R (Factortame Ltd) v Secretary of State for Transport (Interim Relief Order)

Where directly enforceable Community rights are threatened, a national court must set aside any rule of national law which is the sole obstacle to granting effective interim protection. The grant of relief remains discretionary.

A challenge to apparently valid legislation must be sufficiently firmly based to justify restraining its enforcement. The court should consider the adequacy of damages, the wider public interest and every relevant circumstance. Its objective is to choose the course carrying the lower risk of eventual injustice. Where neither side can be compensated and the material facts are settled, the court may give decisive weight to its informed assessment of the likely legal outcome.

The applicants sought judicial review of provisions governing the registration of British fishing vessels under Part II of the Merchant Shipping Act 1988 and the Merchant Shipping (Registration of Fishing Vessels) Regulations 1988. They alleged that the residence and domicile requirements imposed on beneficial owners, shareholders and directors infringed directly effective Community rights.

The Divisional Court referred the substantive Community-law questions to the European Court of Justice and granted interim relief. The Court of Appeal set that order aside. At an earlier hearing, reported at [1990] 2 AC 85, the House held that English law supplied no power to disapply primary legislation provisionally or grant an injunction against the Crown. It referred the Community-law jurisdiction question to the European Court of Justice.

After the European Court ruled in Case C-213/89 that the national rule obstructing interim relief must be set aside, the House reconsidered the application de novo. The central issue was whether interim protection should be granted pending resolution of the substantive reference.

1. Appeal allowed unanimously; interim injunction granted. Lord Goff of Chieveley delivered the principal speech. Lord Brandon of Oakbrook and Lord Oliver of Aylmerton agreed with it. Lord Bridge of Harwich adopted Lord Goff's account and principles, and Lord Jauncey of Tullichettle agreed in the result while adding reasons of his own.

2. Per Lord Bridge and Lord Goff, the European Court's ruling in Case C-213/89 established that a national court must set aside a national rule which is the sole obstacle to interim protection of directly enforceable Community rights. This followed logically from the supremacy voluntarily accepted through the European Communities Act 1972. The ruling supplied jurisdiction but left the court's discretion unfettered.

3. Per Lord Goff, the guidelines in American Cyanamid Co v Ethicon Ltd [1975] AC 396 did not fetter the broad statutory discretion. A claimant must first show a serious question to be tried. The court then considers whether damages would adequately protect either side. If they would not, it assesses the balance of convenience in light of every circumstance.

4. Per Lord Goff, where a public authority seeks to enforce apparently valid legislation, the public interest must be considered more widely. Stability and enforcement of the law carry considerable weight. There was no inflexible rule requiring a strong prima facie case in every such application. Nevertheless, a court should restrain enforcement only where the challenge is prima facie so firmly based that this exceptional course is justified. Lord Jauncey preferred to formulate the ordinary threshold as a strong prima facie case, subject to exceptional circumstances.

5. Per Lord Bridge, the controlling objective was to choose the course offering the best prospect of avoiding or minimising eventual injustice. Neither party had an adequate damages remedy. Because the facts were ascertained and only Community-law issues remained, an informed prediction of the ultimate result could properly receive decisive weight.

6. Per Lord Goff, the decisions in Agegate and Jaderow, together with the President's interim order in Commission v United Kingdom, showed that the challenge to the residence and domicile requirements in section 14 of the Merchant Shipping Act 1988 was prima facie strong. The immediate and irrecoverable damage to the applicants outweighed the demonstrated public detriment. The Secretary of State was therefore restrained, pending final judgment or further order, from withholding or withdrawing registration of the scheduled vessels by reason only of the specified residence, domicile and ownership circumstances.

1. House of Lords: Following the preliminary ruling in Case C-213/89, allowed the appeal unanimously and granted a revised interim injunction.

2. House of Lords, earlier hearing: In the decision reported at [1990] 2 AC 85, held that English law did not authorise the Divisional Court's interim order and referred the Community-law jurisdiction question to the European Court of Justice.

3. Court of Appeal: Allowed the Secretary of State's appeal and set aside the Divisional Court's interim order. No citation is stated.

4. Divisional Court: Referred the substantive Community-law questions under article 177 of the E.E.C. Treaty and ordered that Part II of the Merchant Shipping Act 1988 and the Merchant Shipping (Registration of Fishing Vessels) Regulations 1988 be disapplied provisionally in relation to the applicants.