EU Supremacy cases

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Costa v ENEL (1964) Case 6/64

Facts: Italy was one of the founding member states of the EEC (now the EU) in 1957. The Italian Electricity Nationalisation Act 1962 nationalised the electricity industry and created the “National electricity board”. Mr Flaiminio Costa, a shareholder of an electricity company, opposed the nationalisation policy and refused to pay his electricity bill to the newly created state owned company, ENEL He argued that the 1962 Act was incompatible with EU law.

Held: It was held that once a member state adopts the EU treaty it becomes “an integral part of the legal system” of that member state. Thus, the acceptance by member states of the rights and obligations arising from the treaty carries with it a clear and permanent limitation of their sovereign rights, and any subsequent unilateral act incompatible with the aims of the Community cannot prevail

  • So this case established the principle of supremacy of all EU law
  • This is a necessary corollary of the principle of direct effect → without the supremacy of EU law the member states could easily avoid their obligations arising from (albeit “directly effective”) EU law

Factortame litigation

In the 1970s and 1980s, the European Community issued national quotas to prevent over-fishing of the seas in and around Europe. A Spanish firm called Factortame sought to register as many as 95 of its shipping vessels as ‘British’ so that it can fish in British waters under British quotas. The UK parliament sought to legislate against this practice through the Merchant Shipping Act 1988. This Act restricted the registration of of ships as ‘British’ to those ship-owners who were, by nationality, British. It also required that these British vessels flying the British flag ought to operate from the UK—not, for example, from Spain. Factortame sought to challenge the Act in judicial review proceeding in the High Court.

The High Court was faced with a conflict of laws:

  • Should it give effect to European Community law requiring the free movement of goods, services, capital and labour within the European Community, OR
  • Should it give effect to the Act of Parliament that precludes such freedoms in respect of fishing in British waters?

The High Court sought a preliminary ruling from the European Court of Justice on the substantive community law

  • Put simply, the High Court asked the ECJ whether or not the national court is obliged to set aside or otherwise ‘disapply’ a provision of national law in order to give effect to European Community law
  • Pending the reply of the ECJ it granted an interim relief, which effectively allowed Factortame to carry on fishing pending a final determination

The Court of Appeal and House of Lords held that the High Court had no power to make such an interim order

  • In essence, it was said that the effect of such relief would give Factortame legal rights going directly contrary to parliamentary will

But, the House of Lords was less certain whether such remedy could exist as a matter of European law. Thus, their Lordships sent a second reference to the ECJ

  • The House of Lords, applying the ECJ ruling, restored the interim order allowing Factortame to carry on fishing in British waters pending the determination of the substantive issue i.e. on whether or not the UK national court is obliged to set aside or otherwise ‘disapply’ a provision of national law in order to give effect to European Community law

The ECJ confirmed the incompatibility of the Act with EC law; it was said that EC law (now EU law) may be ‘supreme’ over that of any provision of domestic law (including an Act of Parliament)

In Factortame (No.5), the applicants were successful in seeking full damages for the time during which they were not able to fish pending the determination of the legal issues. Damages were assessed in the tens of millions (£)

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Macarthys Ltd v Smith (1979) 3 All ER 325

Facts: A lady was employed by her employer after another man had left the same position, but she was paid a lower wage (note, they were NOT employed at same time). European Community law (part of English Law by virtue of European Communities Act 1972) prohibits sex discrimination even with respect to successive employment. British legislation (Equal Pay Act 1970 as amended by Sex Discrimination Act 1975) prohibits sex discrimination only with respect to simultaneous employment.

Held: It was held that Community Law prevails over UK law – you cannot legislate contrary to community law

  • Lord Denning: "Community law is now part of our law: and, whenever there is any inconsistency, Community law has priority. It is not supplanting English law. It is part of our law which overrides any other part which is inconsistent with it."
  • This is an important judgement because it is first one where EU law and UK law became in direct conflict

Marshall v Southampton AHA (1986) Case 152/84

Facts: Miss Marshall, a 62 year old woman who worked for the NHS, was dismissed from her employment because she had exceeded the statutory retirement age – which, at the time, was 60 for women and 65 for men. She sought to rely upon an EU directive on equal treatment of men and women with regard to working conditions (including dismissal).

  • The EU directive had been incorporated into UK domestic law via the Sex Discrimination Act 1975. However, the Act provided for exceptions in relation to different pensionable ages between the sexes.
  • Marshall argued that this was an inadequate implementation of the directive and sought to rely upon the directive directly (in spite of the Sex Discrimination Act 1975)

Held: The European Court of Justice (ECJ) agreed with Marshall. However, in stating that she could rely on the directive in this case (since it was sufficiently clear, precise, unconditional, etc., giving rise to direct effect), this was only possible because the employer was deemed to be part of the State.

  • Remember, someone can only rely on a directive if the action is taken against the State or its actors
  • In other words, had the employer been a private firm (e.g. a private hospital), she would not have succeeded in her claim against dismissal

Van Gend en Loos (1963) Case 26/62

Facts: Van Gend en Loos (a company) imported formaldehyde into the Netherlands from Germany. This attracted in import tax of 8%, payable to the Dutch state. EC law required that import taxes or other customs, where they currently exist between Memmer States, should not be increased. In this case, the rate of tax was not increased—rather, the formaldehyde was re-classified to fall within a higher tax bracket (from 3% to 8%).

Held: It was held that moving the product into a different tax band had the same effect as a tax increase contrary to the treaty provision

  • The treaty provision was capable of giving rise to an enforceable right, being ‘directly effective’ – that is to say, available as a right enforceable in the domestic court of the UK
  • The Court said that the EU treaty “is more than an agreement which merely creates mutual obligations between the contracting states”. The EU “creates a new legal order of international law for the benefit of which the States have limited their sovereign rights”
  • Independently of the legislation of Member States, [European] law therefore not only imposes obligations on individuals but is also intended to confer upon them rights”

So this case established the principle of direct effect of (some of) EU law → EU laws are directly applicable in UK courts. For an EU provision to be directly effective it must be sufficiently clear, precise, and unconditional

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