Departamento de Derecho Común, University of Santiago de Compostela, Santiago de Compostela, Spain
KeywordsBusiness which engaged the employeeConflict of lawsConflict ruleEscape clauseHabitual place of workOverriding mandatory rulesSeamen’s contracts of employment
4.1 Sources of Law
Establishing the law applicable to individual employment contracts, including contracts involving seafarers, fishermen and other employees working on board ships, nowadays relies mainly on Regulation No. 593/2008 of the European Parliament and of the Council of 17 June 2008 on Law Applicable to Contractual Obligations,1 i.e., what is known as the Rome I Regulation. This instrument of EU secondary legislation is the result of a process through which the European Union assumes legislative competence, establishing an area of justice under Article 65 TCE introduced by the Treaty of Amsterdam, now Article 81 TFEU as amended by the Treaty of Lisbon. The outcome of the transfer of legislative competence was the transformation of the 1980 Rome Convention on the Law Applicable to Contractual Obligations into the Rome I Regulation.
Against this background, it is important to emphasise the deep relationship between those two instruments, despite marked differences in their legal bases; not only is the latter based upon the former, but both are also intended to be applied simultaneously. Article 24 of the Rome I Regulation clearly states that it replaces the Rome Convention, but only where contracts that have come into force as from 17 December 2009 are concerned, including those that were concluded that very same day.2 Meanwhile, contracts entered into before that date remain subject to the conflict rules laid down in the Rome Convention, which is therefore still applicable to claims arising from such contracts, in spite of the fact that they were brought to court after 17 December 2009.3 Furthermore, the genetic dependence of the two legal sources is relevant for interpretation purposes, also because of their links with the Brussels–Lugano system.4
The main issue that needs to be addressed with regard to the law applicable to individual employment contracts is the role of provisions such as that in Spain’s Additional Disposition 16(7) of Consolidated Text of the Law on State Ports and the Merchant Navy, according to which: ‘The working conditions and social security benefits for non-Spanish nationals employed on board ships registered in the Special Register shall be governed by the legislation to which the parties to the contract freely submit, provided that it respects the rules issued by the International Labour Organization or, failing express submission, by the provisions of Spanish labour and social security regulations, all without prejudice to the application of any Community legislation and international agreements signed by Spain’.5 This provision appears in the legal text that establishes a Special Register of Ships and Shipping Companies in the Canary Islands, which was referred to previously during the discussion of the role of second, international and open registries in maritime employment.6
The Spanish provision is far from being an isolated case, as there are a number of comparative law examples7 that submit working and living conditions on board ships registered in the respective special register to the law chosen by the parties to the employment contract or to the law of the habitual residence of the seafarers or fishermen.8 In fact, this type of rule underlies the CJEU Sloman Neptun Schiffahrts AG judgment that elucidates the complaint filed by German trade unions against the hiring of non-EU workers,9 especially Filipinos, to work on ships registered in the German international register and to whom different working and living conditions from those applicable to German seafarers were applicable, in particular receiving lower wages than the Germans. The CJEU did not tackle the question of whether national legislation that enabled some workers to enjoy different working conditions from others were compatible with Community law, but it did rule on whether this differential treatment constituted a kind of state aid.
Furthermore, the CJEU did not have the power to decide on these provisions’ relationship with the Rome Convention on the law applicable to contractual obligations because at that time it had not been conferred with powers of interpretation with respect to the Convention. The answer that the Court did not furnish directly was, however, supplied by the universal scope of the conflict rules in both the Rome Convention and the Rome I Regulation10: that the national provisions under discussion could only be understood in relation to the rules of the latter international instruments, i.e., those that ultimately decide on the law applicable to seafarers’ employment relationships, even when they were not habitually resident in an EU member state.11 Accordingly, these provisions operate as mere clarifications, addressed to shipowners, of the consequences of the conflict rule laid down by the Rome I Regulation.12
With regard to EU law provisions that can take precedence over the Rome I Regulation,13 it is worth mentioning Article 3 of Regulation 3577/92 of 7 December 199214 regulating maritime cabotage between member states. This rule specifies that generally ‘all matters relating to manning’ are the flag state’s responsibility except for small ships and island cabotage, in which case responsibility is submitted to the host state. The scope of the text quoted was in principle only proposed to cover certain aspects of public law that fall within the employment relationship sphere; the legislative outcome, however, is a provision that is expressed in sufficiently broad terms such as to also embrace aspects of private law that can be extended to the regulation of individual employment contracts, including the relevant collective agreements, in accordance with the submission to the corresponding legal system contained there.15 The shadow of flags of convenience and fears of a potential flight to states with lower labour costs and the corresponding loss of jobs in host states all support an interpretation of this provision that is consistent with what has been posited here, i.e., one encompassing private matters. This interpretation is not without opposition, however, as is emphasised by a different interpretation based on the more restrictive English version that refuses to accept this provision as a conflict rule.16
As a matter of fact, subsequent Commission initiatives seem to confirm that this provision does not interfere with private international law instruments. While in the field of regular passenger and ferry services the great majority of the activity is in the hands of ships both flying EU flags and manned by employees recruited from member states, a trend for hiring non-EU seafarers was detected, triggering Commission intervention with the aim of halting it by amending the Regulation on maritime cabotage and proposing a Council Directive on manning conditions for regular passenger and ferry services operating between member states.17 Although this measure was never approved, it sheds some light on the matter, as the starting point was the different laws that might be applied on board in accordance with the then in force Rome Convention, with a view to subjecting non-EU nationals to living and working conditions similar to those applied to EU seafarers. No further steps were taken, but the proposal contributed to clarifying the fact that the only relevant provisions regarding the law applicable to employment contracts are those in the Rome I Regulation or the Rome Convention, where it is still in force.
4.2 Scope of Application of Article 8 of the Rome I Regulation
4.2.1 Territorial Scope of Application
The Rome I Regulation contains a special conflict rule on individual employment contracts, as its predecessor, the Rome Convention, did, specifically Article 8, which corresponds to Article 6 of the Rome Convention. As indicated above, this provision was designed to be universally applicable. Hence, as long as the seized court is bound by the 1980 Convention or the Rome I Regulation, it applies the conflict rule dealing with individual employment contracts included there, even if the claim in question is submitted to a non-EU legal system pursuant to this conflict rule. Identifying the jurisdictions that are bound by these legal instruments is a separate issue that deserves a brief mention here.
When the United Kingdom and the Republic of Ireland exercised their right to opt in, the Rome I Regulation came into force in twenty-six—now twenty-seven, thanks to Croatia—EU member states. The exception is Denmark, which does not participate in any of the acts based on the area of freedom, security and justice. Had Denmark wished to join the Rome I Regulation, it would have had to conclude an international agreement with the European Union for the instrument to be applicable there. However, this did not happen, and as a result the Rome Convention is still applicable in Denmark. Indeed, Article 1(4) of the Rome I Regulation contains a reminder that member states are to be understood as all those to whom the Regulation applies. In contrast, the term member state in Article 3(4) of the Rome I Regulation denotes all member states, including Denmark, and therefore its stipulations on choice of law and EU mandatory rules also refer to this country.
Article 24(1) of the Rome I Regulation contains a significant specification: ‘This Regulation shall replace the Rome Convention in the Member states, except as regards the territories of the Member states which fall within the territorial scope of that Convention and to which this Regulation does not apply pursuant to Article 299 of the Treaty’, now Article 355 of the TFEU. As already indicated when dealing with these matters with regard to the Brussels I and Brussels I bis Regulations, the Treaties apply to Guadeloupe, French Guiana, Martinique, Reunion, Saint Barthélemy, Saint Martin, the Azores, Madeira and the Canary Islands, where member states have established a second or open registry. On the other hand, other overseas territories are left out of the territorial scope of the Rome I Regulation and, more generally, of EU legislation, as are those of the United Kingdom since the Regulation only applies to Britain, Northern Ireland and Gibraltar.18 The Rome Convention does apply to the Isle of Man19 but not to the Channel Islands, territories in Cyprus, Anguilla, Bermuda, the Virgin Islands, the Cayman Islands, the Turks and Caicos Islands and the Maldives. The Rome Convention is in force in French overseas territories20 such as the Kerguelen Islands, Saint-Pierre and Miquelon, Saint Barthélemy, French Polynesia and the Wallis and Futuna Islands; in Antilles and Aruba, which are under Dutch rule; and in the Danish-ruled21 territories of Greenland and the Faroe Islands.22
4.2.2 Material Scope of Application: Issues Included in Article 8
Like Article 6 of the Rome Convention, the wording of Article 8 of the Rome I Regulation does not contain a proper definition of what is to be understood by individual employment contracts, a definition that cannot even be inferred from its preamble. However, the terminology employed in the new provision includes certain changes with respect to Article 6 of the Rome Convention, seeking a coincidence with the content of Section 5, Chapter II, of the Brussels and Lugano system.23 The EU aims to bring about a convergence between EU instruments and the concepts and definitions they include, with a view to establishing a relationship between forum and ius, at least in some cases.24
Within this framework, what is understood by the term ‘individual employment contract’ is to be construed independently,25 and for this reason reference is made here to the considerations already discussed while dealing with this concept in the framework of international jurisdiction.26 It is worth remembering here that in general terms an employment contract implies the provision of services in exchange for remuneration, which brings the worker within the organisational framework of the business of the employer. As already said, there are no particular problems of characterisation as regards seafarers once uncertainties concerning captains and share fishermen have been resolved.27
Article 8 of the Rome I Regulation therefore decides on the law governing individual employment contracts, while Article 12 deals with the issues that are subject to its material scope of application. It is important to bear in mind that collective agreements are also part of the law designated by this conflict rule, although disputes between those with the bargaining power to conclude them are not submitted to this legal system.28 Collective labour relations are excluded from the scope of application of Article 8 and from Article 6 of the Rome Convention, a question that will be addressed in the last chapter of this book.
Likewise, it should be noted that the law designated in accordance with Article 8 decides on the existence and material validity of employment contracts, as confirmed by Article 10 of the Rome I Regulation, and also covers the consequences of nullity, such as compensation or the obligation to pay wages for the time worked.29 Nevertheless, the scope of the lex laboris does not include the capacity of the parties to contract or the formal validity of the contract. For both issues, the Rome I Regulation lays down specific conflict rules that will be discussed below.
More specifically, according to Article 12 of Rome I the issues that are subject to the lex laboris are the following: the subject matter of the contract, contract types, the contents—i.e., the services and tasks that must be performed as part of the employment relationship—the payment of wages—including payment arrangements such as crew profit sharing,30 and overtime and holidays—workers’ duties of loyalty, contract duration, the number hours of work and rest, holidays, contract modification, temporary worker placement, termination of the contract—including the grounds for dismissal—and the interpretation of the contract.
The consequences of ownership transfer of shipping or fishing companies for employment contracts are also subject to the law applicable to the contract regardless of whether there is a change of employer or habitual workplace, the result being that the contract is subject to a new lex laboris. In these cases, the effects of business relocation on current employment contracts depend on the lex laboris applicable before the move, to oblige the new employer to take on the workers of the transferred business, for example.31
The law applicable to individual employment contracts particularly covers employers’ obligations towards employees, including the duty of care—whose contents and boundaries may depend on laws other than the lex laboris 32—payment of wages, holidays, equal treatment, training, repatriation and so forth. However, the payment of social security is excluded from the scope of this law, as discussed later in a separate section. It is argued that the obligation to pay for sick leave is also excluded from the lex laboris due to its close relationship with the concept of social security.33 However, the position advocating its contractual nature is certainly more consistent, inasmuch as this obligation is the result of failure to comply with the main labour obligation. In any event, it is deemed an overriding mandatory rule, given that its ultimate goal is to ensure that the most basic needs are covered during periods of incapacity.34
In general, the lex laboris decides on the performance of obligations, i.e., whether the parties have fulfilled their obligations, whether there has been noncompliance or compliance has been poor, and to the extent to which the worker is responsible for the defective performance.35 In this regard, it should be noted that Article 18(1) of the Rome I Regulation states that legal presumptions and rules of burden of proof are also subject to the lex contractus. This law also decides on prescription in cases of wage or dismissal claims.36
Potential limitations of liability for breach of contract by workers, usually linked to compulsory insurance, must also be sought in the law applicable to the employment contract. On the other hand, third party liability is reserved to tort law and is therefore left out of employment contract matters, except in the event that the employee is entitled to hide behind the employer, as this matter is subject to the lex laboris. The procedures for dismissal, deadlines and the consequences are also subject to this law, as are collective redundancies, in principle. It must be pointed out, however, that these cases are subject to overriding mandatory rules because of their impact on the economy, as illustrated by both the intervention of public authorities and the regulation of collective bargaining in this framework.37
There are more doubts surrounding health and hygiene issues,38 which as part of public law are referred to the state where the business performing the service is located. In maritime law, this is the state whose flag the ship is flying, irrespective of the law governing the employment contract. Similarly, if the work is done in port, due regard should be given to what the port state law provides for. This leads us on to the manner of performance, which must comply with the law of the place where the work is carried out. Typical examples are public holidays, longer working hours than those established by the lex laboris and the respective risk prevention measures. In fact, given that employment contracts are long-term relationships, many more laws may potentially be taken into consideration,39 including those regarding payment arrangements. In any event, applying the law of the place where the work is carried out is not mandatory, as is illustrated by Article 12(2) of the Rome I Regulation; this only requires the relevant law to be taken into consideration, meaning that there is no impediment to these matters being decided in accordance with the most favourable law for the worker.40
4.2.3 Material Scope of Application: Issues Excluded From Article 8
18.104.22.168 The Law Applicable to the Capacity to Contract, Minimum Age and Professional Training
Without prejudice to Article 13 of the Rome I Regulation, the legal capacity of natural persons is excluded from its scope and also from the Rome Convention. Both international instruments exclusively comprise cases in which the parties to a contract enter into the contract in the same country and one party is unaware of the other’s incapacity to contract, in which case the law of the country in which the agreement was reached applies. In other cases, it is necessary to turn to national law for the relevant conflict rule, such as Article 9(1) of the Spanish Civil Code or § 7 of the Introductory Act to the German Civil Code, which lays down the application of workers’ national law to decide on their capacity to contract.41 However, some other systems, such as the British, choose to submit this issue to the lex substantiae actus, in this case the lex laboris. National conflict rules also determine who can supplement workers’ limited capacity, i.e., who can or should act as their representative—decided in Spain, for example, by Article 10(10) of the Civil Code—which does not prevent public order from intervening when there is a breach of constitutional principles by the applicable law.
The application of national law to the capacity to enter into an employment contract cannot escape the mandatory rules of the lex contractus or the lex fori, particularly when they establish the conditions for access to the labour market.42 Of utmost importance here is the legal provision establishing the minimum working age. This cannot be ignored if a worker’s national law stipulates a lower minimum age, as these rules aim to protect children as well as workers’ health.43 A case in point is Spanish law, which allows foreigners to engage in professional activities in Spain when they are over the age of sixteen, regardless of what their respective national legislation says.44
In a similar vein, attention should be paid to several international provisions that reinforce the statement that this is an overriding mandatory rule, as established by ILO Convention No. 138, of 26 June 1973 on the minimum age for admission to employment,45 requiring all contracting states to specify the minimum age for admission to work ‘within its territory and on means of transport registered in its territory’.46 ILO Convention No. 147 of 1976 on minimum standards for the merchant fleet also takes the minimum age into account, through a 1996 Protocol,47 while MLC, 2006, contains provisions on this matter as well, fixing the minimum age at 16.48 ILO Convention No. 112 of 1959 on Minimum Age (Fishermen) stands out among the very few conventions dealing with work in the fishing sector; however, this will be replaced by Article 9 of the WFC, 200749—when it enters into force—which sets the minimum age at sixteen with some exceptions for 15-year-olds, provided they are not legally obliged to be in full-time education in their countries of origin and have received professional training.
As discussed above, the employee’s age is a matter of capacity to contract and as such is excluded from the Rome I Regulation. The rules on the minimum working age may be opposed not in accordance with this Regulation but by resorting to the respective national law provisions. However, Article 13 of the Rome I Regulation now offers a feasible solution that has the virtue of avoiding the public policy exception. This provision is based on the exception of national interest as developed by French courts in the Lizardi case and seeks to ensure that contracts between parties in the same country follow the rules of the market in question, including capacity issues.50 The broad terms in which Article 13 is written no longer point to the place where the contract is concluded but rather point to the country where the parties to the contract are located. This is true of both the English and Spanish versions, ‘en los contratos celebrados entre personas que se encuentren en un mismo país’, and also of the German version, which reads as follows: ‘bei einem zwischen Personen, die sich in demselben Staat befinden, geschlossenen Vertrag’. This wording allows us to understand that this country is the place where the work is habitually carried out, i.e., the locus laboris,51 thus avoiding differences between nationals and foreigners for reasons of legal certainty.
Although this is not an issue of capacity to contract, workers’ professional qualifications are linked to the issue of the minimum working age and have become an additional key component to gaining access to the labour market. Moreover, seafarers’ and fishermen’s professional qualifications are essential to maritime safety, in addition to being regarded as a way of keeping jobs in the traditional maritime nations. In this regard, it has already been reported that the European Union is active in the struggle to preserve maritime-related employment by focusing on the importance of seafarers’ training both for safety at sea and the fight against pollution and also for access to skilled jobs.52 In this framework, the law governing the professional qualifications seafarers need to have access to work and then keep their jobs will also be the law of locus laboris. In this matter, Article 13 of the Rome I Regulation is of little or no use, but these qualifications’ links with maritime safety and the fight against pollution enable us to classify them as lois de police and thus to activate Article 9 of the Rome I Regulation. This is of course without prejudice to the law governing the employment contract being applicable when it coincides with locus laboris.
It is of particular importance these days to highlight the fact that work permits are not a question of the capacity to contract but merely an administrative requirement.53 Article 36(5) of Spanish immigration law, for example, clearly indicates that lack of authorisation to reside and work in Spain—without prejudice to the employer’s respective responsibilities, including where the social security system is concerned—does not invalidate the employment contract where foreign workers’ rights are concerned, nor does it preclude them from obtaining the benefits deriving from cases enshrined in international conventions for the protection of workers or other benefits they may be entitled to, provided that these are compatible with their situation. As a matter of fact, work permits are not normally required in the merchant and fishing sectors, in an effort to facilitate the recruitment of crews in third countries and with the subsequent savings in terms of labour and social security costs to shipowners. For example, to enable foreigners to work aboard ships flying the Spanish flag, Spanish legislation simply requires an employment contract or a document of renewal of enrolment; ergo, foreign seafarers are exempt from the work permit requirement, and, furthermore, their recruitment is not dependent on the internal situation of the labour market.54
22.214.171.124 The Law Applicable to the Formal Validity of Contracts
The law applicable to the formal requirements of contracts is decided by the Rome I Regulation, which lays down a specific conflict rule governed by the favor validitatis principle, with the aim of avoiding cases of nullity of contracts on the grounds of formal invalidity. The idea is embodied in a result-oriented conflict rule that is structured around alternative connecting factors. Hence, a contract’s formal validity has to be tested in accordance with the lex loci celebrationis, or pursuant to the law applicable to the contract’s material validity or the law of the habitual residence of either party if they are in different countries when the contract is concluded.55
Employment contracts are also subject to this array of connecting factors. Unlike consumer contracts and those dealing with real estate or the use of property,56 the formal requirements of employment contracts do not have a tailor-made conflict rule that refers them primarily to one single law. The Giuliano-Lagarde Report justified this treatment on the ground that merely submitting the form of the contract to lex laboris would originate excessive legal uncertainty to the extent that courts may resort to the exception clause in determining the law applicable.57 Furthermore, the application of the general conflict rule and all its connecting factors is in line with the freedom of form that governs this particular type of contract,58 namely, a contract’s form does not affect its validity, thereby benefitting workers insofar as their access to the labour market is not hampered, nor is the existence of an employment relationship questioned for this simple reason.59
Nevertheless, the employment relationship goes well beyond the concluding of the contract, encompassing other acts such as notice of dismissal or provision of written information about working conditions, in such a way that freedom of form is no longer beneficial for the weaker party but rather the reverse. It makes no sense to maintain the principle of favor validitatis and the ability to validate such actions in accordance with various laws. This kind of criticism had already been voiced in relation to Article 9 of the Rome Convention,60 but the drafters of the Rome I Regulation did not take the opportunity to address this issue at the time. Article 11 applies to the entire life of the employment relationship, with the aggravating circumstance that this provision has increased the number of laws in accordance with which the formal requirements of the act have to be compared: in addition to the law governing the contract and the lex loci actus, it is now possible to apply the law of the country in which the person performing the act in question is habitually resident at the time of its completion.
This problem was not unknown to the Rome Convention drafters, and the Giuliano-Lagarde Report suggested applying Article 7 of the Convention on overriding mandatory rules, in such a way that should the form of the act in question entail mandatory nature, the relevant law is applied in accordance with the provision.61 Nevertheless, this proposal has been criticised62 on the ground that it leads to the application of a given law, usually the lex fori or the lex laboris, avoiding any assessment of which law is the most appropriate to govern these matters. In this regard, it has also been proposed that the issue be resolved through the mechanism of characterisation, i.e., dealt with as a matter of substantive validity or evidence and thus subject to the lex contractus pursuant to Article 18 of the Rome I Regulation.63 Another solution takes the principle of worker protection—underpinning Article 8 of the Rome I Regulation—as a benchmark to project it on Article 11 when applied to an employment relationship; in short, the most favourable solution for workers, either because it is the least or the most demanding in matters of contract form, should be chosen from among the connecting factors provided for.64
In the maritime and fishing sectors, however, it seems that precedence should be given to the solution envisaged in the Giuliano-Lagarde Report, which refers not only to overriding mandatory rules laid down in the lex fori but also to the lex contractus. One way or the other, consideration must be given to international minimum standards that require seafarers’ employment contracts to be written down and a copy to be given to workers.65 The policy underlying these provisions is concerned with the principle of worker protection as it aims to avoid forced work, expressly forbidden by the 1998 ILO Declaration;66 it is also concerned with maritime safety67 and is therefore linked to seafarers’ professional qualifications, which in turn bestows the status of overriding mandatory provisions on these requirements.
126.96.36.199 Non-contractual Obligations: Accidents at Work
The behaviour of one party to a contract may involve a breach of contractual obligations but can also constitute an unlawful event that results in non-contractual obligations. Safety in the workplace and accident prevention regulations have forced many jurisdictions to reflect on the characterisation of damage claims resulting from accidents brought by employees against their employers, and which are clearly framed within the contractual relationship. In fact, certain legal systems—including the English system—allow claimants to opt for the kind of liability that they wish to invoke against their employers based on either contract law or tort law.68
The well-known case of Lauritzen v Larsen 69 in the US entailed the court ruling on an accident that happened in Cuba to a Danish seafarer who had signed his contract in New York to work on board a Danish ship. The decision was finally made in accordance with the flag law, which was deemed to be the law governing the employment relationship; consequently, the lex loci laboris was applied, throwing into relief the many doubts that had been raised on the way accidents at work deserved to be characterised and which law ought therefore to be applied in such cases depending on whether they were characterised as non-contractual or contractual matters.70 Identical doubts also emerged in EU private international law; an initial answer characterising damage claims arising from occupational accidents as contractual matters found its basis in the Rome Convention’s silence on the issue.71 A different answer would now be required in the light of the Rome I Regulation and its relationship to the Regulation (EC) No. 864/2007 of the European Parliament and of the European Council of 11 July 2007 on law applicable to non-contractual obligations (Rome II),72 as these two legal instruments are complementary and their scopes of application thus have to be clearly separated.
The controversy surrounding this matter continues today, but problems of characterisation and adaptation between rules governing contractual and non-contractual relationships may be avoided by invoking Article 4(3) of the Rome II Regulation. This provision allows decisions to be made on non-contractual obligations in accordance with the law governing ‘a pre-existing relationship between the parties, such as a contract, that is closely connected with the tort/delict in question’.73 As a matter of fact, the same provision facilitates the overlap between the law applicable to damage claims and that governing social security issues. Articulated as an escape clause, this secondary connection mechanism pushes both the lex loci damni and the law of the parties’ common habitual residence into the background since both may be the product of mere chance. This is particularly true when it comes to accidents at sea, to the point that it has been claimed that the escape clause enshrined in Article 4(3) in fine is much more than just an exception concerning maritime activity.74 Accordingly, it must be operative in cases where the accident involves another worker as well, provided that both are subject to the same lex laboris.75
The consequences of applying Article 4(3) of the Rome II Regulation remain uncertain, however, when it comes to setting aside the law chosen by the parties to the employment contract on the ground that the law applicable to the contract in the absence of choice of law favours the worker. The European Commission was perfectly aware of this issue when it presented the proposal for the Rome II Regulation76 but consciously chose not to include an express provision in this regard on the understanding that workers are entitled to such protection and the law governing the pre-existing relationship is consequently the one governing the contract in the absence of choice of law where appropriate. Therefore, although Article 4(3) does not contain any reference to the protection of the weaker party, fairness and reasons of consistency support such an interpretation.77 Now the question remains as how to come to the conclusion that such a law is more favourable to the worker than the one chosen in a case dealing with non-contractual liability.78 Beyond cases in which both types of liability are in question, the first response is to apply the law agreed on by the parties unless it can be proved that the law chosen is less protective than the default law governing the contract.
When a social security scheme is established by a legal system, employer liability becomes strict liability, i.e. non-dependant on negligence or intentional misconduct and therefore greatly limiting it. The intrinsic correlation between social security systems and employers’ disclaimers therefore suggests that the latter should be subject to the law applicable to the former. This is the aim of Article 85(2) of Regulation (EC) No. 883/2004 of the European Parliament and of the Council of 29 April 2004 on the coordination of social security systems,79 which states that ‘if a person receives benefits under the legislation of one Member state in respect of an injury resulting from events occurring in another Member state, the provisions of the said legislation which determine the cases in which the civil liability of employers or of their employees is to be excluded shall apply with regard to the said person or to the competent institution’. Apart from these expressly regulated cases, others are covered by the Rome II Regulation, which determines the law governing the treatment of disclaimers. As they are intrinsically connected with social protection, they should be deemed to be overriding mandatory rules, operating only if the worker is really protected against contingencies that occur after the event causing the damage.80
When a third party is involved in the employment relationship there will not be such a close connection with the lex contractus, and other connecting factors of Article 4 of the Rome II Regulation take precedence in deciding on the law applicable to non-contractual obligations. When liability is attributed to third parties, the lex loci delicti commissi comes to the fore, together with the law of the flag. However, in addition to cases where the law of the flag cannot operate in its condition of law of the country in which the damage occurs, such as in cases where ships flying different flags collide,81 the law of the flag may also be relegated, as priority is given to other interests that can be channelled via the escape clause.82 Cases involving more than one vessel are generally the most difficult, and it would be desirable for a specific conflict rule on maritime liability to be issued, as was suggested in the European Group for Private International Law report.83 This idea is reinforced by the role played by uniform law in this area,84 which would justify referral to the lex fori.85
188.8.131.52 Social Security Matters
The law applicable to social security matters is relevant to this study because all matters relating to accidents at work and occupational diseases tend to be channelled through this specific law.86 However, this matter is not included in the Rome I or Rome II Regulations since it cannot be characterised as contractual or non-contractual.87 As this is about a system for social protection provision and the law applicable is therefore generally decided according to the principle of territoriality with concessions to posted workers, the lex loci laboris is usually applied from a conflict of laws perspective.88
In a mobile society, this approach can easily lead to injustices stemming from the fact that workers could come under more than one social security system, which is the reason for establishing the principle that they can only be subject to one such system to avoid potential duplication derived from participating in different social security schemes. Workers can of course be employed in different countries and by different employers, and so the choice of applicable law is also governed by the principle of protecting migrants, that is, the relevant system must take into account time worked and the contributions generated abroad to calculate the benefits due. This requires interstate coordination, which in turn has resulted in the conclusion of numerous bilateral and multilateral agreements in this field.
The European Union has issued regulations to coordinate national social security schemes in accordance with the principle of territoriality. The key instrument here is Regulation (EC) No. 883/2004 of the European Parliament and the Council of 29 April 2004 on the coordination of social security systems, where the issue of the system that actually provides guidelines for affiliation to a social security scheme is addressed in Article 11 et seq. Article 11(4) states that ‘for purposes of this title, an activity as an employed or self employed person normally pursued on board a vessel at sea flying the flag of a Member state shall be deemed to be an activity pursued in the said Member state’.89
The Regulation is based on the principle that only the law of a member state, in this case the law of the flag state, should be applied. In this respect, it fails to matter whether the vessel essentially operates in the territorial waters of third states, as the CJEU points out in M. J. Bakker and Minister van Financiën,90 where the underlying discussion was about the contributions made to the Dutch social security system by a worker residing in Spain who provided services for a Netherlands-based company on board dredgers sailing under the Dutch flag and operating in the territorial waters of China and the United Arab Emirates. In this context, the Court stated that ‘neither respect for the sovereignty of the coastal State nor the United Nations Convention on the Law of the Sea requires that a worker in Mr Bakker’s situation be deprived of the benefit of the social insurance provided for, in accordance with Regulation No 1408/71, by the Member state whose flag the vessel flies, when that vessel is located in the territorial waters of a State other than that Member state’.91
The provision also indicates that people who are pursuing activities in a member state, whether as employees or as self-employed persons, are subject to the state’s law.92 This section of Article 11 makes it clear which the relevant state is for these purposes, in cases where the employee works in one country but is resident in another, a particularly significant issue where seafarers are concerned. In the Salemink judgment, the CJEU gave an affirmative answer to the question of whether a gas extraction platform situated on the Dutch continental shelf is comparable to member state territory for the purposes of Article 13(2)(a) of Regulation No. 1408/71,93 on the basis of which Regulation No. 883/2004 is constructed. In this case, the employee was resident in Spain and had consequently been excluded from the statutory social security scheme in the Netherlands. The CJEU indicated that a member state cannot impose a further obligation—in this case, that of residing in the country—for a person to be entitled to the benefits of the social security scheme there when the activity is pursued either as an employed or a self-employed worker in the country. This would fly on the face of the provision in question, as it asserts that these workers should be included in the social security scheme of the state where they work even when they are resident in other states.94 However, there are three exceptions to this rule.
The first exception is specified in Article 11(4) of Regulation No. 883/2004 to the effect that ‘a person employed on board a vessel flying the flag of a Member state and remunerated for such activity by an undertaking or a person whose registered office or place of business is another Member state shall be subject to the legislation of the latter Member state if he resides in that State. The undertaking or person paying the remuneration shall be considered as the employer for purposes of the said legislation’. Thus, the fact that employers and seafarers or fishermen have a common habitual country of residence qualifies the application of this country’s law. Certain practices exist that should be mentioned here, such as those followed by the Dutch National Institute of Social Security: Title II of Regulation No. 1408/71, now No. 883/2004, is understood to apply to seafarers who hold nationality in an EU member state or the European Economic Area and are resident in one of these states but employed on board ships that do not fly a member state flag, by the mere fact that the employer is established in the Netherlands.95
The second exception affects temporarily posted workers. The principle of a single applicable legislation is put into effect for them by resorting to the law of the state of origin,96 according to which seafarers or fishermen who are temporarily posted on board vessels flying flags that they do not usually fly remain subject to the legislation of the state of origin, which may well be their country of habitual residence if the employer’s residence is also there.
The third is not really an exception, in that it addresses the case of mobile workers.97 For these cases, where services are provided on board more than one ship or on land as well as on ships or other maritime platforms, the state of seafarers’ habitual residence is preferred, provided that a substantial part of their activity is undertaken in this state. Otherwise, priority is given to the member state where the registered office or place of business of the business or employer is located.98 Nevertheless, the rule again prioritises the state of habitual residence in cases involving several employers with registered offices or places of business in different member states.
The network of international conventions on social security is certainly intricate, in particular when agreements are concluded between member states, since Regulation No. 883/2004 does not preclude the application of previous agreements that may be more favourable, and allows new ones to be concluded under certain conditions.99 For example, Spain has entered into numerous agreements with third states that follow grosso modo the guidelines laid down in Regulation No. 883/2004,100 outlined in Article 17 of ILO Convention No. 165 on seafarers’ social security, in particular the principle according to which seafarers can only be subject to one social security scheme, be it that of the flag state or their habitual residence. This Convention was terminated by Spain due to its revision by MLC, 2006.101 WFC, 2007, also follows in the footsteps of MLC, 2006, with regard to fishing vessels.102
In any event, both MLC, 2006, and WFC, 2007, are in line with ILO Convention No. 165 and are based on several factors, including differences in social security systems, the need for coordination among those systems and the idea that each system must determine who is entitled to receive coverage. In this regard, they primarily place obligations to provide social protection on flag states but also contain a clear mandate to the member state of seafarers or fishermen’s habitual residence to include them in its social security system, aiming for equivalent protection to that granted to every other employee resident in its territory.103 In short, regardless of the flag flown by the ship on which seafarers serve, the law of habitual residence takes a prominent role in social security matters as it affects the one country that remains truly stable throughout seafarers’ or fishermen’s working lives. There must therefore be coordination between flag states and states of habitual residence to offer seafarers and fishermen protection that is not less favourable than that enjoyed by land-based workers.104
Spanish legislation is already pursuing this approach with a view to protecting workers living in its territory. In general, and on condition that they both reside and provide services in Spain, Article 7 of the Spanish General Social Security Act covers seafarers and fishermen, for whom a special system has been developed.105 The vessel is considered a workplace, and the activity provided on board a ship registered in a Spanish registry is therefore regarded in the same way as that conducted on Spanish soil.106 This means that all workers on board, regardless of their nationality,107 have to pay contributions to the Spanish social security system, although there are certain exceptions, as seen above.
The other side of the coin is that Article 125(2) of the General Social Security Act specifies that seafarers or fishermen will be included within the system under certain circumstances if the company they are employed by transfers them to a different country, as long as a special agreement with the social security administration is in place. Hence, workers posted to foreign-flagged vessels by Spanish companies continue to be part of the Spanish social security system, according to the Order of 27 January 1982.108 If the company is foreign, this scheme no longer applies, and workers can opt for private insurance or sign a special agreement with the social security administration.109 However, neither of these procedures is fully satisfactory since the benefits and compensations they provide are never as favourable as those provided by the Spanish social security system. In the light of MLC, 2006, Spain should move forward and increase social protection for seafarers and fishermen resident there, given its expected accession to WFC, 2007.110
Given that the law of the flag operates as the first connecting factor, flags of convenience are also an important matter and need to be approached within the broader issue of how to protect state nationals abroad; for these purposes, Law No 40/2006 of 14 December on the Statute of Spanish citizens abroad is applicable.111 Article 18 requires the state to safeguard the social protection of Spanish nationals who move abroad for professional reasons, and the first measure to be taken in the struggle against social protection that is unfavourable to Spanish workers abroad is the signing of international social security agreements.
The second measure was introduced by Spanish labour courts by interpreting the concept of ‘employer’ to include consignees, manning agencies and joint fishing undertakings,112 thus making them jointly and severally liable with foreign shipowners for the payment of damages in the event of accidents at work and for widow’s and orphan’s pensions, in line with the Spanish social security system.
This jurisprudence is currently endorsed by Article 10(3) of the Royal Decree 84/1996 of 26 January on general regulations on business registration and worker affiliation in the Spanish social security system. The law lays down that for the purposes of the special scheme for seafarers, the employers category includes shipowners, operators or owners of fishing vessels or maritime facilities, the consignees of vessels, manning agencies or other natural or legal persons resident in Spain that hire and remunerate Spanish residents to provide services on board foreign flag vessels, including Spanish companies participating in joint fishing ventures incorporated in other countries. More specifically, the Law on Shipping establishes that agents or representatives of foreign shipowners that engage Spanish nationals or residents in Spain must take out an insurance policy whereby seafarers can receive similar compensation to that granted by the Spanish social security scheme in case of death, accident or repatriation; should no policy be taken out, the employment contract will not obtain a visa;113 all without prejudice to international conventions or agreements signed by Spain.
In fact, Spain has several agreements in this area, and some of the earliest submit these matters to the law of the flag, which is not always favourable to workers.114 Accordingly, modern social security conventions also take into account Spanish companies participating in foreign undertakings as employers.115
Finally, it is interesting to note that there are specific regulations for the rights of return of social security institutions responsible for providing benefits against a third party that is liable to provide compensation for injuries to employees in the European Area of Justice. Articles 93 of Regulation No. 1408/71 and 85 of Regulation No. 883/2004 lay down the recognition of legal subrogation and the right of return when events requiring the intervention of a social security body occur in another member state. It is expected that these rights will also be specified in the respective national laws where applicable, i.e., to cases not involving other member states.
Article 19 of the Rome II Regulation deals with the law applicable to such rights in these instances, therefore making it possible for the issue to be submitted to the same law that governs the employment relationship by invoking Article 4(3). However, the public nature of the social security system advocates a characterisation in accordance with this, and thus the rules containing those rights should be treated as overriding mandatory rules of Article 16 of the Rome II Regulation.116 At any rate, any ensuing litigation against a third party that was the cause of damage is subject to the relevant conflict rules.
184.108.40.206 Employer Insolvency
Employer insolvency inevitably has a profound impact on employment contracts, and this can be even greater when employees are seafarers on board ships whose debts the shipowner cannot pay.
In the European Area of Justice, the law governing the effects of insolvency proceedings on current contracts is determined according to Regulation (EC) No. 1346/2000 of 29 May on insolvency proceedings117 or, where this is not applicable, in accordance with the respective national law. The European Insolvency Regulation (hereafter EIR) is only applicable when the centre of a debtor’s main interests is located in a member state, except for Denmark, which is not a party to the Regulation. When this centre is in a third country, national law prevails, in Spain’s case, Law 22/2003 of 9 July on bankruptcy,118 in Germany’s case, Insolvenzordnung,119 which otherwise seems to copy the cross-border insolvency model adopted by the European Union as, in general, national cross-border insolvency rules are fundamentally similar to those laid down by EIR.120 Furthermore, the territorial scope of EIR, which came into force in March 2002, requires further clarifications, in particular where its conflict rules are concerned: in addition to always requiring the centre of a debtor’s main interests to be in a member state, the conflict rules provided for only apply when the law of a member state is referred to; ergo, when the law of a third state is applicable the seized court sets the Regulation aside and resorts to national conflict rules to determine the applicable law.
The opening of an insolvency proceeding does not interfere in principle with specific contractual arrangements, in particular the concluding, performance and termination of contracts, which remain subject to the lex contractus determined in accordance with either the Rome I Regulation or the Rome Convention. Nevertheless, the objectives of the insolvency proceeding may have certain legal consequences for the contractual relationship—thus, altering its normal course—as a result of the need to reorganise the debtor’s estate, with a view to either liquidating or restructuring it. Accordingly, Article 4(2)(e) of EIR submits this matter to lex fori concursus, as most legal systems do, i.e., Article 200 of the Spanish Ley Concursal or § 335 of the German Insolvenzordnung.
However, legal instruments dealing with cross-border insolvency provide for two exceptions to the application of the lex fori concursus to the effects of insolvency proceedings on current contracts, specifically for contracts dealing with real estate and employment. These exceptions are laid down in Articles 8 and 10 of EIR, in Articles 206 and 207 of the Spanish Ley Concursal and §§ 336 and 337 of the German Insolvenzordung. The rules are the consequence of the many interests involved in these matters, which has resulted in a wide array of mandatory rules in both sectors. For this reason, the European Union and member states submit the impact of insolvency proceedings on such contracts exclusively to the law of the place where the property is located or the law governing the employment contract. The law applicable to insolvency proceedings is thus set aside, with the aim of avoiding conflicts between the mandatory rules laid down by these laws, whose basic purpose is to protect tenants and workers.121
Article 10 of Regulation 1346/2000, together with its national counterparts such as Article 207 of the Spanish Ley Concursal or § 337 of the German Insolvenzordnung, sets out the exclusive application of lex laboris to employment contracts and relationships. The underlying principle is worker protection, and employees are at least afforded the protection guaranteed by the law applicable to the contract in the event of their employer’s insolvency. The lex laboris insolvency rules therefore determine the contract’s fate, covering aspects such as its continuing validity, modification or termination as a result of the opening of insolvency proceedings, for example via a collective redundancy plan, and under which specific conditions, procedures and deadlines, as well as the rights and obligations arising from the new situation such as the right of workers to terminate their contracts where appropriate.122
In accordance with these provisions, the insolvency practitioner must apply the lex laboris insolvency rules to deal with employment contracts that are subject to the law of a state other than the one where insolvency proceedings were opened. The implementing of this law by a foreign insolvency practitioner may lead to problems of adaptation that the insolvency judge must try to resolve.123 Such problems may prove insurmountable though, for example should the applicable law stipulate the exclusive intervention of the administrative or labour institution in the country of employment. In such cases, insolvency practitioners have to visit the country in order to take the steps prescribed by the law in question there.124
In response to these problems, the European Union has undertaken to harmonise the issue by means of Directive 2008/94/EC of the European Parliament and the Council of 22 October 2008 on the protection of employees in the event of the insolvency of their employer.125 Articles 9 and 10 deserve particular attention and deal with insolvent companies with activities in the territory of at least two member states, with a view to regulating the activities of each guarantee institution. Once an insolvency proceeding has been opened in a member state—a question to be decided in accordance with EIR—the guarantee institution in the country where the insolvent company’s employees work or habitually provide services will take on their case. For these purposes, workers’ rights are governed by the law of the competent guarantee institution.126 Against this legal background, it is however doubtful whether the path opened by the CJEU to the application of national legislation establishing the right of workers to enjoy wage guarantees provided by national institutions is still applicable—in addition to that provided by the guarantee institution of the country of the habitual workplace—on a complementary or substitutive basis;127 CJEU case law dealt with previous directives, now abrogated by the 2008 directive in force, which lacks any mention of this issue and thus creates a question mark over the matter.128 For its part, Article 10 establishes coordination obligations between the guarantee institutions involved in cross-border insolvencies, in particular to share information on employees’ outstanding claims to clarify the question of who is to pay them.
This Directive replaces others that previously addressed the issue, specifically Directive 2002/74/EC of the European Parliament and the Council of 23 September 2002, transposed by Spanish Law 38/2007 of 16 November regulating the statutory security for payment of unpaid wage claims in transnational insolvency procedures of companies with activities in more than one member state. The result of the transposition and instructions about how to act in these situations can be found in Sections 10 and 11 of Article 33 of the Spanish Workers’ Statute, which places obligations on the Wage Guarantee Fund under Articles 9 and 10 of Directive 2008/94/EC. In Spain, these directives were transposed without excluding share fishermen,129 whereas Greece, Italy, Malta and the UK actually excluded these workers on the basis of Directive 2008/94/EC, whose Article 1(3) authorises states not to include them if other mechanisms offer equivalent protection. In this regard, we agree with the Commission that maritime liens do not provide the same protection since the vessel’s value may not reach the minimum amount of outstanding claims allowed by the Directive.130 In any event, seafarers whose workplace is in a third state are not covered by these directives,131 and their transposition has not entailed extending their coverage.
The exception laid down in Article 8 of Regulation No 1346/2000 as such is thus limited to the effects of insolvency proceedings on current contracts. However, other aspects typically characterised as insolvency matters are not covered by the exclusion and therefore remain subject to the lex fori concursus; examples of these are the ranking of claims resulting from these contracts and creditors’ rights once insolvency proceedings are over.132 Other issues include the protection of worker’s claims arising from their employment relationship, i.e., whether they are granted preference over other claims and, where appropriate, the amount of the protected claim and the ranking of the preference, or the lodging, verification and admission of claims.133
With respect to the ranking of claims and maritime employment, the 1993 Convention on maritime liens and mortgages comes to the fore,134 as it prevails over domestic insolvency laws in decisions on these issues.135 This Convention grants as maritime liens ‘claims for wages and other sums due to the master, officers and other members of the vessel’s complement in respect of their employment on the vessel, including costs of repatriation and social insurance contributions payable on their behalf’, as well as ‘claims in respect of loss of life or personal injury occurring, whether on land or on water, in direct connection with the operation of the vessel’.136 The Convention does not distinguish between enforcement and insolvency proceedings, and the priority of maritime liens as prescribed in Article 5 in more favourable terms for seafarers than in previous regulations must always therefore be respected.137
Seafarers’ maritime liens now take priority over registered mortgages, ‘hypothèques’ and charges while ranking pari passu with those listed in Article 4 of the 1993 Convention, except salvage reward claims for the vessel, which take priority over all other maritime liens. In addition to this, the 1993 Convention lays down provisions on the forced sale of the vessel, and Article 12 establishes that costs and expenses arising out of the sale are to be paid before the creditors mentioned above are satisfied; these include, inter alia, vessel and crew maintenance costs, wages and other sums and costs referred to in Article 4(1)(a) such as repatriation costs, incurred from the time of the vessel’s arrest or seizure.
When establishing the relationship of maritime liens with insolvency proceedings, it should be noted that the preference granted by maritime liens has an expiry date. Article 9 of the 1993 Convention provides for a period of 1 year—and also regulates the point at which this period starts—which can only be interrupted if the creditor entitled to it is not permitted by law to proceed with the arrest or seizure of the ship. After this 1-year period, the 1993 Convention no longer protects the creditor, and the rank and status of the claim in question is determined by the corresponding lex fori concursus. For example, in accordance with the Spanish insolvency law, a maritime lien results in the right to separate enforcement over the vessel, in such a way that only the residuary funds of the forced liquidation become part of the estate of the insolvency proceedings.138 Hence, maritime liens are not affected by the stay of enforcement of security interests on debtors’ estates that are associated with their business activities.139 Holders of maritime liens such as seafarers140 are then entitled to arrest the vessel, at least for a 1-year period from the date of the opening of the insolvency proceeding. Once this period is over, the classification and ranking of credits is governed by the provisions of the Spanish Insolvency Act.141 When the arrest of the ship is effected in a country other than that of the opening of the insolvency proceeding, the seized court may proceed to the recognition of the foreign decision ordering the opening of the insolvency proceeding.142
The lex fori concursus is not always applicable to the effects of insolvency proceedings on maritime liens, however. In addition to granting their holders priority of payment, maritime liens are characterised by the right to obtain erga omnes satisfaction from the attached asset.143 For our purposes, Article 5 of EIR dealing with third parties’ rights in rem is important; this applies when insolvency proceedings over employers are opened, provided that both their centre of main interest and the vessel are located in member states.144 In establishing the ship’s location, regard must be paid to Article 2(g) of Regulation 1346/2000, which lays down a general rule that indicates the place where an asset was entered in a public register, therefore to the place where the vessel was registered.145 When the ship’s registration and centre of the debtor’s main interests point to a member state, Article 5 is applicable provided that they are different member states; in the absence of one of these prerequisites, national insolvency rules are applicable.
Pursuant to Article 5, third party rights in rem are not affected by insolvency proceedings, provided that the asset related to the said right is located in a member state other than the one in which insolvency proceedings have been opened. Therefore, maritime liens falling within its scope are not affected by the insolvency proceedings, and holders may, for example, ignore a temporary stay imposed by the relevant lex fori concursus. In contrast, Article 201 of the Spanish Ley Concursal or § 351 of the German Insolvenzordnung provides for an exception to the application of the lex fori concursus as well but submits this issue to the insolvency rules laid down in the lex rei sitae. This law decides the effects of the insolvency proceeding on the maritime lien in question. This provision is intended to protect creditors by removing the legal uncertainty generated by the unpredictability of where insolvency proceedings will be opened, and thus which law will decide on the preference granted to creditors holding a right in rem, and whether they may effect it or not.
4.3 Connections Provided for in Article 8 Rome I Regulation
4.3.1 Origins and Structure
Although expressed in slightly different terms, Article 8 of the Rome I Regulation follows Article 6 of the Rome Convention, and both are therefore to be interpreted along the same lines due to reasons of consistency in the European Area of Justice, as highlighted by the CJEU in Koelzsch v Luxembourg.146 The latter provision introduces the protection of workers—the weaker party to a contract—into the Rome Convention by establishing measures to counterbalance the other party’s dominant position. All those measures are reproduced in Article 8 of the Rome I Regulation, save a few changes arising from the proposals submitted by both the GEDIP and the Max Planck Institute for Comparative and Private International Law.147 None of those provisions mentions work performed on board a ship; nonetheless, seafarers’ and fishermen’s employment contracts are also included within the scope of both provisions, whose connecting factors are to be read in the light of the peculiarities of work at sea.
The first of the measures to put employees and employers on an equal footing is the admission of party autonomy to choose the applicable law, albeit limited to cases in which it benefits workers.148 By submitting the contract to the chosen law, employers may seek to deprive employees of the protection granted to them by mandatory rules contained in the law otherwise applicable. Worker protection is achieved by their not being deprived of the set of mandatory rules that would govern the contract in absence of choice of law, i.e., the chosen law is applicable as long as it is more favourable to the worker than the law otherwise applicable.149
Result-oriented considerations lie behind this particular choice of law, but they are absent from the remaining connecting factors, selected according to the principle of proximity and predictability.150 In default of choice of law, the country of the habitual workplace comes to the fore as a foreseeable law for both parties, and one that is close to them. Nevertheless, determining this place is not a simple operation when an employee performs services in different countries or in areas that are not subject to sovereignty, as is the case with work carried out on board a vessel. An alternative connecting factor has been established for cases where identifying the habitual workplace is impossible, i.e., when the employee does not discharge duties to the employer in one and the same country; the contract is then subject to the law of the place where the business which engaged the worker is located. This conflict rule is in fact closed by an escape clause to which the seized court is granted discretion to assess whether there is a law that has closer links with the employment contract under the circumstances in question, i.e., a law with more significant contacts with the employment relationship than the law of the habitual workplace or, failing that, the law of the place where the business which engaged the employee is located.
In view of these connecting factors, the law applicable to the employment contract in the absence of choice of law is particularly significant, as it operates not only by default but also when the parties have actually selected a different law to govern the contract. For this reason, when it comes to applying this conflict rule, the modus operandi always starts from establishing the applicable law in the absence of choice of law and then proceeds to compare the two legal systems and decide whether the law chosen by the parties to the contract may be applied as more favourable to the worker than the one otherwise applicable.
The following pages are devoted to discussing these connecting factors and their application when the employment relationship is mainly effected on board a vessel. In these cases, the fact that the ship ceased to be considered a territory long ago becomes critical.151 Nonetheless, both public international law and international labour law are still based on the fiction that the flag state is, inter alia, responsible for living and working conditions on board. Preservation of this fiction has to be defended within the framework provided by private international law as well, given that the habitual workplace of seafarers and fishermen is the vessel and the fiction is the only thing that makes this connecting factor meaningful. Although it was ultimately not successful, it is worth bearing in mind that the Proposal for a Rome II Regulation did enshrine this fiction in a rule aiming to provide guidance in the event of damage occurring in a non-sovereignty area.152 In the same vein, there is a specific reference to the flag state in Article 11(4) of the Regulation (EC) No 883/2004 on the coordination of social security systems.
It has already been indicated here that this dogma is subject to the tensions generated by globalisation, allowing shipowners to choose the applicable law through their choice of country of ship registration. The outcome is an acute case of forum shopping, which in turn encourages another malady, social dumping. In this context and from the standpoint of seafarer’s protection, it seems difficult to maintain that the law of the flag state qua the law of the habitual workplace is the law governing the employment relationship. Other interpretations have been explored with the aim of providing a more suitable law to govern the employment contracts than the flag law, ranging from directly resorting to the law of the place where the engaging business is located to systematic use of the escape clause, in an attempt to identify the most favourable law to the worker every time. However, the first proposal is based on a connecting factor that can easily be manipulated by the employer, and the second alternative—involving avoiding other connections and always applying the escape clause—clashes with the philosophy behind Article 8, as result-oriented considerations only inform part of the conflict rule laid down there.153 With the exception of the choice of law, all the remaining connecting factors—including the escape clause—are to be applied according to the principle of proximity and foreseeability, but not with the aim of picking the most favourable law for the worker. Nevertheless, the escape clause does appear to be an adequate countermeasure to flags of convenience, in particular once the CJEU clarified that this clause had to be understood to be a further connecting factor,154 not subordinate to the previous ones, and consequently not of exceptional application.
Finally, it must be borne in mind that these factors largely overlap with those in Article 19 of the Brussels I Regulation and the Lugano Convention, 21 of the Brussels I bis Regulation, a fact that indicates lawmakers’ interest in establishing a coincidence between forum and ius. With this objective in mind, these common concepts should give rise to an autonomous and above all common interpretation, so for this reason many of the considerations used in the discussions on seafarers’ employment contracts and international jurisdiction issues are also valuable in this chapter.
Be that as it may, despite the clear interest in laying down a basis for the seized court to apply its own law, potential deviations between forum and ius are of course possible, first, because parties to the contract may resort to choice of law and choice of forum clauses are also admitted, but on more restrictive terms than the former; second, because the conflict rule laid down in Article 8 contains an escape clause that can set aside the law of the habitual workplace or, failing that, the law of the business which engaged the employee, in favour of a law that has closer connections with the employment relationship. This is the consequence of the fact that the two sets of rules serve different objectives, which may have also a say in applying the relevant connecting factors.
4.3.2 Party Autonomy
220.127.116.11 Agreement on Choice of Law
The first connecting factor in individual employment contract matters is party autonomy. However, it should be noted from the outset that this only plays a residual role in the case of seafarers.155 The internationalisation of the maritime and fishing labour markets allows shipowners to resort to other mechanisms that bring about identical results, such as registering vessels in states with poor working conditions or contacting employment and placement agencies in countries with significantly lower labour costs than those shipowners would have incurred by recruiting seafarers at company headquarters. In both situations the issue of the choice of law applicable to the contract is relegated, in the second because the real chances for seafarers or fishermen to file complaints are restricted to the state where they were recruited.
This does not mean, however, that the possibility of selecting the applicable law is not welcome; on the contrary, it has become even more interesting in the current context of the relocation of shipping and fishing businesses.156 Indeed, against the present background of international mobility, being able to decide on the law governing contracts provides legal certainty as it avoids unforeseeability regarding the applicable law in cases in which employees discharge their duties to their employers in more than one country. In addition to this, parties to a contract are in a better position to decide which law is most closely connected with their relationship. This also applies to seafarers and fishermen, although some kind of limitation on the exercise of party autonomy is unavoidable given the inherently unequal balance of power between the parties to employment contracts. Party autonomy is thus admitted as a connecting factor but also is subject to a serious restriction, namely, that the chosen law will only be applicable as long as it is more favourable than the law that would govern the contract in the absence of such a choice.
The conditions the choice of law clause has to meet to be valid and effective are established in Article 8 of the Rome I Regulation—or 6 of the Rome Convention—by reference to Article 3(1) of the Rome I Regulation, which in turn refers to Articles 10, 11 and 13 laying down respectively the law governing its substantive validity—the law chosen by the parties to the same agreement on choice of law; its formal validity—dependent on the alternatives offered by Article 11; and the capacity to contract, at least among parties located in the same country. This is because, as mentioned above, this issue is generally not governed by either the Rome I Regulation or the Rome Convention and depends on the respective applicable law according to national conflict rules, for example referring the issue to the national law of the person in question, as both Spanish and German laws do. In addition, it is important to emphasise that the choice is always between legal systems, that is, Article 3 does not admit agreements that opt for non-state systems such as the labour rules enshrined in ILO conventions. In such cases, the agreement is characterised as a substantive covenant whose validity depends on the relevant applicable law, but not as a choice of law clause.157
More specifically, Article 3 admits both express and tacit choice of law.158 Here, it is important to highlight that the choice of law clause may also be contained in a collective agreement.159 In such cases, the choice of law is not among the terms of a particular individual employment contract, but a collective agreement applicable to the industry, business or establishment in question, so that the choice of law contained there reaches all employment contracts within its scope of application.160 This approach raises doubts as to whether it should be the other way around, i.e., first, ascertaining the law applicable to the contract and, second, assessing whether the relevant collective agreement is part of this law.161 Nevertheless, doubts as to the binding effect of these clauses on particular contracts are dissipated by the fact that a collective agreement is an expression of private autonomy as well.162 Fewer doubts have been expressed with respect to the choice of law clause included in general terms, as long as the legal conditions arranged to guarantee that the terms are not unfair are met.163
The choice of law may also be ‘clearly demonstrated by the terms of the contract or the circumstances of the case’. The way in which a tacit choice is asserted is a different matter that may adversely affect the worker, for which reason legitimate doubts arise as to whether it ought to be permitted in employment contracts. The fact that the mandatory provisions of the default law governing the contract are to be applied supports a choice implied from the circumstances as a whole, which at any rate must be ‘clearly demonstrated’.164 In this sense, it is not enough to simply point to some indication that the parties prefer one legal system over others, but rather the terms of the contract or circumstances of the case must point unequivocally to a given legal system.
Recital 12 of the Rome I Regulation is a reminder that choice of forum clauses are relevant when assessing whether a choice of law may be implied from the terms of the contract. The operability of choice of forum agreements is certainly restricted in employment contract matters to the benefit of workers.165 For that very reason, they should be deemed to be significant indicators that the parties to the contract intended to apply the law of the designated forum while simultaneously contributing to the objective of establishing concurrence between forum and ius, thus avoiding the costs of proof of foreign law.166
Other relevant factors emerge when, for example, an employee seeks the payment of claims arising from a particular law167 or, more generally, when the contract contains typical institutions of a given law and is also written in the language of the state concerned,168 when the parties settle their disputes in court in accordance with the law of the forum,169 when the services to be performed are restricted to one particular establishment and the worker’s social protection is provided for a given social security system170 and even in cases where the choice of law results from correspondence between the parties or is contained in a previous contract that has been renewed, without further evidence that modifying the contract has altered the relationship between the parties.171 Another powerful indication for the purposes of discerning a choice of law from the terms of the contract is any express reference to a collective agreement in the specified country.172 However, none of these indications in themselves can be considered conclusive evidence of a tacit choice of law. On the contrary, the very fact that there is no express choice reinforces the idea that only in circumstances that clearly point to a particular law is it possible to infer that the parties truly intended it to be applied.
Article 3 of the Rome I Regulation and the Rome Convention also admits a partial choice of law, applicable to just a few aspects of the contract, and provided that it does not compromise the contract’s consistency, for which reason the choice of law clause must address a severable part of the contract such as dismissal or certain benefits.173 The provision also addresses time issues by stipulating that the choice of law can be concluded at any time during the life of a contract and is therefore modifiable or replaceable. Employment contracts are no exception to this rule, and the applicable law may change during their lifetime. Since this is a long-lasting relationship, the issue arises as to when the new law chosen by the parties will be effective. The principle of party autonomy plays a part here, and so the parties may decide whether to apply the choice of law agreement ex tunc or ex nunc at the time it is entered into. Should they not explicitly address this issue, the bulk of doctrine rightly indicates that the choice of law ought to be interpreted as being operative from the outset of the employment relationship.174
18.104.22.168 Limitations to Party Autonomy Based on the Principles of Proximity and Protection
Limitations to party autonomy may be classified according to the principles of proximity and protection, among other criteria.175 First, the choice of law is restricted to laws that have some relation with the case, that is, to laws connected with the contract whose law is to be established.176 A limitation of this type is set out in Sections 3 and 4 of Article 3 of the Rome I Regulation with the aim of avoiding the displacement of the mandatory provisions of the law that would have governed the contract had the choice of law not in fact been agreed on. Thus, Article 3(3), like Article 3(3) of the Rome Convention, establishes that when all relevant aspects of the situation are located in a country other than the one whose law has been chosen, ‘the choice of the parties shall not prejudice the application of provisions of the law of that other country which cannot be derogated from by agreement’, i.e., when an employment contract is concluded in Spain between persons domiciled there for the provision of services on board a ship flying the Spanish flag, the parties may choose to submit their relationship to a different law, but this will only govern the contract and its vicissitudes within the framework provided for by Spanish mandatory rules.177 To assess whether the employment contract is a domestic one, the time at which the choice of law is made has to be considered, although an exception to this rule deserves to be made if the contract is concluded with the aim of posting workers abroad.178 Finally, it is important to observe that if domestic law prevails, this can lead to an outcome that is contrary to the aim of applying the law that is most favourable to the worker. Accordingly, it has been rightly suggested that Article 8(1) of the Rome I Regulation ought to prevail over Article 3(3), meaning that the chosen law should be applied instead of the domestic law whenever it is more favourable to the worker.179
Unlike Article 3(3), Article 3(4) of the Rome I Regulation has no equivalent in the Rome Convention. Formulated in a similar way to Section 3, it aims to avoid party autonomy being used to circumvent mandatory provisions enshrined in this case by EU law. The provision thus targets cases where all the relevant elements are located in one or more member states but where the choice of law has been concluded in favour of a third state. Accordingly, the choice of law is not a means to escape from ‘the application of provisions of Community law, where appropriate as implemented in the Member state of the forum, which cannot be derogated from by agreement’. The scope of this limitation is debatable,180 but it refers to provisions laid down in EU instruments that also deal with work at sea. Nevertheless, the rule does not clash with others that determine the scope of application of EU law, that is, it does not prevent the respective directive from being applicable when not all the contacts in the case point to European Union territory, in other words, when its scope of application is broader than that provided for in Article 3(4).
Other limitations to party autonomy directly point to the protection of the weaker party by grading the effectiveness of the choice of law, depending on which legal system is more protective, whether it is the one that is chosen or the one that is otherwise applicable.181 The protection granted to employees relies on the provisions contained in the law that is applicable in the absence of choice of law and that cannot be derogated from by agreement, meaning all mandatory provisions provided for without exception, for example with regard to the underlying policy: whether they aim to protect workers or target other interests instead.182 It is important to note here that these provisions may be contained in collective agreements as well or in public law rules that have a certain impact on the employment relationship.183
It is even more important to highlight the fact that Article 8(1) of the Rome I Regulation seeks to clearly differentiate between the provisions it refers to—those ‘which cannot be derogated from by agreement’—and those in Article 9 dealing with overriding mandatory rules, lois de police or lois d‘application immédiate. In fact, the provisions that Article 8(1) of the Rome I Regulation refers to are in line with those included in Sections 3 and 4 of Article 3 of the Rome I Regulation since all of them deal with mandatory rules. They are not to be confused with overriding mandatory rules, which are applied regardless of the law applicable to the employment contract, as they aim to preserve the forum’s core values and essential policy options. This distinction does not mean that the overriding mandatory rules contained in the lex laboris are not applicable through Article 8(1), but this rationale does not work the other way around, i.e., the provisions referred to in Article 8(1) cannot be applied via Article 9 of the Rome I Regulation.
The mechanism devised in Article 8(1) of the Rome I Regulation and in Article 6(1) of the Rome Convention for worker protection obliges more than one legal system to be taken into account, which may lead to a dépeçage on one hand184 and problems of proof of foreign law on the other, making it impossible to tackle the comparison of legal systems as required by the provision at stake.185 This rule includes a requirement according to which two laws must be compared so that the more favourable of the two can be applied to the worker.
In principle, the comparison should be comprehensive, given that the purpose is not to build an ad hoc scheme by picking out the most beneficial provision for the worker from each legal system. Nevertheless, the huge difficulties that the seized court faces in proceeding to such a comprehensive comparison preclude this approach186 and it has therefore been suggested that what has to be dealt with is the specific issue at hand, and not the rule under discussion, since that would lead to fragmentation of the applicable laws.187 There are many practical reasons for doing this, in particular that a court cannot be asked to compare all the legal systems involved to assess whether or not one protects workers better than another in general terms.188 The reasonable and sensible thing to do is to focus on the legal issue raised by the case at hand; more specifically, in assessing whether one legal system is more favourable than another, the comparison should be restricted not to the specific provisions for resolving the issue but to those regulating the institution in question.
The CJEU judgment Voogsgeerd v Navimer 189 offers an example of this kind of operation, as the employee claimed protection under Belgian law as the law applicable in the absence of choice of law; the contract was actually submitted to the law of Luxembourg, which sets a shorter time limit on dismissal claims than that established in Belgium and according to which the time limit had already expired. In dealing with the case, the CJEU did not discuss how to compare the two laws, but it is clear that the Court did not consider proceeding to a comprehensive comparative analysis possible. A comparison of the time limits for the opening of proceedings should not be sufficient either. In contrast, the two regulations on dismissal have to be subjected to careful assessment, including the grounds for dismissal, the consequences of a declaration of unfair dismissal and even the rules of evidence.190 The comparison must be carried out by the seized courts since they have the authority to determine which law is most favourable to the employee. In this regard, the arguments put forward by the worker are not sufficient for concluding which legal system should decide on the case at hand,191 although they cannot simply be ignored for practical reasons.192
4.3.3 Applicable Law in the Absence of Choice of Law
22.214.171.124 The lex loci laboris
An individual employment contract’s centre of gravity is the location where the work is to be carried out, a place agreed on by employer and employee and consequently known to both parties, which means that both expect this place’s law to be applied. Other pro-worker considerations also emerge, as this connection gives priority to the one stable factor within the employment relationship, while simultaneously allowing for equal treatment of all parallel employment contracts since they are all submitted to the same law, i.e., the same law governs the employment relationships of all employees in the same workplace, thereby ensuring equal opportunities for them all193 and thus avoiding the distortion of competition and the potential social dumping that may result from this distortion.194
In favour of this connecting point,195 it should also be noted that the regulation of the employment relationship is riddled with general and public interests that express national concerns about the regulating of the labour market.196 The application of the lex loci laboris to the entire employment relationship does actually facilitate the work of applicators by avoiding the need to take other laws into consideration,197 as it must be borne in mind that, in addition to the lex laboris, the mandatory rules of the state where the services are performed may come into play when deciding on the employment relationship, via Article 9 of the Rome I Regulation, which actually deals with the overriding mandatory rules of the forum state, as may Article 12(2) dealing with manners of performance and steps to be taken in case of substandard performance. The application of the lex loci laboris does reduce the cases in which applicators have to take these other laws into account.
Unlike Article 4 of the Rome I Regulation and the Rome Convention, Article 8 does not take into account the habitual residence of the person carrying out the characteristic performance of the contract. This deviation from what resembles a general rule is explained by the different economic analyses underlying the two provisions. The first conflict rule aims at facilitating international trade for those celebrating contracts with numerous counterparties in different countries, whereas the second focuses on an individual relationship with a party that cannot be simply deemed a supplier and whose protection is to be granted by other means.198
As already mentioned, the paramount role granted to the lex loci laboris is grounded in considerations of proximity and foreseeability for the parties to the employment relationship. In this context, there is apparently no room left for worker protection; however, the CJEU recently revisited this approach, highlighting the fact that as the locus laboris is foreseeable and close to the parties, this in itself is a protection for employees since they are covered by a law they are familiar with.199
The advantages of the locus laboris in terms of proximity and foreseeability determine its relative priority vis-à-vis the connecting factor stipulated for occurrences in which it is not possible to identify a habitual place of work in one country, namely, the place where the business through which the employee was engaged is located. In fact, this connecting point can easily be manipulated by the employer, and this convinced the CJEU of the constant need to identify a habitual workplace, even when a worker provides services in different states, ‘to guarantee adequate protection to the employee’;200 in other words, all workers must have a habitual workplace, meaning the country with which the work performed ‘has a significant connection’.201
The position adopted by the Court is somehow questionable because it does not respect the architecture of Article 8 of the Rome I Regulation insofar as it confers a significant discretionary power onto the seized court to decide where the habitual workplace is situated, thus to the detriment of the connecting point, which is designed precisely to intervene when problem cases arise. The business through which the employee was engaged therefore becomes a residual connection, on the ground that it does not have the most significant link with the employment relationship. In contrast, the most significant connection with a country leads us to the place where the characteristic performance of the contract is carried out, which is the ultimate justification of the locus laboris as a connecting point. The same rationale should explain the relationship between this connection and the escape clause, which allows the seized court to deviate from the habitual workplace and resort to a closer law to the employment relationship.
Finally, when the law governing the employment contract is being established, the interrelationship sought between concepts employed by all instruments linked to the European Area of Justice, such as the Brussels I, Brussels I bis and Rome I Regulations, should also be taken into account;202 these are explained in detail above when dealing with the scope of CJEU case law.
Work Performed at Sea
As seen in the field of international jurisdiction, it is necessary to distinguish between different cases when identifying locus laboris in the fishing and shipping sectors. Two clarifications need to be made: the first is connected to public international law to take into consideration the type of waters in which a vessel sails or fishes in pursuit of its objective, while the second focuses on workers who serve on a single vessel or on different ones.
This section deals with seafarers or fishermen who carry out their tasks on one vessel, making it therefore possible—at least in theory—to locate a habitual place of work by taking into account public international law, as shown by the CJEU case law contained in Weber v Ogden.203 When their task of exploiting natural resources is exclusively performed in the territorial waters of one state, maritime or fishing activities are assimilated to any other work performed at a permanent establishment in the country. When the work is performed on the high seas, in an area not subject to state sovereignty or in different maritime areas, public international law supports the application of the law of the flag by ‘placing’ all matters related to the ship, including maritime employment, under the authority of the flag state, as acknowledged by Article 5 of the Convention on the Law of the Sea, and in particular Article 94 of UNCLOS. This connecting factor prevents the permanent shifting from one law to another depending on the waters through which the vessel is sailing, in addition to submitting all employment relationships on board to the same law, in principle guaranteeing equal treatment for all workers on board.204 All in all, this fiction receives broad doctrinal support205 and is also underpinned institutionally, as proved by different statements in programmatic206 and legal texts,207 as well as case law.208
Flags of convenience challenge this equation. Once the assimilation of a vessel to a territory of the flag state is rejected, other arguments seek to strengthen the connection between them,209 in particular those highlighting the powerful socio-economic bonds between the state and the vessel flying its flag, a connection that becomes weaker when the flag state is a flag of convenience. From a conflict of laws viewpoint, the finding that there is no such close link between the vessel as a workplace and the state whose flag it flies has led to the loss of its central role in establishing the applicable law to an employment contract, as various events show.
The first of these instances is provided by states that have lost their fleet in favour of flags of convenience and have also lost a considerable number of jobs besides, since seafarer’s and fishermen’s fates are inextricably linked to the ship on which they provide their services, now a vessel flying a foreign flag. When disputes arise, seafarers still lodge their claims at home, and the law of the flag no longer seems to be the most appropriate one to govern maritime employment; consequently, the courts resort to different mechanisms to apply what they think to be the closest law, the lex fori.210
In the framework of the fight against flags of convenience, it has been suggested that a measure could be introduced involving piercing the veil and thus not recognising the flag when a vessel should in fact be flying a different flag if the shipowner’s nationality is taken into consideration. This would amount to establishing a sanction where there is to be no genuine link with the flag state, resulting in the non-recognition of the flag being flown by the vessel in question.211 A variation of this doctrine is one that directly pushes the law of the flag into the background and brings to the fore the law of the ship’s ‘base of operations’. This approach has been advocated by the United States of America; for example, the Seamen’s Act of 1920 establishes U.S. jurisdiction and the application of the law of the forum to ‘a seaman on a foreign vessel when in harbor of United States’.212 Fair competition is at stake here and would be damaged if the same standards were not applied to all ships docked at U.S. ports. This background led to the U.S. jurisdiction deciding on the living and working conditions on board the vessel according to the principle of ‘base of operations’,213 namely, proving that there is a link between the case and the U.S., taking into account the place where the accident occurred, the place where the seafarer is domiciled and the employer is based, the place where the contract was concluded, the degree of inaccessibility of the foreign forum for the claimant and the lex fori.214 In the same vein, the Australian Fair Work Act 2009 determines its application beyond the Australian exclusive economic zone and continental shelf to any ship operated by an Australian employer and that uses Australia as a base.215
The third situation refers to the establishing of second and international registries by traditional seagoing nations to counteract the loss of their maritime and fishing fleets, which also has implications for the flag as a connecting factor.216 In their endeavours to reduce labour costs, different pieces of legislation break the law of the flag’s monopoly over the crew by distinguishing between seafarers and fishermen with habitual residence in the registration state and those without it. With this distinction, crews of convenience—deprived of any of the benefits of the law of the flag as the most favourable to labour rights—make their appearance along with flags of convenience.
These situations merge together to suggest the need to find a different connection to govern employment relationships on board.217 Before the CJEU Voogsgeerd v Navimer judgment, all alternatives proposed for the application of the law of the flag sought to avoid the habitual workplace as a connecting point. Conversely, the Court’s decision mentioned above focused on this connection to give it a new twist.218
Following the line initiated by the CJEU in Mulox v Geels and Rutten v Cross Medical,219 Article 8(2) of the Rome I Regulation was drafted in different terms from Article 6 of the Rome Convention, such that ‘the contract shall be governed by the law of the country in which or, failing that, from which the employee habitually carries out his work in performance of the contract’. The innovation in this rule is to be found in the italicised words, which provide a legal answer to all cases in which workers perform their tasks in different countries but still have a base of operations, which is what usually happens in the air transport sector. The question here is whether these terms are also applicable to the shipping or fishing venture, covering by extension all those bound by an employment contract to be carried out at sea.220 The starting point to the discussion is that in principle the explanation accompanying the new provision does not take into account other staff apart from airline personnel who work in non-sovereignty areas.221
This discussion seems to have found a tipping point with the Voogsgeerd v Navimer case, the main arguments of which are revisited below. The case involved an engineer—a Dutch national—hired by a Luxembourg firm, Navimer S.A., to serve on two vessels owned by the company and operating in the North Sea. In the account of the facts, no reference was made to the flags flown by the two vessels, but Mr. Voogsgeerd’s wages were paid by an agency located in Luxembourg, where his pension and sickness contributions were also being paid. The employment contract contained a choice of law clause submitting it to the law of Luxembourg. However, besides these contacts with Luxembourg, the worker had concluded his employment contract at the headquarters of a different company, Naviglobe N.V., based in Antwerp (Belgium), where he had to go for instructions and where he usually returned at the end of his voyages. On the basis of these contacts, when Mr. Voogsgeerd was dismissed he filed a claim against Navimer and Naviglobe in Antwerp under Belgian law, which he found more favourable to his position than Luxembourg law, according to which the time limit for filing a claim had expired.
The preliminary questions put to the CJEU avoided Section (a) of Article 6(2) of the Rome Convention and focused on Section (b), therefore mainly dealing with the notion of the business which engaged the employee. Nevertheless, the CJEU redirected the determination of the law applicable to the contract in the absence of choice of law to the habitual workplace, taking into account that ‘the aspects characterising the employment relationship, as referred to in the order for reference, namely, the place of actual employment, the place where the employee receives instructions or where he must report before discharging his tasks, are relevant for the determination of the law applicable to that employment relationship in that, when those places are situated in the same country, the court seized may take the view that the situation falls within the case provided for in Article 6(2)(a) of the Rome Convention’.222 Thus, all the circumstances surrounding a worker’s tasks should be assessed in order to determine ‘whether the employee, in the performance of his contract, habitually carries out his work in any one country, which is that in which or from which, in the light of all the aspects characterising that activity, the employee performs the main part of his duties to his employer’.223
The judgment cited and its doctrine are striking in the framework of the ongoing discussion on the law applicable to maritime employment above since at no point do they even mention the law of the flag as the law potentially governing the employment relationship.224 For this very reason, the judgment does not tackle the issue of flags of convenience and whether or not Luxembourg should be considered one of them. By remaining silent on this issue, the CJEU completely ignored the peculiarities of the maritime world, which were indeed taken into account by the Giuliano-Lagarde Report and the drafters of the Rome II Regulation.
Moreover, by disregarding both precedents, the CJEU put carriers—the subject matter of Koelzsch v Luxembourg—and seafarers—the subject matter of Voogsgeerd v Navimer—on an equal footing. Thus, it takes for granted that there actually is a base of operations, although this is not easily identifiable in the shipping and fishing sectors, and the alternatives point to places that can be easily manipulated by employers, such as the base port of the ship225 or the manning agency that recruits seafarers and gives them travel and work instructions. One case can be identified, that of ferries sailing the same route between countries with workers embarking and disembarking at the same port.226 But in general, the assessment required in Voogsgeerd v Navimer is highly flexible in the current framework of growing offshoring trends intensified by free ship registration, business cooperation and the ability to recruit crews all over the world.
However, the main criticism of Voogsgeerd v Navimer affects the conflict of laws technique, as it does not acknowledge the modus operandi of Article 6 of the Rome Convention or Article 8 of the Rome I Regulation, not only because it undermines the role of the alternative connection to the habitual workplace but also because it obliges the seized court to consider all activities when deciding where the main workplace is, similar to an escape clause. In fact, it could even be said that it transforms the very nature of this connecting factor—the habitual workplace—which is legal and not factual in that it is necessary to determine the characteristic performance of the contract, ergo what type of workers are being dealt with and what the core tasks assigned to them are to then establish where the workplace actually is.227 In this vein, it does not seem reasonable to accept that a naval engineer’s main tasks are picking up his travelling instructions and reporting back to a given business, for example. It seems that lying behind the CJEU’s decision was an attempt by the Court to solve the controversy ex post, which lacked an appraisal of what is really at stake and of how to avoid conflicts ex ante.228
Voogsgeerd v Navimer can also be challenged on grounds of the interests at stake, given that it ignores the special features of work at sea, as already noted. Article 8 of the Rome I Regulation and Article 6 of the Rome Convention aim at foreseeability and so prefer a connection that is close to both parties to the contract, employee and employer. In the current context of wild offshoring, these parameters are better met by the law of the flag than by other connecting factors: the flag state is the only one that is internationally obliged to guarantee workers on board ship certain working and living conditions; any other connection leaves it up to the respective state to provide these conditions.
As seen above,229 the diplomatic struggle to strengthen the link between a state and vessels flying its flag has produced mixed results at best because although all states are still free to grant their flags to vessels under the conditions they themselves impose, indirect controls over flag state activities have increased through the development of uniform legal instruments and port state control measures. MLC, 2006, and WFC, 2007, reflect this trend, which aimed to undermine flags of convenience by specifying flag states’ obligations towards seafarers and fishermen and by making port states also responsible for monitoring compliance with these obligations. Despite the counterweights to the flag state, the reading of these Conventions reveals that vessels sailing on the high seas have to primarily organise legal relationships on board according to the law of the country whose flag they are flying.230
Furthermore, it is important to be aware of the many difficulties involved in classifying a state as a flag of convenience,231 which are precisely the same hurdles that can be encountered when deciding on the existence of a genuine link between the flag state and the vessel in question, which means that this problem cannot be addressed by simply stating that some countries are flags of convenience. In fact, from the conflict of laws viewpoint, it seems more reasonable to address this issue in accordance with Article 8 of the Rome I Regulation: if the law of the flag is not closely connected with the employment contract in question, the seized court must turn to the escape clause to determine the closest law.232
Mobile Workers: The Voogsgeerd v Navimer Doctrine
Voogsgeerd v Navimer altered the architecture of both maritime and private international laws by failing to consider their peculiarities and techniques. Nevertheless, this judgment’s meaning can be put into context by taking into account the series of decisions of which it forms a part, all relating to mobile workers.233 In the case in question, the worker performed his duties on more than one vessel—although they both shared the same characteristics—and always had to visit a specific business to receive his instructions. Because of this, he was to be deemed to be a mobile worker, meaning that he was the one moving from one workplace to another and his workplaces were in turn located in different states or in areas not subject to territorial sovereignty. In such cases, work is carried out on an unspecified vessel, and the point of reference in the search for the closest connection to the employment relationship must therefore be the company and not the vessel.234
The situation is totally different when workers do not actually move from their workplace, which is itself characterised by being mobile;235 in these cases, the flag must survive as a connecting factor. In contrast, where mobile workers are concerned, the Voogsgeerd v Navimer doctrine has to play a leading role because of well-established CJEU case law that underlines the fact that these workers also have a habitual workplace, namely the place from where they discharge the essential part of their duties towards their employer.236 In identifying seafarers’ principal place of work, the seized court cannot disregard public international rules, though, as the CJEU seems to take for granted by not making any reference to the flag state in Voogsgeerd v Navimer. As a matter of fact, resorting to public international rules is imposed by the concept habitual workplace, as it requires to establish, first, which are seafarers’ tasks and, second, the place where the essential part of them are discharged to the employer; should they take place in an area subject to public international law, this has to be taken into account by the seized court.237