Basfar v Wong

Where an appeal from a Court of Appeal decision succeeds in the Supreme Court on a different ground, the Court of Appeal's determination of an issue which the Supreme Court did not need to decide ceases to bind lower courts. It remains potentially powerful persuasive authority.

For article 31(1)(c) of the Vienna Convention on Diplomatic Relations 1961, a diplomat exercises a commercial activity only by carrying on, or participating in carrying on, a business or profession. The personal employment and exploitation of a domestic servant, even on assumed facts of trafficking and modern slavery, is not such an activity. The diplomat was therefore immune from the employment claims.

The claimant alleged that the respondent, a serving diplomat, trafficked her to the United Kingdom and subjected her to modern slavery while employing her as a domestic servant at his diplomatic residence. She brought claims including constructive dismissal, National Minimum Wage, unlawful deduction and working-time claims.

The Employment Tribunal rejected the respondent's strike-out application based on diplomatic immunity. It held that the Court of Appeal decision in Reyes was not binding and preferred the non-binding doubts expressed by three Supreme Court Justices about the meaning of commercial activity.

The respondent appealed. The central issues were whether the Court of Appeal's decision in Reyes remained binding after the Supreme Court had allowed that appeal on a different ground, and whether the alleged conduct related to commercial activity under article 31(1)(c) of the Vienna Convention on Diplomatic Relations 1961.

1. Appeal allowed. The respondent's defence of diplomatic immunity succeeded. The Tribunal had erred in holding that the alleged employment and trafficking constituted commercial activity for article 31(1)(c).

2. The Tribunal was right that the Court of Appeal's decision in Reyes on commercial activity was no longer binding. Applying the proper effect of Al-Mehdawi, a case is one continuous and unfragmented piece of litigation. Where the Supreme Court allows an appeal on another ground and does not decide an issue determined below, the only binding ratio is that of the highest court in that litigation. The lower decision nevertheless remains persuasive authority.

3. The Tribunal had been wrong to treat Lord Wilson, Baroness Hale and Lord Clarke as necessarily having rejected Lord Sumption's construction of article 31(1)(c). Their observations expressed serious doubts and identified arguments for legal development, but did not reach a contrary conclusion. The Tribunal also wrongly relied on the suggestion that the Court of Appeal had treated commercial activity and official functions as a composite question.

4. Greater weight should be given to the clear and fully reasoned, though non-binding, conclusions of the Court of Appeal and of Lords Sumption and Neuberger in Reyes. Commercial activity requires practising a profession or carrying on, or participating in carrying on, a business. The consumption of personal domestic services is not commercial activity exercised by the diplomat. That conclusion is unchanged by trafficking, exploitation, or payment below the lawful rate.

5. The assumed conduct was outside the respondent's official functions, but it was not commercial activity. Article 31(1)(c) therefore did not displace diplomatic immunity.

• Employment Appeal Tribunal: Allowed the respondent's appeal and upheld diplomatic immunity.
• Employment Tribunal, London Central: On 13 June 2019 dismissed the respondent's application to strike out the claims on grounds of diplomatic immunity.