Thorvaldur Gylfason
Presentation at Nordic House,
Torshavn, Faroe Islands,
2 March 2012.
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Iceland story
Efficiency and fairness
Constitutions
Human rights
Look to Norway
Restricted access to fishing grounds in 1984 made
catch quotas valuable, and thus created wealth
 By international law, and later also Icelandic law,
this wealth belongs to the people
 Even so, politicians decided to give quotas to boat
owners gratis based on catch experience 1981-83
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This was ruled discriminatory and unconstitutional
by Supreme Court in 1998 and by UNHRC in 2007
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Violation of ICCPR and human rights
So, I say to you: Do not follow Iceland’s example
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Boat owners drafted the legislation themselves
First the fish, then the banks, then the crash in 2008
Look to Norway’s oil management instead
 Valuable
common property catch quotas were
handed out free of charge to vessel owners
from 1984 onward
 Quotas became freely transferable by law in
1990, so many quota holder sold out and made
a killing
 Those who had objected to fishing fees
accruing to the state or to the people had no
objection to fees accruing to boat owners
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If the banks paid politicians, as documented by the
parliament’s SIC report, how about boat owners?
Fishing fees accruing to the state were introduced
into law in 2002, but they were quite low
 Good
fisheries management must be both
efficient and fair
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Efficiency means maximizing revenue from
fisheries and minimizing cost by allowing efficient
(i.e., low-cost) operators to buy quotas from
inefficient (i.e., high-cost) ones
Fairness means that, to insure equality, everyone
must have a seat at the same table
Hence, free transferability of quotas is acceptable
only if the initial allocation of quotas is fair
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If not, universal principle of equality is violated, a
principle enshrined in binding international legal
agreements as well as in national constitutions and laws
Here in lies the fatal flaw in the Icelandic system
 In
Iceland, free allocation of fishing quotas
created a small class of rich boat owners
who through their wealth and political
clout changed the balance of power
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In politics, it is “suicide” to rise against them
Boat owners now own Morgunblaðið, Iceland’s
Dimmalætting, and use it to fight reform of the
quota system as well as EU membership
They used quotas as collateral in bank deals with
serious consequences
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No one should ever be allowed to use other people’s
property as collateral
Illegal for foreigners to own Icelandic quotas
 Violations
of the universal principle of
equality bring constitutional issues into
the picture
 Every constitution declares that we are
all equal before the law, ruling out any
kind of discrimination among individuals
on whatever basis
 Faroese constitution bill does this
beautifully
 (1)
Myndugleikarnir varða um tilfeingi
landsins
 (2) Tá vunnið verður úr landsins tilfeingi, skal
landið antin krevja viðurlag ella tryggja
øllum vinnurætt
 (3) Margfeldið á landi og á havleiðum
landsins, sum privat ikki eiga, er tilfeingi og
ogn fólksins
 (4) Landið tryggjar, at bæði almenna og
privata tilfeingi landsins verður umsitið á
sjálvberandi hátt við umsorgan fyri
umhvørvinum
 The
resources are the property of the people
(article 3)
 The people charge for the utilization of the
resources or grant everyone equal access to
them (article 2)
 The utilization and treatment of the
resources and the environment must be
sustainable (article 4)
 The authorities are the custodians of the
resources on behalf of the people (article 1)
 Key
distinction between state ownership and
national ownership
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State ownership (e.g., public office buildings)
means that the state can sell or pledge such assets
National ownership (e.g., cultural assets like
Thingvellir or natural assets like fish and energy)
means that the state cannot sell or pledge such
assets
Like our cultural assets, we have inherited our
natural resources from earlier generations and must
preserve them for future generations
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We do not have the right to squander them
Hence, special chapter on Human rights and nature
Iceland’s natural resources which are not in
private ownership are the common and
perpetual property of the nation. No one may
acquire the natural resources or their attached
rights for ownership or permanent use, and they
may never be sold or mortgaged.
 Resources under national ownership include
resources such as harvestable fish stocks, other
resources of the sea and sea bed within Icelandic
jurisdiction and sources of water rights and
power development rights, geothermal energy
and mining rights. National ownership of
resources below a certain depth from the
surface of the earth may be provided for by law.

The utilization of the resources shall be guided
by sustainable development and the public
interest.
 Government authorities, together with those
who utilize the resources, are responsible for
their protection. On the basis of law,
government authorities my grant permits for the
use or utilization of resources or other limited
public goods against full consideration and for a
reasonable period of time. Such permits shall be
granted on a non-discriminatory basis and shall
never entail ownership or irrevocable control of
the resources.
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ICCPR was made in 1966 to fortify the UN Human
Rights Declaration from 1948
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Iceland signed ICCPR in 1968 and ratified it in 1979
The opinions of the UN Human Rights Committee
(UNHRC) are binding, and cannot be appealed
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Rules on effective remedy for victims of human rights
violations
165 signatories
Non-signatories: China, Cuba, Malaysia, Pakistan, SaudiArabia, Singapore, Vatican plus some very small countries
However, UNHRC cannot enforce its opinions
It can only name and shame violators
Human rights are absolute rights and cannot be swayed
or subordinated to other interests
 Article
1 of ICCPR defines common
property resources as human rights
by stating that
 “All people may, for their own ends,
freely dispose of their natural
wealth and resources …”
 Article
1 of the International Covenant
on Economic, Social and Cultural
Rights (ICESCR) is identical
 12
of 18 human rights specialists on
UNHRC ruled that Iceland’s fisheries
management system violates article 26 of
the ICCPR stipulating that “All persons are
equal before the law”
 Article 26 of the ICCPR is essentially the
same as the equality article 65 in
Iceland’s constitution from 1944
 UNHRC
cites Icelandic fisheries
management law from 1990 that states
that fishing banks around Iceland are the
common property of the Icelandic nation
 UNHRC declares that the discriminatory
allocation of quotas initially, in 1984,
based on catch experience 1980-83, may
have been based on reasonable and
objective criteria as a temporary measure
However, says UNHRC, with the law of 1990 this
measure “became not only permanent … but also
transformed the original right to use and exploit a
public property into individual property”
 “Allocated quotas no longer used by their original
holders can be sold or leased at market prices
instead of reverting to the State for allocation to
new quota holders in accordance with fair and
equitable criteria”
 Icelandic state “has not shown that this particular
design and … implementation of the quota system
meets the requirement of reasonableness”
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 UNHRC
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concludes:
“Property entitlement privilege accorded
permanently to the original quota owners, to the
detriment of the authors [i.e., the two fishermen
who sued], is not based on reasonable grounds, … a
violation of article 26 of the Covenant”
“… State party is under an obligation to provide
the authors with an effective remedy, including
adequate compensation and review of its fisheries
management system”
“… Committee wishes to receive from the State
party, within 180 days, information about the
measures taken to give effect to the Committee’s
Views”
UNHRC did not find it necessary to consider if the
allocation of quota rights to limited resources
conforms to the ICCPR in general
 However, in this particular case where quotas were
allocated permanently to the original quota
holders, against the interests of the two fishermen
suing the state, it is not possible to consider such a
system based on reasonable grounds
 Accordingly, the majority of the UNHRC concluded
that the system constitutes a violation against the
equality principle in article 26 of the ICCPR

 Fisheries
management law leads to
discrimination in violation of equality
principle in article 65 of constitution and
freedom of employment article 75 that
states:
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“Everyone is free to pursue the occupation of his
choosing. This right may however be restricted
by law, if such restriction is required with regard
to the public interest.”
Together, articles 65 and 75 mean that any type
of restriction of the freedom of employment in
the public interest, including restrictions on the
access to fisheries, must be compatible with
equality and human rights
 Prof.
Sigurður Líndal maintains that the
property rights clause in the constitution
justifies the quota system
 UNHRC rejects this view on the grounds that
the quota system “transformed original rights
to use and exploit a public property into
individual property,” deeming the system
inequitable, discriminatory, and, hence,
unconstitutional
 From
the beginning, the oil and gas reserves
within Norwegian jurisdiction were defined
by law as common property resources,
thereby clearly establishing the legal rights
of the Norwegian people to the resource
rents
 On this legal basis, the government has
absorbed about 80% of the resource rent over
the years, instead setting most of its oil
revenue aside in the state petroleum fund
the name of which was recently changed to
pension fund to reflect its intended use
Government laid down economic/ethical
principles (commandments) to guide the use and
exploitation of the oil and gas for the benefit of
current and future generations of Norwegians
 Main political parties have from the beginning
shared an understanding that national economy
needed to be shielded from an excessive influx
of oil money to avoid overheating and waste
 The Central Bank, granted increased
independence from the government in 2001,
manages the oil/pension fund on behalf of the
Ministry of Finance, maintaining a healthy
distance between politicians and the fund

 Fisheries
policy need not and must not be
allowed to violate human rights
 Do not repeat mistake that Iceland made in
1984
 Make
sure that the Faroese people’s right
to their natural resources, a human right
proclaimed in primary documents of
international law as well as in many
national constitutions and laws, is also
enshrined in your new constitution