BBC Scotland is reporting that Europe is preparing the way for sanctions against Iceland and the Faroe Islands over the so-called "mackerel wars".
Both island nations have announced plans for increased mackerel catches, which could in turn impact Scottish catches of this small but controversial fish. Mackerel is the Scottish fleet's most valuable stock.
According to BBC Scotland, Europe's Fisheries Commissioner is now believed to be pushing for changes in regulations that could result in sanctions against Iceland and the Faroe Islands.
The latest round of talks, held in December failed to resolve the on-going dispute. The meeting, which included the EU and Norway, ended with the Faroese refusing to sign an agreement to limit mackerel catch levels for 2011.
Scottish Fisheries Secretary Richard Lochhead said: "We were extremely frustrated by last week's breakdown in mackerel talks."
The controversy centers around Atlantic mackerel, which are small pelagic fish that travel in huge schools. Scientists claim that mackerel, in response to rising sea temperatures have shifted their range northward, which brings more fish into Icelandic and Faroese waters.
Meanwhile Scottish and other European fishermen feel that increased fishing quotas could devastate mackerel stocks, impacting the entire region.