held that national courts had to set aside a domestic rule preventing interim relief where necessary to protect rights claimed under Community law. In Case C-221/89 [1991] ECR I-3905, it held that the nationality, residence and domicile conditions breached Community law, particularly freedom of establishment under Article 52 of the EEC Treaty. The requirement for management, direction and control from the UK was not itself prohibited. The conflicting restrictions were disapplied; the litigation did not repeal the whole Act.

The Act has been repealed. The Merchant Shipping (Registration, etc.) Act 1993 repealed its fishing-vessel registration provisions, and the Merchant Shipping Act 1995 consolidated much of the wider shipping legislation. The remaining 1988 Act was repealed on 26 May 2015 by the Deregulation Act 2015, Schedule 23 paragraph 26. The registration framework now rests on the Merchant Shipping Act 1995 and the Merchant Shipping (Registration of Ships) Regulations 1993, as amended.

The UK left the Common Fisheries Policy at the end of the Brexit transition period on 31 December 2020. The Fisheries Act 2020 now provides the framework for access, fishing licences and allocation of fishing opportunities, alongside other fisheries legislation and international agreements. Registration alone does not confer permission to fish: a fishing vessel normally also requires the appropriate licence. Economic-link licence conditions seek to ensure that fishing against UK quota benefits UK fishing communities; the detailed policy is devolved.

The later damages proceedings were also significant. In R v Secretary of State for Transport, ex parte Factortame Ltd [1999] UKHL 44, the House of Lords upheld the finding that the breaches were sufficiently serious to give rise to liability for losses shown to have been caused by them.

As a result, while the Merchant Shipping Act 1988 remains an important part of the historical development of UK maritime and constitutional law – particularly because of the Factortame litigation and its impact on the doctrine of parliamentary sovereignty – the regulation of modern shipping and maritime safety is now primarily governed by later legislation and international maritime regulatory frameworks.

Last updated: 12 November 2026