FACTORTAME

General principle:

UK constructive approach is overruled and the supremacy of EU Law reaffirmed.

Name:

R (Factortame Ltd) v Secretary of State for Transport (Case C-213/89) 1990 ECR 1-2433

Facts:

The case involved companies registered in the UK but mainly owned by Spanish nationals. The Merchant Shipping Act 1988 required a certain percentage of UK national ownership for the registration of a vessel. This provision expressly violated the “non-discrimination on nationality” principle of Article 12. The Divisional Court granted an interim relief suspending the operation of the impugned law. The House of Lords then made a reference to the ECJ arguing than nothing neither in the UK Constitution nor in EC Law permitted such interim.

Preliminary question before the Court:

Does the incompatibility of an act of Parliament, enacted after accession to the Treaties and expressly introducing inconsistencies to EC Law, permits judges to suspend the legal effect of the domestic provision?

Preliminary Ruling:

The Court firmly recalls that any act of Parliament, even enacted after the accession Treaties, that would be inconsistent with EU Law cannot override it.

In addition to this, national Courts being confronted to inconsistencies or incompatibilities with EU Law are required to do everything necessary to set aside the impugned law.

Application:

The UK constructive approach is overruled and the supremacy of EU Law is affirmed. There is now an external body competent to make laws affecting the United Kingdom, which are applied by the English Courts irrespective of the wishes of Parliament.

The impact of supremacy on UK Law

The UK compliance with supremacy was probably the most far-reaching of the EU. Partly because dualist states are generally not designed to integrate international orders implying any sort of supremacy. According to Dicey’s traditional definition of Parliamentary sovereignty, it makes Parliament the supreme legal authority in the UK, which can create or end any law. Generally, the courts cannot overrule its legislation. Parliamentary sovereignty is the most important part of the UK constitution.

However, the CJEU case-law on supremacy requires national Courts to suspend operations, declare as invalid and dis-apply acts of Parliament. This approach is completely opposed to the UK conception of the role of Judges. The United Kingdom being a dualist system allowed EC law to get an automatic incorporation through the European Communities Act 1972(ECA). Section 2(1) of this act particularly conveyed how the UK limited its sovereign rights in favour of the EC. However section 2(4) limited the EU's sovereignty over domestic law by ensuring that all domestic enactments had effect only subject to directly applicable rules of community law. The ECA 1972 had two major consequences on the traditional UK system: overriding the usual presumption that any later enactment overruled prior law inconsistent with it and clearly terminates any effect of acts of Parliament purporting to contradict EU Law. UK judges took the following positions:

Analysis:

The Factortame principle was developed as a direct consequence of a fishing strategy that was established in 1983 by the member states. This gave member states the ability to impose fishing restrictions in territorial seas within 12 nautical miles of their boundaries. Every member state was allotted a certain quota of fish, which they were not allowed to go beyond. The United Kingdom's fishing quotas were depleted by ships that were registered in the United Kingdom but were owned and run by non-British firms. This behavior, known as "quota hopping," became a source of worry for the British government not long after it was discovered that Spanish finishing boats were engaging in it. As a result, the Merchant Shipping Act of 1988 was passed into law by the British Parliament.

The 1988 Act was in conflict with European Community law, which permits individuals and organisations to freely establish and run businesses anywhere within the Community. After some time, the Act was challenged by firms based in Spain, who maintained that European Community law should take precedence over the 1988 Act. Following a preliminary reference to the ECJ, the House of Lords came to the conclusion that Section 2 (4) of the 1972 Act "has precisely the same effect as if a section were incorporated in...[the 1988 Act saying]...that the provisions with respect to registration of British fishing vessels were to be without prejudice to the directly enforceable Community rights of nationals of any member state." The House of Lords' decision was reached after the ECJ gave its preliminary opinion on the case.