Royal Mail Group Ltd v Communication Workers Union

A contractual dispute-resolution procedure which permits referral to external mediation after one month of discussions does not require referral immediately, or within a short fixed period, after that month expires, where the agreement contains no such express restriction. An implied restriction may undermine the commercial and industrial purpose of the procedure. Where the parties have agreed not to call industrial action until the procedure is exhausted, a strike call made during the process is in breach of contract and may be restrained by injunction. On an interim injunction application, the court may consider the apparent merits where the parties invite it to do so, alongside adequacy of damages and the balance of convenience.

Royal Mail Group Ltd sought an injunction restraining the Communication Workers Union from calling strike action in a national dispute concerning pensions, pay, working hours and related collective-agreement issues.

The parties had entered into a legally enforceable agreement containing dispute-resolution procedures. Those procedures permitted referral of unresolved national matters to external mediation after one month of discussions, and provided that the union would not call industrial action until the procedures had been exhausted.

The union argued that Royal Mail had referred the dispute to mediation too late. The central issue was whether the agreement required referral shortly after the expiry of the one-month period.

1. The application was granted. The proposed strike was unlawful because the union remained contractually bound not to call industrial action until the external-mediation procedure had been exhausted.

2. Paragraph 3.2 of Schedule 3 permitted either party to refer a national matter to external mediation at any time after one month of discussions had commenced, unless both parties agreed that the disagreement was likely to be resolved within a further agreed period. The provision contained no express requirement that referral take place within a specified time after the one-month period.

3. The court rejected the proposed implication that referral had to occur as soon as reasonably practicable after that period. National disputes could involve complex and lengthy negotiations. Requiring immediate referral would risk either losing the opportunity for mediation or causing unnecessary referrals, and would undermine the purpose of the agreed procedure. The construction adopted was consistent with business common sense and a sensible industrial outcome.

4. The contractual interpretation principles in Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896, as re-endorsed in Wood v Capita Insurance Services Ltd [2017] UKSC 24, applied. The court also considered the approach to interim injunctions summarised in Series 5 Software v Clarke [1996] 1 All ER 853.

5. Damages would not be an adequate remedy. The balance of convenience strongly favoured allowing the parties to use the agreed mediation process. The valid ballot remained available for six months, so the union could call industrial action if mediation failed.