Seahorse Maritime Ltd v Nautilus International

The Court of Appeal considered the meaning of "establishment" in section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992 and the territorial reach of the consultation duty imposed by that provision. Applying the established CJEU authorities (notably Rockfon, Athinaïki Chartopoïïa, Bluebird and USDAW), the court held that an "establishment" is the unit to which workers are assigned to carry out their duties and that the identity of the legal employer need not be the same as the operator of that unit.

On the facts the court concluded that individual ships in the TOISA fleet were self‑contained operating units capable of being establishments and that, typically, Seahorse crew were assigned to particular ships. However, because the ships were stationed outside Great Britain the collective consultation right in section 188 must be assessed by reference to the establishment’s location; the ships lacked a sufficient connecting link with Great Britain to engage the duty to consult, so the claim failed in respect of Seahorse crew assigned to those ships. The court left undecided the position of non‑assigned crew (the "riding squad").

Background and nature of the claim:

• Parties: Seahorse Maritime Ltd (appellant, a Guernsey company supplying seafarers) and Nautilus International (respondent, recognised trade union).
• Relief sought: Nautilus brought proceedings under section 189 of the Trade Union and Labour Relations (Consolidation) Act 1992 seeking a finding that Seahorse breached its duty under section 188 to consult about proposed collective redundancies and an award of protective payments.
• Preliminary issues: (1) whether the relevant ships constitute one establishment or individual establishments (the "establishment issue"); and (2) whether the rights under Chapter II of Part IV of the 1992 Act reach employees working on ships stationed outside Great Britain (the "territorial jurisdiction" issue).

Procedural posture:

• The Employment Tribunal (Employment Judge Allen) held it had territorial jurisdiction and that the ships did not individually constitute establishments for Seahorse employees.
• The Employment Appeal Tribunal (Slade J) upheld both conclusions.
• Seahorse obtained permission to appeal to the Court of Appeal.

Material facts found by the Employment Tribunal:

• Sealion (a Bermuda company) operated the TOISA fleet; Seahorse supplied crew to Sealion and was incorporated in Guernsey but used a UK agent (Farnham Marine Agency Ltd) for some administrative functions.
• Crews typically lived on board and joined/left ships by helicopter or boat on rotations of four to six weeks; many employees returned repeatedly to the same ship though transfers occurred and a small mobile "riding squad" worked across ships.
• Contracts referred to the client shipowner, identified a ship name "if known", and contained an English choice of law clause and a statement preserving tribunal rights.

Issues framed by the court:

1. Whether each ship in the TOISA fleet was an "establishment" within the meaning of section 188(1) TULRCA 1992.
2. Whether the territorial reach of the consultation duty should be assessed by reference to the establishment or the individual employee (and whether there was a sufficient connection with Great Britain in the present case).

Court’s reasoning and conclusion:

• On the meaning of "establishment" the court applied the CJEU authorities (Rockfon, Athinaïki Chartopoïïa and the later Bluebird/USDAW line) and concluded that an establishment is a unit to which workers are assigned to carry out their duties, and that legal identity of the employer is not decisive. An operating unit can qualify even where centralised functions (such as HR or payroll) are performed elsewhere.
• Applying the Tribunal's primary findings, the court held that individual ships were self‑contained operating units and, in the typical case, Seahorse crew were assigned to particular ships. The court therefore concluded that each ship was capable of being an establishment.
• On territorial reach the court determined that the collective consultation duty in section 188 is most naturally assessed by reference to the establishment. Because the ships at issue were stationed outside Great Britain and the connections with Great Britain (via Seahorse’s agent FMA) were insufficient to overcome the territorial pull of the ships’ location, the duty to consult under section 188 was not engaged for those ships. The court therefore allowed the appeal and dismissed Nautilus’s claim in respect of Seahorse crew assigned to ships stationed outside Great Britain.

Subsidiary findings and practical consequences:

• The court left unresolved the position of non‑assigned or mobile crew (the "riding squad") for whom insufficient findings existed about assignment to an establishment.
• The court did not remit the establishment issue back to the tribunal in respect of assigned crew, finding the ET’s facts adequate to decide that point.

Appeal allowed. The Court of Appeal held that under the case law on the Collective Redundancies Directive an "establishment" is the unit to which workers are assigned and that the identity of the legal employer is not decisive; on the Tribunal’s primary findings each ship in the TOISA fleet was such an establishment and Seahorse crew were typically assigned to particular ships. However, because those ships were stationed outside Great Britain the collective consultation duty in section 188 is assessed by reference to the establishment’s location and the ships lacked a sufficient connection with Great Britain; accordingly Nautilus’s section 189 claim failed in respect of Seahorse crew assigned to those ships. The court did not decide the position of non‑assigned mobile crew.

Appeal from the Employment Appeal Tribunal (Slade J) which had upheld the Employment Tribunal (Employment Judge Allen). Employment Tribunal judgment (19 August 2016) upheld on preliminary issues by Employment Appeal Tribunal (30 June 2017). Court of Appeal [2018] EWCA Civ 2789 allowed Seahorse’s appeal.