Regina v Secretary of State for Transport ex parte Factortame Limited and others

The House of Lords held that, in circumstances where Community law gives rise to directly effective rights, a national court which considers that the sole obstacle to granting interim relief is a rule of national law must set that rule aside (following the preliminary ruling of the European Court of Justice in Case C-213/89). The court reaffirmed that the grant of interim injunctive relief which would suspend application of primary legislation is a matter of judicial discretion to be exercised in light of established principles (including those in American Cyanamid) but modified by the public interest considerations applicable where public authorities enforce statute. The court applied those principles to the Merchant Shipping Act 1988 (in particular section 14) and the 1988 Regulations and concluded that the applicants showed a strong prima facie case that the domicile and residence requirements were incompatible with Community law and that, on the balance of convenience and in order to minimise potential injustice (given the lack of an adequate remedy in damages), interim relief should be granted.

This is an application for judicial review by owners and interests in fishing vessels challenging parts of the Merchant Shipping Act 1988 and the Merchant Shipping (Registration of Fishing Vessels) Regulations 1988 on the ground that they conflicted with Community (then E.E.C.) law. The applicants sought interim injunctive relief restraining the Secretary of State from withholding or withdrawing registration of specified vessels on grounds based solely on residence, domicile or beneficial ownership requirements in section 14 of the 1988 Act.

The procedural history was appellate: the Divisional Court (Neill L.J. and Hodgson J.) had referred questions to the European Court of Justice under Article 177 and had granted interim relief; the Court of Appeal allowed the Secretary of State's appeal against that interim relief; the House of Lords initially held (in the earlier hearing) that under English law there was no jurisdiction to grant the form of interim relief sought and referred particular legal questions to the European Court of Justice. The European Court of Justice (Case C-213/89) answered that Community law requires a national court to set aside a national rule that is the sole obstacle to the grant of interim relief protecting directly enforceable Community rights.

Issues framed

• Whether national courts have jurisdiction to grant interim relief suspending the application of national measures which would otherwise deprive a party of rights under Community law.
• Where such jurisdiction exists, what criteria govern the exercise of the discretion to grant interim relief, particularly when the relief would restrain enforcement of primary legislation (section 14 Merchant Shipping Act 1988).
• Whether the domicile and residence requirements in section 14 were prima facie incompatible with Community law (articles 52 and 221 and the quota system governed by Council Regulation 170/83).

Court’s reasoning and disposition

The House accepted the European Court of Justice's ruling that national law cannot be the sole obstacle to granting interim relief to protect directly enforceable Community rights. It then considered how to exercise discretion: the American Cyanamid guidelines remain relevant but must be adapted where public interest and enforcement of statute are involved. The court emphasised that challenges to primary legislation engage a strong presumption of validity and that, ordinarily, a strong prima facie case is required before interim relief suspending primary legislation will be granted. In the present case, however, the court found that the applicants had strong prima facie arguments — supported by the ECJ decisions in Agegate (C-3/87) and Jaderow (C-216/87) and by the President's interim order in Case 246/89 R — that residence and domicile requirements were not necessary to establish the "genuine economic link" required by the quota regime. The court weighed the balance of convenience, noting the applicants would suffer irremediable harm without relief and that there was no adequate remedy in damages, and concluded that interim injunctive relief should be granted to restrain the Secretary of State from withholding or withdrawing registration on the specified grounds until final judgment or further order.

Appeal allowed. Relying on the European Court of Justice's ruling in Case C-213/89 that Community law requires national courts to set aside national rules which are the sole obstacle to the grant of interim relief protecting directly enforceable Community rights, the House applied adapted American Cyanamid principles (with particular attention to the public interest when the Crown enforces statute), found a strong prima facie challenge to section 14 residence and domicile requirements, and on the balance of convenience granted interim injunctive relief restraining the Secretary of State from withholding or withdrawing registrations on the specified grounds.

Divisional Court (Neill L.J. and Hodgson J.) considered judicial review and referred questions to the European Court of Justice (Article 177); the Divisional Court granted interim relief; the Court of Appeal allowed the Secretary of State's appeal against that interim order (orders dated 16 and 22 March 1989). The House of Lords first heard the appeal in May 1989 and referred legal questions to the ECJ (Case C-213/89). The ECJ gave its ruling on 19 June 1990; the House reconvened and granted interim relief in July 1990 and delivered reasons in July/October 1990. Relevant neutral citations include the present appeal [1990] UKHL 7 and the earlier House consideration reported at [1990] 2 A.C. 85.