Lord Justice Woolf overturned a High Court ruling which had forced Nalgo members at Newham council, south London, back to work.
His ruling had a wider significance. He and Lords Justices Neill and Butler-Sloss said that union leaders could be 'partisan' in the run-up to a strike ballot and need not adopt an attitude of strict neutrality while their members were deliberating. They also allowed unions to ballot for further action once a dispute had started.
The case was provoked by a nine month dispute between 1,100 Nalgo members who had taken action after the Labour controlled council made three poll tax officers redundant.
The action was escalated after a ballot in July. The union called out 10 per cent of the council's staff. They were forced back to work when the High Court declared the action illegal a month ago because the union had 'promoted' the strike and was therefore in breach of the 1990 Employment Act. The law makes it unlawful for any union to call on its members to vote in favour of industrial action.
Nalgo branded the High Court's ruling as 'extraordinary' and said that it meant that any trade union would be prevented from campaigning for a 'yes' vote. It also meant unions would be prevented from balloting on escalating action during the course of a dispute.
Lord Justice Woolf said it was clear from the evidence that Nalgo, while demonstrating that it wanted industrial action to be extended to other members in addition to those who were already on strike, was not calling on them to strike or authorising or endorsing their striking.
Rather, the union was communicating its decision to authorise a ballot of all its members with a view to more extensive industrial action being taken.
The union was not adopting a neutral stance, but, 'not surprisingly', the legislation did not make such an 'unreal requirement'. 'The union, as long as it complies with the legislation, is perfectly entitled to be partisan,' the judge said.
Newham received a further rebuff when it was refused leave to appeal to the House of Lords. But the council's leader, Stephen Timms, said he would apply directly to the Law Lords for the right to have the case heard.
The Appeal Court urged conciliation saying that the dispute had caused a lot of inconvenience to Newham residents and that all efforts should be made to find a negotiated settlement - particularly as the gap between the two sides was now very small.
But union officials said privately that after the victory it would be very difficult to keep members in work.
Alan Jinkinson, general secretary of Nalgo, said he had always been confident that the High Court ruling, which he described as an 'Alice in Wonderland' decision, would be overturned.