B e f o r e :
LORD JUSTICE MOORE-BICK
LORD JUSTICE RIMER
LORD JUSTICE UNDERHILL
|| THE UNITED STATES OF AMERICA
||- and -
(Transcript of the Handed Down Judgment of
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John Cavanagh QC and Sir Daniel Bethlehem QC (instructed by Nabarro LLP) for the Appellant
No appearance by the Respondent
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Lord Justice Underhill :
- This appeal was first before the Court in March 2010. It was decided that a reference needed to be made to the Court of Justice of the European Union ("the CJEU") under article 267 of the EU Treaty. However the reference took an unexpected turn and the principal issue which we now have to decide is one which did not arise at the earlier stages of the case. The full history of the proceedings can be found in the judgment of the Court on the making of the reference ( EWCA Civ 1223,  IRLR 40), and I need deal with it only to the extent necessary to show how we have got to where we are.
- Up to 2006 the US Army maintained a watercraft repair facility ("the base") at Hythe in Hampshire. Some 200 civilian employees were employed there. Their employer as a matter of law was the United States of America itself. In early 2006 a decision was made to close the base, with the result that the employees were dismissed for redundancy. One of those employees, Mrs Christine Nolan, who is the Respondent in this appeal, brought proceedings in the Employment Tribunal (with her husband) under section 189 of the Trade Union and Labour Relations (Consolidation) Act 1992 claiming that the USA as her employer had failed to comply with the consultation obligations under section 188 of the Act. Mrs Nolan claimed to be entitled to bring the proceedings as an "employee representative" within the meaning of section 188 (1B) of the Act.
- It will be convenient at this stage to summarise the relevant statutory provisions, which are contained in Chapter II of Part IV of the 1992 Act. I will refer to them as "the collective redundancy provisions".
- The primary operative provision of Chapter II is section 188. It has been amended on several occasions both before and after the date of the breach alleged by Mrs Nolan. At the time to which the complaint relates sub-section (1) read:
"Where an employer is proposing to dismiss as redundant 20 or more employees at one establishment within a period of 90 days or less, the employer shall consult about the dismissals all the persons who are appropriate representatives of any of the employees who may be affected by the proposed dismissals or may be affected by measures taken in connection with those dismissals."
Sub-section (1A) prescribed the period within which consultation must take place. Sub-section (1B) defined "appropriate representative" as either the representative of a recognised trade union or, where no trade union was recognised, an "employee representative" appointed or elected in accordance with the terms of sub-para. (b) (i). Sub-section (2) read:
"The consultation shall include consultation about ways of—
(a) avoiding the dismissals,
(b) reducing the numbers of employees to be dismissed, and
(c) mitigating the consequences of the dismissals,
and shall be undertaken by the employer with a view to reaching agreement with the appropriate representatives."
I need not set out sub-section (3). Sub-section (4) required the employer "[for] the purposes of the consultation … [to] … disclose in writing to the appropriate representatives" a number of matters, including, at (a), "the reasons for his proposals". There is nothing relevant in sub-sections (5), (5A) or (6). Sub-section (7) read (so far as material):
"If in any case there are special circumstances which render it not reasonably practicable for the employer to comply with a requirement of subsection (1A), (2) or (4), the employer shall take all such steps towards compliance with that requirement as are reasonably practicable in those circumstances ... ."
I need not set out sub-sections (7A), (7B) or (8).
- Section 189 provides that where there has been a breach of section 188 an appropriate representative can bring proceedings in the Employment Tribunal, which can make a "protective award" expressed as a number of days' pay for the affected employees.
- I should refer also to section 273 of the 1992 Act. This provides that the provisions of the Act shall have effect in relation to Crown employment and persons in Crown employment as they do in relation to other employment; but that is subject to certain specified exceptions, which include the provisions of Chapter II of Part IV (see sub-section (2)). Thus the collective redundancy provisions do not apply in the case of persons in Crown employment. "Crown employment" is defined in sub-section (3) as "employment under or for the purposes of a government department or any other officer or body exercising on behalf of the Crown functions conferred by an enactment". I should add, though it is not directly material, that section 274 provides that service as a member of the armed forces does not count as Crown employment, with the result that the armed forces fall altogether outside the provisions of the 1992 Act.
- The collective consultation provisions as originally enacted replaced the substantially identical provisions of sections 99-105 of the Employment Protection Act 1975 (which also contained, at section 121, provisions equivalent to sections 273 and 274 of the current Act). As noted above, they have since been amended in various respects. The only amendments to which I need to refer for present purposes are two changes made by the Collective Redundancies and Transfer of Undertakings (Protection of Employment) (Amendment) Regulations 1995 ("the 1995 Regulations"), as follows:
(1) Under the 1975 Act, and the 1992 Act in its original form, the only employee representatives with whom employers were obliged to consult were the representatives of a recognised trade union. The result was that the provisions had no application in cases where no trade union was recognised. It was held by the ECJ in Commission of the European Communities v United Kingdom (C-383/92)  ECR I-2479,  ICR 664, that in that respect UK law failed to comply with the requirements of the underlying Directive (see para. 8 below); and provisions were introduced requiring employers to appoint, or arrange for the election of, "employee representatives" with whom they could consult about proposed redundancies in cases where there was no recognised trade union. The new provisions include section 188 (1B).
(2) Section 99 of the 1975 Act, and section 188 of the 1992 Act as first enacted, provided that the consultation obligations arose if even a single redundancy was proposed. That went beyond the terms of the Directive, art. 1.1 of which defines "collective redundancies" as involving a specified minimum number of employees (defined according to two alternative formulae). The Regulations amended section 188 (1) so as to incorporate one of those thresholds, i.e. at least twenty employees at one establishment over a ninety-day period.
- The collective consultation obligations under the 1975 and 1992 Acts represent the UK's implementation of what was originally Council Directive 75/129/EEC and is now Council Directive 98/59/EEC (which consolidates the 1975 Directive and a further Directive, 92/56/EEC). As noted above, article 1.1 of the 1998 Directive defines "collective redundancies". Article 1.2 reads (so far as material):
"This Directive shall not apply to:
(a) … ;
(b) workers employed by public administrative bodies or by establishments governed by public law (or, in Member States where this concept is unknown, by equivalent bodies);
(c) … ."
I will use the abbreviation "PAB" as a shorthand for both "public administrative bodies" and "establishments governed by public law" (or their "equivalents") within the meaning of article 1.2. Article 2 sets out the substantive requirements of the Directive as regards information and consultation. Article 5 reads:
"This Directive shall not affect the right of Member States to apply or to introduce laws, regulations or administrative provisions which are more favourable to workers or to promote or to allow the application of collective agreements more favourable to workers."
The 1975 and 1998 Directives are not in all respects identically worded – in particular, article 3 of the former, which is the equivalent of article 2 of the latter, was less elaborately drafted – but there are no differences which are material for present purposes. I should note specifically that the language of article 1.2 of the 1998 Directive is the same as that of article 2 of its predecessor, and that article 5 is identical in both. Save where it is necessary to distinguish, I will refer to the 1975 and 1998 Directives without differentiation as "the Directive", and to "article 1.2" to cover also article 2 of the 1975 Directive.
- The trend of English authority until comparatively recently was to the effect that the collective redundancy provisions, even when read with the Directive, did not oblige an employer to consult about, or therefore disclose the reasons for, the underlying business decision which gave rise to a proposed collective redundancy – the paradigm case being the closure of a workplace – but only about the consequences of that decision. The leading cases were R v British Coal Corporation, ex p Vardy  ICR 720; MSF v Refuge Assurance plc  ICR 1365; Middlesbrough Borough Council v Transport and General Workers Union  IRLR 332; and Securicor Omega Express Ltd v GMB  IRLR 9. However, the decision of the ECJ in Junk v Kühnel (C188/03)  ECR I-885,  IRLR 310, raised a serious question whether that approach was compatible with EU law. In UK Coal Mining Ltd v National Union of Mineworkers  ICR 163, decided in September 2007, the EAT (Elias P presiding) declined explicitly to depart from the established approach (while expressing some reservations about it); but it nevertheless held that in a case where a decision to close a workplace and the consequent decision to make redundancies were "inextricably interlinked" the obligation to consult about the reasons for the latter necessarily involved an obligation to consult about the reasons for the former – and thus required the employer to initiate consultations prior to the closure decision. The CJEU revisited this issue in Akavan Erityisalojen Keskusliitto AEK Ry v Fujitsu Siemens Computers Oy (C-44/08)  ECR I-8163,  IRLR 944 ("the Fujitsu decision"); but unfortunately the effect of its reasoning is, to put it no higher, not entirely clear.
- Following hearings in June 2007 and January 2008 the Employment Tribunal upheld Mrs Nolan's claim that the USA had acted in breach of section 188, and at a subsequent remedy hearing it made a thirty-day protective award. There were various issues before the Tribunal but only three points need to be referred to for present purposes.
(1) The USA challenged Mrs Nolan's status as an employee representative. This was decided in her favour. (Mr Nolan dropped out of the picture at this point.)
(2) As regards the claimed breach of section 188, the initial position of the USA before the Tribunal was that it had commenced consultation promptly once the decision to close the base had been made, and that that sufficed. That stance reflected the established wisdom at the time, as summarised at para. 9 above. But it was undercut by the decision in UK Coal, which was handed down in the interval between the two liability hearings. UK Coal was relied on by the Tribunal as confirming its view that the USA's consultation was inadequate because it did not commence prior to the closure decision and did not cover the reasons for the closure.
(3) On the approach which it had initially taken, which involved acceptance of an obligation to consult only about the consequences for employees of the closure of the base, there had been no need for the USA to take any point on its status as a sovereign state. But the approach espoused in UK Coal was unacceptable to it: it did not believe that it should or could be under any legal obligation to consult with employees about a decision to close a military base, which is an act done iure imperii. Accordingly, at the second liability hearing its solicitor argued that it was "unrealistic" to expect a sovereign state to consult about the closure of a military base. He was asked by the Tribunal whether he was invoking the "special circumstances" defence under section 188 (7) of the Act. He said that he was not. On that basis the Tribunal rejected the submission. At the remedy hearing the USA sought for the first time to invoke state immunity; but the Tribunal held that it had already submitted to the jurisdiction. It was common ground at the previous hearing of this appeal that if a claim to state immunity had been made at the outset it would have succeeded.
- The USA appealed to the EAT on, broadly, two grounds, as follows:
(1) There was a challenge to the finding that Mrs Nolan was an employee representative within the meaning of the statute.
(2) It again sought to rely on its position as a sovereign state. Mr John Cavanagh QC, who represented the USA, did not revive the claim of state immunity or seek to rely on section 188 (7). Rather, he argued that as a matter of construction the obligations imposed by section 188 should be read as excluding any obligation by an employer which is a sovereign state to consult about a decision made iure imperii, even if collective redundancies are the necessary consequence of that decision. By way of fallback, he argued that even if a failure to consult about the reasons for the closure of the base constituted a breach of section 188 the fact that the decision was made iure imperii should operate to reduce what would otherwise be the appropriate protective award.
The EAT, Slade J presiding, ( IRLR 923) rejected Mr Cavanagh's submissions on the second ground; but it remitted the case to the Employment Tribunal to make further findings of fact on the employee representative issue. (It is convenient to say at this point that that reconsideration has now taken place: the Tribunal affirmed its original decision, and there has been no appeal.)
- At the initial hearing of the appeal to this Court Mr Cavanagh's primary submission was, again, that section 188 did not on its true construction oblige the USA to consult about its decision to close the base or the reasons for it. Insofar as that argument was based on the fact that closure of the base was an act done iure imperii it was rejected (see para. 28 below). But that left the broader question of whether the traditional view which I have explained at para. 9 above had indeed been invalidated by Junk v Kühnel and/or the Fujitsu decision, or at least whether it required qualification of the kind adopted in UK Coal. The Court believed that, in the light in particular of the difficulties in interpreting the Fujitsu decision, that issue could not be safely decided without a reference to the CJEU. Accordingly the following question was referred:
"Does the employer's obligation to consult about collective redundancies, pursuant to Directive 98/59/EC, arise (i) when the employer is proposing, but has not yet made, a strategic business or operational decision that will foreseeably or inevitably lead to collective redundancies; or (ii) only when that decision has actually been made and he is then proposing consequential redundancies ?"
- In the event the CJEU did not answer that question. Prompted by an observation in the Commission's written observations, it raised of its own motion the question whether a dismissal of the kind that had occurred in this case, "terminating an employment relationship between a United Kingdom national and a non-member state", fell within the scope of the Directive at all; and by its decision dated 18 October 2012 ((C-583/10),  ICR 193) it held that it did not. Its reasoning can be summarised as follows:
(1) It was necessary to decide whether the dismissal which was in issue in the proceedings fell within the scope of the Directive: see para. 32 of the judgment. The Court refers to article 1.2 (b) and says:
"33. By virtue of that provision, which provides an exclusion from the scope of Directive 98/59, the latter does not apply to workers employed by public administrative bodies or by establishments governed by public law (or, in Member States where that concept is unknown, by equivalent bodies).
34. Given that armed forces fall within the public administration or equivalent body, it is clear from the wording of Article 1(2)(b) of Directive 98/59 that the civilian staff of a military base is covered by the exclusion laid down by that provision."
This (taken with point (3) below) is the core of its reasoning.
(2) At paras. 35-41 the Court explains that that conclusion is congruent with the general scope and purpose of the Directive, which forms part of the legislation concerned with the functioning of the internal market. It refers to its decision in Scattolon v Ministero dell' Istruzione (C-108/10)  ECR I-7491,  ICR 740, as establishing that "activities which, like national defence, fall within the exercise of public powers are in principle excluded from classification as economic activity".
(3) At para. 42 it says that article 1.2 applies as much to the public administration of non-member states as of member states.
(4) At para. 43 it summarises its primary conclusion as follows:
"Therefore, it must be held that, by virtue of the exclusion laid down by Article 1(2)(b) of Directive 98/59, the dismissal of staff of a military base does not, in any event, fall within the scope of that directive, irrespective of whether or not it is a military base belonging to a non-member State. In those circumstances, it is not necessary specifically to take into account the fact that, in this case, it was a military base belonging to a non-member State, that question having implications in international law (in the context of the employment of staff of an embassy of a non-member country, see Case C-154/11 Mahamdia … [ ICR 1] paragraphs 54 to 56)."
(5) At paras. 44-56 the Court considers whether, notwithstanding that the dismissal in question fell outside the scope of the Directive, it might nevertheless have jurisdiction to give a ruling. It had previously been held (see Cicala v Regione Siciliana (C-482/10)) that such jurisdiction exists where a domestic legislator has evinced an intention to apply the provisions of EU law in a situation to which they would not otherwise apply. It held that it was not sufficiently clear that that was the intention here. In the context of that discussion it says, at paras. 49-50:
"49. ... [It] is clear from the order for reference that, if the United States of America had so decided in the preliminary phase of the main proceedings, they could have relied on their immunity as a sovereign State and avoided the main proceedings.
50. It should be added that, according to the national court, under Section 188(7) of the 1992 Act, a non-member State has the possibility of invoking 'special circumstances', by reason of which that non-member State is not required to carry out the obligatory consultations in the case of collective redundancies, in accordance with Section 188, sub-sections (1A), (2) and (4) of the 1992 Act."
- The appeal was listed for a further hearing in the light of the ruling of the CJEU. In the skeleton argument lodged for the purpose of that hearing the USA sought permission to take the point that the relevant provisions of the 1992 Act should be construed so as to conform with the effect of the Directive as now established by the CJEU – i.e. that they did not cover dismissals consequent on the closure of a military base by a foreign state. It was contended that that was a conclusive answer to Mrs Nolan's claim and that it was accordingly unnecessary, and would in the circumstances be inappropriate, for this Court to seek to answer for itself the question which it had originally referred to the CJEU, described as "the Fujitsu question" – see para. 12 above. Mrs Nolan's solicitors' response to that contention was as follows:
"… In the light of the CJEU's judgment in the present case, and having considered the United States of America's further skeleton argument, [Mrs Nolan] does not intend to contest the jurisdictional issue or to submit arguments in opposition to the United States of America's case that s188 did not apply to the closure of a US military base, such that section 188 does not apply to the closure that is the subject matter of these proceedings. Mrs Nolan will not oppose a ruling that the judgments of the Employment Tribunal and the Employment Appeal below were wrong in law in the light of the judgment of the CJEU."
They made it clear, however, that if the Fujitsu point remained live they would wish to be heard on it.
- We were not prepared to accept the USA's submission about the scope of the Act without hearing full argument, but we indicated that we would determine that issue on its own and leave the Fujitsu point to be dealt with if necessary on another occasion. Accordingly Mrs Nolan was not represented. The USA was represented by Mr Cavanagh and Sir Daniel Bethlehem QC, both of whom addressed us orally. Their original skeleton argument dated 20 May 2013 was supplemented by further submissions dated 11 November 2013. We gave permission for the points raised in both skeletons to be advanced.
THE SUBMISSIONS ON BEHALF OF THE USA
- The essential submission advanced by Mr Cavanagh and Sir Daniel was that since it was now clear from the decision of the CJEU that dismissals in consequence of the closure of a military base did not fall within the scope of the Directive the collective redundancy provisions in the 1992 Act should be construed as being to the same effect. It was submitted in their skeleton argument that it was legitimate "to read in a few words in order to make clear that section 188 does not apply to the non-economic exercise of public powers by a sovereign state". It was suggested that the opening words of section 188 (1) could be construed as if they read:
"Where an employer (not including a foreign sovereign state which is engaged in the exercise of public powers) proposes to dismiss … ."
We were referred to the familiar cases emphasising the wide power which the domestic court has to "interpret" domestic legislation so as to achieve conformity with EU law, and in particular to Litster v Forth Dry Dock & Engineering Co. Ltd.  1 AC 546.
- Mr Cavanagh and Sir Daniel accepted that it was in principle open to Parliament in enacting the collective redundancy provisions to go further than the Directive required, whether by reason of article 5 of the Directive or otherwise. But they submitted that there was no indication, and that it was in fact very unlikely, that that was its intention in the present case. We were referred to a number of statements to the effect that it was Government policy generally to avoid "gold-plating" – that is, that in transposing an EU directive into domestic law it would not normally seek to go beyond the minimum requirements imposed by that directive. We were shown a Cabinet Office guide dated 2003 entitled Better Policy Making: A Guide to Regulatory Impact Assessment (see para. 5.35) and two documents issued by the Department of Business Innovation and Skills in 2011 and 2013 entitled Transposition Guidance: How to Implement European Directives Effectively (see para. 2.7) and Guiding Principles for EU Legislation (see para. 5). We were also referred to a Parliamentary answer given by the then Secretary of State for Education and Employment in January 1996 to the effect that it was not the policy of his Department "to gold-plate EC directions by the addition of unnecessary burdens when implementing them in the UK". Mr Cavanagh took us to the decisions of the Supreme Court in R (Risk Management Partners Ltd) v Brent London Borough Council  UKSC 7,  2 AC 37, and of this Court in Alemo-Herron v Parkwood Leisure Ltd  EWCA Civ 24,  ICR 793, as examples of cases where a restrictive interpretation of a statute had been adopted so that it did not go beyond the scope of the underlying EU directive.
- I pause to observe that insofar as those submissions depend on the broad proposition that the collective redundancy provisions in the UK legislation should be interpreted as going no further than the Directive, and specifically that they should be construed as incorporating the full effect of the exclusions in article 1.2, they can not be limited to the particular case of the closure of a military base maintained by a foreign state: the scope of art. 1.2 extends to all PABs. It follows that the words which it was submitted should be implied – referring as they do to the exercise of "public powers" by "a foreign sovereign state" – are too specifically directed to the facts of the present case. The USA's position on this aspect of the argument has to be, as Mr Cavanagh acknowledged in the course of his oral submissions, that the provisions on their true construction do not apply in the case of workers employed by any PAB. I refer to this as "the broad submission".
- Mr Cavanagh and Sir Daniel also advanced an argument specific to the particular facts of the present case. It was described as being "in support of and also in addition to" the broad submission; but it seems to me that it is analytically distinct, and that in truth it is no different from the point argued and rejected in this Court first time round (see para. 12 above). The starting-point was the proposition that it was wrong in principle that a foreign government should be subject to a legal obligation to give prior information to its employees about a decision to close a military base and to consult about the reasons for that decision. Such a closure was an act done iure imperii and not justiciable. However, this was not advanced as a defence in itself: that is, it was not sought to revive the claim of state immunity rejected by the Tribunal. Rather, it was said to go to the proper construction of the Act and to reinforce the primary submission that it should not be read as going beyond the requirements of the Directive, because Parliament could not have intended to legislate in breach of the recognised norms of international law. We were referred to the speech of Diplock LJ in Salomon v Commissioners of Customs and Excise  2 QB 116, at p. 143. We were also referred to the judgment of the CJEU in Mahamdia v People's Democratic Republic of Algeria (C-154/11)  ICR 1, which discusses the application of the doctrine of state immunity in the context of an employment claim brought by a member of the staff of an embassy, though I am bound to say that I am not sure how this advanced the argument.
- That submission was reinforced by the observation that if a foreign state were subject to the collective consultation obligations in relation to the closure of a military base it would be in a worse position than the UK government, which had the protection of sections 273 and 274 (see para. 6 above). It was submitted that this would in the case of a member state constitute a breach of the prohibition on discrimination on the grounds of nationality set out in art. 12 of the Treaty Establishing the European Community and would be unenforceable. The result was that in practice the only foreign state which would be subject to such obligations would be the USA, and it was submitted that it was inconceivable that this could have been Parliament's intention.
- Those points are concerned with the construction of the collective redundancy provisions. Mr Cavanagh and Sir Daniel also advanced a distinct, and more narrowly-focused, argument arising out of the fact that the employee representative provisions under which Mrs Nolan claimed were not enacted by primary legislation but were introduced into the 1992 Act by statutory instrument: see para. 7 (1) above. The 1995 Regulations were made under the powers conferred by section 2 of the European Communities Act 1972, which at the material date read (so far as relevant) as follows:
"(1) All such rights, powers, liabilities, obligations and restrictions from time to time created or arising by or under the Treaties, and all such remedies and procedures from time to time provided for by or under the Treaties, as in accordance with the Treaties are without further enactment to be given legal effect or used in the United Kingdom shall be recognised and available in law, and be enforced, allowed and followed accordingly; and the expression "enforceable Community right" and similar expressions shall be read as referring to one to which this subsection applies.
(2) Subject to Schedule 2 to this Act, at any time after its passing Her Majesty may by Order in Council, and any designated Minister or department may by regulations, make provision—
(a) for the purpose of implementing any Community obligation of the United Kingdom, or enabling any such obligation to be implemented, or of enabling any rights enjoyed or to be enjoyed by the United Kingdom under or by virtue of the Treaties to be exercised; or
(b) for the purpose of dealing with matters arising out of or related to any such obligation or rights or the coming into force, or the operation from time to time, of subsection (1) above;
The submission is that the imposition on PAB employers (including foreign states) of an obligation to consult, in the event of proposed redundancies, with employee representatives can not be "for the purpose of implementing any Community obligation of the United Kingdom" within the meaning of section 2 (2) (a), since we now know from the decision of the CJEU in this case that there is no such obligation; nor can it fall within the terms of section 2 (2) (b). Accordingly, it is said, the 1995 Regulations were to that extent ultra vires. We were referred to the leading cases on the scope of section 2 (2), and in particular to the decision of this Court in Oakley Inc. v Animal Ltd  EWCA Civ 1991,  Ch 337.
DISCUSSION AND CONCLUSION
- There was, both in the skeleton arguments and the oral submissions, a certain amount of blurring between the different elements in the arguments summarised above. But in my view it is important to address them separately. I start with the broad submission summarised at paras. 16-18.
- The question raised by the broad submission is whether the relevant provisions of the 1975 and 1992 Acts must be construed on the basis that Parliament cannot have intended to confer any rights, or impose any obligations, that were not required by the Directive. I do not believe that it is helpful to consider that question by reference to generalisations about "gold-plating". Granted that there may now be – and may have been for some time (though the evidence does not go back to 1975, or even 1992) – a Government policy of, generally, transposing only the minimum requirements of a directive, it nevertheless remains necessary to consider in each case the actual terms of the legislation in question, having regard to the relevant context, which will include the terms of the directive which falls to be implemented. In at least one very obvious respect the 1975 Act unquestionably went beyond the requirements of the Directive, namely by not incorporating the requirement of a minimum number of proposed redundancies: see para. 7 (2) above.
- The starting-point in the present case is that the draftsman of the 1975 Act made what must have been a deliberate choice not to reproduce in terms the exclusion contained in article 2 of the Directive (now article 1.2) – that is, he included no general exclusion for "workers employed by public administrative bodies or by establishments governed by public law (or … equivalent bodies)". Instead he provided for an exclusion for "Crown employment": see para. 6 above. Although there may be some uncertainty as to the exact scope of the concept of a PAB in EU law, it seems clear that (even leaving aside the particular, and exceptional, case of employees of a foreign state) it goes wider than Crown employment, i.e. employment in a government department or a body exercising functions on behalf of the Crown: the most obvious example is employment by a local authority. That must have been apparent to the draftsman, and I can see no warrant for assuming that he nonetheless intended, but incompetently failed, to provide for an exclusion which precisely corresponded with that contained in the Directive. There is nothing surprising in his not attempting to achieve a precise correspondence. The fact is that the concept of a special employment regime for public employees recognised in some civil law countries has no equivalent in the common law. It makes perfectly good sense for Parliament to have settled for a touchstone for exclusion which used common law concepts and would be (comparatively) easy to apply in the UK, while recognising that it might be narrower in its effect than the exclusion provided for in the Directive. (In fact the Government in 1975 may have positively wished as a matter of policy to subject at least some "public administrative bodies", such as local authorities, to the requirements of the collective redundancy provisions: that would be unsurprising for a Labour government, at a time when public sector trade unions were particularly influential.)
- That being my view of the Parliamentary intention as regards the 1975 and 1992 Acts, I see no reason to spend time analysing the decisions in the Risk Management Partners case or in Alemo-Herron. They are simply examples of cases where, on the construction of the language of the particular statutes with which the Court was concerned, it was right to conclude that Parliament had not intended to go beyond the requirements of the relevant directive. They offer no assistance in construing the terms of a different statute designed to give effect to a different directive. The Litster line of authorities is still less relevant, being concerned with cases where on a natural reading the statute fails to conform to even the minimum requirements of EU law: that is an entirely different situation.
- That is a conclusion which I am glad to reach. Having to consider whether a particular body in (broadly) the public sector was or was not a "public administrative body" or an "establishment governed by public law" (or an "equivalent body") within the meaning of art. 1.2 – questions which would be both unfamiliar and sometimes far from easy to answer – would be a highly unwelcome task for both employment tribunals and for parties and their advisers and would unsettle a state of the law that is at present reasonably well understood.
- I turn to the arguments based on the position of the USA as a foreign government acting iure imperii, summarised at paras. 19 and 20 above. It is important to repeat that the case is not advanced as a claim of state immunity: rather, what is said is that the 1992 Act should, as a matter of construction, not be treated as requiring an employer which is a sovereign state to consult about such an act.
- Essentially the same argument was advanced in the EAT and in the earlier hearing in this Court. On both occasions it was rejected, on the basis that, while it was no doubt right in principle that the USA should be entitled to claim such an immunity, the correct route to that result was not by implying an exclusion into the statute but by a straightforward claim of state immunity – and perhaps also by invoking the "special circumstances" defence in section 188 (7). It was only because the USA had waived its claim to immunity by submitting to the jurisdiction and had expressly disavowed any reliance on sub-section (7) (see para. 10 (3) above) that it was compelled to advance the artificial and, they held, unsustainable argument based on construction. Slade J said, at paras. 82-83 (p. 931):
"82. A construction of Section 188 to impose no requirement for consultation with employee representatives about the reasons for a jus imperii decision is not necessary in order to avoid absurdity. Any absurdity involved in subjecting such a decision to scrutiny in the ET could have been avoided by claiming state immunity. The law of state immunity applies alongside all other domestic statutes including employment legislation. The [State Immunity Act 1978] and the common law of state immunity exist alongside [the 1992 Act].
83. We agree with [counsel for Mrs Nolan] that a special construction of Section 188 is not necessary to avoid the absurdity of a jus imperii decision being subject to scrutiny in the ET. The US had two 'escape routes' available to it. It chose not to use them."
In this Court Rimer LJ, giving the judgment of the court, said, at paras. 41-42 (p. 47):
"41. [Mr Cavanagh] ... submitted ... that a foreign sovereign state is ... to be regarded as implicitly exempt from the section 188 requirement to engage in consultation [before taking a closure decision]. There is, he said, an implied exception in section 188 exempting a foreign sovereign state from requiring it to consult about an operational decision which will foreseeably lead to collective insolvencies in any case where such decision is in the nature of a jus imperii. Any conclusion otherwise would, he said, be absurd since it would be inconsistent with the principles underpinning the law of state immunity. More particularly, the submission was that the natural interpretation of the Directive and section 188 precluded the conclusion that their reach imposed any such consultation obligations upon a sovereign state.
42. With respect to Mr Cavanagh's careful argument, the court was not persuaded that there is any substance in it. There is no warrant anywhere in the legislation for reading into it the special exemption for which Mr Cavanagh contended. Nor is there is there a need to search for one: the sovereign state's interests are fully protected by its ability to claim sovereign immunity. In addition, we would consider (although we do not decide) that a decision not to consult over an operational decision of military sensitivity would probably enable the sovereign state to plead the section 188 (7) 'special circumstances' defence, although the USA did not advance that defence in this case."
- I do not believe that the subsequent decision of the CJEU warrants any departure from that reasoning, with which I respectfully agree. The role of the Court was to decide what the effect of the Directive was as a matter of EU law. It was not its role to decide on the construction of the domestic statute. Even if it should be taken to have decided that as a matter of EU law the USA was entitled to claim state immunity, it made a point of observing that it could have made such a claim, either explicitly or indirectly by invoking section 188 (7), but that it had not done so: see para. 13 (5) above.
- Mr Cavanagh and Sir Daniel repeated arguments advanced at the initial hearing to the effect that section 188 (7) was not apt to cover a case of the present kind, essentially because the question was not one of "reasonable practicability" but of law: making the test one for the factual assessment of the tribunal would deprive the foreign state of its absolute entitlement to immunity. The question is not ultimately of great significance, since the defence under sub-section (7) is only a fallback or alternative in a case where for some reason a claim of state immunity is not made. But for what it is worth I strongly incline to the view that if a foreign state were to establish that its decision to close a military base constituted an act done iure imperii it would necessarily follow that it was wrong in principle that it should be required to consult employees about the reasons for that decision, and that any decision by an employment tribunal that it was nevertheless "reasonably practicable" so to consult would be perverse and thus wrong in law.
- I turn finally to the vires argument summarised at para. 21 above. I of course accept that in respect of some employees – to be specific, employees in PABs who are not in Crown employment and in respect of whom no trade union is recognised – the 1995 Regulations create rights and obligations which go beyond the requirements of the Directive. To that extent they can not be said to have been made "for the purpose of implementing any Community obligation of [the UK]", and they thus fall outside the terms of section 2 (2) (a) of the 1972 Act. However, in my view they were in the relevant respects made "for the purpose of dealing with matters arising out of or related to" such an obligation, within the meaning of section 2 (2) (b). There is a Community obligation to consult with employee representatives, even in the absence of a recognised trade union, when collective redundancies are proposed. Although that obligation does not cover "PAB employers", the extension of an equivalent obligation to them (except in the case of Crown employment) is plainly a "matter related to" the primary Community obligation. It can also, I think, be said to "arise out of" it; but that does not add anything.
- I fully accept that not every "relationship" between a Community obligation and a provision made by secondary legislation will satisfy the requirements of section 2 (2) (b). It is clear from the judgments in Oakley v Animal that it is necessary in any given case to consider whether the provision in question is of a kind which Parliament must have intended to be capable of being enacted by secondary legislation: see in particular the judgments of Waller LJ at para. 39 (p. 352) and May LJ at para. 47 (p. 353). But I think it is plain that that is the case here. The decision to go beyond the requirements of the Directive by extending the "employee representative" rights to employees in PABs (except those in Crown employment) may, as a matter of strict analysis, reflect a substantive policy choice made by the Secretary of State; but, as the judgments in Oakley make clear, that is not in itself objectionable. In fact all that he was doing was plugging the rights created by the Regulations in cases where no trade union was recognised into the pre-existing scheme of the Act and thereby reproducing, in the case of this late-discovered lacuna in the implementation of the Directive, the selfsame decision as Parliament had already made in enacting the primary legislation in 1975 and 1992. It would indeed have been an extraordinary anomaly if the kinds of employment where the obligation to consult arose differed as between cases where a trade union was recognised and cases where it was not; and it was not only natural but right for the Secretary of State in making the Regulations to ensure that the position was the same in both cases. In my judgment this is precisely the kind of "closely related original choice which the Directive does not … require" but which "has the effect of tidying things up" that May LJ identifies in his judgment in Animal v Oakley (loc. cit.).
- For those reasons I would reject the contention that the decision of the CJEU means that this appeal must be allowed. If my Lords agree, the result is that (unless the parties can reach a compromise) there will need to be a further hearing to determine the Fujitsu issue. That is regrettable, not only because of the length of time that these proceedings have already taken but also because it is not satisfactory that an issue which will in almost all other cases – albeit not in this – depend on EU law will have to be decided without the guidance of the CJEU. But that cannot be helped.
Lord Justice Rimer
- I agree.
Lord Justice Moore-Bick
- I also agree.