R v Secretary of State for Transport Ex Parte Factortame (No 2) (1991) 1 AC 603 is also known as Factortame (No 2). It is a European Union Law case concerning Supremacy of EU Law.
In Factortame (No 2), the Merchant Shipping Act 1998 was enacted to protect the British fishing industry. This was by preventing foreign (specifically Spanish) nationals from exploiting British fish stocks.
Could primary legislation (the Merchant Shipping Act 1998) be set aside for EU law to prevail?
In conclusion, the House of Lords noted that they could not set aside primary legislation. This was because of the doctrine of Parliamentary sovereignty.
However, the European Court of Justice reminded the courts that EU law must prevail. Moreover, wherever there is a conflict between national and EU law they must ignore the national law in favour of EU law.
The House of Lords issued the injunction by disapplying the relevant parts of the Merchant Shipping Act 1998 so that claimants could exercise their conflicting rights under the treaty. It was explained that the statute was disapplied temporarily pending the final decision about its compatibility with EU law.
Moreover, Lord Bridge argued that the UK joined the union, such that ‘whatever limitation of its sovereignty Parliament accepted when it enacted the European Communities Act 1972 was entirely voluntary’.
Key part of the judgement in Factortame (No 2):
The House of Lords suspended the Merchant Shipping Act 1998 because it was inconsistent with Community law. Some comments said that the fact that ECJ decisions can override national legislations is a dangerous invasion. An invasion by a Community institution of the sovereignty of the UK Parliament.
However, UK joined the Community voluntarily. Thus, whatever limitation of its sovereignty parliament accepted when it enacted the European Communities Act 1972 was entirely voluntary.
References:  1 AC 603,  UKHL 13,  3 CMLR 375,  1 All ER 70, (1991) 3 Admin LR 333,  3 WLR 818,  1 Lloyd’s Rep 10