The Kingdom of Spain v Lydia Lorenzo

Under the restrictive doctrine of state immunity, an employment claim against a foreign state is ordinarily classified by the nature of the employment relationship and the functions performed. Immunity remains possible where the claim arises from an inherently sovereign or governmental act, including limited cases involving state security, recruitment policy or specific reinstatement.

Employment at an embassy, administrative or technical status, access to confidential material, or work connected with a diplomatic agent does not by itself make the employment sovereign. Dual nationality is generally less significant than the nature of the job, especially where staff were locally recruited and permanently resident in the forum state. Diplomatic immunity is personal to the diplomatic agent and cannot be invoked by the sending state.

Lydia Lorenzo, a locally recruited employee of the Spanish Embassy in London, brought claims including constructive unfair dismissal, nationality discrimination and harassment. Spain relied on state immunity and diplomatic immunity.

The Employment Tribunal held that Spain was immune from claims under the Employment Rights Act 1996 and Employment Act 2002, but rejected immunity in respect of claims under the Equality Act 2010. The Employment Appeal Tribunal affirmed that decision, reported at [2023] EAT 153, while criticising the Tribunal for not considering the pleaded discriminatory acts in sufficient detail. The central issues before the Court of Appeal were whether those acts were sovereign, whether Lorenzo’s employment and dual nationality altered the analysis, and whether Spain could invoke diplomatic immunity.

Appeal dismissed on all grounds. Lord Justice Bean gave the leading judgment, with Lord Justice Baker and Lady Justice Andrews agreeing.

1. The restrictive doctrine requires the court, in most employment cases, to examine the nature of the employment relationship and the functions performed. State immunity applies where the claim arises from an inherently sovereign or governmental act. The Supreme Court’s analysis in Benkharbouche v Embassy of the Republic of Sudan; Janah v Libya [2017] UKSC 62; [2019] AC 777 was applied.
2. The alleged discriminatory remarks and conduct of the diplomatic official were not sovereign acts and were not analogous to the limited exceptional cases identified in Benkharbouche, such as dismissal for state security reasons, recruitment policy, or a claim for specific reinstatement. The State Immunity Act 1978 (Remedial) Order 2023 did not assist Spain. It was not retrospective and its reference to acts done in the exercise of sovereign authority did not answer the underlying classification question.
3. Lorenzo’s administrative and technical status, her work within the Embassy, and her incidental access to confidential documents or the diplomatic bag did not establish sovereign functions. The relevant distinction was between personal involvement in the diplomatic or political operations of the mission and activities capable of being carried out by private persons. Access to confidential material did not make her equivalent to a diplomatic agent.
4. Nationality and residence were not generally determinative of the distinction between acts jure imperii and jure gestionis. Lorenzo had been locally recruited and was permanently resident in the United Kingdom. Her Spanish nationality was incidental and was not a prerequisite for employment. The rationale for disapplying section 4(2)(b) of the State Immunity Act 1978 in Benkharbouche applied equally to section 4(2)(a), so section 4(2)(a) was disapplied in relation to the Equality Act claims.
5. Diplomatic immunity was personal to the diplomatic agent concerned and could not be invoked by the sending state to defeat the employment claims. The contrary Nigerian decision in Kramer Italo Limited v Government of Kingdom of Belgium; Embassy of Belgium was not followed.

The Court invited further written submissions on whether section 4(2)(a) of the State Immunity Act 1978 was incompatible with the ECHR.

• Court of Appeal (Civil Division) — The appeal from [2023] EAT 153 was dismissed on all grounds. Further submissions were invited on the proposed compatibility declaration concerning section 4(2)(a) of the State Immunity Act 1978.
• Employment Appeal Tribunal — Ellenbogen J affirmed the Employment Tribunal’s rejection of state and diplomatic immunity in relation to the Equality Act claims. The decision is reported at [2023] EAT 153.
• Employment Tribunal — Spain’s immunity succeeded in relation to claims under the Employment Rights Act 1996 and Employment Act 2002, but failed in relation to the Equality Act claims. The former issue was not appealed.