Armada 2019 - Foreign Flag and Conflict of Laws

Applicability of French Law to the Employed Captain of a Ship Flying a Foreign Flag (English) under a Foreign Law Employment Contact

On February 20, 2019 (decision No. 17-20532), the Social Chamber of the French Cour de cassation validated a decision (No. 16/06204) of the Court of Appeal of Aix-en-Provence, which had decided to apply the more favourable provisions of French Labour Law to an employment contract the employer and the employee had nevertheless chosen to submit to English Law.

Mr. Raphaël Z was hired on June 20, 2007 as a pleasure boat master by “Vendôme Luxury Boats”, a company based in the Isle of Man which was renting the “Winning Streak”, a yacht flying the British flag. The parties signed two successive employment contracts; one for a fixed-term, followed by a second for an indefinite duration. Each provided that English Law shall apply to it as the legislation of the ship’s flag. On September 25, 2013, Mr. Z was subject of a dismissal. He challenged its legality before the Labour Court of Grasse, whose territorial jurisdiction was triggered both by the usual mooring port of the “Winning Streak” (Antibes) and by the employee’s home (Cagnes sur Mer).

By a judgement of March 9, 2016, the Labour Court ordered “Vendôme Luxury Boats” to pay several indemnities, damages and interest for the dismissal of Mr. Z without real and serious cause under French Law. The employer appealed, challenging in particular the French judge’s decision to apply French Law to the dispute, although the parties of the employment contract had freely chosen to prefer English Law.

This was without counting on the European Regulation (EC 593/2008) of June 2008, 17 known as “Rome I” on the Law applicable to Contractual Obligations. Article 8 establishes the following conflict-of-law rule for individual employment contracts :

1. An individual employment contract shall be governed by the law chosen by the parties in accordance with Article 3. Such a choice of law may not, however, have the result of depriving the employee of the protection afforded to him by provisions that cannot be derogated from by agreement under the law that, in the absence of choice, would have been applicable pursuant to paragraphs 2, 3 and 4 of this Article.

2. To the extent that the law applicable to the individual employment contract has not been chosen by the parties, 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 country where the work is habitually carried out shall not be deemed to have changed if he is temporarily employed in another country.

3. Where the law applicable cannot be determined pursuant to paragraph 2, the contract shall be governed by the law of the country where the place of business through which the employee was engaged is situated.

4. Where it appears from the circumstances as a whole that the contract is more closely connected with a country other than that indicated in paragraphs 2 or 3, the law of that other country shall apply”.