R (Factortame Ltd) v Secretary of State for Transport
R (Factortame Ltd) v Sec. of State for Transport | |
---|---|
Court | House of Lords, European Court of Justice |
Full case name | R (Factortame Ltd) v Secretary of State for Transport |
Decided | March 1989 to November 2000 |
Citation(s) | |
Keywords | |
direct effect, Common Fisheries Policy |
R (Factortame Ltd) v Secretary of State for Transport[1] was a judicial review case taken against the United Kingdom government by a company of Spanish fishermen who claimed that the United Kingdom had breached European Union law (then Community Law) by requiring ships to have a majority of British owners if they were to be registered in the UK. The case produced a number of significant judgements on British constitutional law, and was the first time that courts held that they had power to restrain the application of an Act of Parliament pending trial and ultimately to disapply that Act when it was found to be contrary to EU law.
The litigation was lengthy, and is typically divided into five main stages:
- Factortame I, where the High Court and then the House of Lords (which functioned as the final court of appeal prior to 2009) both made a reference to the European Court of Justice on the legality of the Merchant Shipping Act 1988's ("MSA") requirement for UK fishing vessels to be 75% UK owned. After the ECJ confirmed the incompatibility of the Act with EU law, Factortame saw the House of Lords confirm the primacy of EU law over national law in the areas where the EU has competence because of the UK acceding to the EU treaties.[2]
- Factortame II, where the ECJ held that the provisions of the MSA were required to be disapplied by the UK courts if they contravened EU law.
- Factortame III, where the ECJ held that a member state could be liable for damages in an action by the European Commission for breach of EU law.
- Factortame IV, where the House of Lords ruled that damages could be awarded against a member state like the UK for losses suffered by private parties under the Francovich v Italy[3] principle, that wrongs by violation of a public body generate a private law claim from anybody who has suffered a directly connected loss (also known as the doctrine of state liability).
- Factortame V, holding that claims after 1996 were statute-barred, since claims against a member state were like other claims in tort under the Limitation Act 1980.
Facts
The EU's
From 1980, as seen earlier, Galician fishermen began to enter the UK fishing market by taking advantage of easy
In order to put an end to this practice, the British Government enacted a series of measures which proved largely ineffective. In two cases the High Court of Justice of England and Wales asked
As from 31 March 1989, fishing vessel registrations under the 1894 Act would lapse and the owners would be required to re-register under the 1988 Act. None of Factortame's vessels could satisfy the new requirements and an action for
Factortame I
Factortame Ltd sought, first, a
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 (
Court of Appeal
The Court of Appeal (
House of Lords
The case was brought on 18 May 1989 by Factortame before the
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
On 19 June 1990 the ECJ court (as "full court" of 11 justices) en banc gave its ruling,[8] 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".[9] 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
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
Factortame II compatibility
On 25 July 1991 the ECJ gave its ruling in case C-221/89 on the question referred by the High Court,[12] namely whether the conditions for registration of fishing vessels under the 1988 Act were compatible with Community law. Agreeing with Advocate-General Mischo's opinion, the court (sitting as the full court of 11 justices) en banc held that "it is for the Member States to determine ... the conditions which must be fulfilled in order for a vessel to be registered in their registers and granted the right to fly their flag, but, in exercising that power, the Member States must comply with the rules of Community law". In particular, the conditions for registration should not constitute obstacles for nationals of one Member State to establish themselves in business in the territory of another Member State (the freedom of establishment), nor should they discriminate on the basis of nationality.
In the event, the ECJ found the nationality requirements in the Merchant Shipping Act 1988 discriminatory and contrary to Article 43 EC as a restriction on the freedom of establishment. It also violated articles 12 and 221 EC. The residence and domicile conditions also breached Article 43. In effect, by introducing a requirement based on an individual's residence and domicile, the Act operated an unfair distinction between UK nationals and those from other Member States as "the great majority of nationals of the [UK] are resident and domiciled in that State and therefore meet that requirement automatically, whereas nationals of other Member States would, in most cases, have to move their residence and domicile to [the UK] in order to comply with the requirements of [the 1988 Act]". In respect of the condition that the vessel should be managed and its operations directed from the UK, the ECJ found, however, that this requirement was compatible with Community law.
The UK government had argued that the conditions imposed by the 1988 Act were justified on the basis that the Common Fisheries Policy allowed for a system of national quotas and the 1988 Act ensured the effectiveness of that system. This was rejected by the ECJ which stated that fishing vessel registration criteria were permitted, but not where they violated Community law. It was, in that respect, open to the UK government to introduce conditions ensuring that a "real economic link" existed between the ship and the State of registration, but such a link had to "concern only the relations between the vessel's operations and the population dependent on fisheries and related industries". In other words, it would have been possible for the UK government to prescribe conditions which protected UK fishing communities from the effects of the opening up of national fishing waters to other Member States, but it could not do that through the imposition of explicit nationality and residence conditions.
Factortame III state liability
Following the ECJ's second ruling, the case returned once more to the High Court which, on 18 November 1992, requested a third ruling from ECJ concerning the conditions under which a member state may incur liability for damage caused to individuals by breaches of Community law attributable to that state. At around the same time the
At this time the ECJ had just delivered judgment in
In its judgment delivered on 5 March 1996,[13] the court of nine justices en banc reaffirmed the right of reparation, and stated that it existed irrespective of whether the provision of Community law in question has direct effect. Furthermore, the principle applies to any case where a member state breaches Community law, irrespective of which organ of the state was responsible for the breach. The ECJ rejected the contentions that the right to reparation required the introduction of legislation by the EU, and that the availability of damages should be decided, in each case, on the basis of the national law of the state in question.
The court proceeded to outline the conditions on which liability would be established. It underlined that such conditions could not, in the absence of a particular justification, differ from the conditions applicable to the liability of the Community in similar circumstances. Further, the right to reparation would depend on the nature of the breach of Community law in question and the extent of the discretion available to the State in question. The conditions are:
- the rule of law infringed must be intended to confer rights on individuals;
- the breach must be sufficiently serious;
- there must be a direct causal link between the breach of the obligation and the damage sustained by the injured party.
In the case where a state had exercised broad discretion in passing legislation which breached Community law (as was the case in Factortame), for the breach to be "sufficiently serious" it must be "manifest" and "grave". National courts have jurisdiction to decide how to characterise the breach in question, taking into account the clarity and precision of the Community rule infringed, whether the damage was intentional or involuntary, whether any error of law was excusable, and whether a Community institution contributed towards the adoption or maintenance of contrary national measures or practices. These same conditions apply to state liability for damage caused by the decision of a judicial body adjudicating at last instance.
Factortame IV right to damages
The matter came back to the Divisional Court (
The House of Lords unanimously ruled in favour of Factortame on 28 October 1999. It rejected the argument that HMG's reliance on legal advice at the time of passing the 1988 Act did not deprive the breach of its grave and manifest character. The court did accept, however, that the government had acted in good faith in passing the Act. Nevertheless, the government had been aware of the risk it was running with such legislation and it had done everything possible to ensure that fishermen could not obtain interim relief against the Act's application. The case would now go back to the Divisional Court for the amount of damages to be determined.
In March 2000, Factortame and the other claimants (approximately 90 Anglo-Spanish fishing companies) accepted an offer of settlement from the Secretary of State. Under the terms of the settlement the claimants, who had originally claimed £285 million, received £55 million including interest of some £26 million.[15]
Factortame V limitation issues
On 27 November 2000, Judge Toulmin in the
The judge also rejected an attempt by Factortame to obtain damages for injury to feelings and aggravated damages caused by HMG's breach of Community law. Factortame had argued that claims for discrimination under European law were broadly comparable to claims for discrimination to individuals under the Race Relations Act 1976. This was not accepted by Judge Toulmin who emphasised that such damages were only awarded in cases where the breach in question had caused harm to the claimant's self-esteem.
Significance
The Factortame case has produced large amounts of academic debate as to whether it can be reconciled with the idea of legislative supremacy as stated by
The issue of whether the UK Parliament or the European Court of Justice had ultimate sovereignty over European Community laws which applied to the UK is still an area of intense legal debate and conflicting views. Prior to Brexit (31 January 2020), the UK recognised the primacy of the European Court of Justice for those areas of law in which the EU has competency. However, in Macarthys Ltd v Smith, Lord Denning MR said, "If the time should come when our Parliament deliberately passes an Act—with the intention of repudiating the Treaty or any provision in it—or intentionally of acting inconsistently with it—and says so in express terms—then ... it would be the duty of our courts to follow the statute of our Parliament."[17][18]
This view of the UK's ultimate sovereignty was supported by Lord Justice Laws in the Thoburn v Sunderland City Council case, when he said that "there is nothing in the European Communities Act which allows the European Court, or any other institution of the EU, to touch or qualify the conditions of Parliament's legislative supremacy in the United Kingdom ... That being so, the legislative and judicial institutions of the EU cannot intrude upon those conditions."
That European law had primacy over UK law has been stated many times in European courts. In ECJ Case 6/64 Costa v ENEL (1964), the ECJ stated that "the Members States have limited their sovereign rights, albeit within limited fields". In Case 26/62 Van Gend en Loos v Nederlandse Administratie der Belastingen (1963) their ruling states that "the Community constitutes a new legal order of international law for the benefit of which the states have limited their sovereign rights".
The question of who has the ultimate kompetenz-kompetenz (i.e. the right to decide the limits of jurisdiction of the European Court of Justice) has now been settled.
See also
- European Union law
- 1993 Cherbourg incident
- Supremacy (European Union law), and the Solange doctrine of German law
- Constitution of the United Kingdom
- History of the British constitution
- Pescanova
Notes
- ^ By convention, for judicial review cases the monarch appears in the title of the case as the nominal bringer of the action. In reality the action was brought by Factortame Limited against the Secretary of State.
- ^ The House of Lords judgment is referred to as R (Factortame Ltd) v Secretary of State for Transport (No 2) [1991] 1 AC 603.
- ^ (1990) C-6/90
- ^ "Common Policies". Archived from the original on 11 May 2009. Retrieved 26 September 2010.
- ^ a b c d "Thomas Cooper Law: "FACTORTAME BACKGROUND"". Archived from the original on 16 January 2014. Retrieved 29 April 2017.
- ^ "Thomas Cooper Law: "ABOUT FACTORTAME"". Archived from the original on 16 January 2014. Retrieved 29 April 2017.
- ^ "C-213/89 – The Queen v Secretary of State for Transport, ex parte Factortame". InfoCuria. THE COURT OF JUSTICE OF THE EUROPEAN UNION. Retrieved 30 March 2019.
- Christopher Bellamy, Christopher Vajda for the Respondent; as well as the state of Ireland, the European Commission, and Rawlings Trawling Ltd.
- ^ "The tension between the supremacy of EU law and Parliament's continuing sovereignty". Law Wales. Law Wales (a collaboration between the Welsh Government and Westlaw UK). Retrieved 30 March 2019.
- ISBN 978-0-19-927389-8.
Some public comments on the decision of the Court of Justice, affirming the jurisdiction of the courts of member states to override national legislation if necessary to enable interim relief to be granted in protection of rights under Community law, have suggested that this was a novel and dangerous invasion by a Community institution of the sovereignty of the United Kingdom Parliament. But such comments are based on a misconception. If the supremacy within the European Community of Community law over the national law of member states was not always inherent in the EEC Treaty it was certainly well established in the jurisprudence of the Court of Justice long before the United Kingdom joined the Community. Thus whatever limitation of its sovereignty Parliament accepted when it enacted the European Communities Act 1972 was entirely voluntary. Under the terms of the 1972 Act it has 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. ... Thus there is nothing in any way novel in according supremacy to rules of Community law in those areas to which they apply ...
- ISBN 978-0-19-876525-7.
- Advocate-General: ECLI:EU:C:1991:113
- ^ ECLI:EU:C:1996:79, Joined Cases C-46/93 and C-48/93: Brasserie du Pêcheur SA v Federal Republic of Germany; and The Queen v Secretary of State for Transport, ex parte Factortame Ltd and Others" 5 Mar 1996. Tesauro, AG; 6 other EU member state governments; the European Commission, 8 lawyers for 97 Claimants, and J.E. Collins, Stephen Richards, Christopher Vajda and Rhodri Thompson for the Respondent.
- ^ "BBC News – EUROPE – Spanish win legal fish fight". Retrieved 29 April 2017.
- ^ "House of Lords, Hansard Debates, 8 February 2001". Retrieved 19 January 2008.
- Wade, Sir William (1996). "Sovereignty – Evolution or Revolution?". Law Quarterly Review. 112: 574.
- ISBN 978-0-19-927959-3.
If the time should come when our Parliament deliberately passes an Act with the intention of repudiating the Treaty or any provision in it or intentionally of acting inconsistently with it—and says so in express terms—then ... it would be the duty of our courts to follow the statute of our Parliament.
- ^ Jack Straw MP (8 February 2005). "Select Committee on European Scrutiny Minutes of Evidence: Examination of Witnesses (Questions 229–239): Rt hon Jack Straw MP and Mr David Frost". House of Commons Publications. Retrieved 9 January 2008.
I think your Committee will be familiar with what Lord Denning, then Master of the Rolls, said in McCarthy v Smith: "If the time should come when our Parliament deliberately passes an Act with the intention of repudiating the Treaty or any provision of it or with the intention of acting inconsistently with it—it says so in express terms—I should have thought it would be the duty of our courts to follow the statute in our Parliament." That much is clear. Other consequences would follow in those circumstances, which arise from our signature on the Vienna Convention on the Law of Treaty, Article 27, which says that you have to respect the international obligations into which you have entered.
References
- Articles
- Books
- A O'Neill, EU Law for UK Lawyers (Hart 2011) 279–286
- P Craigand G de Búrca, EU Law: Text, Cases and Materials (5th edn OUP 2011) 287–288
External links
- Companies House: company registration information for Factortame Limited
- legislation.gov.uk: photographic copy of "Merchant Shipping Act 1988", 3 May 1988
- eur-lex.europa.eu: Official Journal of the European Union 28 Dec 2013 – full text of Common Fisheries Policy (as amended)
- Factortame I
- High Court judgment, 10 March 1989
- Court of Appeal judgment, 22 March 1989
- House of Lords judgment, 18 May 1989
- ECJ's ruling, 19 June 1990
- House of Lords 2nd judgment, 11 October 1990
- The Law Reports: R v Secretary of State for Transport ex parte Factortame Ltd (No. 2) [1991] 1 AC 603
- Factortame II
- Factortame III
- Factortame IV
- Factortame V