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  3. R (Factortame Ltd) v. Secretary of State for Transport (No 2) [1991] 

R (Factortame Ltd) v. Secretary of State for Transport (No 2) [1991] 

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Headnote

This case was seen by the Court of Justice and the House of Lords. It concerned the power of the UK national courts to grant interim orders when a national law was being contested before the Court of Justice for its reputative incompatibility with the European Economic Community law. 

I. Background of the Case 

The Hague resolution of 1976 (Council Regulation of 3 November 1976; Official Journal 1981 No. C 105/1) restricted the number of hake that Spanish fishing boats were allowed to fish in the British waters. However, there were concerns that Spanish fishing boats were registering themselves as British fishing boats to circumvent the Hague Resolution, which were deemed by British fishermen as inroads into their fishing opportunities. In response the UK government passed the Merchant Shipping Act 1988 and the Merchant Shipping (Registration of Fishing Vessels) Regulations 1988

This legislation imposed new requirements for registration, including in respect of nationality of the owners of the boats. The claimant’s boats failed to satisfy the conditions for registration under section 14(1) of the 1988 Act due to their Spanish nationality or the proportion of the companies’ beneficial ownership in Spanish hands. Due to the potentially catastrophic financial consequences, they sought to challenge the legality of the relevant provisions by reason of their reputed incompatibility with the European Economic Community Treaty and European Communities Act 1972. In addition, they sought an interim injunction suspending the application of the Act and Regulations against them until a final determination as to their compatibility with the Community Law was made by the Court of Justice. 

The Court of Justice and the House of Lords found for the applicants on the ground that the national courts are obligated by the Community law to grant such an interim injunction provided that the two-fold American Cyanamid test is satisfied.

II. Issues of the Case 

The issues of the case are three-fold: 

1. Whether the national courts have the obligation or power to set aside national statutes when they are the sole obstacle to granting an interim injunction relief to protect directly enforceable European Economic Community rights; 

2. What tests should be applied when deciding whether the applicants in question are entitled to the relief if the national courts have the power to grant it; and 

3. Whether the Spanish vessels satisfied these tests.

III. Rationes Decidendi 

The European Court of Justice decided that in a case where the compatibility between national law and the Community law is disputed, if a national court considered that the only obstacle to it granting an interim relief is a rule of national law, they should set it aside. According to the Court of Justice, this is to ensure the protection of directly enforceable Community rights and the uniformity of their application across member states. The Court of Justice also ruled that it is for the national courts, in application of the principle of cooperation under article 5 of the European Economic Community Treaty, to ensure the legal protection of directly enforceable Community rights and that they should not be fettered by any provision of a national legal system or any legislative, administrative, or judicial practice. 

The House of Lords decided that interim relief should be granted to Spanish vessels pending the preliminary ruling of the Court of Justice on the validity of the beneficial ownership requirement under section 14 of the Act of 1988. In considering whether interim relief should be provided, a two-fold test should be applied. Firstly, whether the applicants made a serious case as to the validity of the national law in question. Secondly, whether on the balance of convenience, the applicants’ interests outweigh the interests of the other party. It is acknowledged that the court has to consider the adequacy of remedy in damages, but that in a case involving a public authority, such remedies will normally be insufficient. It is also acknowledged that the public interest has to be taken into account in the balance of convenience test, for which reason the applicants’ case needs to be sufficiently firmly based to justify the exceptional course of granting an injunction. 

IV. The Significance of the Case 

The significance of the decision was that the supremacy of the European Economic Community law over national law was reaffirmed and that the member states’ nationals were given stronger protection in respect of directly enforceable Community rights. One of the reasons is that national law could no longer serve as a hurdle to granting interim reliefs to claimants whose directly enforceable Community rights were violated. Secondly, this case made it easier for claimants whose Community rights were violated to bring a claim due to the availability of interim reliefs that reduced the potential loss they might have suffered. Lastly, the availability of interim reliefs when such claimants had a strong case addressed the power imbalance between the member states and their nationals. 

In the grand scheme of things, this case also paved the way for stronger political integration of the EU as it strengthened the force of EU law over the Nation States. 

Appellate History

  • European Court of Justice and House of Lords [1991] – Decision Approved
  • Court of Appeal [1989] – Decision Rejected
  • Divisional Court [1989] – Decision Approved

Topic

  • The Supremacy of European Economic Community Law 

Submission Details

Reviewed By Ross Birkbeck
Submitted By Haocheng Fang
First Published 26th July 2022

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See

  • Act of Accession of 1985
  • American Cyanamid Co. v. Ethicon Ltd. [1975] A.C 396
  • Amministrazione delle Finanze dello Stato v. Ariete S.p.A. [1980]
  • Amministrazione delle Finanze dello Stato v. MIRECO S.a.S. [1980]
  • Amministrazione delle Finanze dello Stato v. Simmenthal S.p.A. [1978]
  • Bourgoin S.A. v. Ministry of Agriculture, Fisheries and Food [1986]
  • British Fishing Boats Act 1983
  • British Fishing Boats Order 1983
  • Commission of the European Communities v. United Kingdom [1989]
  • Council Regulation (E.E.C.) No. 170/83
  • Council Regulation (E.E.C.) No. 172/83
  • Council Regulation (E.E.C.) No. 1408/71
  • European Communities Act 1972
  • European Economic Community Treaty
  • Geneva Convention on the High Seas
  • Hague resolution of 1976
  • F. Hoffmann-La Roche & Co. A.G. v. Secretary of State for Trade and Industry [1975]
  • Films Rover International Ltd. v. Cannon Film Sales Ltd. [1987]
  • Merchant Shipping Act 1894
  • Merchant Shipping Act 1988
  • Merchant Shipping Act 1988 (Amendment) Order 1989
  • Merchant Shipping (Registration of Fishing Vessels) Regulations 1988
  • Reg. v. Ministry of Agriculture
  • Fisheries and Food, Ex parte Agegate Ltd. [1990]
  • Reg. v. Ministry of Agriculture
  • Fisheries and Food, Ex parte Jaderow Ltd. [1990]
  • Reg. v. Secretary of State for Transport, Ex parte Factortame Ltd. [1989]
  • Reg. v. Secretary of State for Transport, Ex parte Factortame Ltd. [1990]
  • Rules of Procedure of the Court of Justice
  • Sea Fish (Conservation) Act 1967
  • Sea Fish Licensing Order 1983
  • Sea Fishing Boats (Scotland) Act 1886
  • Sierbien v. Westminster City Council (1987)
  • Smith v. Inner London Education Authority [1978]
  • Supreme Court Act 1981
  • United Nations Convention on the Law of the Sea. 
Updated on July 12, 2023

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