[1991] 1 AC 603, ECJ Case C-213/89
FACTORTAME LTD & ORS v SECRETARY OF STATE FOR TRANSPORT. ECJ case C-213/89, ECJ decision dated 19th June 1990 followed by UK House of Lords ruling dated 11th October 1990. Reported at [1991] 1 All ER 70.
A case on conflict between UK law and EC law.
The UK was concerned that its fishing quotas were being used up by foreign fishermen who had no real connection with the UK other than ownership of trawlers registered as British and flying the British Flag, a practice known as "quota hopping".
The UK therefore tightened up the rules for registration of fishing vessels as British as from 31st March 1989 (by the Merchant Shipping (Registration of Fishing Vessels) Regulations 1988, SI 1988/1926 passed under the Merchant Shipping Act 1988). Under the new regulations a trawler had to be beneficially owned at least 75 per cent by British citizens or companies to qualify for entry on the register.
Spanish fishermen who had been indulging in "quota hopping" were affected by the new rules. Those involved in the Factortame litigation owned 95 British registered fishing vessels which would no longer qualify for registration as British under the new regulations (more than half of these vessels were originally Spanish and previously flew the Spanish flag while the rest were genuinely British but had recently been purchased by or for the Spaniards).
The easy way for the Spanish fishermen to get round the new rules would be to set up a British company to own their vessels. They did exactly this, and Factortame Ltd was one such company. However, this was such an obvious loophole that it had been foreseen and blocked by a requirement in the new regulations that company owned vessels could only be registered as British if the beneficial owners of shares in, and the directors of, the company were at least 75 per cent British citizens.
Factortame Ltd and the others applied to the Divisional Court in London for judicial review and a declaration that the new registration of fishing regulations should not apply to them on the grounds that this would be a breach of the Treaty of Rome (arts 7, 52, 58 and 221 were quoted). The Divisional Court decided to refer to the European Court (which it did -case 221/89) but in the meantime preserved the status quo by granting a temporary injunction requiring the British government to allow the 95 vessels to stay on the British register.
The Secretary of State appealed against this injunction and won in both the Court of Appeal and in the House of Lords on the basis that the UK courts have no power to disapply Acts of Parliament even on a temporary basis. However, the House of Lords accepted that this traditional restriction on its power might no longer be justified in serious cases in which questions of EC law arose and referred this quite separate matter to the ECJ for urgent consideration (this was July 1989). The ECJ decided that the UK courts must set aside any rule of UK law which prevented them from granting interim relief in the type of situation involved in the Factortame case.
The European Commission decided it would be appropriate to jump on the bandwagon and started a third Factortame-related case (Case 246/89) requesting a declaration that the new British rules for registration of fishing vessels were contrary to the Treaty of Rome. Pending full hearing the Commission asked the ECJ for an interim order to require the UK to suspend the offending parts of the new rules. On 10th October 1989 the ECJ made the interim order as requested by the EC Commission and the UK government quickly complied by making an appropriate amendment to British law (see the Merchant Shipping Act 1988 (Amendment Order) 1989, SI 1989/2006, which came into effect on 2nd November 1989).
In the meantime, the House of Lords had received the ECJ's ruling that in some situations it must set aside the traditional rule of British law which prevented it from granting an interim injunction against the Secretary of State for Transport in the first place, decided (not surprisingly given the ECJ's ruling) that Factortame was such a situation and on 11th October 1989 granted Factortame Ltd the injunction it wanted.
The importance of Factortame is thus that it shows that if the British parliament passes a new law which arguably conflicts with European law, the national courts have power in some circumstances to grant a temporary injunction to prevent the UK authorities from enforcing that UK law while the matter is being sorted out.
The "in some circumstances" Partis important. The most important consideration will be whether an adequate remedy in damages would be available. If so, it is unlikely that a UK court would exercise its power to grant an injunction. However, if, as in Factortame, an award of damages would not provide an adequate remedy in the long run then a temporary injunction might be granted by the UK courts. The injunction would prevent enforcement in the UK of a UK law which is arguably inconsistent with European law until the ECJ had considered the arguments and dealt with the main question. Factortame shows that the UK courts have power to grant such an injunction and sweeps away the traditional rule to the contrary.