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”.


English Law, which the employer and the employee had twice chosen to govern their employment relations, must not take precedence over the mandatory and more protective provisions of another legislation which would be designated pursuant to paragraphs 2 to 4 of the provision above.


In this case, paragraph 2 referred to French Law, since Mr. Z used to do his work from the port of Antibes “with the exception of a few rental periods not exceeding a fee weeks per year”. However, the trial judges did not fail to point out that French Labour Law was more protective than English Labour Law on a specific point : “[w]hile in French Law, failure to state the reason for dismissal in the dismissal letter makes it without real and serious cause, in English Law [Employment Act (2008)], failure to comply with the legal procedure does not automatically make the dismissal unjustified. It is for the Court seised to determine whether failure to comply with the procedure renders the dismissal unjustified”.


Mr. Z, whose letter of dismissal did not contain any reason, was well founded in requesting the eviction of English Law for the application of French Law.


“Vendôme Luxury Boats” sought one last time to exclude the applicability of French Law before the Court of Cassation. After recalling that the trial judges had discretion over the facts and evidence capable of demonstrating the more or less protective nature of conflicting laws, it only remained for the judges of the Social Chamber to validate the application of Article 8 or the Rome I European Regulation by the Grasse Labour Court, as confirmed by the Aix-en-Provence Court of Appeal.


In short, French seamen employed on ships flying a foreign flag or whose employment contract is governed by Foreign Law still benefic from the mandatory and more protective provisions of French Law in the field of Labour Law, provided that the employment relationship falls within the scope of the “Rome I” Regulation, that the case is brought before a Court of a Member State of the European Union and that the employment contract concerned was concluded after December 17, 2009.


Employment contracts concluded before this date are covered by Article 6 of the Rome Convention of June 19, 1980, on the Law Applicable to Contractual Obligations :


1. Notwithstanding the provisions of Article 3, in a contract of employment a choice of law made by the parties shall not have the result of depriving the employee of the protection afforded to him by the mandatory rules of the law which would be applicable under paragraph 2 in the absence of choice.

2. Notwithstanding the provisions of Article 4, a contract of employment shall, in the absence of choice in accordance with Article 3, be governed:

(a) by the law of the country in which the employee habitually carries out his work in performance of the contract, even if he is temporarily employed in another country; or

(b) if the employee does not habitually carry out his work in any one country, by the law of the country in which the place of business through which he was engaged is situated;

unless it appears from the circumstances as a whole that the contract is more closely connected with another country, in which case the contract shall be governed by the law of that country”.

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