Factortame Litigation - Factortame IV: Right To Damages

Factortame IV: Right To Damages

The matter came back to the Divisional Court (Hobhouse LJ, Collins J and Moses LJ) which ruled on 31 July 1997 that the UK had committed a sufficiently serious breach of Community law in passing the offending provisions of the Merchant Shipping Act 1988, and that that breach gave rise to damage for which Factortame should be compensated. The court rejected a claim by Factortame for exemplary damages. The decision was appealed by the UK government to the Court of Appeal (Lord Woolf MR, Schiemann LJ and Walker LJ) which rejected the appeal on 8 April 1998. The government appealed again to the House of Lords (Lord Slynn, Lord Nicholls, Lord Hoffmann, Lord Clyde and Lord Hope).

The House of Lords unanimously ruled in favour of Factortame on 28 October 1999. It rejected the argument that the government's reliance on legal advice at the time of passing the 1988 Act did not deprive the breach of its grave and manifest character. The court did accept, however, that the government had acted in good faith in passing the Act. Nevertheless, the government had been aware of the risk it was running with such legislation and it had done everything possible to ensure that fishermen could not obtain interim relief against the Act's application. The case would now go back to the Divisional Court for the amount of damages to be determined.

In March 2000, Factortame and the other claimants (approximately 90 Anglo-Spanish fishing companies) accepted an offer of settlement from the Secretary of State. Under the terms of the settlement the claimants, who had originally claimed £285 million, received £55 million including interest of some £26 million.