Rolls-Royce Plc v Doughty

A directly effective directive may be invoked against a body only where the body falls within the state’s sphere for the relevant obligation. State control alone is insufficient. In the usual public-service case, the approach in Foster v British Gas Plc ([1991] 2 AC 306) requires state-created responsibility for a public service, state control and special powers beyond ordinary private-law relations. A missing criterion is not necessarily fatal, but requires a strong additional reason. A commercial company trading with the state at arm’s length, without special powers and without responsibility for providing a public service, will not ordinarily qualify.

The appellant was compulsorily retired by Rolls-Royce at 60, although a male employee could have continued to 65. At the time, section 6(4) of the Sex Discrimination Act 1975 excluded discrimination claims arising from retirement provisions. The domestic law was later amended, but too late to assist the appellant.

The Industrial Tribunal upheld her claim based on the Equal Treatment Directive. The Employment Appeal Tribunal dismissed the claim on appeal. The appellant appealed, arguing that Rolls-Royce was sufficiently controlled by the Crown to be treated as the state, or alternatively that the European Court’s formula was not exhaustive.

Mustill LJ delivered the leading judgment. Butler-Sloss LJ and Sir John Megaw agreed. The appeal was dismissed with costs, and leave to appeal to the House of Lords was refused.

1. Directives of this kind do not generally create causes of action between private individuals. Where domestic law fails to implement the directive, an individual may invoke the directive against the member state and have the case decided as if the state had complied. The doctrine operates in the individual’s favour and does not permit the state to rely on its own default.
2. For that doctrine to apply against an incorporated body, the body’s relevant acts must be attributable to the state or fall within the state’s sphere of authority. The mere existence of state ownership or a power of control is insufficient.
3. Applying the approach in Foster v British Gas Plc ([1991] 2 AC 306), the usual criteria are cumulative: the body must have been made responsible by a state measure for providing a public service; the service must be under state control; and the body must possess special powers beyond those arising under ordinary private-law relations. The formula is the starting point, and usually the finishing point, in cases of the same general type. The absence of one factor is not necessarily fatal, but requires a strong additional reason.
4. Rolls-Royce could be assumed to satisfy the control criterion. It was not, however, made responsible by a state measure for providing a public service. It was a commercial undertaking trading with the state at arm’s length, and its services were provided to the state rather than to the public generally. It also possessed no special powers comparable to the British Gas Corporation’s monopoly powers. No additional special reason justified applying the Directive against it.
5. The court declined to use the expression emanation of the state as an alternative test, preferring the direct and recent guidance of the European Court of Justice. The postscript concerning Francovitch v Italian State (Case C - 6/90) expressed no opinion on any possible claim against the United Kingdom.

1. Court of Appeal (Civil Division): dismissed the appeal with costs and refused leave to appeal to the House of Lords.
2. Employment Appeal Tribunal: dismissed the appeal from the Industrial Tribunal’s decision in the appellant’s favour.
3. Industrial Tribunal: upheld the appellant’s claim under the Equal Treatment Directive.