Is the sun setting on State immunity in employment claims? Court of Appeal dismisses another appeal from Spain

Insight

23.12.2024

On 20 December 2024 the Court of Appeal handed down the latest in a series of significant judgments concerning State immunity in England and Wales. The Court dismissed Spain’s appeal and therefore its attempt to assert immunity from a claim brought by a previous employee in Spain’s Embassy in the UK (the “Embassy”). The Court also provided views on when a role at an Embassy will be considered an exercise of sovereign authority by the Courts.

Critically, the Court allowed the Claimant to bring a claim against the sending state, notwithstanding the fact that she is a national of that State, whilst also a British national and resident. In order to do this, the Court invoked the case of Benkabouche to disapply section 4(2)(a) of the State Immunity Act 1978 (“SIA”).

Indeed, the Court of Appeal has indicated that it is willing to go further, and possibly issue a declaration of incompatibility between the Human Rights Act 1998 and section 4(2)(a) SIA. If so issued, Parliament will have a duty to consider amending the SIA, and thus enabling nationals of sending States to bring employment claims against those States in England and Wales. Indeed, the judgment now allows this in certain circumstances.

It is notable that just a few months ago, Malaysia was able to successfully assert immunity in a case involving an employee at its embassy with Malaysian Nationality and British residence (Muda v Malaysia). In that case the Employment Tribunal judge declined to read down section (4)(2)(a) SIA so as to allow for the Claim to proceed. The Court of Appeal’s judgment in this case signals an evolution of this position

For the Claimant, it brings some festive season cheer, coming nearly nine years after her claim was issued. But for Spain in particular, and the diplomatic community in the UK more generally, it was yet more evidence that State immunity protections are being significantly eroded by the English courts.

Facts

In December 2015, the Claimant issued an Employment Tribunal ("ET") claim for constructive unfair dismissal; direct race discrimination on the grounds of nationality; and harassment on similar grounds.

The Claimant’s allegations of discriminatory conduct were aimed principally at a Canciller at the Embassy. The respondent asserted first State immunity and then (by way of amendment made in 2020) diplomatic immunity.

In summary:

The Claimant worked at the Spanish Embassy until 2015.
She was a dual national (Spain/UK).
The Claimant initially worked as the Ambassador's Social Secretary, from his official residence (next door to the Embassy). She sometimes saw confidential documents.
Following a career break, the Claimant then worked in the “more junior capacity” of Administrative Assistant. She rarely had sight of confidential documents.
At some point towards the end of her employment with the Respondent, the Claimant acted in the capacity of Protocol Officer for the Embassy.
The presence of the Claimant was not notified to the FCO because she was viewed as a locally employed member of staff.
That contrasts with the position of the Cancillar, whose presence in the UK was notified to the FCO on the basis that he enjoyed those "privileges" in the capacity of "Attache (Administrative Affairs) – Diplomatic Staff".

Key issues

After being unsuccessful in asserting immunity before the ET, Spain appealed to the Employment Appeal Tribunal, where it was also unsuccessful. Spain then appealed to the Court of Appeal, where the key issues for the Court were:

Was the conduct complained of by the Claimant an exercise of sovereign authority?
Were the functions which the Claimant was employed to perform an exercise of sovereign authority of Spain?
Was Spain immune from the claim by virtue of the fact that the Claimant held Spanish nationality notwithstanding that she was also a British national and resident?
Could Spain assert diplomatic immunity (as opposed to State immunity) by virtue of the provisions in the Vienna Convention on Diplomatic Relations (VCDR)?

Findings of the Court of Appeal

Issue 1 – Were the acts complained of sovereign acts?

The Court looked at the acts of the Canciller and found that they were not sovereign acts. The Court was critical of Spain’s submissions which it said, “almost seem to argue that anything said or done by a senior diplomat at an embassy must be a sovereign act.”

Issue 2 – What were The Claimant's status and the nature of her employment?

The Court considered whether the Claimant’s role was an exercise of sovereign authority. In stating it was not, the Court took a notably hard line:

“We were not shown any authority demonstrating that, as a matter of customary international law or UK domestic law, anyone employed at an embassy who has any access to confidential documents or conversations must be treated as barred by state immunity from bringing a tribunal claim. Cleaners, at least in the era of hard copy documents, may have the opportunity to read confidential documents if they choose to do so. Most employees who work for senior diplomats may know about their confidential activities or overhear their confidential conversations. This does not elevate the employee to become the equivalent of a diplomatic agent.”

Issue 3 – The effect of dual nationality

The Court held that there is a tension between two competing principles: (1) that immunity should apply between a state and its nationals and (2) that immunity should not apply in respect of locally recruited staff who are nationals of and permanent residents in the forum state.

The Court found that the fact that the Claimant was British and locally recruited was key. The Court also suggested that where the first two issues have been decided in a way that deemed them not to be an exercise of Sovereign Authority, this constitutes a basis for disapplying s 4(2)(b) of SIA.

Issue 4 – Could the sending State rely on Diplomatic immunity?

The Court held that, putting aside one case, there is no authority to contradict the established principle that diplomatic immunity is personal to the diplomatic agent concerned (giving, for example, immunity from prosecution) and cannot be invoked by the agent's sending state. Therefore, Spain was unable to rely on diplomatic immunity.

Other points

The Court concluded by making two important points. First it recorded its dismay at the fact that nine years has elapsed since the Claimant filed her claim with the merits still not to be decided, noting that “Ms Lorenzo may understandably feel that the English ET system has not treated her well.”

Second, the Court invited further submissions in writing from the parties and from the Secretary of State as to whether it should make a declaration that s 4(2)(a) of the State Immunity Act 1978 is incompatible with the European Convention of Human Rights (ECHR). If such a declaration is made, Parliament will be required to consider whether legislation should be changed.

Key takeaways

In disapplying immunity for States facing certain employment claims brought by its own nationals, the judgment sweeps aside a key aspect of the SIA that has been in place for nearly 50 years, with remarkable brevity. In doing so, the Court opens the door to an increasing number of claims against States.
The Court was similarly brief on the issue of whether the role in question was an exercise of sovereign authority. In its discussion, the Court did not consider what effect the Claimant’s duties as the Embassy’s protocol officer had on its assessment of whether immunity applied. The role of protocol officer is not unimportant, and it is perhaps unhelpful that this issue was not looked at in detail by the Court.
The Court emphasised that whether acts or a role invoked sovereign authority had to be assessed on a case-by-case basis, stating that “each case is fact-sensitive.” This drives home the importance of States carefully building and asserting a factual case when asserting immunity.
The Court of Appeal were strongly critical of the fact that it has been nine years, virtually to the day, since the Claimant issued her claim, expressing sympathy to the Claimant but not to Spain. However, the Court’s comments echoes those we have often heard from diplomats who have privately expressed regret at the inefficiency of the administration of the English courts. The new UK Government appears to have recognised this issue by allocating more funds to the Courts. But this issue remains something that must be addressed if the credibility of the UK as an international legal centre is to remain strong.
Spain continues to take a robust approach to defending itself against immunity cases, whether in employment matters or when facing attempts to enforce against its assets – see this article by Jehad Mustafa in the Law Society Gazette.
Ultimately this is a further case in which the Courts have made it easier to bring claims against States and their missions in the UK. This continues the trend that has existed since the Supreme Court judgment of Benkharbouche in 2017. Whilst Claimants will celebrate this, it comes with obvious risks to London’s status as a diplomatic hub amongst the international community.

This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.