United Kingdom Employment Appeal Tribunal

Appeal No. UKEATS/0019/13/JW

 

EMPLOYMENT APPEAL TRIBUNAL

52 MELVILLE STREET, EDINBURGH, EH3 7HF

 

 

                                                                                                                At the Tribunal

On 15 and 16 October 2015

written submissions April and June 2016.

 

 

 

Before

THE HONOURABLE LADY STACEY

(SITTING ALONE)

 

 

 

 

MR HORST WITTENBERG                                                                         APPELLANT

 

 

 

 

SUNSET PERSONNEL SERVICES LIMITED                             FIRST RESPONDENT

TIDEWATER CREWING LIMITED                                        SECOND RESPONDENT

TIDEWATER MARINE NORTH SEA LIMITED                       THIRD RESPONDENT

FAIRWAY PERSONNEL SERVICES LIMITED                    FOURTH RESPONDENT

TIDEWATER MARINE INTERNATIONAL INC.                       FIFTH RESPONDENT

TIDEWATER INC.                                                                        SIXTH RESPONDENT

 

 

 

JUDGMENT

 

 

 

 

 

 

 

 

 

 

APPEARANCES

 

 

 

 

 

For the Appellant	Mr A OHRINGER (Counsel) Instructed by: Zimmers Solicitors 7- 9 Ferdinand Street London NW1 8ES
For the First Respondent         For the Second to Sixth Respondents	Debarred from proceedings         Mr A KEMP (Solicitor) Clyde & Co 4 Carden Terrace Aberdeen AB10 1US

 

SUMMARY

 

Jurisdictional points and territorial scope.  Working outside the jurisdiction. Unfair dismissal, discrimination, Working Time Regulations, and breach of contract.

 

The claimant was a mariner who worked off shore Nigeria.  He lived in Germany.  His employer was a limited company registered in Scotland and operating from Aberdeen.  The Employment Tribunal (ET) did not err in law in deciding that there was no territorial reach in respect of claims under the Employment Rights Act 1996, the Equality Act 2010, and the Working Time Regulations.  The appeal is refused and the case remitted to the ET to hear the claim for breach of contract.

 

 

 

THE HONOURABLE LADY STACEY

 

Introduction

1.               This appeal has a long procedural history.  Following the first decision by the Employment Tribunal (ET) I heard an appeal which resulted in my remitting the case to the ET for further consideration of the question concerning who was the employer of the claimant.  I did so because that was necessary to consider fully the subsequent questions of territorial reach in the case.  The ET gave its decision on 22 June 2015.  Parties accepted the decision in so far as relating to the identity of the employer, and allowing the case to be heard on the claim of breach of contract.  The claimant continued his appeal against the decision on territorial reach.  I then heard submissions from parties over two days in October 2015.  I requested submissions on the effect of the Equality Act (Work on Ships and Hovercraft) Regulations 2011 and the case of Hasan v Shell International Shipping (PTE) Ltd UKEAT/0242/13.  Further written submissions were made in April and again in June 2016, enabling me to consider up to date decisions submitted by parties as relevant. Both parties raised matters said not to have been raised at first instance. It was agreed that they were matters of law, and that they required no further fact finding. I decided they should be heard. This judgment should be read in conjunction with my earlier judgment, seal date 13 August 2014.  Both judgments of the ET dated 18 January 2013 and 22 June 2015 are relevant.

 

The Issues

2.               The dispute between the parties at the ET concerned claims under the Employment Rights Act 1996 (ERA), the Equality Act 2010, the Working Time Regulations 1998, and a claim for breach of contract at common law.  The ET decided that there is no territorial reach in respect of the statutory claims, and that there is jurisdiction in respect of the common law claim.  The matters that remain in dispute is that of jurisdiction in the sense of territorial reach for the claims of unfair dismissal, failure to make a redundancy payment, failure to provide written reasons for dismissal, failure to provide written a written statement of terms and conditions, complaints of discrimination on grounds of race and age under the Equality Act 2010, and a claim under Regulation 30 of the Working Time Regulations 1998 for payment in lieu of annual leave.

 

3.               As the terms “territorial reach” and “jurisdiction” are sometimes used interchangeably, it may be useful to state that counsel referred me to two  articles by Louise Merrett in the Industrial Law Journal, volume 39, 2010 and volume 44, 2015. Both articles are interesting for the author’s views. Both set out clearly the complications which arise in these cases. Although the author refers to England her remarks are also applicable to Scotland. In the second article the author states as follows at paragraph 2:

“Territoriality and jurisdiction in international employment cases.

The question of whether an employee can rely on British employment rights to bring a claim in England involves three separate, conceptually distinct, but interrelated elements:

(i) Can the claim be brought in England? This is a question of international jurisdiction.

(ii) Does British employment law apply either because (a) the contract is governed by English law or (b) the statute relied on is an overriding provision of English law. These are issues concerning applicable law.

(iii) Even if the claim can be brought in England and English law applies, the statute relied on may have its own (express or implied) requirements as to territorial scope.”

 

I refer to the definitions set out above to remind myself and readers of the different questions which arise.  In the course of my judgment, I have referred to territorial scope or territorial reach as synonyms. This case is about territorial scope.

 

The facts found by the ET

4.               The claimant is a German national, who lives in Germany and who worked as a chief engineer aboard a ship, The Wilburt Tide.  The identity of his employer was hard to ascertain; put broadly he worked as part of the Tidewater Group, the parent company of that group being Tidewater Inc., a US Corporation, the main business of which was to provide

‘offshore service vessels and marine support services to global offshore energy industry through the operation of a diversified fleet of marine service vessels’

 

as found by the ET in its first judgment.

 

5.               The ET decided that the employer at the time of dismissal, November 2011, was a company which I will refer to as “Fairway”. (The company has changed its name to Tidewater Support Services Ltd.  While I allow the name to be amended in the papers before me, like the EJ, I will continue to refer to it as Fairway, in the interests of clarity.)  That company is registered in Scotland and has a place of business in Aberdeen.  It is part of the Tidewater Group.  The work which the claimant carried out was mostly offshore Nigeria, with a small part of his work being offshore elsewhere, though never in UK waters.  The identity of his employer has now been determined by the ET and not appealed.  As his employer is a company which carries out business from premises in Aberdeen, it is agreed between parties that there is jurisdiction for the claim of breach of contract at common law.

 

6.               The claimant’s work, that of a mariner,  was not carried out inside the UK; he is a German national, and therefore a citizen of the EU; his work was not carried out in the EU, although it could be argued that his home in Germany was his base from which he went to and returned from work.  While the evidence about his contract of employment was scanty it appeared that the proper law of the contract is ‘the laws of the UK’.  The contract between the claimant and Sunset provided that

“24. The interpretation and enforcement of this contract of employment is subject to the laws of the United Kingdom.”

 

Further, it provided in appendix E that that the Code of Conduct for the Merchant Navy applied.  That code, in the version current at the time is printed in appendix E of the contract.  It refers to dismissal hearings taking place in the UK. In its last paragraph it states

“16. Nothing in this Code of Conduct should be read as negating any seafarer’s right to bring an unfair dismissal claim before an Industrial Tribunal as provided in the Employment Protection (Consolidation) Act 1978.”

 

7.               The ET found that the claimant’s employment began in May 1998 with a written contract of employment with Sunset Personnel Services Ltd (Sunset) which contained terms and conditions typically found in a British contract of employment. Sunset ceased to exist at some time before the events which led to the dismissal in 2011, but there was no evidence of how the claimant’s employment continued.  He went to sea and was paid for doing so, but no new contract was produced and no evidence led of the terms of any contract.  The respondent was unable to produce any contract with the claimant after the one with Sunset.  The ET accepted the claimant’s evidence that in the 10 years or so before his dismissal the only contact he had with anyone about terms and conditions of employment was with “Aberdeen” by which he meant personnel in Fairway in Aberdeen.  The letter of dismissal dated 1 November 2011 was from Mr Hewlett who worked in Aberdeen, who stated that he wrote on behalf of Fairway.  The ET found that the claimant did not have any relationship with Tidewater Marine International Inc. (TMII);  it also found that the claimant’s duties were carried out as part of the operation conducted by TMII, at paragraph 96 (b) of the second judgment.  The ET expanded that by finding that the overall control of marine operations was under the supervision of Mr McGimpsey who was acting manager of TMII, operating through the office of that company in Aberdeen.  Mr McGimpsey lived and worked in Nigeria but took instructions from Mr Handin who worked in Aberdeen.  In the first judgment the ET found that TMII was a wholly owned subsidiary of Tidewater Inc.  It was incorporated in the Republic of Panama and was the primary operating entity for Tidewater Inc.  It exercised control over Tidewater vessels in Nigeria.  Its principal place of business was New Orleans, Louisiana, USA.

 

8.               The ET summed up the situation in paragraph 40 of the second judgment thus:

“40. ….The claimant’s services as chief engineer were performed on the vessel which had been chartered by Mobil. The vessel’s operations were conducted by TMII through Mr McGimpsey as manager for the area, as part of its business. It may be said on one view that the ultimate beneficiary of the work was Mobil, but more directly the claimant’s work as chief engineer was part of the operation of the vessel and accordingly I regard his services as having been performed for TMII; but that on its own does not necessarily mean he was their employee.”

 

The ET went on to find that the employer was Fairway, a company registered in the UK and part of the Tidewater Group, which had an office in Aberdeen.

 

Submissions for the Claimant

9.               Mr Ohringer, counsel for the claimant, relied on the original findings and on additional findings made in the second judgment which he argued were relevant to show that the ET had erred in law.  The ET found that the only relationship being conducted by the claimant as regards his employment terms and ongoing arrangements in the last 10 years of his employment was with Fairway.  The maritime operations in Nigeria were for and under the control of TMII which operates out of offices in Aberdeen.  That is the company for whom the claimant performed the services.  While Fairway calculated the claimant’s monthly pay and operated the payroll, the real paymaster was TMII. Fairway had control of some aspects of the employment arrangements such as assigning seafarers to particular vessels, in some cases at least preparing and issuing terms and conditions of employment, calculating wages and issuing payslips, making travel arrangements for seafarers, arranging medical examinations and making decisions to terminate employment.  Day‑to‑day control of the claimant was by master of the vessel but he was under the control of Mr McGimpsey who acted as area manager for TMII.  Salary levels were discussed between Mr McGimpsey in Nigeria and Mr Hewlett’s office in Aberdeen;  Mr McGimpsey had the power to make the decision to dismiss although intimation of a decision to employees came from Aberdeen.  Fairway acted autonomously in carrying out administration in relation to human resources functions and payroll.  After an accident on board the vessel, Mr McGimpsey decided that he did not want the claimant working in Nigeria, but it was a Fairway decision to terminate his employment.  Thus, Mr Ohringer argued that the strength of the relationship with the respondent’s offices in Aberdeen had only been amplified in the new judgment.

 

10.            Counsel argued that the claimant had connections with Aberdeen because the ET had found that Fairway employed him, and that the real beneficiary of his work was TMII, a company which shared the office in Aberdeen with Fairway.  He argued that the centre of gravity of the employment relationship was in Aberdeen.  He accepted that some factors found by the ET militated against that.  Firstly the claimant is a German citizen who lives in Germany.  He paid neither tax nor national insurance in Great Britain.  Counsel argued that little weight should be attached to that, in light of the claimant living in the EU, where there is freedom of movement of workers.  Secondly, the work is carried out outside both Great Britain and the EU.  He argued that while that had to be weighed in the balance, it was not decisive.

 

11.            Counsel argued that there had been several new developments within the law.  He argued that the ET applied the wrong test for territorial jurisdiction applicable to workers who are working abroad in that the EJ said that territorial jurisdiction existed only if the connection with Britain was especially strong.  He should have carried out a comparative test, as required by the cases of Ravat v Halliburton Manufacturing & Services Ltd [2012] ICR 389, paragraphs 27 and 33, and Bates Van Winkelhof v Clyde & Co [2013] ICR 883 paragraph 98.  He recognised that the dicta in Bates was obiter.  In the more recent case of Dhunna v Creditsights Ltd [2015] ICR 105, the Court of Appeal reversed the judgment of the EAT,  but agreed with that the analysis of law given in the EAT judgment.  The difference was in evaluation of the exercise carried out by the ET.  Counsel accepted that the Court of Appeal was satisfied the ET had carried out a proper analysis to enable it to decide the test which is sets out in paragraph 41

“The authorities make it clear that the general rule is that someone in Mr Dhunna’s position is on dismissal excluded from any right to claim under section 94(1) of the Employment Rights Act 1996. If he wishes to show that, exceptionally, his case is not caught by that general rule, but that he is within the territorial jurisdiction of section 94(1), he must be able to show that his employment relationship has a sufficiently strong connection with Great Britain and British employment law such that it can be presumed that Parliament must have intended that section 94(1) should apply to him.”

 

But he argued that it was not enough to look at the connection or lack of it with Great Britain; it had to be a comparative exercise.

 

12.            Counsel referred to my own judgment in the case of Fuller v United Healthcare Services Inc. (UK EAT/0464/13) which he argued implied that the “nationality of the employment relationship” was relevant.  He referred to the article by Louise Merret in Employment Law ILJ 2015 44 which states that the correct exercise is to “identify the most appropriate system of law, usually either because it was chosen by the parties or because it is the law with the closest connection to the dispute, and to take that appropriate law as you find it.”

 

13.            In the case of Ministry of Defence v Holloway (UK EAT/0396/14), the application of the comparative analysis enjoyed the support of Langstaff (P).  Counsel also referred to the case of R (Hottak) v Secretary of State for Foreign and Commonwealth Affairs [2016] EWCA Civ 438, which showed that the question to be decided was where the worker had the stronger links.  In that case it was decided that the claimants had stronger links to Afghanistan and to Afghan law than to the UK. Counsel also argued that the case of Lodge v Dignity and care in Dying (2015) I RLR 184 was relevant, where the EAT identified the following factors as being relevant to jurisdiction:

1.         whether the claimant would have a right to bring a claim in the competing jurisdiction; and,

2.         The jurisdiction in which any grievance to be handled under the employer’s rules.

 

14.            Counsel argued that the parties’ expectations were relevant, as in the case of Powell v OMV Exploration & Production Ltd UKEAT/0131/13, paragraph 58.  In the current case the original contract states that disputes would be dealt with by UK law.  Not only did the parties select “the laws of the United Kingdom” as the proper law of the contract, but they also referred to the Merchant Shipping Code.

 

15.            Mr Ohringer argued that the EJ in the current case had not undertaken the necessary comparative exercise.  He had decided that there was not the required connection to Great Britain, but had not compared any British connection to any other connection.  The ET had not identified any other alternative jurisdiction.  As part of this submission, counsel argued that the tribunal failed to recognise that the effect of its decision on jurisdiction is that the claimant’s employment has no statutory protection in any country despite being employed by a British entity.  Counsel argued that could not have been the intention of Parliament.

 

16.            Counsel then argued that the ET having decided that the Scottish ET was the appropriate forum for the breach of contract, and that the proper law of the contract is Scots law, it was inconsistent to find that there was an insufficiently strong connection with Britain for the ET to hear the statutory claims.  The proper law of the contract was an important indication of what the parties expected.  In the case of Holloway Langstaff J (P) found that a mistake in identifying the applicable law was vital, such that he remitted the case to the ET.  Counsel accepted that choice of law was not definitive, but argued that it was of great importance.  The ET had erred in law in its treatment of the applicable law in paragraphs 213 and 214 of the first judgment.  The ET had found that while the applicable law had to be weighed in the balance, it could not have any great weight because of the terms of section 204 of ERA.  Counsel argued that section was in a part of the act headed “Contracting out etc. and remedies”.  Section 203 prevents contracting out of the provisions of ERA.  Section 204 provides that it is immaterial whether the law which (apart from this Act) governs any person’s employment is the law of a part of the UK or not. 

 

17.            Counsel then argued that the conclusion that there was an insufficient connection between the claimant’s employment and UK was perverse.  The ET had found that the claimant was under the operational control of TMII, operated from Aberdeen, and the administrative control of Fairway, also operating from Aberdeen.  He argued that in the case of Ravat working for the benefit of a UK company was held to be an important factor.

 

18.            Turning to the EU dimension, counsel argued that the ET decided that the principle in the case of Bleuse v M B T Transport Limited [2008] ICR 488 applied to extend the tribunal’s jurisdiction to provide an effective remedy for breaches of EU law only where the work was undertaken in the EU.  He argued that if the claimant’s employment was within the scope of the Equal Treatment Directive it is necessary to interpret the territorial scope of the Equality Act 2010 in such a way as to give effect to that.  Since the first EAT hearing the point had arisen in the case of Hasan v Shell International (UK EAT/0242/13) in which the EAT declined to allow the argument to be presented because it had not been raised below.  The EAT did however indicate that the principle in the case of Bleuse applies only to employment within the EU.  Counsel submitted that that statement is wrong, under reference to paragraph 56 of the Bleuse case and under reference to Ministry of Defence v Wallis [2011] ICR 617 paragraphs 47 to 53.  He argued that the extra European effect of some EU laws has been recognised when it is necessary to protect employment which is European in nature.

 

19.            In support of his argument about EU law, counsel referred to the cases of Ingmar GB Ltd v Eaton Leonard Technologies Inc. (2001) 1 All ER (Comm) 329 and Holis v Metal Industries Ltd GMB [2008] ICR 464. In Ingmar the court held that the Commercial Agents (Council Directive) Regulations 1993 which were made in implementation of Council directive (EEC) 86/653 were intended to make conditions of competition within the community uniform and to increase the security of commercial transactions.  The regime so established was mandatory and had to be observed throughout the community.  The principal, who was based in California, USA had an agent carrying out activity within the community.  The proper law of the contract was that of California.  The question referred to the court was whether the provisions of the directive applied in that situation.  The answer given by the court was that the provisions did apply.  A purposive interpretation showed that the point of the directive was to provide protection for commercial agents on termination.  A principal could not evade the obligations of the directive by choosing non EU law as the proper law of the contract when the business was carried out in the EU.  In the case of Holis a trade union brought a claim against two companies who had transferred part of a business between them, according to the union in breach of the duty to consult imposed by Regulation 31 of TUPE 2006, regulations which implemented Council directive 2001/23/EC. Art 1(2).  The part of the business which was transferred went to Israel, therefore outside the EU.  The EAT held that in fact the transfer had taken place while the undertaking was still in the United Kingdom.  It considered however that as the regulations is concerned with transfers of undertakings situated immediately before the transfer in the UK, a purposive interpretation meant that the regulations applied if the transfer was to territory outside the EU.

 

20.            Counsel argued that the case of Petersen v Finanzamt Ludwigshafen [2013] 2 CMLR 47 (case C 544/11) supported his position.  The case relates to income tax and to the free movement of workers.  Thus the subject matter is not employment law.  The decision in the case was that Article 45 TFEU must be interpreted as precluding national legislation pursuant to which income received for employment activities by a taxpayer who is resident in a particular member state, and has unlimited tax liability, is exempt from income tax (on income from work outside the EU) if the employer is established in that member state, but is not so exempt if the employer is established in another member state.  Counsel relied on paragraph 41 which states as follows:

“Provisions of European Union law may apply to professional activities pursued outside the territory of the European Union as long as the employment relationship retains a sufficiently close link with the European Union (see, to that effect, inter-alia, Prodest, cited above paragraph 6; case 9/88 Lopes da Veiga [1989] ECR 2989, paragraph 15 and case C – 60/93 Aldewereld [1994] ECR1 – 2991 paragraph 14). That principle must be deemed to extend also to cases in which there are a sufficiently close link between the employment relationship, on the one hand, and the law of a member state and thus the relevant rules of European Union law, on the other (Case C – 214/94 Boukhalfa [1996] ECR 1– 2253 paragraph 15.)”

 

21.            Counsel referred to Boukhalfa v Germany [1996] 3 CMLR 22, which does concern employment law.  A reference was made from the federal labour court of Germany.  The question was whether provisions of Community law may apply to professional activities pursued outside community territory as long as the employment relationship retains a sufficiently close link with the Community.  It was found that the principle must be deemed to extend to cases in which there is a sufficiently close link between the employment relationship, on the one hand, and the law of a member state and thus the relevant rules of Community law, on the other.  The facts of the case are that the applicant was a Belgian national permanently resident in Algeria.  She was employed as a local employee in the passport office of the German Embassy in Algiers.  The terms and conditions of those employed in German embassies were dealt with by German law.  It was provided that the conditions of local staff of German nationality would be governed by German law, whilst the conditions of local staff not of German nationality would be determined by the law of the host country.  As the applicant was Belgian, her contract was governed not by German law but by Algerian law.  She argued that she should receive the same treatment as local staff of German nationality.  The court held that whilst Community law applied in principle to the same geographical area as the Treaty itself, it could apply to professional activities pursued outside Community territory where there was a sufficiently close link between the employment relationship and either Community law or the law of a member state; the applicant’s situation was subject to the rules of German law in three respects.  Her contract was entered into in accordance with German law, and it was that law which provided that her conditions were to be determined in accordance with Algerian law;  her contract provided that the German courts had jurisdiction in the event of any dispute;  and she was affiliated to the German social security system for pension purposes and was subject, though to a limited extent, to German income tax law.  Germany’s argument that Community law was irrelevant since the applicant’s contract was governed by Algerian law could not succeed as the issue was whether the provision of German law which subjected her to Algerian law was compatible with Community law.  In situations such as that of Ms Boukhalfa,  Community law and the prohibition of discrimination based on nationality, laid down in Article 48 (2) E.C. and Article 7 (1) and (4) of Regulation 1612/68, applied to all aspects of the employment relationship which were governed by the law of a member state.  The court found that the fact that the applicant’s work was to be carried out in Algeria where she lived was not such as to call into question the links with Community law.  It is clear from the report that the opinion of the advocate general is that there must be, as a matter of fact, “a sufficiently close link with the Community” for the Community law to apply.  This is the same question of fact which has been raised in the series of cases relating to the territorial reach of ERA.

 

22.            Counsel argued that further support for his contention could be found in the case of Olsen v Gearbulk [2015] IRLR 818 at paragraph 39 where it was suggested that the Equality Act 2010 may have a broader territorial reach than the ERA because of the strong public interest in matters such as the elimination of discrimination.  However he accepted that the Court of Appeal in Hottak found the territorial reach of ERA and the Equality Act 2010 to be the same, which also was my view in the case of Fuller.

 

23.            Counsel argued that the ET having found that the ET in Aberdeen is the appropriate forum for the breach of contract claim, it should have applied the reasoning of the EAT in Simpson v Intra Links Ltd [2012] ICR 1343 and concluded that the rights under the Equality Act 2010 and the Working Time Regulations 1998 were part of the mandatory system of law which had to be applied.

 

24.            Counsel argued that the EJ erred in interpreting section 204 of ERA as requiring him to attach little weight to the choice of law clause in the claimant’s contract.  Counsel referred to the authorities originally referred to and to the case of Ministry of Defence v Holloway (UK EAT/0396/14) where it was said by Langstaff (P) to be of considerable importance.  He argued that section 203 of ERA prevents parties contracting into or out of ERA. The choice of law and the expectations of the parties as to the legal rights are of central importance in determining whether the employment relationship has a close connection to the UK or another jurisdiction.

 

The decision in Hasan and the effect of the Equality Act (Work on Ships and Hovercraft) Regulations 2011.

25.            Before I deal with the submissions for the respondent in reply it is convenient to deal with the matter on which I had asked to be addressed in light of the case of Hasan.  The claimant is a mariner but no submissions had been made about the effect, if any, of any statutory provisions on seafarers.  (It seems that ‘mariner’ and ‘seafarer’ are used as synonyms in the legislation.)  Section 81 of the Equality Act 2010 provides:

“81  Ships and hovercraft

 

(1)     This Part applies in relation to--

(a)     work on ships,

(b)     work on hovercraft, and

(c)     seafarers,

 

only in such circumstances as are prescribed.

(2)     For the purposes of this section, it does not matter whether employment arises or work is carried out within or outside the United Kingdom.

(3)     ‘Ship’ has the same meaning as in the Merchant Shipping Act 1995.

(4)     ‘Hovercraft’ has the same meaning as in the Hovercraft Act 1968.

(5)     ‘Seafarer’ means a person employed or engaged in any capacity on board a ship or hovercraft.

(6)     Nothing in this section affects the application of any other provision of this Act to conduct outside England and Wales or Scotland.”

 

26.            Thus part 5 of the act [work] applies only in circumstances prescribed by regulations.  The Equality Act 2010 (Work on Ships and Hovercrafts) Regulations 2011 (which came into force in August 2011 and therefore apply to the current case) provide:

“4  Application of Part 5 of the Act to seafarers working wholly outside Great Britain and adjacent waters

 

(1)     Part 5 of the Act applies to a seafarer who works wholly outside Great Britain and United Kingdom waters adjacent to Great Britain if the seafarer is on--

(a)     a United Kingdom ship and the ship's entry in the register maintained under section 8 of the Merchant Shipping Act 1995 specifies a port in Great Britain as the ship's port of choice, or

(b)     a hovercraft registered in the United Kingdom and operated by a person whose principal place of business, or ordinary residence, is in Great Britain,

 

and paragraph (2) applies.

(2)     This paragraph applies if--

(a)     the seafarer is a British citizen, or a national of an EEA State other than the United Kingdom or of a designated state, and

(b)     the legal relationship of the seafarer's employment is located within Great Britain or retains a sufficiently close link with Great Britain.”

 

27.            In Hasan the EAT held that the regulations excluded the claimant.  It heard an argument that the regulations should be dis-applied as they prevent the enforcement of EU derived rights, in accordance with the principle under the case of Bleuse.  Mr Ohringer repeated that argument, that the question is whether the law of the EU applies to the claimant’s employment.  If it does, then any domestic law which prevents him from enforcing his right must be dis-applied.  He also argued that even if the regulations stand in the way of a claim under the Act there is no reason to suppose that they should in any way restrict the territorial scope of ERA.  Rather it is the reverse:  the ERA has a specific provision which applies to mariners, section 199, and its terms are quite different to the regulations.

 

28.            Mr Kemp addressed me to the effect that section 199(7) and (8) of ERA provides that part X of ERA, which includes section 94, apply to employment on board a ship registered in the register maintained under section 8 of the Merchant Shipping Act 1995 in certain circumstances.  The case of Diggins v Condor Marine Crewing Services Ltd 2010ICR 213 is authority for the proposition that those employed as mariners aboard ships not so registered are not affected by that provision.  They are like other employees (for example airline pilots), entitled to the protection of section 94 if they can satisfy the test of territorial reach.  Therefore the claims in the current case which are made under ERA may be made if there is territorial reach and the terms of section 199 are not preyed in aid in making the decision.

 

29.            As for the other claims, the Equality Act 2010 provides by section 81 that part 5 of that Act, which deals with work, applies to seafarers only in such circumstances as are prescribed.  The Equality Act 2010 (Work on Ships and Hovercraft) Regulations 2011 prescribe those circumstances.  Regulation 4 is concerned with the application of Part 5 of the Act to seafarers working wholly outside Great Britain and adjacent waters.

 

30.            Mr Kemp argued that while it would suit him to argue that the regulations excluded the claimant, he could not do so.  It was not disputed that the claimant did not satisfy the provisions of the regulation as the ship on which he worked was not registered at a port in Great Britain.  In the case of Hasan, the EAT found that the claimant did not satisfy the regulation for the same reason.  The claimant submitted that on the Bleuse principle the regulations should be dis‑applied.  The EAT was not prepared to allow that argument to proceed as it had not been taken at the ET.  However the EAT indicated, in obiter dicta, that the Bleuse principle applied only to work within the EU.

 

31.            Mr Kemp argued that the EAT in Hasan had gone too far in holding that the regulations applied to the claims made under the Equality Act 2010, as the regulations are made under section 81 which applies only to Part 5 of the Act, which deals with work.  The part of the Act which prohibits discrimination is Part 2, section 13.

 

32.            I appreciate Mr Kemp’s assistance to me in bringing before me a point which does not advance his argument, but I do not agree with his submission.  The claim made in respect of discrimination on the grounds of race and age in the current case are claims of unfair dismissal which are covered by section 39 of the Equality Act 2010, which is in Part 5 of the Act.  In the ET1 the claimant states that no reason was given for his dismissal.  I characterise that as a claim of unfair dismissal under section 94 of ERA.  He also says that his dismissal was in part due to age discrimination and in part due to race discrimination.  Those are claims of unfair dismissal under section 39, in Part 5 of the Equality Act 2010.

 

33.            Therefore I hold that claims made under the Equality Act 2010 are on the face of the regulations not open to the claimant.  The difference between the provisions of ERA on seafarers and the Equality Act 2010 is that section 81 of the Equality Act 2010 states that Part 5 of the Act applies in relation to seafarers only (my emphasis) in such circumstances as are prescribed.

 

34.            Mr Ohringer argued, on the hypothesis that the regulations do apply, that on the authority of Bleuse the regulations should be held not to apply, as they would prevent the claimant from obtaining a remedy to which he was otherwise entitled.  As I explain elsewhere I do not accept that the case of Bleuse does set out a principle which applies to work done outside the EU. 

 

Submissions for the Respondent

Mr Kemp, solicitor advocate for the respondent, submitted that the second decision of the ET confirmed that Fairway was the employer and he had not appealed that. He reminded me that the claims against the employer were dismissed save for that in respect of breach of contract.  The respondent in the current appeal submits that that remains the appropriate outcome. Therefore the appeal should be refused.  He analysed the law by saying that the cases have given guidance because ERA no longer has any section about territorial reach.  These include Lawson v Serco [2006] ICR 250 HL, Duncombe v Secretary of State (2) [2011] ICR 1312, Ravat, Bates van Winkelhof, and more recently Cox v Ergo [2014] 1 AC 379, a case in the Supreme Court concerning the Fatal Accidents Act 1976.  In that case Lord Sumption suggested that the three cases above “turn on choice of law, not the extra‑territoriality of the ERA.”  In discussion with Mr Kemp, he described that comment as “Delphic”.

 

35.            Mr Kemp argued that the issue of territorial reach arises if, as here, the worker works abroad.  It is clear from the case of Duncombe (no. 2) that it will only be exceptional cases where employees working and based abroad are covered.  While in that case the employees succeeded, it was stated that it was only in cases where the employment had such an overwhelmingly closer connection with Britain and with British employment law than with any other system of law that it was right to conclude that Parliament must have intended that the employees should enjoy protection from unfair dismissal.  That test was stated slightly differently by Lord Hope in the Supreme Court in the case of Ravat.  He said that the guiding test was:

“… Whether, despite the workplace being abroad, there are other relevant factors so powerful that the employment relationship has a closer connection with Great Britain than with the foreign country where the employee works.” See paragraphs 14 and 16.

 

His Lordship said that the question is one of degree and in addressing the point about whether this is a question of law or a question of fact, stated that the question of fact is whether the connection between the circumstances of the employment in Great Britain and British employment law were sufficiently strong to enable it to be said that it would be appropriate for the employee to have a claim for unfair dismissal in Great Britain.

 

36.            Mr Kemp argued that in the case of Bates van Winkelhof, the Court of Appeal clarified that there are two tests.  This case went to the Supreme Court but on other grounds only.  Therefore the relevant judgment is the Court of Appeal in which Elias LJ said that the comparative exercise, working out which country the employment had the closest connection with, applies only where the claimant both lives and works abroad.  Where the claimant lives and works for at least part of the time in Great Britain the test is different.  Thus in that particular case the fact that the claimant worked in London for several weeks each year was relevant in the court finding  that there was territorial reach.  In the current case the claimant lived and worked abroad.

 

37.            Mr Kemp argued that there are four types of cases as follows:

1. peripatetic workers

2. special cases consisting of those who work in a British enclave or as a foreign representative of the UK business

3. those who do not work in the UK and do not have their home in the UK

4. those who have their home in the UK or who work partially in the UK.

The claimant is in the third category.  It will be in rare cases that workers in that category could bring a claim under UK employment law.  While there was at least a suggestion that the original employment contract had a choice of law clause in favour of UK law, (a suggestion I understood Mr Kemp agreed he must accept, as he had no evidence of any change) it should not be given great weight.  The claimant had sought to rely on the case of Dhunna.  The Court of Appeal held that the general rule is that an employee who is working or based abroad at the time of his dismissal will not be within the territorial jurisdiction of the UK but that exceptionally he may be if he has “much stronger connections both with Great Britain and with British employment law than with any other system of law”.  (The relative merits of any competing systems of law have no part to play in the enquiry because it is not the object of the exercise to decide which system of law is more or less favourable to the employee; it is rather to decide whether an employee is able to except himself from the general rule by demonstrating that he has sufficiently strong connections with Great Britain and British employment law.) The Court of Appeal upheld the decision of the EJ, finding that he had carried out a full careful and sufficient assessment of the facts to support the conclusion that the claimant had not established such a connection. Mr Kemp submitted that the EJ in the current case had done likewise. Mr Kemp appreciated that the argument made against him was that the EJ had not carried out a comparative exercise in that he had not discussed any other jurisdiction which had a stronger connection.  He argued however that the EJ was entitled on the facts to find that there was very little connection with Great Britain, and therefore insufficient connection to enable territorial reach.

 

38.            Mr Kemp argued that in the case of Olsen Langstaff J (P) noted that in the case of Ravat, Lord Hope treated the question of sufficient connection as a question of law but also one of degree.  He found that the time may now have come to treat the question of “sufficiently close connection” as indeed being a question of fact such that a decision by the tribunal, properly directing itself as to the applicable law, with regard to appropriate cases, would commit an error of law only if it were shown to be perverse.  Mr Kemp submitted that Langstaff J (P) was correct in that.  Therefore, according to Mr Kemp, the matter was a question of fact for the EJ. He would err in law only if his decision was perverse.

 

39.            Mr Kemp therefore submitted that the appeal should be refused because the ET had found that the employer was Fairway, and had gone on to find that there was no sufficiently close connection with UK and its systems of law.  He argued that, as required by the judgment of the Court of Appeal in the case of Dhunna v Creditsights, the ET had made a sufficient examination of the factors which might be relevant in connecting the claimant to Great Britain and British employment law. It has found no sufficient connection.  He argued that the reference to UK legislation in the appendix to the contract simply meant that anyone who had a right to make a claim for unfair dismissal might do so, but it could not create rights where none existed.

 

40.            Mr Kemp argued that the principle in the case of Bleuse was restricted to those working within the EU.  The cases referred to by Mr Ohringer for the claimant did not deal with the rights under the Equality Act and the Working Time Regulations and were not relevant in deciding on the scope of these rights.

 

41.            Mr Kemp brought to attention while this judgment was outstanding the case of Hottak in which the Court of Appeal had given its decision in May 2016, and which I have dealt with above.  He also made a written submission about the case of R (Fleet Maritime Services (Bermuda) Ltd v Pensions Regulator [2015] EWHC 3744 [2016] IRLR 199.  He also referred to the case of Windstar Management Services Ltd v Harris in which the EAT gave its decision in May 2016.  His letter referring to these cases was brought to the attention of the solicitors for the claimant.  Written submissions on the case of Fleet Marine were received from Mr Ohringer and considered by me.

 

42.            The case of R (Fleet Maritime Services (Bermuda) Ltd v Pensions Regulator [2015] EWHC 3744 [2016] IRLR 199 concerns the reach of the Pensions Act 2008 which provides by section 1(1) (a) that a jobholder is a worker who “is working or who ordinarily works in Great Britain under the worker’s contract”.  The judge (Leggatt J) in Fleet Maritime decided that seafarers who travelled from the UK to a port to embark were not ordinarily working in the United Kingdom.  Mr Kemp argued that the case showed that a seafarer who lives in Great Britain but who works on board a ship which spends its time outside Great Britain, and whose tours of duty do not habitually begin or end in Great Britain cannot be regarded as based in Great Britain.  Therefore there was no territorial reach.  Mr Ohringer argued that the case was not in point because it involved interpretation of an act which unlike ERA or the Equality Act 2010 had an express jurisdiction set out in the first section. In any event. Leggatt J did say obiter at paragraph 68 the following

“There are plainly policy considerations which militate in favour of finding a country within whose territory an employee is regarded as working or ordinarily working if the alternative would be to hold that there is no jurisdiction in which the employee is entitled to complain if unfairly dismissed. It does not seem to me that any similar imperative exists, however, in relation to the automatic enrolment obligations imposed by the 2008 Act.”

 

Counsel submitted that was judicial endorsement of the idea that Parliament must have intended the provisions of ERA to apply if the connections to Great Britain were stronger than any other connection.

 

43.            In the case of Windstar the EAT upheld a decision of the ET that there was territorial reach in an ERA case, and Mr Kemp properly drew the case to my attention despite the decision being against his arguments in the current case.  The claimant was a mariner who was employed by the respondent as master of a cruise ship which spent the summer cruising around Europe and the winter cruising around the Caribbean.  The employer was a company incorporated in Jersey with its head office in Guernsey.  The owners of the ship were based in USA.  The claimant received day to day instructions from them.  The claimant was recruited by a UK company, in the UK.  His appeal against dismissal was heard in the UK.  The proper law of the contract of employment was English law, and incorporated a British collective agreement.  The claimant lived in Kent and travelled from London to wherever the ship was berthed to act as master for the cruise.  Calculation of days of service started when he went to the airport in London and ended when he landed back at that airport.  The ET found that it had jurisdiction to deal with the claim for unfair dismissal.  The EAT found no error of law in that decision and refused the appeal against it.

 

44.            In a review of the authorities, Laing J found at paragraph 30 that section 94 of ERA enables employees in varying situations to claim its protection.  The general rule is that an employee who does not work within Great Britain will not have the protection but there  are exceptions to that including those who are found to be “peripatetic” and “expatriate”.  The case of Ravat shows that the individual circumstances of the employee required to be considered and that it is not necessary that they fit into any particular category;  Ravat showed that an employee may work wholly abroad but may still have strong enough links to claim the protection of section 94 of ERA. 

 

45.            A submission was made in Windstar about the effect of Fleet Maritime.  The Pensions Act 2008 provides by section 1(1) (a) that a jobholder is a worker who “is working or who ordinarily works in Great Britain under the worker’s contract”.  The judge in Fleet Maritime decided the seafarers who travelled from the UK to a port to embark were not ordinarily working in the United Kingdom.  The EAT in Windstar distinguished the decision in Fleet Maritime on the basis that Leggatt J was applying an express statutory test.  The case dealt with generic facts and examples.  The underlying principles of Ravat and Duncombe were not relied on.  Further, Wood v Cunard Line [1991] ICR 13 is relied on in Fleet Maritime.  At the time of that case, the Employment Protection (Consolidation) Act 1978 was in force.  Section 141 (1) provided that the right to be unfairly dismissed did not apply during any period during which the employee was engaged to work outside Great Britain, “unless the employee ordinarily works in Great Britain and the work outside  Great Britain is for the same employer.”  An exception was by section 141 (5) made in respect of ships registered in the United Kingdom.  A person employed to work on board such a ship was to be treated as a person who was under his contract ordinarily working in Great Britain, unless the employment was wholly outside Great Britain.  The facts of the case were that the seafarer lived in Great Britain and travelled from Southampton to Puerto Rico where his ship was berthed.  His fare for that journey was paid by his employer.  The Court of Appeal found that the seafarer was employed wholly outside Great Britain.  By the date of the case of Diggins, the repeal of the statutory territorial limitation in ERA had been made.  The EAT found that the principles which one can draw from the case of Diggins are that the place where the ship is registered is not determinative and the relevant question is where the employee is based, not where the employer is based.  The judge decided that she should follow the case of Diggins and found that there was no error of law in the decision of the ET.

 

 Discussion and Decision

46.            In his second judgment the EJ found that nothing which had arisen in his reconsideration of the identity of the employer affected the question of territorial reach.  Thus the question is whether in light of facts found in both judgments, there is any error of law in the reasoning given in the first judgment for deciding that the claims are not within the territorial reach of the legislation.  The EJ dealt with that question as the second issue, from paragraph 160 onwards.

 

47.            The EJ began by noting that section 196 of ERA was repealed and not replaced by any other legislation.  Similarly the Equality Act 2010 has no express provision for territorial scope.  He set out the question as being whether the connection between the circumstances of the employment and Great Britain and British employment law is sufficiently strong to enable it to be said that Parliament would have regarded it as appropriate for an employee to have a claim brought under ERA before an employment tribunal in Great Britain.  He found the question to be similar for the claims under the Equality Act 2010 and under the Working Time Regulations 1998, while appreciating that as these rights derive from provisions made under EU law, a different approach may be required. He referred to the case of Bleuse.  He found that the case related only to those working inside the EU. In paragraph 189 the EJ recognised that if a court has jurisdiction, it may require to apply foreign law.

 

48.            The EJ explained his reasoning at paragraph 202 and onwards.  He relied on Ravat for the proposition that a person neither living nor working in Britain would require to show an especially strong connection to found jurisdiction.  He found that the claimant did not do so, because his home address, from where he commuted to work, was not in Great Britain.  He acknowledged that nationality of the claimant was not directly relevant, while it might have an indirect effect.  The EJ also considered nationality of the employer.  Having found that the employer is a company registered in the UK and conducting its business in Aberdeen, he went on to find that the employer merely engaged the crew for a vessel and thereafter did not supervise or direct the day to day work.  He found that there was little connection to Great Britain or to UK law.

 

49.            The EJ noted that the original contract with Sunset contained a clause expressly applying “UK law”.  He was uncertain as to the status of that clause, as the contract with Sunset no longer existed.  Nevertheless he was prepared to proceed on the basis that the proper law of the contract was “UK law”.  (I did not understand Mr Kemp to be in a position to argue that the choice of law clause no longer applied, given that the respondent companies were not able to say what the contract terms were. Mr Kemp accepted that the respondent was not in a position to make any positive assertion that the choice of law clause had changed. Nothing turns on the inept expression “UK law”.  I understood parties to be content to read that as though Scots law applied. )

 

50.            The EJ found that the choice of law could not be decisive, as putting emphasis on such a provision “collides directly” with section 204 of ERA.  That section is in the following terms:

“204 Law Governing Employment

(1)          For the purposes of this Act it is immaterial whether the law which (apart from this Act) governs any person’s employment is the law of the United Kingdom, or of a part of the United Kingdom, or not.”

 

The immediately preceding section, 203, prohibits contracting out of the provisions of ERA.  In my opinion section 204 means that parties may if they wish provide that the proper law of their contract is something other than Scots or English law, but if the employment relationship is within territorial reach of ERA, the provisions of ERA will nevertheless apply.  I do not understand that section 204 is intended to prevent consideration of what is the proper law of the contract when deciding on territorial reach. I suspect that the phrase used by the EJ that section 204 and consideration of the choice of law “collide” comes from the report of the case of Bleuse.  In the rubric of that case the following is stated:

“…that section 204(1) of the Employment Rights Act 1996 made it plain that the proper law of the contract was immaterial when considering the reach of the statutory rights, and, accordingly clause 17 of the claimant’s contract made no difference to the issue of territorial jurisdiction; …”

 

The report states at paragraph 43 that

“Section 204, not referred to by the claimant, makes it plain that the proper law of the contract is of no materiality when considering the reach of the statutory rights….”

 

Elias J (P) (as he then was) goes on in that paragraph to approve a judgment of the EAT in Financial Times v Bishop 25 November 2003 in which the EAT rejected an argument that a United Kingdom statute applies to a contract the governing law of which is English law, and that section 204 has the effect of permitting the application of ERA to contracts in which the proper law is not English law.  The EAT in that case went on to point out that the right not to be unfairly dismissed is not contractual but is statutory.  Elias J (P) approves of that, and goes on in paragraph 44 to note that in the Court of Appeal judgment in Lawson, it was stated that section 204(1) was not inconsistent with the conclusion that [ERA] applies only to employment in Great Britain.  He then states

“It seems to me that the section would be inconsistent with that conclusion if the legislation inevitably (my emphasis) applied whenever English law was the proper law of the contract. Moreover, the contract in that case was in fact found to be governed by English law, as a perusal of the decision in the Employment Appeal Tribunal makes clear. Had that fact been decisive (my emphasis), I have little doubt that the Court of Appeal and /or the House of Lords would have said so, even though it was not specifically argued on appeal, because it would have been the short answer to the case. Moreover, Lord Hoffman [2006] ICR 250 para 38, expressly approved the judgement of the Employment Appeal Tribunal in Bishop’s case 25 November 2003.”

 

51.            Thus Elias J (P) was dealing with a submission that if the proper law of the contract was English law, then territorial reach inevitably followed; that is that the choice of law was a decisive factor.  He disagreed with that submission.  The choice of law is a factor to be weighed in the balance.  The EJ appreciated that.  He stated at paragraph 213 that in terms of Ravat, a choice of law clause is a factor to weigh in the balance when assessing connection.  He summed up his approach in paragraph 215 when he said this:

“At one point in his submissions Mr Ohringer had referred to the test as one of assessing whether the connections with Britain were stronger than with any other country. I realise that  part of what Lady Hale had said in the Supreme court in Duncombe (No.2) was to that effect; but I do not see that that alone can be the whole exercise. As is plain from Lawson and Ravat, Lady Hale concurring in the latter, there is more to it: jurisdiction will in the end effeir to Britain only if it can be said as a matter of law that Parliament would have intended the Act to apply to the particular claimant in the particular circumstances. The facts in any one case may indeed show greater connection with one country than with any other, but not yet reach the level of strength required for that ultimate conclusion to be drawn.”

 

52.            The EJ finds in the next paragraph that there are no especially strong connections with Great Britain and so the claims under ERA have to be dismissed. Therefore I do not accept that the EJ erred in law in the way in which he dealt with the proper law of the contract. He weighed it in the balance and was entitled to find that it did not have much weight.

 

53.            The EJ then considered the other claims, giving additional consideration to the Bleuse question.  He made the distinction between the criteria used to decide if persons may be sued in particular courts and the scope, that is the territorial reach, of legislation.  He found no reason in authority or principle to find that employment rights derived from EU law can be exercised by a person in the circumstances of the claimant, where his work was performed outside the EU, and where no close connection had been found to law of an EU country, in  this case Great Britain.

 

54.            I do not find that there is any error of law in the decision of the EJ.  The general rule in considering territorial reach is that the place of employment is the starting point, although it is not decisive.  In this case the claimant never worked in the UK, nor on a UK registered ship, nor in UK territorial waters.  There are exceptions to the general rule; these are summarised by Lord Hope in Ravat at paragraph 28 thus:

“28. The reason why an exception can be made in those cases is that the connection between Great Britain and the employment relationship is sufficiently strong to enable it to be presumed that, although they were working abroad, Parliament must have intended that section 94(1) should apply to them. The expatriate cases that Lord Hoffmann identified as falling within its scope were referred to by him as exceptional cases: para 36. This was because, as he said in para 36, the circumstances would have to be unusual for an employee who works and is based abroad to come within the scope of British labour legislation. It will always be a question of fact and degree as to whether the connection is sufficiently strong to overcome the general rule that the place of work is decisive. The case of those who are truly expatriate because they not only work but also live outside Great Britain requires an especially strong connection with Great Britain and British employment law before an exception can be made for them.”

 

55.            The cases which have been recently decided show that a claimant does not have to bring himself into any of the categories thought at one time to have been laid down by Lord Hoffmann in Lawson.  A claimant has to show that there is a sufficiently strong connection to Great Britain and in this case Scots law to show that Parliament must have intended that the terms of ERA would apply.  It will not be enough that a person shows that he is a UK citizen recruited by a company registered in the UK and that the proper law of the contract is Scots law.  In the Court of Appeal in the case of Bates van Winkelhof Elias LJ explained that for a person living and working abroad, powerful factors would be needed to “displace the pull of the place of work”.  No rule can be laid down as to what circumstances will suffice;  but there must be something to show that Parliament would have intended the UK law to apply.  I am aware of Lord Hoffmann’s reference in Lawson to pilots as “Flying Dutchmen” who are unable to bring themselves into any court’s jurisdiction.  I also note Leggatt J’s obiter view that Parliament cannot have intended employees to have no protection against unfair dismissal.  However it seems to me that the cases referred to may lead to such a result.  In any event it was not suggested to me nor as far as I can tell to the ET that there was no possibility of jurisdiction in another country such as Germany, Nigeria or even the USA.  This case is rather about whether there is jurisdiction in Scotland in light of the statutory scheme and the cases decided under it.

 

56.            Choice of law by the parties will have some weight, as it indicates what the parties may have expected to happen.  In the current case while the evidence was scant it seems to me correct to proceed on the basis that the parties chose “UK law” and made reference to the UK employment legislation then in force.  But I do not find it sufficient on its own.  In Dhunna Rimer LJ described that situation as “not compelling”.  In that case the claimant had worked in London for the respondent, a company based there providing a world-wide investment research service.  The parent company was based in New York.  The claimant moved to Dubai, setting up an office there to deal with business in Asia.  He claimed to have been unfairly dismissed.  The ET found that there was no territorial jurisdiction.  The Court of Appeal held that the ET had not erred in law.  It had carried out the necessary exercise of examining the circumstances to decide if there was a sufficient connection to Great Britain and British employment law.  In doing so the EJ had examined the connections to the other competing jurisdictions.  He found that following the move to work in places other than London there were no strong connections to Great Britain.

 

57.            In the case of Hottak the Court of Appeal considered an appeal in a judicial review.  The claimants were Afghan interpreters with the British forces in Afghanistan.  They brought a claim alleging discrimination in respect of a scheme for their assistance said to be less advantageous to them than a scheme put in place for similar purposes in Iraq.  The argument for the interpreters failed in the High Court.  The question for the court is set out in paragraph 18; the claimants asserted that the provisions of Part 5 of the Equality Act 2010 extend extra territorially to work done by them in Afghanistan.  The Court of Appeal noted that the both ERA and Equality Act 2010 are silent on territorial reach.  It considered the cases which had dealt with ERA, finding at paragraph 48 that the court should look at discrimination claims in the same way as it would unfair dismissal claims.  The employer was not only based in Great Britain; it was the British government.  Nevertheless the Court of Appeal found that the High Court had been correct in finding that there was insufficient connection.  The claimants were not British citizens; they did not live in Great Britain; they were recruited in Afghanistan; the proper law of the contract was Afghan law.  They worked in Afghanistan and had no international or peripatetic element to their work.  They were not subject to UK taxation.  They were not employed on the same footing as British staff or British service personnel.  Any action brought against the British government in local courts would be likely to be met with a plea of state immunity, but that factor in itself did not tip the balance in favour of the Equality Act having territorial reach.

 

58.            In my opinion the case law shows that what is needed for territorial reach is a connection with Great Britain and Scots (or English, as the case may be) employment law.  A finding that the work is done for the benefit of a UK company may be of importance as it was in the cases of Ravat and Lodge.  The latter case is a good example of an unusual situation, where on the facts the employee did her work in Australia, but as it was all done electronically she could have been anywhere.  She did the same work she had done in the UK.  While in the current case the ET found that the real paymaster is TMII, a company incorporated elsewhere but having an office in Aberdeen, the ET also found that the work is done for the group, which is American.  It did not find that there is anything in the terms of the employment which give a strong connection to Great Britain.

 

59.            I accept that the terms of the contract, in so far as they can be ascertained, tend to indicate that the parties chose the law of the UK as the proper law of the contract and that they made reference to UK collective agreements.  That might indicate that the parties did intend that the claimant should have the protection of UK employment law.  However, I am not persuaded that there is any other close connection to the UK or to UK employment law.  I am influenced in my decision by the decision in the case of Hottak in which the employer and the beneficiary of the work done was the British Army.  Even in those circumstances it was found that there was not a sufficient connection with Great Britain.  I note the decision in the case of Windstar.  The claimant in that case came and went from London, which is a vital distinction on the facts.

 

60.            I have to decide if the case of Bleuse is authority for the proposition that the protection provided by EU law, that is the protection under the Equality Act 2010 and the Working Time Regulations are to be enjoyed by an EU citizen wherever he might work.  I do not find any such authority in the cases before me. In particular, in Bleuse itself, it is said to be limited to work within the EU.  I did not find that Ingmar and Holis were helpful as they dealt with different situations. While the cases of the Petersen and Boukhalfa have given me cause to pause, I am not in the end persuaded that either of them is directly in point as they do not address the question of territorial reach.  The Petersen case relates to income tax and to the free movement of workers and was I suspect cited to me because it refers to Boukhalfa.  That case is, I think, about choice of law, as discussed by Lord Sumption in the case of Cox.  The real question in that case is whether, in a contract governed by German law, discrimination on the basis of nationality is valid.

 

61.            It is clear from the series of cases dealing with the territorial reach of ERA, that the proper law of the contract being Scots law is not definitive. It is not disputed between parties that the reach of ERA section 94 is not world-wide.  There has to be a connection with this country, which will usually, but not always, be found because work is performed here.  (That connection may be displaced as in the case of Fuller.)  Thus there is no question about the validity of a provision in Scots law; rather the question is whether, applying Scots law,  UK statutory law applies to work done outside the UK.  The answer to that depends on the connections made in other ways, and is a question of fact.  It is not perverse to find that the contract between the parties is governed by Scots law and so contractual claims may be litigated under Scots law, in Aberdeen.  That does not mean that statutory claims, such as unfair dismissal or the other statutory claims are allowable, as that depends on the reach of the statute.

 

62.            I appreciate that the connection to the EU is said to be that the claimant is an EU citizen and he came to and went from his place of work to Germany.  The question still remains, why should legislation emanating from the EU have territorial reach all over the world?  It seems to me that it must be limited in its application, just as UK law is limited to its own territory and those other situations where the court finds that Parliament must have intended there to be territorial reach.  Properly understood, the case of Boukhalfa finds that the provision to which objection was taken by the employee is a provision of German law.  Therefore there is a close connection to EU law.

 

63.            I find that by parity of reasoning, rights which exist because of EU directives are rights to which effect must be given inside the EU. I am not persuaded that there is any reason why the territorial reach of such rights should automatically extend beyond the EU.  In the case of Duncombe (no. 2), Baroness Hale of Richmond said at paragraph 31

“31. …In what circumstances does a contract of employment between a United Kingdom employer and a worker who is employed to work outside the United Kingdom incorporate the protection given by European Union law? It may be that it is not enough simply to provide that the contract is governed by English law (or by the law of some other jurisdiction within the United Kingdom). Would a person employed to work in China, for example, be able to claim the benefit of all the domestic law which emanates from the European Union?”

 

64.            By raising that question, Lady Hale raised essentially same question as is raised in the line of cases starting with Lawson and dealing with the territorial scope of ERA.  That is, did Parliament intend that the rights would extend to territories outside the EU?  The cases in which people working outside Great Britain but who are found by the court to have rights under ERA are cases where that question is answered in the affirmative, because the employment has a strong connection with Great Britain and with Great Britain’s employment law.  In Bleuse it was held that rights coming from EU directives had to be protected by enabling the litigation to go ahead in England.  That is because the principle of effectiveness is a part of English law, and it requires that those who have rights under EU law have an effective opportunity of enforcing those rights.  There can be little dispute that EU directives are enforceable within the EU.  But I do not see the case of Bleuse as authority for the proposition that rights derived from EU directives have worldwide territorial reach.  I was not asked to make a reference in this case.

 

65.            In the present case the claimant is a mariner.  According to the authority of the case of Diggins, the fact that regulations have been made dealing with mariners on board UK registered ships does not of itself mean that mariners who are not on board such ships are not able to bring claims under ERA or for rights deriving from EU directives in in Great Britain.  They are employees and are entitled to the same consideration as other employees.  The claimant in the current case has connections with Great Britain by virtue of his employer and the company found to be the beneficiary of his work being registered and/or carrying on business in Great Britain, by the choice of law clause and by mention of UK employment statutes in that contract.  He has connections with the EU by virtue of the list above and further by his being a national of Germany, and by virtue of his having his base in his home in Germany.  Against that, none of his work takes place in the EU.  The group for which he works is based in USA.  There is no question of his employer being an EU state, or any organisation which could be said to be an emanation of the state.  There are no peculiarities of his work which could lead to it being connected to the EU.  I appreciate that between his residence being in Germany and his employer being in Aberdeen he may have as much connection with EU as the claimant mariner in Windstar had with Great Britain.  I respectfully disagree that such connection is necessarily sufficient.  I regard it as a question of fact which the ET was entitled to answer as it did.  I find the case of Fleet Maritime not in point because there is a specific section in the Act which the court had to interpret.

 

66.            Mr Ohringer argued that the case of Simpson v Intralinks [2012] ICR 1343 is relevant, on the basis that if the ET is to consider the claim for breach of contract, and is to apply Scots law to do so, then the provisions of the Equality Act 2010 and the Working Time Regulations must also apply as they are part of the mandatory laws of Scotland. I do not agree.  I do not find that the case of Simpson is in point.  That case is about the interconnection between territorial reach and jurisdiction under the convention known in that case as Brussels 1.  The provision in the convention for the applicability of mandatory laws is relevant where the choice of law clause names the law of another country.  That complication does not arise in the current case.

 

67.            I will allow the name of the fourth respondent to be amended to Tidewater Support Services Limited.  I refuse the appeal.  The case is remitted to the ET to hear the breach of contract claim. 

 

68.            I am grateful to those appearing for their extensive research into this case which I have not found easy. I note from his judgments that the EJ regarded it in a similar way. I apologise for the delay in advising this case.