Critical Examination of Factortame Litigation and its Effect to the UK Constitution

Critical Examination of Factortame Litigation and its Effect to the UK Constitution

Factortame[1] litigation is one of the most significant cases for the Law of England and Wales and the United Kingdom (UK) constitution. This essays attempts to critically examine the ways in which Factortame litigation affected the law of England and Wales and the UK uncodified constitution. A short background of the case was summarized and legal issues that have affected the law of England and Wales in particular the erosion of the concept of Parliamentary supremacy were discussed in detail.

In 1977 the European Economic Community (EEC) initiated the Common Fisheries Policy which purposively regulate and control the fishing industry to protect stocks by introducing a quota system for the Member States. Factortame involved Spanish fishermen. The Spanish fishermen in the 1980’s began to infiltrate the UK fishing market by taking advantage of the lax fishing vessel registration requirements contained in the Merchant Shipping Act 1984[2]. The act although prohibiting ownership of vessels by non-UK nationals, allowed UK registered companies to be registered as owners. The Spanish fishermen simply re-registered their vessels as company owned vessels by a registered UK company. One of those who benefited from this is the Factortame Limited, a company owned by Joseph J L Couceiro, John A Couicero and Ken L Couceiro all Spanish national and resident and domiciled in Spain. The company, Factortame Limited, re-registered 53 vessels which had formerly flown the Spanish flag as British fishing vessels under the 1894 act. They also purchased 42 existing British vessels with the intention of using them in the UK fishing zone. Most of these vessels landed their catches in Spain, but as the fish were caught in the UK waters, they comprise against the UK fishing quota. The British government intervened to end this practice and enacted thru Parliament the 1988 Merchant Shipping Act[3] and the Merchant Shipping (Registration of Fishing Vessels Regulations) were introduced. Under the new domestic law the system of registration contained in the 1984 act was repealed. They restricted registration of fishing vessels to only those with “a genuine and substantial connection” with the UK. For this to be complied the vessels must be British-owned, it should be managed, controlled and operated in the UK and any charterer, manager or operator had to be a qualified person or company which means British citizen who are resident of the UK or a company which has a majority share about 75% owned by British national whose principal place of business is the UK.

Under the Merchant Shipping Act all Factortame vessels could not qualify to re-register to fish in the UK fishing zone. Hence an action for judicial review was initiated in the UK courts in December 1988.

The legal issue on the Factortame litigation was that the Merchant Shipping Act of 1988 is contrary to the European Union (EU) law and as a result can not be imposed to the Spanish Fishermen as Spain joined the EEC in 1985. The Spanish fishermen requested that the High Court disapply the UK Act of Parliament. The court issued an injunction which temporarily suspended the Secretary of State for Transport from enforcing the Act. This issue was taken up by the Court of Appeals and later by the House of Lords (Regina v Secretary of State for Transport, Ex parte Factortame Ltd. And Others (No.2) [1990] which both confirmed that the decision of the first Court was wrong as the Courts did not have the power to suspend an Act of Parliament. The House of Lords were obliged under the European Union law to refer this matter to the European Court of Justice (European Court of Justice) which ruled that domestic courts were able to disapply a domestic law which contravened EU law and therefore the Merchant Shipping Act 1988 could not be applied.

On 11 October 1990 the House of Lord gave its judgement in the light of the European Court of Justice’s ruling and granted an injunction in favour of the Spanish fishermen. The judgement of the European Court of Justice is a point of no return in the UK constitution, the House of Lords laid the unthinkable the availability of an interim relief against the Crown, the basis on which the relief can be granted and the issue of its ruling in favour of the Spanish fishermen on the concepts of Parliamentary sovereignty.

Lord Goff acknowledged that, as a matter of Community law, interim relief had to be available in principle against the Crown under section 37 of the Supreme Court Act 1981. [4] The decision of the House of Lord to grant relief in Factortame is based on two factors. The first one being the likelihood that Factortame would suffer hardship and loss if the interim relief was not granted. Secondly which is the more important factor is the strong probability that Factortame can succeed in a full trial once ECJ’s ruled that the Spanish arguments had ‘considerable force’.

Erosion of Parliamentary Sovereignty and the European Union

With the rulings of the European Court of Justice on the Factortame case the issue of erosion of Parliamentary Sovereignty was the main content of criticism. As what Dicey[5] said “the principle of Parliamentary sovereignty means neither more nor less than this, namely, that Parliament thus defined has, under the English constitution, the right to make or unmake any law whatever; and, further, that no person or body is recognized by the law of England as having a right to override or set aside the legislation of Parliament.” It is clear that in the Factortame case the House of Lords set aside the Merchant Shipping Act of 1988. Some scholarly arguments would say that on the strict reading 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. Justifying that the courts was not over-riding or striking down a domestic act of Parliament, but were instead attempting to interpret legislation to construe with the obligation of the UK under EU law as proposed by Diplock in the case of Garland v British Rail Engineering[6]. But it is clear in Factortame that the court set-aside an Act of Parliament to give way to a directly applicable community rights under the European Communities Act 1972[7]. This new power given to the court to set-aside an Act of Parliament was the first in the history of the UK constitution. Sir Robert Megarry in Manuel v AG[8] said that
“The duty of the court is to obey and apply every Act of Parliament and…the court cannot hold any such Act to be ultra vires. Of course there maybe questions about what the act means, and of course there is power to hold statutory instruments and other subordinate legislation ultra vires. But once an instrument is recognized as being an Act of Parliament, no English court can refuse to obey it or question its validity.”

To quote Willes J “If an act of Parliament has been obtained improperly, it is for the legislature to correct it by repealing it; but so long as it exist in law, the courts are bound to obey it.” Lord Reid further said “In earlier times many learned lawyers seem to have believed that an Act of Parliament could be disregarded in so far as it was contrary to the law of God or the law of nature or natural justice, but since the supremacy of Parliament was finally demonstrated by the revolution of 1688 any such idea has become obsolete.”

Lord Bridge reiterated that under the European Communities Act 1972, the law regulating the UK’s membership of the European Union, it had “always been clear that it was in the duty of a UK 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.” In the same way that Parliament had introduced legislation to remedy areas of the UK law which did not meet the standards set by EU directives, the House of Lord was now accomplishing the same task in giving judgment for Factortame. There was nothing new, in this respect, in recognizing the supremacy of EU law in the area which it applies. Although European supremacy over UK law has been stated many times as in the ECJ Case 6/64 Costa v Enel[9] ECJ said, “…the Member States have limited their sovereign rights, albeit within limited fields.” In Case 26/62 Van Gend en Loos v. Nederlandse Administratie der Belastingen[10] the ECJ ruling states “…the Community constitutes a new legal order of international law for the benefit of which the states have limited their sovereign rights”. This acceptance of European Union supremacy was purely theoretical in a way but not since the Factortame litigation.

Arguments both for and against erosion of Parliamentary sovereignty because of the decision of the House of Lords landmark case of Factortame seems to go on a vicious cycle. But it can be inferred safely that Factortame gave a clear and distinct guidelines to the UK court and constitution that if there is a question or conflict with Domestic Law the Community law takes precedence. It reasserts the primacy of the EU law over domestic law of member states. It also affected the balance of power in the constitution as it enabled the Judiciary to overturn the Legislature even though it has knowledge of its express will.

An academic debate as to the question of who has the ultimate say on things has not been settled. Lord Denning in McCarthy’s Ltd v Smith[11] 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 Parliament. This view is supported by Lord Justice Laws in the Thoburn v Sunderland City Council[12] case, when he stated, “…there is nothing in the European Communities Act which allows the European Court, or any other institution of the European Union, 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 European Union cannot intrude upon those conditions.”

Section 2 of the European Act of 1972 provides that the UK courts are to give effect to the Acquis Communautaire, to enforce community rights and remedies, etc however ss2 and 3 did not include the possibility that the European Act of 1972 can be repealed in a future date thereby protecting the concept of Parliamentary sovereignty. Looking to the future it is almost impossible that the UK would repudiate its inclusion with the European Union but theoretically it is possible to assert Parliamentary sovereignty in the future making it an open option though deemed unthinkable as of present situation. But as of present time and with the precedent laid comprehensively by the Factortame case the European Union Supremacy is asserted within the context of the United Kingdom as a member state of the European Union.

Summary:

The Factortame case was a landmark case as it was the first known case in England and Wales that affirmed EU supremacy over national law in the areas where the European Union has competence. It is also the first time that a national court disapplied an Act of Parliament which before Factortame was unthinkable as enshrined in the doctrine of Parliamentary supremacy. The constitution of the UK is very clear in that Parliament is supreme and the judiciary is subservient to it. In so doing the Factortame litigation evolved the Judiciary from its former and traditional interpretative function to a constitutional court. It has given the judiciary with the new powers never before seen and was previously unimaginable in the UK law.

[1] [1991] A.C. 603; [1990] 3 W.L.R. 818; [1991] 1 All E.R. 70; [1991] 1 Lloyd’s Rep 10; [1990] 3 C.M.L.R. 375; (1991) 3 Admin. L.R. 333; (1990) 140 N.L.J. 1457; (1990) 134 S.J. 1189
[2] Merchant Shipping Act 1984. (c.5), London: HMSO.
[3] Merchant Shipping Act 2008. (c.12), London: HMSO
[4] Supreme Court Act 1981. (c.54), London: HMSO
[5] Dicey A.V., 1915. Introduction to the study of the law of the constitution. 8th ed
[6] Garland v British Rail Engineering Ltd [1982] ICR 420
[7] European Community Act 1972. (c.68), London: HMSO
[8] Manuel and others v H.M. Attorney General [1982] 3All ER 822
[9] C6/64 Flaminiano Costa v ENEL [1964] ECR 585, 593
[10] C26/62 N V Algemene Transport –En Expeditie Onderneming Van Gend en Loos v Nederlandse Administratie der Belastingen
[11] C129/79 Macarthy’s Ltd v Wendy Smith
[12] Thoburn v Sunderland City Council [2002] EWHC 195 (Admin), [2003] QB 151