A Scottish firm was told to destroy its stock of turbot by the government after an outbreak of infectious disease in 1994.

When it tried to claim compensation it was told the then Scottish Office had "a long-established policy of non-payment of compensation for fish diseases".

Stocks have been hit by disease

Booker Aquaculture launched a court action, which has now resulted in Scotland's senior judge, the Lord President, Lord Rodger, referring the case to the European Court of Justice in Luxembourg.

Scotland's salmon farmers, some of whom have been forced to destroy millions of fish because of disease, are watching the landmark case closely.

The government has also refused them compensation, despite the impact on the Highlands and Islands economy.

If a successful precedent is set, the salmon farmers could be in line for payouts.

'Acted illegally'

Booker Aquaculture sought a £600,000 payout after its was told to destroy turbot following a suspected outbreak of viral haemorrhagic septicaemia (VHS) among fish at its farm on Gigha, in Argyll, in 1994.

The fish farm notified the Scottish Secretary of the situation and was instructed to destroy eggs and a substantial quantity of fish.

It then lodged a claim for its losses with the Scottish Office but the claim was rejected under the government's non-payment policy.

The decision was appealed by the firm in a judicial review at the Court of Session in Edinburgh.

The presiding judge ruled the Scottish Secretary had acted illegally under the 1994 Diseases of Fish (Control Regulations) Act.

Enforced slaughter

The legislation was brought in to fulfil Britain's obligation to provide control measures for diseases under a 1993 EC directive.

But the government appealed against the ruling, and the appeal judges, led by Lord Rodger, were told the new Scottish Executive insisted on continuing with the challenge.

In a written judgement, Lord Rodger said the government could have included fish within legislation on paying compensation for enforced slaughter because of disease, but did not do so.

Lord Rodger said the fundamental question in Booker's case was whether the issue of compensation was governed by EC law or national law.

After considering the European position, he said: "I am satisfied that the right to property is recognised as a fundamental right under Community law and the availability of compensation is relevant to any consideration of whether the right has been respected."