Rosrybolovstvo withdraws quotas from crab fisher due to foreign control

CJSC Tefida, which produces crabs in the Far East, has been excluded from the list of quota holders due to being under the control of a foreign investor. According to regulators, the beneficiary of the company held senior positions in American structures. The sale of withdrawn quotas will arouse interest, but experts see the risks of reducing the amount of allowable catch of the resource and difficulties with exports.

The Federal Agency for Fisheries excluded Tefida CJSC from the list of companies entitled to quotas for catching crab due to being under the control of a foreign investor. This follows from the agency’s order of June 29, available at the bank of legal acts. We are talking about quotas for the catch of king crab, blue crab and snow crab in the Far East. For 2022, the total catch under these quotas was estimated at more than 580 tons.

Alexey Kozlov is named the main owner of Tefida in the company’s financial statements for 2022. We can talk about a businessman who, back in 2005, was accused of illegally harvesting bioresources in the exclusive economic zone of Russia and selling crabs to the United States (see Kommersant dated July 26, 2005). The Federal Antimonopoly Service (FAS) recognized Tefida as being under the control of a foreign investor in March 2022, the company challenged the decision, but the courts of two instances refused Tefida. The appellate ruling was published in June 2023. Tefida will appeal against the decision in the cassation, the consideration is scheduled for September.

As follows from the materials of the court, the FAS revealed that Alexei Kozlov held senior positions in the American Marine Fishing International, Inc and Marine Fishing International, LLC in 2018-2022, therefore, the companies can be considered foreign investors. Tefida indicated that at the beginning of 2023, Mr. Kozlov was no longer a member of the management bodies of American companies. But the courts considered that this did not refute the conclusions of the antimonopoly authority, since Aleksey Kozlov lost his corporate functions in Marine Fishing International only during the trial and after the issuance of the FAS opinion.

The FAS told Kommersant that the conclusion of the service passed a judicial review and was recognized as legal, after which it was sent to the Federal Agency for Fishery in order to forcibly terminate the rights to harvest aquatic biological resources. The Federal Agency for Fishery announced that after the termination of the contracts with Tefida, the shares of quotas will be put up for auction. Tefida did not promptly respond.

Judicial expert of the Veta group Alexander Terentiev says that if there were no gross procedural violations by lower courts, decisions are rarely canceled in cassation. Although, in theory, Tefida could present some new evidence to the court of a lack of control by a foreign investor, he adds. If the cassation confirms the legality of the decision, the case can be considered resolved, adds Dmitry Kletochkin, partner at the law firm Rustam Kurmaev and Partners.

The head of the Fisheries Information Agency, Alexander Savelyev, says that the withdrawn quotas are likely to be in demand at auctions, as crab remains a valuable resource, including due to the potential for increased supplies to China. According to the Association of Fishing Fleet Owners, in 2022 Russia increased the export of crabs to China by 41%, to 23.4 thousand tons, worth $770 million, or an average of $32.9 thousand per ton. But, adds Mr. Savelyev, the expected sale of the second part of the crab quotas for investment purposes may change the amount of allowable catch, and, consequently, the volume of production according to quotas.

WARPE President German Zverev notes that so far Russia accounts for almost 50% of the world market of premium crabs due to the growth in production in recent years, but the fishery may be reduced for natural reasons. The United States in 2024 banned the fishing of crabs in the Bristol Bay and the Bering Sea due to a declining population, he recalls. In addition, the expert adds, the US authorities have closed the market for Russian crab miners, and Chinese buyers, taking advantage of the situation, are lowering prices.

Anatoly Kostyrev