The smoldering dispute between Norway and Latvia over the catch of snow crab due to an agreement from the 1990s has hit a new level, as the case has reached the International Centre for Settlement of Investment Disputes (ICSID), for the first time in Norway's history.
Latvian fishermen demand NOK 5 billion (nearly $500 million) in compensation from Norway over the loss of income as a result of not being allowed to fish for snow crab at Svalbard.
The dispute originated in 2017, when Norway first stopped Latvian fishermen outside Svalbard -despite the foreign crews having received the green light from the EU. The case subsequently went to Norway's Supreme Court, which ruled that the Scandinavian country has exclusive rights to the continental shelf outside Svalbard.
The legal battle is rooted in investment agreements that Norway signed in the 1990s with several countries. These were meant to protect Norwegian investments abroad, especially in countries with an unstable political and economic situation, and vice versa. Disputes between the company and the state were supposed to be settled by an arbitration court.
Since then, Norway has canceled more than half of the agreements concluded in the 1990s with fellow European Economic Area countries. According to its Foreign Ministry, the background is that the majority of EU countries have agreed on their liquidation based on the idea that national courts are good enough to safeguard legal certainty. The agreement with Latvia has been nixed as well, which in Oslo's eyes disqualifies it from serving as a basis for investor-state dispute resolution.
Professor Mads Andenaes of the legal team that handles the case on behalf of the Latvian shipping company SIA North Star argued that the Norwegian authorities are "panicking" and are "afraid of losing the lawsuit."
"These agreements were to promote investments, and they have been good enough for Norway when it comes to protecting Norwegian investments in developing countries," Andenaes told Norwegian media.
Deputy Leader of the Socialist Left Party Torgeir Knag Fylkesnes called the situation "absolutely crazy." According to him, Norway has itself given foreign companies the opportunity to sue it, if there are changes in laws and regulations, and called on the authorities to stop it. A government spokesman assured that work is underway.
Even if Norway's Supreme Court unwavering holds to the position that the Latvian company has been fishing illegally, the case could nevertheless cost Norway dearly. A state sued in the ICSID receives an average accrued cost of 4.7 million dollars, previous research has shown.
The Svalbard archipelago is located deep inside the Arctic Circle, roughly halfway between Norway and the North Pole, and home to the world’s most northerly permanently inhabited community. Under the Svalbard Treaty of 1920, which has since been signed by numerous countries including the US and EU member states, Norway maintains sovereignty over the islands, but other signatories have equal rights to the resources in Svalbard's territorial waters including fish, oil and gas. The "crab war" may therefore have deep ramifications for exploration programs in the Arctic.