The Borgarting Court of Appeal recently ruled in a case regarding choice of law in an international employment dispute. The case, which is still pending before the courts, demonstrates the various issues that can arise in international employment disputes.

Facts

An Italian employee entered into an employment contract with an Irish staffing company in March 2012. According to the contract, the employee was to be hired out to Ryanair Limited as a customer service agent and crewmember. The contract was time limited for three years. The employee lived in Italy at the time of the agreement, while both the staffing company and Ryanair had their main offices in Ireland. The contract stated that the employment relationship was subject to Irish law and jurisdiction. The salary was paid to the employee's account in Ireland. Furthermore, the employee paid income tax to Ireland and was a member of the Irish social security system.

The employee was initially based at Rygge airport in Norway. However, Ryanair reserved the right to relocate the employee to another airport where it operated, without compensation.

In January 2013, 10 months into the employment, the staffing company dismissed the employee without notice. The employee disputed the dismissal and instituted legal proceedings before the Moss District Court in April 2013.

Jurisdiction

The district court first evaluated whether the dispute was subject to Norwegian jurisdiction. The question went all the way to the Supreme Court, which in June 2014 upheld the Bogarting Court of Appeal decision, accepting Norway as the legal venue for the dispute.

The decision was based on a concrete evaluation of where the employee had habitually carried out her work, taking into consideration:

  • the Lugano Convention;(1)
  • the Civil Procedure Act;(2) and
  • European Court of Justice (ECJ) case law.

The Bogarting Court of Appeal had found that the employee had mainly carried out her work during the flights, but pointed out that she had had some assignments on the ground. The Supreme Court emphasised that the employee was obliged to reside close to the airport in Norway, and that the airport in Norway was therefore not just the place of enrolment, but also the employee's natural connection point with respect to both work and leisure.

The Norwegian courts were considered competent to decide on the matter, regardless of the clause in the employment contract which stated that the employment relationship was subject to Irish jurisdiction.

Choice of law

The next issue that arose was the choice of law. On October 16 2015 the Bogarting Court of Appeal concluded that the case was subject to Norwegian law.

The court based its decision on the Norwegian non-statutory choice of law rules, which specify that choice of law shall be determined by an overall consideration of which country the case has the strongest connection to (the 'Irma-Mignon formula'), unless otherwise agreed. In view of European legal unity, the court took into consideration the Rome I Regulations. According to Article 8 of the regulations, an employee may not by choice of law be deprived of the protection afforded to his or her by provisions that cannot be derogated from by agreement under the law that would otherwise apply. The court examined the relevant ECJ case law, and concluded that the case would be governed by Norwegian law if the parties had not agreed on Irish law. The court also found that the employee enjoyed greater employment protection under Norwegian mandatory law compared to Irish law, and thus concluded that the case was subject to Norwegian law.

Currently, this decision is not legally binding. Ryanair has stated that it will appeal to the Supreme Court.

After a final decision regarding choice of law, the court shall hear the actual employment dispute (ie, the case concerning the dismissal). This might take several years, depending on a possible appeal process.

Recognition and enforcement

The third issue that can arise in international employment disputes, as well as other international legal disputes, concerns recognition and enforcement of a court decision in a foreign country. It is unhelpful to have a court decide in your favour if the other party has no operations or property in the country where the decision was made. The winning party is therefore dependent on a decision being enforced in another country.

This case involves EU and European Free Trade Association (EFTA) countries that are regulated by the Lugano Convention and the Brussels I Regulation. The main rule states that decisions in EU and EFTA countries are, subject to certain exemptions, applicable in all EU and EFTA countries. However, the enforcement may be a time-consuming and complicated process.

Comment

This case demonstrates the various issues that can arise in international employment disputes, which parties should be aware of when entering into international employment contracts.

It is important that parties seek advice on the various possibilities and restrictions with respect to jurisdiction, choice of law and enforcement.

For further information on this topic please contact Ole Kristian Olsby at Homble Olsby Advokatfirma AS by telephone (+47 23 89 75 70) or email (olsby@homble-olsby.no). The Homble Olsby Advokatfirma website can be accessed at www.homble-olsby.no.

Endnotes

(1) Article 19(2).

(2) Sections 4-5, Paragraph 4.

This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.