R v Secretary of State for Transport, Ex p Factortame Ltd (No 2)

A national court must set aside any rule of domestic law which is the sole obstacle to granting interim relief needed to protect directly enforceable Community rights. The supremacy of Community law extends logically to interim protection.

Interim relief against enforcement of apparently valid legislation remains exceptional and discretionary. The court must consider the strength of the legal challenge, the public interest in enforcing the law, the availability of damages and the balance of convenience. The governing objective is to choose the course carrying the lower risk of eventual injustice.

Companies owning or operating fishing vessels challenged the compatibility of the registration conditions in Part II of the Merchant Shipping Act 1988 with directly effective Community law. The Divisional Court granted interim relief and referred the substantive Community-law issues to the European Court of Justice. The Court of Appeal, reported with the Divisional Court at [1989] 2 C.M.L.R. 353, set that relief aside.

The House of Lords initially held that English law did not permit the requested relief and referred the jurisdictional question to the European Court. After that court ruled that the obstructing domestic rule must be set aside, the House reconsidered whether interim relief should be granted. The central issues were the principles governing relief against primary legislation and their application to the residence and domicile requirements for fishing-vessel ownership.

1. Appeal allowed unanimously; interim relief granted. Lord Goff of Chieveley delivered the principal speech. Lord Bridge of Harwich agreed with his principles and conclusion, Lord Brandon of Oakbrook and Lord Oliver of Aylmerton agreed with him, and Lord Jauncey of Tullichettle agreed in a separate speech.

2. Per Lord Bridge, the European Court's ruling required a national court to set aside any domestic rule constituting the sole obstacle to interim protection of directly enforceable Community rights. This was a logical consequence of the supremacy voluntarily accepted through the European Communities Act 1972. The European Court's ruling established jurisdiction but left the domestic court's discretion unfettered.

3. Per Lord Goff, the guidelines in American Cyanamid did not fetter the broad discretion under section 37 of the Supreme Court Act 1981. Where neither side could be adequately protected by damages, the court had to examine the balance of convenience and all relevant circumstances. When a public authority sought to enforce apparently valid legislation, the public interest in upholding the law carried considerable weight.

4. Per Lord Goff, there was no inflexible rule requiring every applicant challenging legislation to establish a strong prima facie case. Nevertheless, a court should not ordinarily restrain enforcement of apparently authentic legislation unless the challenge was prima facie so firmly based as to justify that exceptional course. Lord Jauncey regarded a strong prima facie case as the normal threshold, subject only to exceptional circumstances.

5. The applicants had a strong prima facie challenge to the residence and domicile requirements in section 14 of the Merchant Shipping Act 1988. The decisions in Agegate and Jaderow indicated that permissible conditions must relate to a genuine economic link between fishing operations and populations dependent upon fisheries. If residence of 75 per cent of a vessel's crew was irrelevant, residence or domicile of beneficial owners, shareholders or directors appeared still less defensible.

6. The interim order in Commission v United Kingdom also indicated that the United Kingdom's reliance on sovereign control over its flag and international law was unlikely to justify derogation from Community rights. The likely irreparable damage to the applicants outweighed the demonstrated harm to the public and the British fishing industry. The order restrained the Secretary of State from withholding or withdrawing registration solely by reason of the specified residence or domicile requirements. The cause was remitted to the Queen's Bench Division.

1. House of Lords: Following the European Court's preliminary ruling, unanimously allowed the appeal, granted interim relief and remitted the cause to the Queen's Bench Division: [1991] 1 AC 603.

2. European Court of Justice: Ruled on the House of Lords' reference that a national court must set aside a domestic rule constituting the sole obstacle to interim relief in a Community-law case.

3. House of Lords: Initially held that English law supplied no jurisdiction to grant the requested interim relief and referred the Community-law question to the European Court: [1990] 2 AC 85.

4. Court of Appeal: Allowed the Secretary of State's appeal and set aside the Divisional Court's interim order: [1989] 2 C.M.L.R. 353.

5. Divisional Court: Referred the substantive Community-law issues for a preliminary ruling and granted interim relief suspending Part II of the Merchant Shipping Act 1988 and the related Regulations as against the applicants: [1989] 2 C.M.L.R. 353.