United States of America v Nolan

This is the judgment of the court.

The appellant is the United States of America ('the USA'). The respondent is Christine Nolan. The proceedings arose out of a decision by the Secretary of the US Army to close a US Army base at Hythe, Hampshire known as RSA Hythe. The activity formerly carried on there was the repair of watercraft and other equipment used by US Forces on military operations. The closure took place on 30 September 2006 and resulted in the redundancy of some 200 civilian employees.

Mrs Nolan was one of them. She brought proceedings against the USA in the Southampton Employment Tribunal under the Trade Union and Labour Relations (Consolidation) Act 1992 ('the 1992 Act') for compensation by way of a 'protective award'. She claimed to sue as an 'employee representative' on behalf of the redundant employees. Her complaint was that the USA had failed to consult with representatives of the civilian workforce in accordance with its obligations under section 188 of the 1992 Act; in particular, that it had not so consulted before, and about, taking the operational decision to close the Base.

By a liability judgment sent to the parties on 6 February 2008, the employment tribunal (Employment Judge Guyer, Mrs S. Foulser and Mr W.M. Heckford) upheld both (i) Mrs Nolan's claim to be an 'employee representative' for the purposes of the 1992 Act and (ii) her claim that the USA had failed to discharge its consultation obligations. By a remedy judgment sent to the parties on 16 April 2008, the tribunal made a protective award in respect of all United Kingdom citizens who were civilian employees at the Base on 29 June 2006 (when the redundancy notices were issued) and set the protected period at 30 days.

The USA appealed to the Employment Appeal Tribunal against both limbs of the liability decision and also against the remedy decision. Its arguments on liability were (a) that as a foreign sovereign government it had no obligation, in advance of a decision to close a military base, to consult with the civilian workforce about the reasons for its closure; and (b) that the tribunal had anyway been wrong to find that Mrs Nolan was an 'employee representative' entitled to bring the claim. By its order of 15 May 2009, the appeal tribunal (Slade J, Mr D. Norman and Mrs R. Chapman) allowed the appeal under point (b) to the extent of remitting to the same tribunal for re-hearing the question of Mrs Nolan's entitlement to bring the claim. It otherwise upheld the tribunal's decisions on liability and remedy.

The USA's appeal to us is against the appeal tribunal's order. It repeated the argument that, as a foreign sovereign state, it had no such consultation obligation as the tribunals below had held. It also sought to pre-empt the need for that argument by raising (without objection) the new point, said to be supported by a decision of the Court of Justice of the European Union ('the ECJ') in 2009, that anyway no employer has an obligation to consult with its employees about a proposed operational decision to close a workplace that will lead to redundancies: it is said that the consultation obligation only arises after the employer has made such decision and is then proposing to dismiss the employees as redundant. If wrong on both points then, as to Mrs Nolan's status to bring the claims, the USA argued that the appeal tribunal should itself have decided that she was not an 'employee representative'; alternatively, that any remission of that question should not have been to the same tribunal but to a differently constituted one.

The remainder of this judgment is in seven sections which will (i) set out the material provisions of the Collective Redundancies Directive; (ii) set out the material provisions of the 1992 Act which gave domestic effect to that Directive; (iii) summarise the facts found by the employment tribunal; (iv) explain the course of the proceedings before the employment tribunal and its reasoning in its liability and remedy judgments; (v) summarise the appeal tribunal's decision; (vi) summarise the decision of the Employment Appeal Tribunal in UK Coal Mining Ltd v. National Union of Mineworkers (Northumberland Area) and another [2008] ICR 163; and (vii) discuss the arguments on the appeal.

The USA was represented before us by Mr John Cavanagh QC, who also appeared before the appeal tribunal, although not before the employment tribunal, where the USA was represented by Mr Lyndon James, a solicitor. Mrs Nolan was represented by Mr Richard Lissack QC and Mr Mark Mullins. Mr Mullins also appeared for her at the appeal tribunal, although not before the employment tribunal where she appeared in person.

We say straight away that we have come to the conclusion that we cannot decide this appeal without first making a reference to the ECJ on the new point taken by the USA to which we have referred in [6] above. We record that Mr Cavanagh indicated at the oral hearing that the USA did not wish any such reference to be made. Our consideration of the issues after we had reserved judgment led us to the provisional view that we ought to make a reference, and we sought further submissions on that matter from the parties. Having taken instructions on the matter, which required some weeks, Mr Cavanagh repeated that the USA did not want a reference to be made, but wished this court (which has no obligation to make a reference even if an applicable point of European Union law is not acte clair) to decide the point itself. We have of course had regard to the USA's position in that respect, and have given anxious consideration to what we should do, but have nevertheless reached the decision we have indicated. The remainder of this judgment explains the story and how and why we have reached that decision.

The Collective Redundancies Directive

Directive 98/59/EC, the Collective Redundancies Directive ('the Directive'), is essentially a consolidation of Directive 75/129/EEC as amended by Directive 92/56/EEC. Recital 2 recites the importance 'that greater protection should be afforded to workers in the event of collective redundancies while taking into account the need for balanced economic and social development within the Community.' Article 1.1(a) defines 'collective redundancies' as meaning dismissals effected by an employer for one or more reasons not related to the individual workers concerned where, according to the choice of the Member States, the number of redundancies is (i) over a period of 30 days, various minimum numbers of redundancies varying according to the total numbers of employees (the details do not matter); and (ii) over a period of 90 days, at least 20 redundancies whatever the number of workers normally employed in the relevant establishments. Article 1.1(b) defines 'workers' representatives' as meaning the workers' representatives provided for by the laws or practices of the Member States. Article 1.2 provides that the Directive is not to apply to '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)', an exception that Mr Cavanagh accepted did not extend to workers employed by a foreign sovereign state such as the USA.

Article 2 provides, so far as material:

Article 5 provides:

The Trade Union and Labour Relations (Consolidation) Act 1992

The 1992 Act was in part enacted to give domestic effect to the Directive. The relevant provisions are in Chapter II (comprising sections 188 to 198) of Part IV, headed 'Procedure for Handling Redundancies'. The material provisions are these:

Section 188A prescribes requirements for the election of 'employee representatives' under section 188(1B)(b)(ii), but I need not explain them. It is not suggested that Mrs Nolan was elected under that sub-paragraph. The issue is whether she was elected under the provisions of section 188(1B)(b)(i).

Section 189 deals with the remedies available in a case where the employer has failed to comply with a requirement of sections 188 or 188A. So far as material, it provides:

Section 190 provides that where a tribunal has made a protective award, every employee of a description to which the award relates is, subject to the further provisions of section 190 and to section 191, to be paid remuneration by his employer for the protected period. Section 193 imposes a duty upon an employer to notify the Secretary of State of collective redundancies and to provide certain prescribed information. Section 273, in Part VII (headed 'Miscellaneous and General'), provides that, subject to prescribed exceptions, the 1992 Act has effect in relation to Crown employment and persons in such employment. One such exception is the provisions of Chapter II of Part IV (procedure for handling redundancies).

The facts

I take these from the employment tribunal's liability judgment. Personnel at RSA Hythe (RSA stands for Reserved Storage Activity) repaired watercraft and other equipment. From time to time they were sent overseas to assist US forces that were operational in other countries. About 200 civilians were employed at the Base. They were represented by the Local National Executive Council ('LNEC').

Since at least early 2004 consideration had been given to the closure of the Base. In early 2006 an audit was conducted into its operations. That led to a report entitled 'Acquisition Strategy for Sustainment of APS Watercraft Assets'. It was presented on 13 March 2006 to Major General Johnson, the commander of the Base's higher headquarters located at Rock Island, Illinois. It showed that a decision had by then been taken to close the Base. The decision was made in the USA by the Secretary of the US Army and was approved by the Secretary of Defense. It was to the effect that operations would cease by the end of September 2006.

In early April 2006 the Ministry of Defence ('MoD') police complement at the Base was informed by management of the closure proposal. The US Government was obliged to notify the United Kingdom Government of its intention to vacate any United Kingdom premises before making any public announcement of such intentions; and in April confidential discussions about such intention took place between representatives of both Governments. There was a BBC news item about the closure on 21 April. A local press article about it followed on 22 April. On 24 April the Commanding Officer of the Base (Colonel Binder, a US Army Officer) called a meeting of the workforce partly in order to explain the decision to close the Base and partly to apologise for the way the news about the closure had become public. Following that meeting, and on the same day, the Chairman of the LNEC, Mr Holmequest, convened an ad hoc meeting of the LNEC, which was attended by about half the workforce. The purpose of the meeting was to consider Colonel Binder's information about the closure proposal. Mrs Nolan, an employee at the Base, was voted on to the LNEC by a show of hands, having been proposed as additional member by the Chairman. The employment tribunal found that her election to the LNEC was valid.

By a letter of, and delivered on, 9 May the US Government formally notified the MoD that the Base would close and that the US facilities at Hythe would be returned to the United Kingdom on 30 September 2006. Shortly after 9 May, Mr Schoenstein went to the Base and had informal discussions with members of the LNEC. He was a human resources specialist for labour relations at the HQ USAREUR office of the Deputy Chief of Staff (USA) in Mannheim, Germany. A memorandum prepared for and provided to the LNEC members in June stated that all employees at the Base would be made redundant and that it was proposed to issue all redundancy notices simultaneously on about 30 June, with the effective date of termination of all employment contracts being 29 September 2006. The formal decision on the termination of employment was made in Mannheim. Consultation with the LNEC commenced on 5 June.

At a meeting between Mr Schoenstein and the LNEC on 14 June, a question was raised about the consultation period. The answer was reflected in a memorandum dated 28 June from the Base Commander. It recorded that management considered the beginning date of the consultation to be 5 June (the USA's formal position), when 'the elected representatives were informed in writing about the potential personnel impact cause by the Army's decision to close' the Base. The memorandum continued:

The proceedings in the employment tribunal

The liability proceedings

The tribunal proceedings on liability were argued on 11 June 2007 and 28 January 2008. The explanation for the double hearing is that, following the conclusion of the argument on 11 June 2007, when the tribunal reserved its judgment, the tribunal became concerned as to whether it had jurisdiction to entertain the protective award claim at the suit of Mrs Nolan, a matter that had not been argued. The tribunal's concern was prompted by its consideration of a recent decision of the Employment Appeal Tribunal (Northgate HR Limited v. Mercy EAT/0466/06). On 11 July 2007 the tribunal raised its concern by letters to the parties and later gave directions for the filing of further evidence. That led to the resumed hearing on 28 January 2008, which the tribunal's written reasons later described as devoted to two points: (i) whether Mrs Nolan was a member of the LNEC, and (ii) if she was, whether she was entitled to bring the claim without express authority from the LNEC. In addition, by the time of the resumed hearing in January 2008, there had been an important development, namely the decision on 28 September 2007 of the Employment Appeal Tribunal in UK Coal Mining Ltd v. National Union of Mineworkers (Northumberland Area) and another [2008] ICR 163, a judgment written by Elias J (the President), as he then was. If Mrs Nolan was entitled to bring the claim, UK Coal was relevant to the scope of the consultation obligation that the USA should have conducted.

As for the jurisdiction issue, the tribunal found (and recorded as common ground) that 'the appropriate representatives' whom the USA was required to consult for the purposes of section 188(1) were the members of the LNEC. I have already recorded its finding that Mrs Nolan became a validly appointed member of the LNEC on 24 April 2006. It further found that there were no 'employee representatives' within the meaning of section 188(1B)(b)(ii). As to whether Mrs Nolan, as a member of the LNEC, was entitled to bring her claim despite the absence of any resolution of the LNEC authorising her to do so, the tribunal referred to section 189(1) and held that she was qualified to do so under section 189(1)(b). It drew support for that from paragraph [15] of the judgment of Maurice Kay LJ in Northgate HR Ltd v. Mercy [2007] EWCA Civ 1304; [2008] IRLR 222, a decision of this court of 13 December 2007 upholding the decision of the Employment Appeal Tribunal to which I have referred. The tribunal therefore concluded that it had jurisdiction to entertain Mrs Nolan's claim for a protective award.

The tribunal turned to consider whether there had been proper consultation. This was a case in which the employer was proposing to dismiss more than 100 employees so that section 188(1) required the consultation to begin 'in good time and in any event … at least 90 days' before the first of the dismissals was to take effect. Section 188(2) described the nature of the required consultation – including consultation about ways of 'avoiding the dismissals' - and the tribunal pointed out that these obligations derived from the Directive. It found (as is accepted) that the consultation only began on 5 June 2006. By then, however, there was no scope for any meaningful consultation about the closure of the Base – and the mass dismissals which it would inevitably involve - because the closure decision had been taken by 13 March 2006. The tribunal referred to the absence of any evidence as to why consultation had not commenced before 13 March 2006, or at the latest by 9 May 2006 (when the US Government formally notified the MoD of the proposed closure of the Base). It recorded, and rejected, a submission by Mr James that it was unrealistic to expect the USA to consult about a strategic decision to close a military base. The tribunal's view was that once the closure decision had been made, the issue of the dismissal notices did not represent a separate decision to dismiss: it was simply the processing of the inevitable consequence of the closure decision. The tribunal recorded Mr James's disclaimer of any argument that section 188(7) ('special circumstances') excused the USA from consulting about the closure, a disclaimer the tribunal described as inevitable in the absence of supporting evidence.

The tribunal's conclusions were:

The remedy proceedings

The same tribunal heard the remedy proceedings on 17 March 2008 and reserved judgment. The tribunal sent its reasons to the parties on 16 April 2008. It made a protective award in respect of all persons who on 29 June 2006 were United Kingdom citizens and civilian employees at the Base. It ordered the USA to pay such employees remuneration for a protected period of 30 days beginning on 29 September 2006.

In paragraph 3 of its reasons, the tribunal referred to paragraph 68.1 of its liability reasons (quoted above) and said that it considered it was 'implicit in paragraph 68.1 … that we are saying that the dates [sic] from which the ninety day consultation period should be measured was 5 June 2006 being the date when the notice of termination was issued.' As it seems to us, section 188(1A) required the consultation to commence 'in good time and in any event … at least 90 days' before 29 September 2006, that being the date when all the dismissals took effect. It is accepted that consultation started on 5 June 2006, which was more than such 90 days. There was, therefore – contrary to what the tribunal appears to have held in paragraph 68.1 - no breach of the 90-day minimum. The real bite of the tribunal's liability decision was, however, in paragraph 68.2, to the effect that the USA had failed in its consultation obligations by not consulting about the prior operational decision to close the Base, one made by 13 March 2006. The tribunal's reasoning in its remedy decision is not at every point easy to follow, but we read it as conveying that, in deciding upon the appropriate protective award, it relied not on its paragraph 68.1 conclusion, but solely on its paragraph 68.2 conclusion, upon which it expanded in paragraphs 60 and 61 of its reasons, which we shall quote below.

We should refer to an important development at the remedy hearing. Mr James, for the USA, raised a last-minute argument that the USA, as a sovereign state, enjoyed state immunity against Mrs Nolan's claim to fix it with a protective award. It was common ground before us that the USA would have been entitled to raise such a plea in response to Mrs Nolan's claim when it was originally issued and that, had it done so, such plea would have brought her claim to a full stop. The problem facing Mr James in the belated raising of the point on 17 March 2008 was that by then the USA had unequivocally submitted to the tribunal's jurisdiction over the claim and had defended the liability proceedings on the merits. The tribunal concluded that in those circumstances it was too late for the USA to raise a plea of sovereign immunity and it rejected such plea.

It was not argued before us that the tribunal was wrong in so concluding: that was not a ground of appeal. We ought, in fairness to Mr James, to explain that at the time that the USA did so submit to the jurisdiction, it either did not foresee, or may not have foreseen, that the focus of the argument at the liability hearing would ultimately be on whether there was a duty to consult about the proposed closure of the Base, a matter which the tribunal found to be an exercise by the USA of an act of state - a jus imperii -about which the USA would legitimately want to be defensive: it is self-evident why a sovereign state would not wish to consult a workforce about a possibly sensitive strategic decision to close a military base. The reason that the USA either did not have, or may not have had, such foresight is that it was only the promulgation of the decision in UK Coal in September 2007 (following the first liability hearing) that made it clear that the consultation duty extended to requiring consultation about an operational proposal to close a workplace that will carry with it inevitable redundancies. Before that decision the thrust of the domestic authorities was to the effect that, even in a case such as the present, the consultation obligation would only arise once the closure decision had been made. If that was the limit of the consultation obligation, it is not suggested that the USA did not embark upon it in good time when it commenced its consultation on 5 June 2006; and the inference is that the USA did not, at the time of the institution of Mrs Nolan's proceedings, foresee that the proceedings might lead to the raising of matters in respect of which it might, with hindsight, have wanted to raise a plea of sovereign immunity.

That, however, all changed with the raising of the point made clear by UK Coal, although even then the USA delayed until 17 March 2008 before raising its sovereign immunity plea. There was limited discussion before us as to whether a change of circumstances in mid-proceedings such as happened in this case might enable the raising of a plea of sovereign immunity at the point of such change even though there had originally been a submission. As we have said, we do not have to decide that question.

After dealing with the sovereign immunity point, the tribunal dealt with and rejected another submission by Mr James that it had no jurisdiction to make a protective award against the USA, a submission not repeated to us. It concluded that it did have jurisdiction to make an award and it explained why it made the award it did. As promised, we quote two paragraphs of its reasons:

The appeal tribunal's decision

The appeal tribunal set out the facts found by and conclusions of the tribunal. As for the two issues now raised by the appeal to this court, it recorded that Mr Cavanagh did not question the correctness of the decision in UK Coal. His primary submission was that, accepting that UK Coal decided that in appropriate cases there will be a section 188 duty upon an employer to consult about the proposed closure of a workplace that will inevitably lead to redundancies, such duty cannot, upon the true construction of section 188, require such consultation when such proposed closure is an act of state. He submitted that UK Coal could be distinguished upon the basis that it applied only to commercial decisions to close a workplace, not to those involving questions of public policy. There was an issue as to whether that had been argued before the employment tribunal, but no objection was raised to its being argued before the appeal tribunal. The appeal tribunal gave full reasons for rejecting it.

Mr Cavanagh's second submission went to whether Mrs Nolan was an appropriate representative of the civilian employees at the Base. Referring to section 188(1B)(b)(i), he said that she was not 'elected … otherwise than for the purposes of' section 188. His point was that the key question was the purpose of her election to the LNEC. He said the inference was that she was elected specifically to deal with the redundancy process, since at that stage in the history of the Base nothing remained to be done except to consult about redundancy. If so, her election was purportedly under section 188(1B)(b)(ii) but was invalid for want of satisfaction of the requirements of section 188A(1). The appeal tribunal's view was that, whilst it was likely that the LNEC's work as from 24 April 2006 (when Mrs Nolan was elected) would be concerned with redundancies, it did not follow that such work would be confined to consultations about them. It may have ranged more widely. The problem was that the tribunal had made no finding as to whether Mrs Nolan had been elected to the LNEC 'otherwise than for the purposes of' section 188. It was the answer to that question that would determine whether she was an 'appropriate representative' for the purposes of section 188. The appeal tribunal remitted that question for decision to the same tribunal.

The decision in UK Coal

We turn to UK Coal Mining Ltd v. National Union of Mineworkers (Northumberland Area) and another [2008] ICR 163, which was central to the employment tribunal's decision. The USA did not question its correctness before the appeal tribunal, although it sought to distinguish it.

UK Coal owned a mine at which it employed 329 employees. A decision was made to close it, which led to dismissals for redundancy. In a claim for a protective award because of a failure by UK Coal to consult, the employment tribunal held that there was no duty to consult over the closure of the mine but that UK Coal had anyway failed to discharge its consultation obligations about the matters relating to the redundancies. The appeal tribunal dismissed UK Coal's appeal as to the latter holding and allowed the unions' appeal against the former holding that there had been no duty to consult about the closure.

In delivering the judgment of the appeal tribunal, Elias J referred to the Divisional Court's decision in R v. British Coal Corporation, Ex parte Vardy and Others [1993] ICR 720. That recognised that the Directive (more accurately, its 1975 predecessor, 75/129EEC) required consultations in good time when an employer was 'contemplating' collective redundancies; and that it also required such consultations 'at least, [to] cover ways and means of avoiding' such redundancies (compare article 2.2 of the Directive, cited above). The Directive therefore required consultation on ways of avoiding redundancies by not closing the particular establishment, if that was what the employer had in mind. The Divisional Court's view was, however, that section 188's domestic incorporation of the consultation obligations did not go as far as the Directive. As then enacted (identically to the predecessor provisions in the Employment Protection Act 1975), section 188 merely imposed a consultation obligation if the employer was 'proposing' to dismiss an employee as redundant; and such consultation was only required to be 'about the dismissal', not about the reason for the redundancy, including whether or not a plant should close. In the Divisional Court's view section 188 could not be read compatibly with the Directive:

The Divisional Court's approach in Vardy as to the limit of section 188's scope was applied by the Employment Appeal Tribunal in Middlesbrough Council v. Transport and General Workers' Union [2002] IRLR 332 even though by then what is now section 188(2) had been introduced so as to provide (inter alia) that the consultation shall include consultation about ways of 'avoiding the dismissals' (an amendment introduced by the Collective Redundancies and Transfer of Undertakings (Protection of Employment) (Amendment) Regulations 1995/2587). The appeal tribunal, in a judgment delivered by His Honour Judge Peter Clark, held in paragraph [33] and repeated in paragraph [45] that Vardy showed that an employer was not obliged to consult as to his reasons for proposing redundancies (in that case, financial reasons). Both Vardy and Middlesbrough were followed and applied by the Employment Appeal Tribunal (Burton J presiding) in Securicor Omega Express Ltd v. GMB [2004] IRLR 9.

In UK Coal the appeal tribunal was presented with a head-on challenge to the correctness of the decisions in Middlesbrough and Securicor insofar as they repeated and held that the section 188 obligation does not extend to consultation about the reasons for the redundancies, including whether or not a plant should close. Both sides in UK Coal recognised that the Directive did require such consultation and that if article 2.2 of the Directive were properly implemented into domestic law, such law would also require consultation about closure. Elias J said at paragraph [82] that the point was made that it had not been sufficiently transposed when Vardy was decided because section 188 did not then include what is now section 188(2): at that stage the consultation obligation was limited to consultation 'about the dismissal'. At paragraph [83], he recorded UK Coal's submission that the section 188(2) amendment did not sufficiently fill the gap exposed in Vardy because the consultation duty was still limited to the case where the dismissals are 'proposed', in contrast to that under the Directive where they are 'contemplated'.

Elias J preferred and accepted the unions' submissions. He was in no doubt that the court in Vardy was correct to say that under European law the obligation under article 2.2 of the Directive required consultation over a decision to close a plant. He continued:

The essence of the decision was, therefore, that there is no doubt that – as was said in Vardy - the Directive required consultation over the formation of a clear, albeit provisional, intention to close a plant, at any rate when such closure was contemplated as giving rise to collective redundancies; and so now does section 188, whose current form differs materially from its form at the time of the decision in Vardy.

The arguments on the appeal

Mr Cavanagh's primary submission to us was premised on the basis that UK Coal was correctly decided in the respect just discussed and was to the effect that under the Directive and section 188 a consultation obligation can in principle kick in once a mooted closure (with inevitable consequential redundancies) has moved to the valley of provisional decision. He submitted, however, that a foreign sovereign state is nevertheless to be regarded as implicitly exempt from the section 188 requirement to engage in consultation at such stage. 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.

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.

Mr Cavanagh also addressed us on whether Mrs Nolan was entitled to bring the claim. He submitted that, on the employment tribunal's findings, Mrs Nolan could only have been elected to the LNEC for section 188 purposes, in which event her appointment was ineffective for want of satisfaction of section 188A(1). He said that we could and should decide that point ourselves. Alternatively, he submitted that the appeal tribunal was wrong to remit that issue for a re-hearing by the same tribunal: he said it should have been remitted to a differently constituted tribunal. We would also reject both of these submissions. The appeal tribunal was, in our judgment, right to conclude that the employment tribunal had made inadequate findings for the resolution of this issue and we are in no position to make the necessary findings of fact ourselves; it was therefore also right to remit the question for a re-hearing; and its decision to remit it to the same tribunal was one properly within its discretion that it is not open to this court to disturb.

If these had been the only matters argued by the USA, the court would simply have dismissed the appeal. Mr Cavanagh's further submission, however, was that the decision of the ECJ in Akavan Erityisalojen Keskusliitto Alek RY and others v. Fujitsu Siemens Computers OY Case C-44/08; [2009] IRLR 944 (a decision of 10 September 2009, post-dating the decision of the appeal tribunal) is authority for the conclusion that, upon the true interpretation of the Directive, the consultation obligation is not triggered by a proposed business decision to effect the closure of a plant; and that the consultation obligation only arises at the later stage when the business decision has been made and the intention to make the employees redundant has been formed. The submission was that the Divisional Court in Vardy had therefore misstated the nature of the consultation obligation under the Directive; that the consultation obligations under section 188 should be interpreted harmoniously with the Directive; and that insofar as UK Coal interpreted them as being more extensive that those prescribed by the Directive, itwent too far, was wrong not to follow Middlesbrough and Securicor and was decided in error.

If Fujitsu is authority for a narrower interpretation of the Directive than that divined by Vardy and UK Coal, then in agreement with Mr Cavanagh we consider that it must be our duty to interpret section 188 accordingly and, so far as necessary, to depart from UK Coal, which is anyway not binding on us. We turn therefore to Fujitsu. Mr Cavanagh did not put his submission so high as to suggest that Fujitsu unquestioningly supports it. Mr Lissack, for his part, submitted that, far from undermining UK Coal,Fujitsu positively supported it, although in his oral argument he did no more than list, without discussion, those paragraphs in Fujitsu that he said did so.

The facts were these. The respondent, Fujitsu, was the subsidiary of a company we will call Holdings. The group had a production plant in Kilo, Finland. On 7 December 1999 Holdings' executive council decided to make a proposal to Holdings' board to disengage from, or divest, the Kilo factory. Any such disengagement, or divesting, would be likely to lead to redundancies. On 14 December 1999 the Holdings board decided to support the proposal, but (according to the minutes) made no specific decision to do so. On the same day Fujitsu proposed consultations with the employees' unions, which continued for six weeks from 20 December 1999 to 31 January 2000. On 1 February 2000 Fujitsu's board decided to terminate its operations in Finland, with the exception of computer sales activities. On 8 February 2000 it started dismissing employees and dismissed some 450 out of a total of 490. Some complained of infringements by Fujitsu of the Finnish law on co-operation within undertakings ('yhteistoiminnasta yritksissa annettu laki') and assigned their claims to the claimant, a large trade union in Finland. The union claimed that the final decision to disengage the Kilo plant had been taken by the Holdings board on 14 December 1999 at the latest, which was before the consultations with the workforce had started. Its complaint was, therefore, Fujitsu had breached its consultation obligations.

The Finnish court dismissed the claim. It found that the decision to terminate the Kilo operation was taken by Fujitsu on 1 February 2000 after it had proved impossible to find other alternatives and that the consultations had been genuine. The Helsinki court of appeal upheld its decision. The Finnish Supreme Court, however, considered that there were 'differences of structure and content between the provisions of Directive 98/59 and the Law on co-operation' and decided to refer five questions to the ECJ, of which the first is the one relevant to the issues before us.

Question 1 was as follows:

We have added the emphases to clarify our understanding of the essential difference between those two sub-questions. Put shortly, and relating it to the domestic authorities in relation to section 188 to which we have referred, we understand the first sub-question to ask whether the approach in Middlesbrough and Securicor is what the Directive requires; and that the second sub-question asks whether the approach in UK Coal is what it requires. We are not, however, confident that Advocate General Mengozzi interpreted the two sub-questions in quite the same way.

Referring first to the Advocate General's Opinion, his view, at paragraph 49, was that it was clear that the consultation obligations under the Directive arise 'from the existence of an intention on the part of an employer to make collective redundancies.' He continued:

The Advocate General's observations in paragraphs 49 and 50 may tend, therefore, to the view that the consultation obligation only arises upon the formation by the employer of a positive intention to make collective redundancies. But he may perhaps have diluted that in paragraph 54 where he suggested that the consultation arises at the moment 'that the employer intends to make collective redundancies or, at least, that he already foresees the possibility of doing so as a consequence of the measures planned' (emphasis supplied), although that depends on whether he was using the words 'measures planned' as meaning already planned – and thus the subject of a decision – or as meaning 'measuresproposed'. However, he used the same phrase - measures planned - in paragraph 60, quoted below, where we incline to the view that he was using it in the former sense. In paragraph 55 he said, perhaps a little obscurely, that the 'contemplation of redundancies' (a reference to the language of the Directive) 'occurs only where it is such as to give rise to consultations capable of being held in the form of negotiations with sufficiently specific subject matter.'

In the rest of his Opinion relevant to question 1, the Advocate General explained his views, why he considered that the referring court had not asked the right question and what his answer to the right question was. He said this:

We have to say, with respect, that we find that reasoning quite difficult to follow. The kernel, however, is in the emphasised sentence in paragraph 60 and, as foreshadowed, we see force in interpreting its 'measures planned' as meaning 'decisions taken' rather than 'decisions proposed'. If that is not the correct interpretation, we do not find it easy to see the distinction the Advocate General was drawing when earlier in the same paragraph rejecting the notion that the consultation obligation arises 'where the employer plans to adopt measures as a consequence of which a need for collective redundancies … is to be expected.' We are therefore inclined to interpret the Advocate General as favouring the view that the consultation obligation only arises once the crucial operational decision is taken and the employer is then contemplating or intending the collective redundancies made necessary by that decision.

We move to the judgment of the ECJ, which translated the first question as seeking clarification of the expression 'is contemplating collective redundancies' in article 2.1 of Directive 98/59: i.e. as to when the consultation obligation starts. It said, in paragraph 36, that the question asked was:

In paragraph 38 the ECJ made the point that the consultation obligations arise 'prior to the employer's decision to terminate employment contracts'. It explained that in such a case, there is 'still a possibility of avoiding or at least reducing collective redundancies, or of mitigating the consequences.' In paragraph 39 it endorsed the Advocate General's view that a consultation obligation would arise 'in connection with the existence of an intention on the part of the employer to make collective redundancies'; and in paragraph 40 it said much the same again. In paragraph 41 it observed that the consultation obligation will arise 'where the employer is contemplating collective redundancies or is drawing up a plan for collective redundancies'. In paragraphs 42 to 44 it digressed to the collateral point that consultation obligations can also be triggered in cases where the prospect of collective redundancies is not directly the choice of the employer, but may perhaps have been made by the undertaking controlling the employer.

We quote the remainder of the Court's decision on the first question:

We have to say, again with respect, that we do not find the interpretation of the ECJ's decision on the first question straightforward. Putting in stark form the question arising in the present case, does the ECJ explain whether the consultation obligation arises (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?

The ECJ's observations in paragraph 45 perhaps tend in favour of alternative (ii). We are inclined to interpret paragraph 46, in particular the last sentence, in the like sense. On the other hand, paragraph 47, in particular its last sentence, may be said to favour alternative (i). Paragraph 48 follows hard on paragraph 47 with an opening 'therefore', and so one might expect it also to favour alternative (i). Yet its language -- note the 'once a strategic decision … has been taken' – may be said to support alternative (ii); and the same can be said about paragraph 49 (note that it is 'the adoption …of strategic decisions etc' that compels the contemplation or planning of collective redundancies).

So what is the effect of the ECJ's decision? Whilst Mr Cavanagh submitted that the true sense of the decision was that it favoured alternative (ii), Mr Lissack's argument was to the precisely contrary effect. Having considered the judgment further, the court proposes to venture no further views on its true interpretation, which it respectfully regards as unclear.

In our judgment, however, the determination of the true sense of the issue discussed in Fujitsu is crucial to the disposition of this appeal. If Fujitsu has clarified the scope of the consultation obligation under the Directive and has done so by holding that it does not arise at any point prior to the adoption by the employer of a strategic decision or other change that will compel him to contemplate or plan for collective redundancies, we consider that it must follow that insofar as the Divisional Court in Vardy interpreted the Directive as imposing a wider consultation obligation, it was in error. UK Coal did no more than hold that the introduction of section 188(2) enabled section 188 to be interpreted with the supposed wider meaning of the Directive. Whilst section 188 could have imposed a wider consultation obligation than the Directive, we do not consider that it purported to do so. The ordinary rule of interpretation requires section 188 to be interpreted so far as possible in a way conforming with the obligations required by the Directive (Litster and others v. Forth Dry Dock & Engineering Co. Ltd. (in receivership) and Another [1989] ICR 341, per Lord Templeman, at 353C to F; and per Lord Oliver of Aylmerton, at 354D to F). If the true sense of the decision in Fujitsu was to favour what we have called alternative (ii), it would appear to us to follow that Middlesbrough and Securicor were correctly decided and that UK Coal was not. It would, we consider, further follow that the employment tribunal was wrong to have held that the USA had breached its consultation obligations in the present case.

In the circumstances explained, the court has concluded that it can only decide this appeal with the benefit of the further guidance from the ECJ as to the point at which, under the Directive, the consultation obligation arises. Whilst the court appreciates that the ECJ has already provided an answer to that question in Fujitsu, it regrets that it is left with material uncertainty as to what that answer is. The court therefore proposes to order the making of an appropriate reference and would ask counsel to produce a draft reference for its consideration.

The court has of course had careful regard to the USA's express unwillingness for any such reference to be made; and it recognises that it is not the court of last resort and so is not obliged to make a reference. The court is, however, also sensitive to the consideration that the issue upon which it requires guidance is important not just to the disposition of this litigation but also to industrial practice generally: employers need to understand the nature of their consultation obligations. If the court were to venture a view on the true interpretation of Fujitsu and decide the question of principle accordingly, its decision would be binding unless and until the Supreme Court were to hold otherwise in this or another case; and there can be no certainty that its decision in this case, whichever way it went, would be taken to the Supreme Court. In short, the court regards the point as too important for it to risk adopting the wrong interpretation of the decision in Fujitsu.