This case has now been reported in full in The Weekly Law Reports as United States of America v Nolan [2015] 3 WLR 1105, SC(E).

Employment — Redundancy — Consultation — Collective redundancies on closure of American military base in UK — Civilian employees alleging breach of statutory obligation to consult — Court of Justice ruling Directive imposing consultation obligation excluding public administrative bodies — Whether UK statute transposing Directive to be so construed — Whether implied exemption from obligation for sovereign state — Whether employee representative provisions in applying to public administrative bodies ultra vires as not being pursuant to EU obligation — Trade Union and Labour Relations (Consolidation) Act 1992 (c 52), s 188(1) (as substituted by Collective Redundancies and Transfer of Undertakings (Protection of Employment) (Amendment) Regulations 1995 (SI 1995/2587), reg 3(2) and amended by Collective Redundancies and Transfer of Undertakings (Protection of Employment) (Amendment) Regulations 1999 (SI 1999/1925), reg 3(2)) — European Communities Act 1972 (c 68), s 2(2) (as amended by Legislative and Regulatory Reform Act 2006 (c 51), s 27(1))— Council Directive 98/59/EC, arts 1, 2

United States of America v Nolan

[2015] UKSC 63; [2015] WLR (D) 441

SC(E): Lord Neuberger of Abbotsbury PSC, Baroness Hale of Richmond DPSC, Lord Mance, Lord Reed, Lord Carnwath JJSC: 21 October 2015

There was no exception for a foreign state when acting in a iure imperii capacity from the obligation to consult representatives of its employees in England about proposed collective redundancies pursuant to section 188(1) of the Trade Union and Labour Relations (Consolidation) Act 1992.

The Collective Redundancies and Transfer of Undertakings (Protection of Employment) (Amendment) Regulations 1995 in amending section 188 of the 1992 Act were not ultra vires, but came within section 2(2) of the European Communities Act 1972.

The Supreme Court so held (Lord Carnwath JSC dissenting on the second issue) in dismissing the appeal of the employer, the United States of America, against the decision of the Court of Appeal (Moore-Bick, Rimer and Underhill LJJ) [2014] ICR 685 that as a matter purely of domestic law under section 188 of the 1992 Act, as amended, the United States of America had been under an obligation to consult its civilian employees, represented by the claimant, Christine Nolan, about its decision to close a military base at Hythe in Hampshire.

The Court of Justice of the European Union (Case C-583/10) [2013] ICR 193 had earlier ruled, on a reference from the Court of Appeal, that, by virtue of the exclusion in article 1(2)(b) of Council Directive 98/59/EC, the dismissal of staff of a military base (whether or not of a member state) did not fall within the scope of the Directive, which the 1992 Act transposed into domestic law.

LORD MANCE JSC (with whom LORD NEUBERGER OF ABBOTSBURY PSC, BARONESS HALE OF RICHMOND DPSC and LORD REED JSC agreed) said that the United States had not relied on state immunity when the proceedings began. It was common ground that it could successfully have done so. Instead the United States had raised two points of construction and one of vires. The first point of construction was that the domestic legal provisions should be given an interpretation conforming to that given by the Court of Justice, at least regarding foreign state’s iure imperii activity. The second point was that the same construction should be reached regarding foreign states by virtue of or by reference to principles of international law forming part of or inspiring domestic law.

It could not be said that the 1992 Act was intended to be no more than back-to-back with Directive 98/59. It contained no equivalent to article 1(2)(b) of the Directive. Instead, it contained specific and limited exceptions for Crown employment and employees and for certain others in public service. The careful exclusion of several specified categories of public employee spoke for itself. As to the second point of construction. Jurisdiction was primarily territorial in both international and domestic law. The 1992 Act was expressly stated to extend to England, Wales and Scotland. Part IV Chapter II of the Act regulated the procedures for dismissal on the grounds of redundancy of employees at institutions in those territories. It required consultation within the jurisdiction with employees who were and whose employment was within the jurisdiction. The United States’ case was that there should be carved out of the Act, or any other relevant legislation, an exception for circumstances in which a foreign state took a decision or committed an act of a iure imperii nature abroad which would otherwise lead to a person in the United Kingdom having a domestic right and remedy in respect of domestic employment or other domestic activity in the United Kingdom. That submission was far-reaching. It would amount, in effect, to reading domestic legislation as subject to an exception or as inapplicable, at least prima facie, in relation to a foreign state in any circumstances where the foreign state could rely on a plea of state immunity, to avoid the adjudicative processes of another state in which proceedings had been brought against it. Carried to its logical conclusion it would mean that all legislation should, however clear in scope, be read as inapplicable to a foreign state in any case where the state could plead state immunity. That would elide two distinct principles, and very largely make redundant a plea of state immunity at least in respect of any statutory claim. The United States could not place any reliance on any principle of non-discrimination arising under European Union law, since in so far as the 1992 Act covered the employees in question it went beyond European Union law into an area where the principle had no application, and, in any event, as the United States was not a member of the European Union it could not come within its protection.

The United States’ third point was that the 1995 Regulations which amended the 1992 Act were ultra vires section 2 of the European Communities Act 1972. Had the provisions of the unamended 1992 Act been the product of subordinate legislation under section 2(2) of the 1972 Act, they would have been ultra vires at least in so far as they purported to extend the required procedure for dismissals involving redundancies to situations falling within article 1(2)(b) of Directive 98/59. However, the unamended 1992 Act had actually been a piece of primary legislation. So far as Parliament chose by the unamended Act to extend the required procedure for dismissals involving redundancies, it had been fully entitled to do so. Parliament had no need to show any particular competence base for primary legislation. It could legislate at will and at the same time achieve both European Union aims and domestic aims, as long as the latter were not positively inconsistent with the former. But the unamended 1992 Act had been confined to situations where the relevant employees had trade union representation. When the executive chose to rectify that by using section 2(2) of the 1972 Act to cover situations where there was no trade union representation, it did so across the whole width of the previous legislation—so as to affect not only situations within the internal market scope of Directive 98/59, but also the domestic situations to which Parliament had also extended the required procedure for dismissals. The unamended 1992 Act represented a unified domestic regime. It was entirely unsurprising that the 1995 Regulations did not distinguish between parts of the Act which were and were not within the internal market competence or within article 1(2)(b) of the Directive. In those unusual circumstances, Parliament could, by enacting the unamended 1992 Act, be regarded as having created, for the future domestic purposes of the 1972 Act, a relationship between the European Union obligation (which it was a primary object of Part IV Chapter II of the unamended 1992 Act to implement) and the categories of public employment falling within article 1(2)(b) of Directive 98/59 (which Parliament decided without any European Union obligation to do so to cover by the unamended Act). That relationship having been established by the unamended 1992 Act, the executive had been entitled to take it into account and to continue it by and in the 1995 Regulations.

LORD CARNWATH JSC delivered a judgment which concurred on the iure imperii issues but dissented on the ultra vires issue.


John Cavanagh QC and Sir Daniel Bethlehem QC (instructed by Nabarro LLP) for the United States.

Michael Beloff QC and Sarah Wilkinson (instructed by Treasury Solicitor) as advocates to the court.

The claimant was not represented and did not appear.

Reported by: Ms B L Scully, Barrister

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