Marson: Business Law

The Factortame 1 Case

As the Factortame cases cover many issues the main elements are contained in this
overview rather than focusing on one specific case.

Factortame is one of the most significant cases for the UK and the constitution. The
background to the case is important in order to appreciate the UK’s rationale for creating
the legislation which led to the case. In 1977 the EEC initiated the Common Fisheries
Policy which sought to regulate the fishing industry and protect stocks by introducing a
quota system for the Member States (although this was more in theory than in practice). 2
Factortame involved Spanish fishermen. They had begun to re-register their vessels from
Spanish vessels (known as Spanish flag vessels) to British vessels (known as British flag
vessels). They fished with the British fishermen and in the process increased the output
from this industry which improved the quota system applied to the UK. These fishermen
caught fish for the Spanish market 3 which the British fishermen had no concern with,
however the leftover fish and those not wanted by the Spanish market were sold to the
British public. This was of benefit to the British consumer as it increased choice and
availability, and it reduced price, but consequently this adversely affected the British
fishermen. This problem led to governmental action in the form of the British Fishing Boats
Act 1983 which enabled the Spanish fishermen to continue fishing under the British
quotas in Irish waters, but stopped them landing the catch in the UK. This appeared to
please all the parties concerned but this was largely irrelevant because at the time Spain
was not a member of the EEC and so could do little if it was unhappy.

In 1985 Spain joined the EEC and therefore the British Fishing Boats Act became
inoperable 4 as it stopped the free movement of goods. This resulted in the Spanish
fishermen having a claim against the UK if it sought to restrict them from fishing in the UK.
As the Act no longer had any effect, there again was resentment and this was
concentrated in the fishing ports of Brixham, Newlyn and Plymouth. This was important as
these were vulnerable seats for the (then) Conservative Government and an election was
approaching, and the feeling throughout the UK was that the UK had lost its sovereignty
and Brussels was becoming an over-bearing, legislative power. In response, the UK
created the Merchant Shipping Act 1988 which made it compulsory for those wishing to
fish in British waters to be domiciled in the UK. 5 This led to the cases 6 involving
Factortame.

1
[1991] 1 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
They were introduced to identify what the fleets caught rather than what they should catch - in order to
identify what the levels of the quota should be when fully operational.
3
Typically these included Monkfish, Hake and Megrim.
4
Previous case law of the EU, as in Amministrazione delle Finanze dello Stato v Simmenthal S.p.A. (Case
106/77) [1978] E.C.R. 629, identified that a national court was under a duty to give full effect to provisions of
Community law and to protect the rights which those provisions conferred on individuals, if necessary
refusing of its own motion to apply any conflicting provision of national legislation.
5
This would have been unlikely to be complied with as the Spanish fishermen would be unlikely to take up
residence in the UK simply to access to the fishing waters (thereby appeasing the fishermen and electorate),
and even if they did, they would probably be subject to the taxes as are domestic residents (including
fishermen) (which would have assisted the Government in collecting additional revenue).
6
There are in total eleven cases. The cases have dealt with different aspects of the legal arguments present
– Factortame I [1989 Divisional Court; 1990 Court of Appeal; 1990 House of Lords; 1990 ECJ; 1991 House

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 Marson: Business Law

5.5.1.1. The Legal Issue

Factortame involved thirteen fishermen who, due to the Merchant Shipping Act 1988 7
were unable to fish in British waters. Section 14 of the Merchant Shipping Act 1988
imposed domicile and residence conditions on those wishing to fish in British waters which
Factortame could not satisfy. Their claim was that the Act was contrary to EU law, and as
a result could not be enforced against them. Consequently, they 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 Appeal 8 and later by the House of Lords (Regina v Secretary of
State for Transport, Ex parte Factortame Ltd. and Others (No. 2) [1990]) 9 which both
confirmed that the decision of the first Court was wrong as the Courts (including those
deciding this issue) did not have the power to suspend an Act of Parliament. 10 The House
of Lords further evidenced, in the decision of 1990 (No. 2), that when it considered the
legal systems of the other Member States, that only Germany, the Netherlands and
Portugal had some form of ability to disapply domestic laws considered incompatible with
EU law. The House of Lords were obliged under EU law to refer this matter to the ECJ 11
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.

5.5.1.2. The Importance of the Factortame Case

The implications of the Factortame rulings can not be underestimated. This case has to be
read in conjunction with the chapter on the English Legal System to be fully appreciated
as it is not simply about whether Spanish fishermen were allowed to fish in British waters.
Its importance is that it was the first time that a UK court had disapplied an Act of
Parliament. The constitution of the UK is very clear in that Parliament is supreme 12 and
the judiciary are subservient to it. 13 Factortame directly contradicted this philosophy
elevating EU law above UK law, and provided the judiciary with new powers never before
seen. The EU has power therefore to alter the constitution of the states joining it, and this
has been the situation even when the draft Constitution proposed by the EU (at the Treaty
of Nice) was not ratified in the states which considered doing so.

of Lords (for the second time)] concerned the claim to have the Merchant Shipping Act disapplied;
Factortame II [1991] involved the question to the ECJ regarding the compatibility of UK law with EU law;
Factortame III [1996] was the ECJ providing a decision on the issue of State Liability; Factortame IV [1997
Divisional Court; 1998 Court of Appeal; 2000 House of Lords] involved the UK courts deciding on whether
there had been a sufficiently serious breach to enable damages to be awarded against the UK; and
Factortame V concerned limitation issues.
7
The main reason for the Act was to stop the practice of ‘quota-hopping’ which was adversely affecting the
fishing industry.
8
On March 22, 1989.
9
[1991] 1 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.
10
The Lords stated that the case of Regina v Secretary of State for the Home Department, Ex parte
Herbage [1987] Q.B. 872 was precedent for such a decision from the common law.
11
Under Article 177 (now Art. 234) (3) (see Section 4.4.2.).
12
Parliament has the power to make or repeal any law it wishes and it is the highest form of law.
13
As Members of Parliament are elected and represent the population, they have the ability to make laws
which regulate society. If the electorate do not like the laws being passed, they have the ability to elect a
new government at a general election. The judiciary are not elected to their position and are not accountable
to the electorate. It is for this reason that they must follow the laws passed by Parliament.

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