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From the help file:
"Select No Melee Eliminations to prevent defenders in a melee that have no valid retreat hex from being eliminated."
An assumption might be that this applies only to surrounded units. Does it also apply to unlimbered artillery, who since they cannot move, cannot retreat?

Hmm... not sure but I thought this rule only had to do with skirmishers surrounding units and eliminating them in assaults. In which case the unit that is assaulted overruns an adjacent skirmisher unit. Or perhaps I am mistaken?