R v Secretary of State for Transport, ex p. Factortame Ltd (No.2) [1990] EUECJ C-213/89

Spanish-owned fishing companies challenged UK legislation requiring British nationality for vessel registration. The European Court of Justice ruled that national courts must set aside domestic rules preventing interim relief to protect Community law rights, establishing the supremacy of EC law over conflicting national provisions.

Facts

The appellants were companies incorporated under UK law, with directors and shareholders who were mostly Spanish nationals, owning or operating 95 fishing vessels. These vessels had been registered under the Merchant Shipping Act 1894 but failed to meet the new registration conditions under the Merchant Shipping Act 1988, which required vessels to be ‘British-owned’ with specific nationality, residence and domicile requirements for owners, charterers and directors.

The 1988 Act was introduced to combat ‘quota hopping’ – the practice whereby UK fishing quotas were allegedly exploited by vessels flying the British flag but lacking genuine links with the United Kingdom. The appellants faced losing their right to fish from 1 April 1989 unless they could obtain interim relief.

Procedural History

The Divisional Court granted interim relief suspending the application of the 1988 Act pending a preliminary ruling from the ECJ. The Court of Appeal reversed this, holding that under national law courts had no power to suspend Acts of Parliament. The House of Lords found the appellants would suffer irreparable damage without interim relief but confirmed that English courts lacked power under national law to grant such relief against the Crown.

Issues

The central question referred to the Court of Justice was whether Community law obliged or empowered a national court to grant interim relief protecting rights claimed under Community law, where national law precluded such relief.

Judgment

The Court ruled decisively in favour of the primacy of Community law. Referring to established principles, the Court stated:

directly applicable rules of Community law ‘must be fully and uniformly applied in all the Member States from the date of their entry into force and for so long as they continue in force’

The Court emphasised the duty of national courts under Article 5 of the EEC Treaty:

it is for the national courts, in application of the principle of cooperation laid down in Article 5 of the EEC Treaty, to ensure the legal protection which persons derive from the direct effect of provisions of Community law

Crucially, the Court held:

any provision of a national legal system and any legislative, administrative or judicial practice which might impair the effectiveness of Community law by withholding from the national court having jurisdiction to apply such law the power to do everything necessary at the moment of its application to set aside national legislative provisions which might prevent, even temporarily, Community rules from having full force and effect are incompatible with those requirements, which are the very essence of Community law

Extending this principle to interim relief, the Court declared:

the full effectiveness of Community law would be just as much impaired if a rule of national law could prevent a court seised of a dispute governed by Community law from granting interim relief in order to ensure the full effectiveness of the judgment to be given on the existence of the rights claimed under Community law. It follows that a court which in those circumstances would grant interim relief, if it were not for a rule of national law, is obliged to set aside that rule

Implications

This judgment represented a constitutional watershed for the United Kingdom. It established that:

• National courts must disapply domestic rules, including Acts of Parliament, that obstruct the effective protection of Community law rights
• The effectiveness of the Article 177 preliminary ruling procedure requires national courts to be able to grant interim relief pending ECJ decisions
• Parliamentary sovereignty, as traditionally understood in UK constitutional law, was subject to the requirements of Community law membership

The decision had profound implications for the relationship between EU law and national legal systems, confirming that the supremacy of Community law extends to procedural remedies and interim protection, not merely substantive rights.

Verdict: Community law must be interpreted as meaning that 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 set aside that rule.

Source: R v Secretary of State for Transport, ex p. Factortame Ltd (No.2) [1990] EUECJ C-213/89