Factortame:
Does Britannia Still Rule the Waves?

James Hanlon*

In the twenty years since the U.K. joined the European Community we have become
used to newspapers bemoaning the fact that the Community (through the Commission)
was against our crisps, sausages, bathing water, noise levels and newspaper boys.
All these actions we were told by the newspapers were attacks on our "sovereignty".
Sovereignty in this sense is taken to mean the supremacy of Parliament. I That is that
Parliament has the unfettered right to make or repeal any domestic law. Parliament
has jurisdiction over the territory in its hands and presides over a system of laws
and procedures which is free from outside interference. Even when the U.K. entered
into international treaties and has enacted statutes to implement treaty provisions,
these statutes are regarded as in no way different from ordinary Acts of Parliament. 2

Although the issues of sovereignty and the supremacy of Parliament have been
recurring features since our accession to the E.C. in 1973, R. v. Secretary of State
for Transport, ex parte Factortame3 brought them to the forefront of attention again.
This article will attempt to trace the developments in these areas that culminated in
the judgments in the Factortame case.

If we say that sovereignty means the ability to legislate independently of any other
state, if it means that our domestic laws will prevail over all other external laws,
then the U.K. long ago gave up some of its sovereignty. Even before our membership
of the E.C. we accepted limitations on our right to act or legislate in certain areas.
One has only to think of the Hague and Geneva conventions , GATT, the United Nations,
NATO and other international treaties.

* School of Law and International Business, Nene College, Northampton.

I. Wade and Bradley, Constitutional and Administrative Law 10th Ed. (1986), p. 65, describe the doctrine
of sovereignty or legislative supremacy of Parliament as consisting essentially of "a rule which governs
the legal relationship between the courts and the legislature, namely that the courts are under a duty to
apply the legislation made by Parliament."
2. For a discussion of the general debate on sovereignty, see Craig, "Sovereignty of the United Kingdom
Parliament after Factortame", 11 Yearbook of European Law 1991, pp.221-255.
3. Case 213/89 [1990] 1 E.C.R. 2433. [1990] 3 C.M.L.R. 1+375.

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Even before the U.K. joined the E.C. it was well established that Community law
was supreme when in conflict with national domestic law and that member states
had abrogated a part of their sovereignty to the Community. This was first established
in Van Gend en LoOS4 where the European Court of Justice (E.C.J.) said that
Member states "have limited their sovereign rights, albeit within limited fields."

In Costa v. ENED the Court was asked if it could give a ruling in a situation where
a national law seemed applicable in the particular case as against a Community law.
While the Court would not rule on the compatibility of national law with Community
law, it did say that:

". . . transfer by the States from their domestic legal system to the Community
legal system of the rights and obligations arising under the Treaty carries with
it a permanent limitation of their sovereign rights, against which a subsequent
unilateral act incompatible with the concept of the Community cannot prevail. ' '6

This concept of the supremacy of Community law was given further impetus in
lnternationale Handelsgesellschaft7 where the E.C.J. said:

". . . the validity of a Community Measure or its effect within a member state
cannot be effected by allegations that it runs counter to . . . the principles of
a national constitutional measure. "8

In Simmentha/9 the court went even further and said:

". . . any national court must . . . apply Community law in its entirety .
and must accordingly set aside any provision of national law which may conflict
with it, whether prior or subsequent to the Community rule. "10

In 1973 when the U.K. joined the E.C. the Treaty of Rome which it signed was
incorporated into U.K. law by the European Communities Act 1972. Section 2(1)
of the Act states that the principles established by the Treaty "are without further
enactment to be given legal effect" . Section 2(4) provides that" any enactment passed
or to be passed" must be construed subject to the foregoing. This gives rise to a
few problems as to whether this section does give priority to E.C.law thereby limiting
the sovereign rights of the U. K. The traditional view has been to treat section 2(4)
as a rule of construction. It would seem so long as section 2(4) is applied as a rule

4. Case 26/62 [1963] E.C.R. 1.
5. Case 6/64 [1964] E.C.R. 585.
6. At p.594.
7. Case 11/70 [1970) E.C.R. 1125.
8. At p.I134.
9. Case 106/77 [1978] E.C.R. 629.
10. At p.644.

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FACTORTAME: DOES BRITANNIA STILL RULE THE WAVES?

of construction our courts would remain free to apply an English statute which was
contrary to E.C. law and it is clear that Parliament wished to breach its Community
obligations.

This rule of construction was useful in so far as it enabled the U.K. courts to avoid
any outright statement of the supremacy of Community law. II But it did lead to some
initial confusion in the courts. In a number of cases the courts were prepared to give
precedence to E.C. law over U.K. law if there was a conflict but in other cases they
construed inconsistencies between E.C. law and U.K. law in favour of the latter.

The first of these approaches can be seen as early as 1979 in Macarthys Ltd. v.
Smith. 12 This case broke new ground in that it was the first case to be given the
"European view" . Cummings-Bruce and Lawton L.J .J. citing Costa and in particular
the Simmenthal case were prepared to give priority to European law. 13 Lord Denning
MR preferred to see the case as one of interpretation or construction of section 2(4)
and he interpreted the Equal Pay Act 1970 to conform with the principle of equal
pay for equal work as set out in Article 119 E. C. 14 He said:

"we are entitled to look to the Treaty as an aid to its construction: and even
more, not only as an aid but as an overriding force" .15

He was also prepared to say that if domestic legislation was inconsistent with E.C.
legislation then "it is our bounden duty to give priority to Community law."

The House of Lords continued with the rule of construction approach in Garland
v. British Rail Engineering Ltd. 16 Once again, the case involved a conflict between
the Equal Pay Act 1970 and Article 119 E. C. In the earlier hearing of the case the
courts had been prepared to construe section 6(4) of the Act as allowing derogation
from the principle of equal pay if the discriminatory provisions related to death or
retirement. The plaintiff sought to rely on Article 119 E.C. The House of Lords said
that section 6(4) must be construed with Article 119. Lord Diplock said that national
courts must construe domestic law to conform, "no matter how wide a departure
from the prima facie meaning may be needed to achieve consistency." 17

In both the above cases there was no real difficulty in construing domestic law
to conform to E. C. law. In these cases it appeared that the House of Lords had managed
to adopt a "rule of construction" approach to accommodate the idea of the supremacy
of E.C. law with Parliamentary sovereignty. But a quartet of cases that came before
the House of Lords threw doubt on this consensual approach. The first of these cases

II. Collins European Community Law in the United Kingdom 4th Ed. (1990), p.135ff. for a discussion
of this issue. .
12. [1979] 3 All E.R. 325.
13. At pp. 335.
14. At p.329.
15. Ibid.
16. [1983] 2 A.C. 751.
17. At p.77l.

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was Duke v. GEe Reliance. IS In the Macarthys and Garland cases there had been
no great difficulty in construing domestic law in line with E.C. law. However, in
Duke the issue in question, section 6(4) of the Sex Discrimination Act 1975, had
been passed before the provision relied on by Ms. Duke, viz. the Equal Treatment
Directive of 1976.19 It was also clear that the Act was not passed to give effect to
the Directive. In those circumstances Lord Templeman refused to construe section
6(4) of the domestic Act to give effect to the Directive. In a trenchant passage he said:

"Section 2(4) of the European Communities Act does not in my opinion enable
or constrain a British court to distort the meaning of a British statute in order
to enforce against an individual a Community Directive which has no direct
effect between individuals.' '20

The House therefore rejected Ms. Duke's claims. Thus there has arisen a distinction
between domestic legislation passed to implement a Directive and legislation which
pre-dated the Directive. In the former, the House of Lords was prepared by use of
the "rule of construction" under section 2(4) of the European Communities Act to
give priority to E.C. law. In the latter, it considered that to give priority to E.C.
law would require a distortion of a British statute which it was not prepared to do.

In Finnegan v. Clowney Youth Training Programme Ltd. 21 the House was given
an opportunity to reconsider its position. The issue was similar to that in Duke, except
that the relevant legislation was Article 8(4) of the Sex Discrimination (Northern
Ireland) Order 1976. This was a parallel provision to section 6(4) of the Sex
Discrimination Act 1975 except that it had been passed after the Equal Treatment
Directive. Also, in the case of Johnston v. Chief Constable of the Royal Ulster
Constabulary22 the E. C.J. had ruled that the Order should be interpreted in the light
of the Equal Treatment Directive. Despite these distinctions the House of Lords held
there was no material distinction between the Northern Ireland Order and the Sex
Discrimination Act. It said that the accident of timing of the Order was irrelevant
and in also ignoring the distinction in Johnston it refused to give a purposive construction
to the Order. Once again it said that national law not passed to implement Community
law would take priority over subsequent Community legislation.

However, in two cases the House was prepared to allow priority to Community
law passed before a piece of domestic legislation. The two cases also illustrate a striking
departure from the normal approach of the British judiciary. The first of the cases

18. [1988] I All E.R. 626.
19. Dir. 76/207 OJ L39/40.
20. At p.636.
21. [1990] 2 All E.R. 546.
22. Case 222/84 [1986] E.C.R. 1651.

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FACTORTAME: DOES BRITANNIA STILL RULE THE WAVES?

was Pickstone v. Freemans p.l.c.23 The Equal Pay Act 1970 had been amended by
statutory instrument in 1983 to comply with the Equal Pay Directive.24 The 1983
amendments were less than clear and led Lord Oliver to observe that "the strict and
literal construction of the section does indeed involve the conclusion that the Regulations
although purporting to give full effect to the United Kingdom's obligations under
Article 119, were in fact in breach of those obligations. "25 The House examined
the Directive, and the E.C.J. decision which had led to the 1983 amendments and
in an unprecedented step had consulted Hansard to determine the motive for the national
legislation. Based on these examinations Lord Oliver was able to depart from the
literal wording of the legislation. He said:

" ... a construction which permits the section to operate as a proper fulfilment
of the United Kingdom's obligations under the Treaty involves not so much doing
violence to the language of a section as filling a gap by implication which arises,
not from the words used, but from the manifest purpose of the Act and the mischief
it was intended to remedy. "26

Lords Keith, Brandon and Jauncey expressly concurred with Lord Oliver.
Remarkably, Lord Templeman, who had given the leading judgment in Duke a year
earlier, now said:

". . . I can see no difficulty in construing the Regulations of 1983 in a way
which gives effect to the declared intentions of the Government ... and is
consistent with the objectives of the E.C. Treaty .... "

This willingness to overrule a piece of domestic legislation was extended again
in the case of Litster v . Forth Dry Dock. 27 The Transfer of Undertakings (Protection
of Employment) Regulations 1987 had been passed to implement the Acquired Rights
Directive.28 When, as in this case, there was a conflict between the words of the
Regulations and those of the Directive, the House of Lords was prepared to treat
the words of the Directive as overriding the words of the domestic Regulations. Lord
Keith said:

". . . the precedent established in Pickstone. . . indicates that this is to be done
by implying the words necessary to achieve that result" .29

23. [1989] A.C. 66.
24. Dir. 75/117 OJ L45119.
25. At p.127.
26. At p.125.
27. [1989] 1 All E.R. 1134.
28. Dir. 77/187 OJ L61127.
29. At p.1136.

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Lord Oliver was prepared to add words to the regulations to enable the legislation
to "fulfil the purpose for which they were made of giving effect to the provisions
of the Directive", and Lord Templeman was again also prepared to imply words
into the Regulations to enable them to comply with Community obligations.

The Duke and Finnegan cases have been criticised30 but any unfairness that was
felt to be in these decisions has been addressed by a decision of the E.C.J. in case
Mar/easing S.A. v. La Commerciallnternacional de Alimentacion S.A.31 The case
arose out of a conflict between the Spanish Civil Code and an B.C. Company Law
Directive32 which was unimplemented in Spain. In its decision the Court broke new
ground by holding:

"It follows that in applying national law , whether the provisions pre-date or
post-date the Directive, the national court asked to interpret national law is bound
to do so in every way possible in the light of the text and the aim of the Directive
to achieve the result envisaged by it and thus to comply with Article 189(3) of
the Treaty. "33

The effects of this case have ramifications for the concept of sovereignty. Although
the E.C.J. did concede that Directives should be followed only "so far as possible"
bearing in mind the principles of legal certainty and non-retroactivity, it does now
appear that the "rule of construction" approach has been severely circumscribed. 34

Although questions of sovereignty and the supremacy of Parliament have been a
recurring feature since our accession in 1973 the Factortame case brought them to
the forefront of attention again. Indeed, the judgment in the case was treated by some
sections of the press as if 1066 had happened again. The Times editorial of 26th July
1991 called it a "Slap on the face for Parliament". The facts of the case are well
known. In an attempt to prevent "quota-hopping" by Spanish fishermen operating
behind nominally British companies, the U.K. Government passed the Merchant
Shipping Act 1988 and a series of delegated regulations. The legislation set out residence
and domicile conditions for fishing companies, the effect of which was to disqualify
95 Spanish fishing boats from fishing from British ports. The companies sought interim
relief by means of judicial review in the Divisional Court. The grounds on which
they sought interim relief were that the Act and regulations were contrary to Articles
7, 52, 58 and 221 of the Treaty and that interim relief was needed because of the
irreparable damage that would be caused if the companies had to wait for the full
trial to come before the court.

In the Divisional Court, a brave Neil U granted provisional relief. Relying on
Simmenthal he said:

30. See Docksey and Fitzpatrick, "The Duty of National Courts to Interpret Provisions of National Law
in Accordance with Community Law", I.L.J. (I992) 21, p.ll3.
31. Case C-106/89 [1990] E.C.R. 4135.
32. Dir. 68/151 OJ L65.
33. At p.4159.
34. See Saunders, "Marleasing: A Fatal Blow to the Rule of Construction" , Euro. Bus. Law Rev. Dec.
1992, p.339.

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FACTORTAME: DOES BRITANNIA STILL RULE THE WAVES?

"The High Court now has a duty to take account of and give effect to E.C.
law and where there is a conflict, to prefer Community law to national law. "

On appeal by the U.K. Government to the Court of Appeal the interim relief was
set aside on the grounds that under the British Constitution the courts have neither
the power to suspend the application of an Act of Parliament nor to grant an injunction
against the Crown (i. e., the Government). 35

When the case was further appealed to the House of Lords, Lord Bridge held that
there is a presumption that an Act of Parliament was compatible with Community
law unless and until it was decided otherwise, but that nevertheless, by section 21
of the Crown Proceedings Act 1947 there was no jurisdiction to grant interim relief.
However, the House made an Article 177 reference to the E.C.J. which asked, inter
alia, whether E.C. law empowers or imposes an obligation on a national court to
grant interim relief in a situation where a preliminary reference has been made to
the E.C.J.

The reply from the E. C.J. should not have come as a total surprise. Anthony Bradley,
Editor of Public Law, commented that although the outcome had been foreshadowed,
"it was the clearest case of an Act of Parliament being held irreconcilable with
Community law." The Court replied in the affirmative basing its judgment on the
twin pillars of Article 5 and its previous and recent decision in Simmenthal. 36 The
court stressed the importance of ensuring that direct effect was a matter of substance,
not form and further held:

". . . the full effectiveness of Community law would be. . . impaired if a rule
of national law could prevent a national court . . . from granting provisional
relief . . . It follows that a court which . . . would grant interim relief, if it
were not for a rule of national law, is obliged to set aside that rule.' '37

The Factortame decisions have obvious and perhaps damaging ramifications for
the British fishing industry, 38 but the major area of interest is the effect on British
constitutional law. Prior to Factortame it could be argued that U.K. courts had not
unequivocally accepted the supremacy of E.C. law. We have seen that the twin
conflicting claims of this supremacy and the British constitutional principle of
parliamentary sovereignty have been accommodated by the device of the "rule of
construction". But now Factortame makes it clear that a national court is under a

35. See Ross, "Refining Effective Enjoyment", (1990) IS E.L. Rev. 476.
36. See Barav, "Enforcement of Community Rights in the National Courts", [1989] 26 C.M.L. Rev.
369 and Gravells, "Disapplying an Act of Parliament Pending a Preliminary Ruling: Constitutional Enormity
or Community Law Right", [1989], P. L. 568.
37. At para. 21 of judgment.
38. See Churchill, "Quota Hopping: The Common Fisheries Policy Wrong-Footed?", 27 eM.L. Rev.
(1990) 209 and case note in 29 eM.L. Rev. (1992) 405.

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Community law obligation to give effective protection to directly effective rights,
and this will be so even in the face of conflicting domestic legislation.

The source of this obligation is Article 5 E.C. This reflects a growing reliance
by the E. C. J. on the "gap filling" properties of this Article. Article 5 has become
the "tool" by which the E.C.J. has developed general principles of Community law
to ensure the effective judicial protection of individual rights.

The E.C.J. went on to say that the duty upon national courts "cannot fail to include
the provision of interim relief". 39 But the court did not go on to say on what basis
such interim relief was to be awarded. This is still to be a matter for applying national
criteria as set out in American Cyanamid v. Ethicon Ltd.4O The crucial point is that
interim relief should be available and if necessary the national courts would have
to invent a system of reliefs.

What lessons does the Factortame decision hold for U.K. law? It can certainly
be concluded that any lingering doubts about the supremacy of Community law over
domestic law have been laid to rest. Lord Bridge in Factortame expressed it thus:

"under the terms of the European Communities Act 1972 it has always been
clear that it was the duty of a U.K. court when delivering final judgment, to
override any rule of national law found to be in conflict with any directly
enforceable rule of E.C. law .... Thus ... to insist that national courts must
not be inhibited by rules of national law from granting interim relief. . . is no
more than a logical recognition of that supremacy. "41

The only uncertainty left in this area is the question of what the position would
be if an Act expressly said it was to take effect notwithstanding the European
Communities Act. Or if some equally clear form of words was used? It may be well
that the English courts would have to follow the domestic legislation. But the supremacy
ofE.C.law was well established in the jurisdiction of the Court ofJustice long before
the United Kingdom joined the Community. So, whatever limitations to its sovereignty
Parliament accepted when it enacted the European Communities Act 1972 was entirely
voluntary. For Parliament to change its stance to such an extent would require a
renegotiation of the Treaty of Rome. This is an unlikely scenario.

Factortame is important on a wider basis. It, together with the Emmott, Francovich
and Zuckerfabrik:12cases represent a new development in Community law. Up until
recently priority had been given to the establishment of a Community legal order,
separate from national law and giving rights which individuals could plead in their

39. At p.2474.
40. [1977] A. C. 396. See remarks made by Lord Goff in the House of Lords as to the appropriateness
of this approach: (1990) 3 C.M.L.R. 375, at p.385 and Algazy, "The Crown, Interim Relief and E.C.
Law", 141 N.L.I. (1991), at p.1303.
41. (1990) 3 C.M.L.R. 375, at p.380.
42.CaseC-208/90 [1991] E.C.R.I-4869;CasesC-6/90&C-9/90 [1993] 2C.M.L.R.66;CasesC-143/88
& C-92/89 [1991] E.C.R. 1-415.

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national courts. It was this concept of the direct effect of Community law that the
court fought to establish. This battle appears to be won! All the national courts have
accepted the supremacy of the community legal order. What Factartame and the other
cases illustrate is a move by the E.C.J. towards the provision of effective judicial
remedies. It is now the application ofE.C.law which has become the focus of attention.
The decisions can also be seen as representing a major shift towards a partnership
ofE.C. law and national legal systems. This can only strengthen the remedies available
to individuals and will lead to the availability ofthese remedies within an E. C. context.
Certainly, the House of Lords appears to have accepted that a purposive approach,
even overruling national legislation , is an essential and integral part of the development
of E.C. law.

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