Following a decision by the US government to close a US military base situated in the UK, management informed and consulted employee representatives, and then gave the employees notice of dismissal. Mrs Nolan, an employee representative, brought tribunal proceedings against the US claiming that it had failed to consult under section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA) and arguing that consultation should have started earlier. An employment tribunal upheld her claim.

Before the remedies hearing, the US claimed state immunity but, since it had not sought to rely on state immunity earlier and had taken active steps in the proceedings, the tribunal found that the US had waived its right to assert immunity. The tribunal made a protective award of 30 days' pay. The Employment Appeal Tribunal dismissed the US's appeal against the protective award.

On appeal to the Court of Appeal, the US argued that a foreign government's decision to close a military base is an act of state that should not be subject to scrutiny in the courts, and so collective consultation obligations should not apply.

The US also argued that, in the light of Akavan Erityisalojen Keskusliitto AEK ry and others v Fujitsu Siemens Computers Oy, the Collective Redundancies Directive (98/59/EU) (the Directive) and therefore TULRCA, which implements the Directive in the UK, there is no requirement for employers to consult about a proposed decision to close a workplace (C-44/08; www.practicallaw.com/1-500-5638) (see box "The Fujitsu issue").

On the second issue, the Court of Appeal asked the ECJ whether the obligation to consult arises: 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 only when that decision has actually been made and the employer is proposing consequential redundancies (www.practicallaw.com/9-504-5602).

The ECJ concluded that it had no jurisdiction to answer the question. Article 1(2)(b) of the Directive exempts public administrative bodies from the requirement to inform and consult. Since civilian staff working on a military base are protected by this exemption, the case falls outside the scope of the Directive and so the ECJ declined to interfere with what it considered to be a matter of national legislation. The case reverted to the Court of Appeal.

The Court of Appeal found that nothing in TULRCA provides a special exemption for a foreign sovereign state in respect of collective consultation obligations. However, it ordered a further hearing on the so-called Fujitsu issue. The US appealed to the Supreme Court.

The Supreme Court dismissed the appeal. The appeal and decision focused on three grounds.

Conformity construction. The US focused on the fact that the scope of TULRCA goes beyond that of the Directive. The Directive contains an exemption from the requirement to consult with workers employed by public administrative bodies whereas the exemption in TULRCA is limited to those in Crown employment and certain others in public service. The US argued that, as a matter of legal construction, TULRCA should be interpreted in accordance with the Directive in regard to decisions of foreign states made in their sovereign or governmental capacity.

The Supreme Court rejected this construction. It found that the Directive leaves it open to EU member states to apply more favourable provisions for workers than those under the Directive. The scope of the narrower exemption in TULRCA was not mere oversight. Even though the redundancies arose in a rare situation not foreseen by the legislator, since the closure involved the only foreign state with military bases in the UK and its employees were not employed by the Crown, this was no reason for reading into clear legislation a specific exemption that would not reflect the wording or scope of any exemption under EU law. The court was influenced by the fact that the US could have relied on state immunity, had it invoked this on time.

International law. The US also argued that the application of TULRCA to the present situation conflicts with principles of international law. It asserted that international legal considerations require a tailored exemption from TULRCA in respect of redundancy dismissals arising from a decision taken by a foreign state in its sovereign capacity. According to international law, one state cannot legislate to affect the sovereign activity of a foreign state.

The Supreme Court rejected these arguments. The fact that a decision was taken at a governmental level in the US that led to redundancy dismissals in the UK did not mean that the UK was legislating extra-territorially. TULRCA expressly states that it only applies to redundancy procedures in England, Wales and Scotland. It is not appropriate to make clearly drafted legislation inapplicable to foreign states where it is open to them plead state immunity.

Ultra vires. The final prong of attack by the US was that the Collective Redundancies and Transfer of Undertakings (Protection of Employment) (Amendment) Regulations 1995 (SI 1995/2587) were ultra vires in that they purported to extend the consultation obligation to public administrative bodies or public law establishments employing workers without trade union representation. The US argued that this went beyond the Directive and the power conferred by section 2(2) of the European Communities Act 1972.

The Supreme Court ultimately rejected this argument. Since TULRCA, in its unamended form, represents a unified domestic regime and since the amendments were enacted by primary, rather than secondary, legislation, the amendments in TULRCA were not ultra vires.

While lawyers might study with interest the arguments unsuccessfully used by the US to seek to exempt itself from consultation requirements, employers must continue to wait to hear about the point that they are really interested in; that is, when the duty to consult arises.