Factortame (No 2): EU Law Supremacy and Parliamentary Sovereignty
Factortame Ltd v Secretary of State for Transport (No 2) [1991] 1 AC 603 is a landmark constitutional case in which the House of Lords held that UK courts had the power to disapply an Act of Parliament that conflicted with European Union law. The decision represented a profound shift in the UK’s constitutional architecture, challenging the orthodox Diceyan conception of parliamentary sovereignty by establishing that EU law, as a higher legal order, could override inconsistent domestic legislation. Though the UK has since left the European Union, Factortame remains a seminal case on the relationship between domestic courts, international legal obligations, and the limits of legislative power.
The Facts
The dispute arose from the Merchant Shipping Act 1988, which introduced a new system for registering British fishing vessels. The Act required that fishing vessels be owned by British citizens or companies controlled by British citizens, effectively excluding Spanish fishing companies that had registered vessels under the British flag to gain access to UK fishing quotas. Spanish nationals owned 95 of the 106 vessels registered with the UK Fisheries Department under the previous registration system. The Factortame group, a consortium of Spanish-owned fishing companies whose vessels were excluded from registration under the new Act, challenged the legislation as incompatible with the Common Fisheries Policy and the principle of non-discrimination on grounds of nationality under Article 7 of the Treaty of Rome.
The Interim Injunction
The applicants first sought an interim injunction to suspend the application of the Merchant Shipping Act 1988 pending a ruling from the European Court of Justice (ECJ) on the substantive compatibility of the legislation with EU law. The House of Lords, in Factortame (No 1) [1990] 2 AC 85, held that the English courts had no power to grant an interim injunction against the Crown to suspend the operation of an Act of Parliament. Lord Bridge noted that under English constitutional law, the courts could not restrain the application of primary legislation. However, the House of Lords referred to the ECJ the question of whether interim relief must be available to protect rights claimed under EU law. The ECJ ruled that a national court must set aside any rule of national law that prevents it from granting interim relief to protect rights claimed under Community law, establishing the principle of effective judicial protection as a requirement of EU law.
The House of Lords Decision (No 2)
Following the ECJ’s ruling, the House of Lords granted the interim injunction and, at the full hearing, held that the Merchant Shipping Act 1988 must be disapplied to the extent that it conflicted with EU law. Lord Bridge stated: “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.” The court held that the European Communities Act 1972, by which Parliament had given effect to EU law in the UK, constituted a constitutional statute that conditioned the legislative supremacy of later Acts. Where Parliament later legislated inconsistently with EU law, the courts would give effect to the 1972 Act and disapply the later inconsistent provision.
The Constitutional Significance
Factortame (No 2) had profound constitutional implications. The orthodox Diceyan principle of parliamentary sovereignty held that Parliament could enact or repeal any law whatsoever and that no court could question the validity of an Act of Parliament. Factortame established a qualification: where Parliament had voluntarily limited its sovereignty by acceding to the European Communities, the courts would enforce that limitation against subsequent inconsistent legislation. Lord Bridge described this as the “voluntary acceptance” of the supremacy of EU law, which had been made “quite clear” by the terms of the European Communities Act 1972. The case thus established a hierarchy of statutes in UK law, with constitutional statutes such as the 1972 Act occupying a higher status than ordinary legislation—a departure from the traditional rule that no distinction exists between constitutional and ordinary Acts of Parliament.
The European Court of Justice Preliminary Reference
The ECJ’s preliminary ruling in Factortame (Case C-213/89) established important principles of EU law. The Court held that the UK’s nationality requirements for vessel registration were incompatible with the principle of non-discrimination and the freedom of establishment under the Treaty of Rome. The ECJ also held that the requirement that vessels be managed and controlled from the UK was permissible, provided it did not operate discriminatorily. More significantly for EU constitutional law, the ECJ affirmed the principle of full effectiveness of Community law: national courts must provide effective legal protection for rights conferred by EU law, including interim relief, even where national procedural rules would preclude such relief. This ruling reinforced the doctrines of direct effect and supremacy that the ECJ had developed since Van Gend en Loos (1963) and Costa v ENEL (1964).
The Merchant Shipping Act 1988 Disapplied
Following the substantive ruling from the ECJ, the divisional court applied the principle established in Factortame (No 2) and disapplied the relevant provisions of the Merchant Shipping Act 1988. The Secretary of State was required to register the Factortame vessels under the existing system. The UK government subsequently amended the legislation to comply with EU law, introducing the Merchant Shipping (Registration of Fishing Vessels) Regulations 1993, which removed the discriminatory nationality requirements while maintaining legitimate connections between vessels and the UK fishing fleet. The case ultimately resulted in a claim for damages against the UK government for losses suffered as a result of the unlawful exclusion from the fishing register, which led to further litigation on state liability for breach of EU law under the Francovich and Brasserie du Pêcheur principles.
Post-Brexit Implications
The European Union (Withdrawal) Act 2018 repealed the European Communities Act 1972 and ended the supremacy of EU law in UK law. However, Factortame’s constitutional significance endures. The case established the principle that UK courts can identify constitutional statutes that constrain the operation of subsequent legislation, a principle that survived Brexit and was applied in R (HS2 Action Alliance) v Secretary of State for Transport (2014), where the Supreme Court recognised that certain fundamental constitutional principles could limit the effect of implied repeal. The case also demonstrated that parliamentary sovereignty, while a fundamental principle of the UK constitution, is capable of adaptation and modification by Parliament itself. Factortame thus remains relevant to debates about the nature of legislative supremacy, the hierarchy of constitutional norms, and the relationship between domestic and international legal orders in the post-Brexit constitution.