Law & Jurisdiction in Crew Contracts – Beware!

By 12 July 2018 July 30th, 2018 News

Time and again, clients ask us to assist with a yacht arrest in France linked to an employment dispute where the crew member is relying on French law to seek damages for the wrongful termination of his contract or some other issues linked to his employment. Invariably, the yacht owner or the owner’s rep points out that the employment contract is subject to some other law and/or jurisdiction, usually that of the flag state, and that France has nothing to do with it, whatsoever. Unfortunately, this could not be further from the truth.

Let us be very clear: law and jurisdiction clauses are anything but fool proof in employment contracts and this is not something specific to France. This is because most legal systems recognise certain types of contracts (mainly consumer and employment contracts) as requiring more protection because of the imbalance in the bargaining power of the parties, which tends to force the weaker party to agree certain clauses without real choice.

As a result, whether in France or in other EU or non-EU countries, a jurisdiction clause in an employment contract will generally only be effective if agreed between the employer and the employee after the dispute has arisen or if it is relied upon by the employee against his employer. The rest of the time it is unlikely to be effective and the tribunal seized by the employee will generally accept jurisdiction regardless if it is either the country where the yacht was arrested by the employee for the purpose of securing his claim or the country where the employee habitually carried out his work or, if no single habitual place of work can be identified, where he was engaged.

Similarly, if you have chosen a law in your employment contract different from the law of the place where the yacht generally operates, it is likely to backfire, forcing you to pay compensation to a crew member pursuant to a legal regime you had not anticipated. This is because most employee protection laws, whether in France or in other EU or non-EU countries, are “mandatory rules” which the jurisdiction seized by the employee will apply automatically if it is more favourable to the employee than what the chosen law of the employment contract says. So even if you took care to select a law which had a genuine link to the employment such as the law of the flag, this selection will usually be powerless to block the mandatory rules of the jurisdiction most closely connected to the employment contract. Going further, both sets of laws will end up protecting the crew member and give him the ability to “cherry pick” whichever rules give him better protection whilst you waste significant legal costs by wrestling with translation issues and foreign expert costs to try to prove what the chosen law of the contract says – to no effect.

Accordingly, if you have used a law and jurisdiction clause in your employment agreements, review its content without delay. If the country you have chosen does not correspond to the country most closely connected to the contract, we suggest that you either amend the clause to make this consistent or anticipate that the legal regime of this country may also apply to your contractual relationship, particularly so in case of dismissal.

samuel

About samuel

Avocat (Barreau de Nice) & Solicitor (England & Wales)

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