High Court orders Civil Court to hear Ensis case over MIFCO fish subsidies

The High Court has ordered the Civil Court to accept and hear a lawsuit filed by Ensis Fisheries challenging the former government's policy of providing financial support to state-owned Maldives Industrial Fisheries Company (MIFCO) to purchase fish at MVR 25 per kilogram.

Ensis, which has operated as a fish processor in the Maldives since 2002, filed the case on 25 February 2024 against the fisheries, economic development and finance ministries.

The Civil Court rejected the case on 28 July 2024, ruling that it did not have jurisdiction to consider a challenge involving a government policy decision.

Ensis appealed the decision, and the High Court ruled on Thursday that the Civil Court has jurisdiction to hear the case and ordered it to proceed with the lawsuit.

The dispute concerns a decision announced by the administration of former President Ibrahim Mohamed Solih on 16 September 2023 for MIFCO to purchase fish from fishermen at MVR 25 per kilogram.

Ensis argues that it held a government-issued licence to purchase, process and export fish but was required to compete with MIFCO, which was receiving state funding to maintain the MVR 25 purchasing price.

According to Ensis, the government policy allowed MIFCO to purchase fish at rates above market prices and export the products at international prices that were lower than its purchasing cost. The company alleges that the resulting losses were covered through capital provided by the government.

Ensis argues that private fisheries companies did not receive similar financial support and that the arrangement placed them at a disadvantage when competing to purchase fish from fishermen.

The company is seeking a declaration that providing subsidies exclusively to MIFCO to purchase fish above market rates violated the Competition Act by restricting competition from private businesses.

Ensis has also asked the court to order the Finance Ministry to compensate it for additional costs incurred when purchasing fish above its normal buying price to compete with MIFCO.

It is seeking a separate order requiring the Fisheries Ministry to reimburse costs incurred from purchasing fish at MVR 25 per kilogram or more.

Ensis has further asked the court to recognise its right to bring a separate case against the state to recover its total calculated financial losses.

The Civil Court had ruled that the Competition Act did not apply to government policy decisions involving state-owned enterprises and declined to hear the case on that basis.

The High Court disagreed with the approach, finding that questions over whether the Competition Act applies and whether the government can rely on protections relating to the exercise of executive authority should be determined after hearing arguments from both sides.

The High Court said the Civil Court must therefore consider whether the government's decision to provide financial support exclusively to MIFCO was an exercise of state authority protected from such claims or whether it amounted to conduct prohibited under competition law.

The ruling does not determine whether the government's policy violated the Competition Act or whether Ensis is entitled to compensation. Those issues will now be considered by the Civil Court.

Ensis suspended fish purchases after the Solih administration increased MIFCO's purchasing price to MVR 25 per kilogram during the 2023 presidential election campaign, saying it could not continue purchasing at that rate without incurring losses.

The administration of President Mohamed Muizzu later changed MIFCO's pricing mechanism. The state-owned company now adjusts its purchasing price based on international market rates and operating costs, with rates generally ranging between MVR 16 and MVR 18 per kilogram.

During the 2023 presidential campaign, Muizzu pledged to maintain a base purchasing price of MVR 20 per kilogram.