Factortame Ltd sought, first, a
preliminary injunction declaring that the offending part of the 1988 Act could not be applied to them on the grounds that such application would be contrary to
directly effective rights under EU law, specifically the right not to be discriminated against on the grounds of nationality (article 7 of the
Treaty of Rome), the right of individuals and companies to establish themselves in business anywhere in the EU (articles 43–48), and the right to participate in the capital of companies situated in another Member State (article 294). The claimants also demanded an order of prohibition preventing the
Secretary of State from treating its registrations under the 1894 Act as having ceased. HMG argued that the registration requirements were intended to ensure that fishing vessels flying the British flag had a genuine link with the UK. It maintained that international law entitled each State to determine the conditions under which a ship might fly its flag and that Community law had not removed that right. It was also contended that the 1988 Act was consistent with the Community policy on fisheries. In the event this assertion proved false.
High Court On 10 March 1989 the divisional court (
Neill LJ and
Hodgson J) referred the matter to the
European Court of Justice (ECJ) for a
preliminary ruling under Article 234 of the Treaty of Rome (case C-221/89). It asked whether requirements as to nationality, domicile and control imposed by a Member State as conditions for the registration of fishing vessels were compatible with Community law (now:
European Union law). At the same time, the Court granted an injunction against the application of the 1988 Act pending a ruling by the ECJ. Giving his judgment, Lord Justice Neill stated that although Community law is part of
English law and prevails in the event of a conflict, it was open to argument whether a conflict existed in this case; a national court would have to take a decision which preserves the
status quo ante. HMG disapproved and elevated the case to the
Court of Appeal.
Court of Appeal The Court of Appeal (
Lord Donaldson MR,
Bingham LJ and
Mann LJ) reversed the divisional court's decision on 22 March 1989 on the basis that, although a national court was obliged to give effect to Community law, it was not obliged "to override national law in favour of what is no more than an alleged or putative Community right". Furthermore, it did not believe that the divisional court had "acknowledged the constitutional enormity, as the law stands, of requiring a Secretary of State to act contrary to the clearly expressed will of Parliament when the unlawfulness of that expression has yet to be established". The divisional court would not, according to the court, have jurisdiction to grant an injunction until Factortame had succeeded before the ECJ.
House of Lords The case was brought on 18 May 1989 by Factortame before the House of Lords (
Lord Bridge,
Lord Brandon,
Lord Oliver,
Lord Goff and
Lord Jauncey) who upheld the decision of the Court of Appeal on the grounds that English law did not contain any rule allowing a preliminary injunction against the application of an
Act of Parliament. According to Lord Bridge, two obstacles stood in the way of the granting of the injunction. Firstly, the relief sought required the court to order positive action in the shape of the disapplication of the 1988 Act and the application of the 1894 Act; were Factortame not to succeed before the ECJ, the House of Lords would have "conferred upon them rights directly contrary to
Parliament's sovereign will". Secondly, the court had no jurisdiction to grant an interim injunction against the Crown. Nevertheless, Lord Bridge did accept that each of these obstacles was subject to any contrary Community law requirement. This required the House of Lords to determine whether, regardless of the position in national law, there existed an overriding principle of Community law imposing an obligation on a national court, faced with a seriously arguable claim to rights having direct effect under Community law, to grant interim relief. Lord Bridge concluded that as there was no clear authority on this question, a decision from the ECJ was necessary to enable the House of Lords to give judgment. The House was, in any event, obliged to request a preliminary ruling under Article 234 EC (now Article 267 TFEU post-Lisbon Treaty) which obliges courts "against whose decisions there is no judicial remedy under national law" to make a reference. This request for a preliminary ruling was in addition to that already made by the divisional court on the compatibility of the 1988 Act with Community law.
European Court of Justice The action was lodged at the ECJ on 10 July 1989 (as Case C-213/89) by the House of Lords with the request that it deal with the matter quickly, which it indeed did, giving the case priority over others. The whole matter had up until then proceeded with great speed, taking only six months from its commencement before the divisional court to the House of Lords' judgment. The questions posed essentially asked whether, in the circumstances of the case, Community law overrode English law and either empowered or obliged UK courts to grant the injunction claimed by Factortame.
Advocate-General Tesauro argued his opinion on 17 May 1990 (). He first noted that the injunction sought by Factortame would in fact be available in all Member States except the UK and Denmark. He then proceeded to conclude that a national court must have the power to provisionally set aside a national law which conflicts with Community law, founding his argument on three bases. He recalled that it had been established in
Simmenthal (case 106/77) that directly effective Community law provisions create legal rights which are enforceable by individuals from the date of their entry into force, regardless of any contrary national law. It also followed from the ECJ's case law that it was for the legal system of each Member State to designate the procedures intended to protect Community law rights, and that these procedures must not "be adapted so as it make it impossible in practice to exercise the rights which the national courts are required to protect" (case 61/79, Denkavit, ). National courts must, in that respect, apply EC law through available national procedures or, failing that, of their own motion. Focusing on the House of Lords' argument that it could not temporarily suspend the application of a national law, the Advocate-General emphasised the importance of interim relief in every legal system, remarking that its purpose was to ensure that the time needed to establish a right would not deprive that right of any substance. Furthermore, he did not believe that national courts were entitled to give priority to national legislation merely because it had not yet been shown to be incompatible with Community law; if that were the case, rights conferred by national law would have greater protection than that offered to Community law rights. On 19 June 1990 the ECJ court (as "full court" of 11 justices)
en banc gave its ruling, rephrasing the question posed as "whether a national court which, in a case before it concerning Community law, considers that the sole obstacle which precludes it from granting interim relief is a rule of national law, must disapply that rule". Following the Advocate-General's opinion, the ECJ held that a national court, in fact, has a duty to grant interim relief to safeguard alleged Community rights of individuals until the decision of the ECJ on the interpretation of Community law is available, and where a rule of national law would deny such relief, to set aside that rule. The basis of such a duty lies in the nature and object of directly effective Community law rights which are intended to be fully effective throughout the EU, and where it is necessary to grant interim measures in order to safeguard such a right, a national court must do so. This is especially true where a national court is awaiting a clarification or interpretation of the right claimed by the ECJ.
Back to the House of Lords On 11 October 1990 the House of Lords gave its judgment in the light of the ECJ's ruling and granted an injunction in favour of Factortame. Three principal issues emerged from their judgment, namely the availability of interim relief against the Crown, the basis on which such relief can be granted, and the impact of the ruling on parliamentary sovereignty. Lord Goff acknowledged that, as a matter of Community law, interim relief had to be available in principle against the Crown, and the basis for granting it lay in section 37 of the Supreme Court Act 1981 (now titled the
Senior Courts Act 1981). In deciding to grant relief to Factortame, two factors influenced the House of Lords. Firstly, the likelihood that Factortame would suffer hardship and loss, were relief not to be allowed. Secondly, the prospects of Factortame succeeding in a full trial of the case once the ECJ had given its ruling on the compatibility of the 1988 Act; in this regard, the House of Lords took into account indications from the ECJ's first ruling that Factortame's arguments had "considerable force". Lord Goff did, however, emphasise that the courts would not, in other cases, readily or easily grant an injunction against the Crown which effectively prevents the Crown from applying national law. Addressing the public criticism expressed following the ECJ's decision and the alleged erosion of Parliamentary sovereignty, Lord Bridge remarked that such comments were "based on a misconception", and that under the
European Communities Act 1972, the law regulating the UK's membership of the EU, it had "always been clear that it was the duty of a United Kingdom court when delivering final judgment, to override any rule of national law found to be in conflict with any directly enforceable rule of Community law". In the same way that Parliament had introduced legislation to remedy areas of UK law which did not meet the standards set by EU
directives, the House of Lords was now accomplishing the same task in giving judgment for Factortame. There was nothing new, in this respect, in recognising the supremacy of EU law in the areas in which it applies. These comments were perceived by
Sir William Wade as "revolutionary", in that Lord Bridge suggests that Parliament has, in passing the European Communities Act 1972, managed to bind its successors from repealing the Act impliedly. It had previously been thought that no parliament could ever bind its successors in such a way. In a case where two statutes conflicted, the traditional approach would have been to apply the later statute on the basis that the inconsistent parts of the earlier statute had been repealed. Such an interpretation of the case is supported by statements in
Thoburn v Sunderland City Council and
Hunt v Hackney Borough Council to the effect that there now exist two forms of Acts of Parliament: ordinary acts which can be repealed impliedly, and "statutory" or "constitutional" acts which can only be repealed expressly. (See in particular the judgment of
Laws LJ in
Thoburn.) Nevertheless, there is no restriction on the ability of Parliament to expressly repeal the European Communities Act 1972. Furthermore, the case does not, on a strict reading, constitute a breach of parliamentary sovereignty. The Merchant Shipping Act 1988 was not a purposeful and direct conflict with EC law, but was instead an attempt to give effect to the fishing quotas required under EC law. Therefore, the courts were not striking down a domestic Act of Parliament, but were instead attempting to interpret legislation in a manner compatible with the Treaty obligations that arise under the European Communities Act 1972 (as proposed by
Lord Diplock in the case of
Garland v British Rail Engineering). It remains to be seen how the courts would respond to an Act of Parliament intentionally contradicting EC law. However, in the case of
Macarthys v Smith,
Lord Denning suggested that, should such an event occur, the courts would be obliged to obey the domestic law over the European. ==
Factortame II compatibility==