I. INTRODUCTION
Bringing of an employment claim is normally the ultima ratio for an employee, the last attempt to vindicate his or her rights once all non-litigious ways of resolving the dispute have been exhausted. Employees do not go down this path lightly. It normally takes good economic, social or psychological reasons for an employee to sue their employer. Given the interests at stake, and the typical inequalities between employees and employers, efficient and effective administration of justice is imperative. There is therefore an air of irony in the fact that, out of all private international law cases reaching the Court of Justice of the European Union (ECJ), employment cases have been amongst the most numerous. An unlucky employee whose case goes all the way to the ECJ can wait up to a decade before it has been decided which court has jurisdiction to hear the dispute or which law applies.
The readers of the Quarterly will be familiar with the cases concerning the rules of jurisdiction in employment matters of the Brussels Convention and its successor, the Brussels I Regulation.Footnote 1 After the First Protocol on the interpretation of the Rome Convention by the ECJFootnote 2 came into force in August 2004, the Court has had the power to interpret the choice-of-law rules of the Rome Convention. Two out of three cases decided by the ECJ under this instrument concern employment.Footnote 3 The Rome Convention has been superseded by the Rome I RegulationFootnote 4 which applies in proceedings commenced, and to contracts concluded, after 17 December 2009.Footnote 5
An objective of these instruments, apart from promoting the sound operation of the internal market through the unification of private international law rules, is to protect employees.Footnote 6 With regard to the rules of jurisdiction, this is achieved by making more forums available to employees than to employers, and by restricting the effect of choice-of-court agreements.Footnote 7 With regard to the choice-of-law rules, this is achieved by allowing the parties to an employment contract to choose the applicable law, whilst guaranteeing the application of the mandatory rules of the otherwise applicable law.Footnote 8 The employee may always commence proceedings in the courts for the habitual place of work (‘in the courts for the place where the employee habitually carries out his work or in the courts for the last place where he did so’) or, if there is no habitual place of work, in the courts of the engaging place of business (‘in the courts for the place where the business which engaged the employee is or was situated’).Footnote 9 Similarly, the otherwise applicable law is, in principle, the law of the country of the habitual place of work (‘the law of the country in which or, failing that, from which the employee habitually carries out his work in performance of the contract’) or, if none, the law of the country of the engaging place of business (‘the law of the country where the place of business through which the employee was engaged is situated’).Footnote 10 But if another country is more closely connected with the employment contract, the law of that country will be applicable instead.Footnote 11
The ECJ has on many occasions addressed the interpretation of the connecting factor of the habitual place of work, as well as the relationship between that connecting factor and the connecting factor of the engaging place of business. The importance of the recent case of Jan Voogsgeerd v Navimer SA Footnote 12 lies in the fact that this is the very first case in which the Court has dealt with the interpretation of the connecting factor of the engaging place of business.
This article is divided into two parts. The first part presents the decision in Voogsgeerd (the facts of the case, the Opinion of Advocate General Trstenjak, and the ECJ judgment). The second part comments on the key issues addressed by the Court, namely the relationship between the two connecting factors and the interpretation of the connecting factor of the engaging place of business. It is shown that the ECJ has not only given a somewhat convoluted interpretation to this connecting factor but has also deprived it of almost any effect. This raises the question of whether the objectives of European private international law, in particular that of employee protection, would be better served by abolishing the connecting factor of the engaging place of business altogether.
II. THE VOOGSGEERD CASE
A. The Facts
In August 2001 Mr Voogsgeerd entered into an employment contract with Navimer SA, a Luxembourg company. The contract was concluded at the headquarters of Naviglobe NV, a Belgian subsidiary. The contract was expressly subject to the law of Luxembourg. Mr Voogsgeerd worked as a seaman on board ships belonging to Navimer. He received his salary from Navimer. But he was obliged to report to, and received briefings and instructions from, Naviglobe in Belgium, where all of his voyages commenced and terminated.
In April 2003, almost a year after his dismissal, Mr Voogsgeerd commenced proceedings in Belgium. He sued Navimer and Naviglobe for payment in lieu of notice, invoking mandatory provisions concerning unlawful dismissal of Belgian law as the otherwise applicable law under the choice-of-law rule of the habitual place of work. Contrary to this, the defendants argued that Luxembourg law was solely applicable, since Mr Voogsgeerd had had no habitual place of work and the engaging place of business, Navimer, had been situated in Luxembourg. The claim was time-barred under Luxembourg law, but admissible under Belgian law. After the lower instance courts had rejected his claims, Mr Voogsgeerd appealed to the Belgian Court of Cassation. He claimed that Naviglobe was the engaging place of business and that Belgian law was the otherwise applicable law under the subsidiary choice-of-law rule. The Court of Cassation stayed the proceedings and made a reference for preliminary ruling to the ECJ concerning the interpretation of the concept of the ‘place of business through which [the employee] was engaged’ used in Article 6(2)(b) of the Rome Convention.Footnote 13
B. Opinion of Advocate General Trstenjak
The Advocate General addressed a number of issues, some of which were not directly raised by the questions referred. Although the Advocate General's legal assessment of the case contains important insights regarding the operation of the protective mechanism of Article 6(1)Footnote 14 and the concept of ‘employee’ for the purposes of Article 6 of the Rome Convention,Footnote 15 the following text will only present the parts of the Opinion directly concerning the connecting factor of the engaging place of business.
The Advocate General addressed the relationship between indents (a) and (b) of Article 6(2) of the Rome Convention dealing with the determination of the otherwise applicable law.Footnote 16 The ECJ had dealt with the relationship between these two particular provisions in Koelzsch,Footnote 17 and, in several other cases, with the relationship between the analogous provisions of the Brussels Convention.Footnote 18 After confirming the preceding case-law, the Advocate General held that the rule of the habitual place of work contained in Article 6(2)(a) was relevant ‘if it is possible, for the court seized, to determine the State with which the work has a significant connection’, and that such a connection existed with the place ‘in which or from which the employee actually carries out his working activities and, in the absence of a centre of activities, … where he carries out the majority of his activities.’Footnote 19 The Advocate General then suggested that Mr Voogsgeerd had the centre of activities in Belgium and that, consequently, Belgian law was applicable under Article 6(2)(a) of the Rome Convention.Footnote 20
The bulk of the Opinion was dedicated to the interpretation of the concept of the ‘place of business through which [the employee] was engaged’. In effect, the Advocate General dealt, first, with the interpretation of the term ‘engaged’ and, secondly, of the term ‘place of business’.
With regard to the term ‘engaged’,Footnote 21 the Advocate General held that it referred to ‘the conclusion of the employment contract or, in the case of a de facto employment relationship, the commencement of work, not the employee's actual working activities’.Footnote 22 This view was said to be supported by verbal, purposive and systematic interpretations of Article 6(2)(b). But the Advocate General also pointed out that such an interpretation could lead to abuses. The application of a formal and rigid criterion might enable employers to easily evade protective legislation by establishing places of business in countries with lax laws, and then formally concluding employment contracts through such places of business. In order to reduce the risk of abuse, the Advocate General said that the place of business had to be ‘actively involved in the conclusion of the employment contract on the instructions of the employer, for example, by taking part in contractual negotiations with the employee’.Footnote 23 Other examples of active involvement included publishing the vacancy notice, conducting the job interview, drawing up the details of the contract, or making one's premises available for the conclusion of the contract.Footnote 24 But the Advocate General also stated, somewhat contradictorily, that:
‘In some circumstances … reliance on the place of engagement as the connecting factor might appear to be capricious or even arbitrary, as it may sometimes be a matter of chance, ultimately, where the employee is recruited. To avoid that risk, in extreme cases, there should be a requirement … that the employee is also actually employed at the place in question and that that place is not merely the place where the contract was concluded.’Footnote 25
Furthermore, it was noted that any disadvantages of the formal and rigid criterion could be offset by the application of the escape clause contained in Article 6(2).Footnote 26
With regard to the term ‘place of business’, the Advocate General equated it expressly with the concept of ‘branch, agency or other establishment’ of Article 5(5) of the Brussels I Regulation.Footnote 27 This Article allows the claimant to sue the defendant domiciled in one Member State which has a branch, agency or other establishment (ancillary establishment) in another Member State in the courts for the place of the ancillary establishment. In the view of the Advocate General, the parallel interpretation stemmed from the need to ensure uniform interpretation of the concepts used in European private international law. Thus, the term ‘place of business’ referred to an employer's establishment, regardless of whether it possessed legal personality,Footnote 28 over which the employer exercised actual control so that its actions were attributable to the employer,Footnote 29 which possessed a degree of permanence,Footnote 30 and which had been set up in accordance with the relevant provisions of the country in which it had been established.Footnote 31 Two examples of a requisite degree of control were given: a branch or a subsidiary that took instructions from the management of the employer, and a subsidiary or affiliate that had the same management as the employer.Footnote 32 The Advocate General also clarified that the requisite degree of permanence would not exist where a representative of a foreign employer regularly presented himself at a particular place in order to recruit workers for employment abroad; but it would exist if the employer maintained a permanent establishment at that place.Footnote 33
Finally, the Advocate General clarified that it was irrelevant for the application of Article 6(2)(b) of the Rome Convention who had the authority to issue instructions and supervise the employee.Footnote 34
C. ECJ Judgment
The Court's judgment largely followed the Advocate General's Opinion, although it dealt with fewer issues, most importantly with the relationship between indents (a) and (b) of Article 6(2) of the Rome Convention, and the interpretation of the terms ‘engaged’ and ‘place of business’.Footnote 35
With regard to the first of those issues, the Court confirmed the preceding case-law.Footnote 36 It held that the country in which the employee habitually worked was the country where he ‘principally carries out his work’,Footnote 37 i.e. the country ‘with which the work has a significant connection’Footnote 38 or ‘in which or from which the employee actually carries out his working activities and, in the absence of a centre of activities, … where he carries out the majority of his activities’.Footnote 39 Like the Advocate General, the Court suggested that the facts of the case indicated that Belgian law was applicable under Article 6(2)(a).Footnote 40 Moreover, and more importantly, the Court arguably laid down a general rule for international transport cases that whenever the place from which the employee carried out his transport tasks or where he was obliged to report coincided with the place where he received instructions, that place ‘must’ be regarded as the habitual place of work.Footnote 41
The Court also interpreted the term ‘engaged’ as referring to the conclusion of the employment contract or, in the case of a de facto employment relationship, the creation of the employment relationship, not to the way in which the employee's actual employment was carried out.Footnote 42 The Court dealt with the risk of abuse to which such a formalistic interpretation could lead by stating that:
It is only if factors concerning the engagement procedure lead to the conclusion that the undertaking which concluded the contract, in reality, acted in the name of and on behalf of another undertaking, that the referring court might consider that the connecting criterion contained in Article 6(2)(b) of the Rome Convention refers to the law of the country where the place of business of the latter undertaking is situated.Footnote 43
The Court then said that, for the purpose of this assessment, the referring court should take into account only factors ‘relating to the procedure for concluding the contract, such as the place of the business which published the recruitment notice and that which carried out the recruitment interview’ and ‘must endeavour to determine the real location of that place of business’.Footnote 44
In the part of the judgment concerning the interpretation of the term ‘place of business’,Footnote 45 unlike the Advocate General, the Court did not expressly state that this term should be equated with the concept of ‘branch, agency or other establishment’ of Article 5(5) of the Brussels I Regulation. This term was held to cover every stable structure—including a subsidiary, branch or an office—regardless of whether it possessed legal personality,Footnote 46 provided that it had a degree of permanence,Footnote 47 and that, in principle, it belonged to the undertaking which engaged the employee, i.e. formed an integral part of its structure.Footnote 48 The Court used the same two examples as the Advocate General to illustrate the existence of the requisite degree of permanence.Footnote 49
III. THE IMPLICATIONS OF VOOGSGEERD FOR THE CONNECTING FACTOR OF THE ENGAGING PLACE OF BUSINESS
A. (Ir)relevance of the Connecting Factor of the Engaging Place of Business
The habitual place of work is the principal connecting factor in European private international law of employment. If the employee has a habitual place of work, the identity and location of the engaging place of business are immaterial. Otherwise, the location of this place of business determines the court which has jurisdiction to hear the dispute and, in principle, the applicable law. The relationship between the two connecting factors has caused many practical problems. The ECJ has dealt with this issue in five cases. The common theme of these cases is a wide interpretation of the connecting factor of the habitual place of work, and a correspondingly narrow interpretation of the connecting factor of the engaging place of business.
The habitual place of work is easily identifiable where the work is performed in one place. But where the work is carried out in more than one place, determining the habitual place of work is problematic. Mulox Footnote 50 and Rutten Footnote 51 concerned disputes between commercial representatives domiciled in one country who worked for foreign companies. Both Mr Mulox and Mr Rutten used their homes as offices and bases of operations. Since they covered several countries, they frequently travelled abroad. Following their dismissals, the employees sued their employers in their home courts. The employers argued that these courts did not have jurisdiction, since the employees had not had their habitual places of work there. The ECJ sided with the claimant employees by holding that the jurisdiction over the whole dispute should be concentrated at ‘the place where or from which the employee principally discharges his obligations towards his employer’,Footnote 52 i.e. at ‘the place where the employee has established the effective centre of his working activities and where, or from which, he in fact performs the essential part of his duties vis-à-vis his employer’.Footnote 53 In both cases, the location of the employee's office was the most important factor for determining the habitual place of work. The claim in Weber Footnote 54 was brought by a cook who carried out his work on board various vessels and sea installations in the territorial waters of the Netherlands and Denmark. Mr Weber did not have an office that could constitute the effective centre of his working activities. The ECJ held that, in this situation, the habitual place of work ‘is, in principle, the place where [the employee] spends most of his working time engaged on his employer's business’Footnote 55 by looking at the whole period of employment.
The latest two cases, Koelzsch Footnote 56 and Voogsgeerd concerned international transport workers. Mr Koelzsch was a lorry driver based in Germany who distributed goods for a Luxembourg company throughout Europe. Mr Voogsgeerd was a seaman based in Belgium who worked on board ships operating in the North Sea. In both cases, the ECJ held that the connecting factor of the habitual place of work applied whenever ‘it is possible … to determine the State with which the work has a significant connection’, and that this connecting factor referred to ‘the place in which or from which the employee actually carries out his working activities and, in the absence of a centre of activities, to the place where he carries out the majority of his activities’.Footnote 57 The ECJ gave a strong hint that the employee in Koelzsch had his habitual place of work in Germany, i.e. the country from which he carried out his transport tasks, received instructions concerning his tasks and organized his work, where his work tools were situated, and to which he returned after completion of his tasks. Similarly, the Court suggested in Voogsgeerd that the employee had his habitual place of work in Belgium: ‘if … the place from which the employee carries out his transport tasks and also receives the instructions concerning his tasks is always the same, that place must be considered to be the place where he habitually carries out his work’.Footnote 58
It is interesting to note that the claimant in Voogsgeerd was a seaman. For many years, academics debated whether a seaman's employment contract was governed by the law of the country of the ship's flag or whether other criteria were more appropriate. The Giuliano/Lagarde Report accompanying the Rome Convention stated, somewhat delphically, that, ‘The Group did not seek a special rule for the work of members of the crew on board a ship.’Footnote 59 Their work was therefore subject to the choice-of-law rules applicable to employment contracts in general. But it was uncertain whether the work of seamen fell under the principal or subsidiary connecting factor. Many authors argued that, since seamen worked on ships which fell under the jurisdiction of the country whose flag they flew, employment contracts of seamen were, in principle, governed by the law of the country of the ship's flag.Footnote 60 Others argued in favour of other criteria, in particular the engaging place of business.Footnote 61 The former solution seems inappropriate. For example, saying that a British seaman who works on a ferry registered in the Bahamas and plying from a base in Portsmouth to the Channel Islands and Northern France habitually works in the Bahamas is clearly wrong.Footnote 62 In other words, there is no guarantee that the country of the flag of the ship will be sufficiently closely connected with the employment contract. Moreover, this connecting factor is determined unilaterally by the employer. In any event, this debate has now been resolved. A seaman's employment contract is, in principle, governed by the law of the country of the seaman's permanent base, provided that there is a significant connection between the work and the base. Otherwise, the applicable law is the law of the country of the engaging place of business. Neither the Court nor the Advocate General mentioned that the flag of the ship is a relevant consideration for determining the habitual place of work.
In light of the ECJ case-law, one wonders whether there are any cases in which the principal connecting factor of the habitual place of work is not applicable, and in which the subsidiary connecting factor of the engaging place of business is relevant. Mulox and Rutten demonstrate that employees who have an office from which they frequently travel abroad and to which they return (for example commercial representatives, managers, professionals, technicians) have a habitual place of work in the place where their office is located. Koelzsch and Voogsgeerd show that international transport workers who have a permanent base from which they commence their trips and to which they return (for example bus, lorry and train drivers, aircrew members,Footnote 63 seamen) have a habitual place of work in the country where their base is located. Weber shows that all other employees who change their places of work without maintaining a permanent base (for example construction workers) have a habitual place of work in the place where they spend most of their working time, unless the parties to the employment contract intend the habitual place of work to shift with each change of the place of work.Footnote 64
Consequently, it is very hard to think of work arrangements in which there is not a habitual place of work. One example might be the case in which the employee's work is not carried out from a permanent base, and the distribution of the working time spent in various places and the intention of the parties do not establish a habitual place of work. Another example might be the case in which the employee maintains two or more permanent bases of equal importance in different countries. In Portec (U.K.) Ltd. v Mogensen,Footnote 65 for example, the employee worked in Paris and Ruabon, Wales, maintained offices in both places, and divided his time more or less equally between both places (in 1973–74 he worked 83 days inside and 87 days outside Great Britain). The court held that the employee ordinarily worked, for the purposes of the Trade Union and Labour Relations Act 1974, both in Britain and abroad. Yet other examples might be the cases of employees who work outside the territory of any country (for example AntarcticaFootnote 66 or workers on oil rigs on the high seas)Footnote 67 or of employees who have a base in a particular country, but not a significant connection with that base (for example some globe-trotting seamen). Cases of this kind are rare. Therefore, it can be concluded that the ECJ has deprived the connecting factor of the engaging place of business of almost any effect. One wonders if such an interpretation is justified given that it contravenes the principle of effective interpretation.
B. What Is the ‘Engaging’ ‘Place of Business’?
In order to understand the connecting factor of the ‘engaging place of business’, one has to determine what is meant, first, by the term ‘engaged’ and, secondly, by the term ‘place of business’.
1. ‘Engaged’
As is apparent from Voogsgeerd, the term ‘engaged’ is ambiguous. Navimer (supported by the Dutch government and the European Commission)Footnote 68 argued that it referred to the conclusion of the employment contract; Mr Voogsgeerd (supported by the Belgian government)Footnote 69 argued that it referred to the connection that the employee had with a particular place of business through the actual carrying out of his or her work. These two interpretations reflect the two strands of academic opinion regarding the interpretation of this term. According to Professor Mankowski,Footnote 70 the term ‘engaged’ relates to ‘organisational integration, internal structuring and internal directives’:Footnote 71
‘Employment relations ordinarily are long-term agreements. Hence, it would be very much preferable to employ a connecting factor that is linked with the living relation as such, not merely its starting point. Organisational integration reflects this perfectly. Its elements might be e.g. the monthly payment of wages and salaries, the accountancy work and the tax business, supervision and giving directives. An unchangeable fixation on the formation of the contract … would open up a gap with the notion of the place of where the work is carried out habitually, since the latter would be changeable in time.’Footnote 72
However, national courts, supported by the majority of academics, have interpreted the term ‘engaged’ as referring to the conclusion of the employment contract or recruitment of employees.Footnote 73Voogsgeerd demonstrates why the former interpretation is inappropriate. Here, the employee entered into an employment contract with, and received salary from, the employer established in one country, but was obliged to report to, and received briefings and instructions from, a company from another country. It would be hard, if not impossible, to find one place of business within which the employee was organizationally integrated in accordance with the criteria set out in the quotation above.
It comes as no surprise that both the Court and the Advocate General held that the term ‘engaged’ referred to ‘the conclusion of the contract or, in the case of a de facto employment relationship, to the creation of the employment relationship and not to the way in which the employee's actual employment is carried out’Footnote 74 However, it is not entirely clear whether the ECJ referred to the conclusion of the employment contract by a particular place of business or at a particular place of business. The Court's judgment and the Advocate General's Opinion provide support for both views.Footnote 75 In order to reduce the risk of abuse, it was said that a place of business could be regarded as the ‘engaging’ place of business if it ‘has been actively involved in the conclusion of the employment contract on the instructions of the employer, for example by taking part in the contractual negotiations with the employee’.Footnote 76 A place of business that had not been actively involved in the conclusion of the employment contract should be disregarded, and the connecting factor of the engaging place of business should point to the place of business of the undertaking in whose name and on whose behalf the employment contract was concluded.Footnote 77
Furthermore, the Advocate General stated, somewhat contradictorily, that in extreme cases there should be an additional requirement that the employee was actually employed at the place of business in question.Footnote 78 However, this dictum should best be disregarded as it contradicts the conclusion that the verbal, purposive and systematic interpretations of Article 6(2)(b) demonstrate that the way in which the employee's actual employment is carried out is irrelevant, and as the Court did not refer to such an exception.
2. ‘Place of Business’
With regard to the interpretation of the term ‘place of business’, there are also several strands of opinion. The authors of the Cruz/Real/Jenard Report accompanying the 1989 San Sebastian Convention on the accession of Spain and Portugal to the Brussels Convention seemingly argued that this term should be equated with the term ‘branch, agency or other establishment’ of Article 5(5) of the Brussels Convention.Footnote 79 Professor Mankowski has argued that the term ‘place of business’ should have different meanings in different contexts.Footnote 80 In his opinion, ‘The main difficulty with instrumentalising the very same notion [i.e. the term ‘branch, agency or other establishment’] in the context of employment relations is that the notion has been developed for external business relations and not for the internal feature of employment agreements’.Footnote 81 The majority of authors, however, have not taken a clear position in this regard.Footnote 82
Whilst the position of the Advocate General was clear in this respect, that of the Court was not. The Advocate General expressly endorsed a parallel interpretation:
In the interests of securing an interpretation of the concepts of private international law which is as uniform as possible, it seems reasonable to transpose that definition of ‘place of business’ established by the Court in relation to Article 5(5) of the Brussels Convention to Article 6(2)(b) of the Rome Convention.Footnote 83
In the view of the Advocate General, the parallel interpretation meant that the term ‘place of business’ referred to an employer's establishment, regardless of whether it possessed legal personality,Footnote 84 over which the employer exercised actual control so that its actions were attributable to the employer,Footnote 85 which possessed a degree of permanence,Footnote 86 and which had been set up in accordance with the relevant provisions of the country in which it had been established.Footnote 87 The Court did not expressly endorse the parallel interpretation. But it did arguably refer to the same four requirements laid down by the Advocate General by holding that the term ‘place of business’ covered every stable structure—including a subsidiary, branch or an office—regardless of whether it possessed legal personality,Footnote 88 provided that it had a degree of permanence,Footnote 89 and that, in principle, it belonged to the undertaking which engaged the employee, i.e. formed an integral part of its structure.Footnote 90 Assuming that the Advocate General was right in holding that the requirements she laid down mirrored the definition of the ancillary establishment of Article 5(5) of the Brussels I Regulation (i.e. Brussels Convention),Footnote 91 it can be concluded that the Court effectively also equated the definition of the term ‘place of business’ of Article 6(2)(b) of the Rome Convention with that of the concept of the ancillary establishment under Article 5(5) of the Brussels I Regulation.
3. ‘Engaging Place of Business’: Three Practical Scenarios
It will now be examined how the connecting factor of the engaging place of business applies to some of the factual scenarios which arise in practice. One scenario is, of course, provided by Voogsgeerd itself. Similar facts are provided by the famous English case of Sayers v International Drilling Co NV.Footnote 92 The employer in Voogsgeerd was a Luxembourg company (Navimer). The employment contract was concluded at the premises of a Belgian subsidiary (Naviglobe). It is not known whether the subsidiary concluded the contract on behalf of the employer or whether it merely made its premises available for the conclusion of the contract by a representative of the employer. It is also not known whether the subsidiary was involved in any other way (apart from making its premises available) in the conclusion of the employment contract.
Both Navimer's place of business in Luxembourg and Naviglobe's place of business in Belgium meet the requirements of the term ‘place of business’. Whether Navimer or Naviglobe is to be regarded as the engaging place of business therefore depends on the interpretation of the term ‘engaged’. As discussed, it is not clear whether this term refers to the conclusion of the employment contract by a place of business or at a place of business. If Naviglobe concluded the employment contract on behalf of Navimer at its premises, it seems that the requirements of the term ‘engaged’ would clearly be met. But if Naviglobe made its premises available for the conclusion of the contract by a representative of Navimer, the legal position is not as clear. The former interpretation of the term ‘engaged’ (conclusion of the contract by a place of business) would point to Navimer as the ‘engaging’ place of business. The latter interpretation (conclusion of the contract at a place of business) would point to Naviglobe, provided it was actively involved in the conclusion of the contract. The fact that Naviglobe made its premises available for the conclusion of the contract could, under some conditions, be enough for regarding it as being actively involved. As the Court said:
the purely transitory presence in a State of an agent of an undertaking from another State for the purpose of engaging employees cannot be regarded as constituting a place of business which connects the contract to that State …
If, however, the same representative travels to a country in which the employer maintains a permanent establishment of his undertaking, it would be perfectly reasonable to suppose that that establishment constitutes [the engaging place of business].Footnote 93
However, it is not entirely clear whether, for an establishment to constitute the ‘engaging’ place of business, the representative of the employer must regularly present himself at that establishment or whether a one-off recruitment would be enough. The Advocate General stated that:
The fact that a representative of a foreign employer regularly presents himself at that place in order to recruit workers for employment abroad could not … be regarded as sufficient. If, however, the same representative travels to a country in which the employer maintains a permanent establishment of his undertaking, it would be perfectly reasonable to suppose that that establishment constitutes [the engaging place of business].Footnote 94
One could argue that the Opinion of the Advocate General supports the proposition that the representative of the employer must regularly present himself at a place of business which made its premises available for the conclusion of the employment contract, in order for that place of business to be regarded as the ‘engaging’ place of business. But it seems that the requirement of regularity should not be introduced. Its introduction would increase legal uncertainty and unforeseeability as it would open the question of what ‘regular’ is. Furthermore, it would contribute nothing to the achievement of the objective of employee protection. The employer can always structure its business so as to regularly present itself at a particular place of business for the purpose of entering into employment contracts.
Given the ambiguities of the ECJ judgment and the Advocate General's Opinion, it is uncertain whether the employer (Navimer) or the subsidiary (Naviglobe), or even both, should be regarded as the engaging place(s) of business. In case the term ‘engaged’ covers both the conclusion of the employment contract by and at a place of business, and assuming that the contract was concluded by a representative of Navimer at the premises of Naviglobe and that Naviglobe was actively involved in the conclusion of the contract, the term ‘engaged’ would be satisfied in relation to both Navimer and Naviglobe. Since there can be only one engaging place of business for the purposes of European private international law, the court would have to give preference to either Naviglobe or Navimer. It is uncertain and unforeseeable which place of business would be given preference. The objective of employee protection would have nothing to say in this regard. The employer can always structure its business so as to conclude its employment contracts either by or at a particular place of business.
This leads us to the second scenario. Suppose an employer formally enters into an employment contract through a place of business, whether ‘post-box’ or not, for the purpose of evading the protecting legislation of a particular country. For example, the French Cour de cassation has dealt with a case where a French company used its Swiss and Jersey subsidiaries to engage employees to work abroad.Footnote 95 The employment contracts contained choice-of-law clauses in favour of the law of the countries of the subsidiaries. Arguably, the reason for engaging employees in this manner was to evade the application of French law. Voogsgeerd shows that ‘post-box’ places of business which do not have offices or do not employ workers do not meet the requirements of the ‘place of business’. With regard to real places of business through which employment contracts are concluded, they can be regarded as ‘engaging’ places of business only if they were actively involved in the conclusion of the contracts. But even if the place of business through which the employment contract was concluded had been actively involved in the recruitment process by, for example, publishing the recruitment notice or making its premises available, the court should nevertheless consider whether the employer is trying to abuse the connecting factor of the engaging place of business to procure the jurisdiction of the courts and the application of the law that are not favourable for the employee. In the words of the Court, national courts ‘must endeavor to determine the real location of [the engaging place of business]’.Footnote 96
Yet another scenario concerns employment agencies. An employer might use an employment agency as an intermediary in the recruitment process. Moreover, an employer may procure labour by using the services of agency workers. An agency worker is a person who has a contract with the employment agency which, in turn, ‘hires out’ the worker to its client, i.e. the end-users of the worker's services. Professor Junker, for example, notes that sailors are often recruited by ‘hire agencies’ or ‘crewing companies’ based in countries with low protective standards, for example Antigua.Footnote 97 A question arises whether employment agencies can be regarded as engaging places of business for the purposes of European private international law. According to Professors Mota and Moreno, the answer is affirmative.Footnote 98 However, Voogsgeerd demonstrates that the place of business in question ‘must, in principle, belong to the undertaking which engages the employee, that is to say forms an integral part of its structure.’Footnote 99 Therefore, independent employment agencies cannot be regarded as engaging ‘places of business’. But it could be otherwise if the employment agency is subject to the control or direction by the employer.Footnote 100
There is another reason why independent employment agencies cannot be regarded as engaging places of business. The Brussels I Regulation gives jurisdiction to the courts for the place where the business which engaged the employee is or was situated.Footnote 101 The fact that jurisdiction is given to the courts for both the place where the engaging place of business is located at the moment of commencement of proceedings and for the place where it is located at the moment of engagement goes against interpreting it broadly as covering independent employment agencies. An employer cannot be exposed to litigation in foreign countries just because an employment agency, which might have been used a long time ago, is transferred from one Member State to another. The Rome I Regulation does not contain a similar provision.Footnote 102 If the relevant place of business moves from one country to another, the applicable law is the law of the country of the engaging place of business at the moment of engagement.
In conclusion, the connecting factor of the engaging place of business, as interpreted by the ECJ, leads to considerable legal uncertainty and unforeseeability. In particular, it is not entirely clear what is meant by the terms ‘engaged’ and ‘place of business’. Furthermore, this connecting factor does not meet the objectives of proximity and employee protection. There is no guarantee that it will point to the courts or the law of a country that is sufficiently closely connected with the dispute or the employment contract. Second, since engagement is within the employer's sphere of control, this connecting factor effectively enables the employer to unilaterally choose the competent court and the applicable law. Coupled with the conclusion of the previous section of this part of the article, namely that the ECJ has deprived the connecting factor of the engaging place of business of almost any effect, the conclusion of this section inevitably raises the question of whether this connecting factor should be abolished in European private international law.
C. Should the Connecting Factor of the Engaging Place of Business Be Abolished?
I have argued beforeFootnote 103 that the connecting factor of the engaging place of business should be abolished in the Brussels I Regulation on two grounds. First, leaving aside the fact that it is ordinarily determined unilaterally by the employer, there is another reason why this connecting factor does not accord with the objective of employee protection. With regard to the rules of private international law dealing with adjudicative jurisdiction, the objective of employee protection requires that claimant employees are put in a better jurisdictional position than other claimants in comparable situations by giving them access to more forums, and prohibiting employers from reducing the number of available forums by means of jurisdiction agreements.Footnote 104 However, the existence of the connecting factor of the engaging place of business leads to claimant employees actually having access to fewer forums than other claimants in comparable situations. A comparison can be made between claimant employees and claimant service providers. The service provider, in principle, can sue the other party in the courts for the place of provision of services.Footnote 105 If there is more than one place of provision of services, the service provider can commence proceedings in the courts for the place of the main provision of services; if there is no place of the main provision of services, the service provider can commence proceedings in the courts for each place of provision of services.Footnote 106 Furthermore, if the relevant place(s) of provision of services are located outside the EU, the service provider can bring the claim for non-payment in the courts for the place of payment (provided that the place of payment is in a Member State).Footnote 107 By way of comparison, if there is no habitual place of work, the employee can sue the employer only in the courts of the engaging place of business. Furthermore, if the habitual place of work is outside the EU, the fact that the place of payment of salary is in a Member State is irrelevant for jurisdictional purposes. Consequently, the rules of jurisdiction in employment matters are less favourable for claimant employees than the rules of jurisdiction for services contracts are for service providers, since they give claimant employees access to fewer forums in comparable situations. If the connecting factor of the engaging place of business were abolished in the Brussels I Regulation, claimant employees could, absent a habitual place of work, be given access to the courts for each place of work with which there is a significant connection, and thereby largely equated in their jurisdictional position with claimant service providers.
Second, Article 5(5) of the Brussels I Regulation allows the claimant to sue the defendant domiciled in one Member State which has an ancillary establishment in another Member State in the courts for the place of the ancillary establishment as regards a dispute arising out of the operations of the ancillary establishment. The courts have held that, in order for a contractual claim to be regarded as arising out of the operations of the ancillary establishment, it is enough that the contract was either concluded or negotiated through that establishment.Footnote 108 As discussed, in Voogsgeerd the ECJ arguably equated the definition of the term ‘place of business’ with that of the concept of the ancillary establishment of Article 5(5) of the Brussels I Regulation. Furthermore, the ECJ held that the term ‘engaged’ referred to the conclusion of the contract and recruitment of employees. Consequently, Article 5(5) of the Brussels I Regulation seems to cover by and large the same range of situations as Article 19(2)(b) of the Brussels I Regulation which confers jurisdiction on the courts of the engaging place of business. Given that employees can rely on Article 5(5),Footnote 109 Article 19(2)(b) is of practical importance only in rare situations where the engaging place of business is transferred from one Member State to another after the engagement.
It is for these reasons that some Member States such as the Netherlands which have otherwise implemented the solutions of the Brussels I Regulation in their national jurisdictional codes have decided not to introduce the rule of the engaging place of business.Footnote 110
Are there any good reasons to abolish the connecting factor of the engaging place of business in the Rome I Regulation? If the above arguments were accepted and this connecting factor was abolished in the Brussels I Regulation, there would be an a priori reason for doing the same in the Rome I Regulation for the sake of achieving and maintaining consistency between the two instruments. There are also self-standing reasons for abolishing this connecting factor. It does not support the objectives of the Rome I Regulation, namely legal certainty, foreseeability and employee protection.Footnote 111 It also does not meet the objective of proximity as there is no guarantee that it will point to the law of a country that is sufficiently closely connected with the employment contract. That is why this connecting factor is particularly amenable to being displaced through the application of the escape clause.Footnote 112 In cases in which there is not a habitual place of work, the parties will often be in dispute not only over the interpretation of the connecting factor of the engaging place of business but also over the application of the escape clause. Therefore, the objectives of legal certainty and foreseeability would not be undermined if this connecting factor were abolished. In fact they would be advanced, since the parties would not have to enter into dispute over the interpretation of this connecting factor. Furthermore, the number of appeals would be reduced and the efficiency of proceedings would be increased. Whether a place of business is the ‘engaging place of business’ is a legal question. Since the exact meaning of this concept is unclear, the trial court is likely to answer it wrongly, at least from the point of view of one of the parties. The possibility of such an error of law often gives the losing party sufficient reason to lodge an appeal. On the other hand, direct application of the principle of the closest connection would give the trial court an amount of discretion over the determination of the applicable law. Unless the trial court committed a manifest error when determining the applicable law by direct application of the principle of the closest connection, the appeal court would be unlikely to intervene.Footnote 113 Finally, the objective of employee protection and proximity would be advanced, since employers would not be able to (ab)use this connecting factor to evade protective legislation, and the courts would always have to determine and apply the law of the country with which the employment contract is most closely connected.
From a technical point of view, nothing precludes the abolition of this connecting factor in the Rome I Regulation. If it were abolished, the applicable law would be determined, absent a habitual place of work, by direct application of the principle of the closest connection. This technique would not be much different from that used in the general rules of the Rome I Regulation. Many of these rules are based on the theory of the characteristic performance.Footnote 114 But if the contract in question does not fall under a predetermined category and if its characteristic performance cannot be established, the applicable law is determined by direct application of the principle of the closest connection.Footnote 115 If the connecting factor of the engaging place of business were abolished, the location of the engaging place of business would still retain relevance as one of the factors to be considered under the principle of the closest connection.
It is interesting to note that the English courts apply such a technique when determining the territorial scope of employment legislation forming part of English law.Footnote 116 Thus, ‘the standard, normal or paradigm case’ of the application of the Employment Rights Act 1996 is the employee working in Britain at the time of the breach of the relevant statutory provision, regardless of what the contemplated place of work was when the employment contract was made.Footnote 117 With regard to peripatetic employees (for example airline pilots, international management consultants or salesmen), their work is considered to be performed in Britain if the employee is based in Britain at the time of the breach.Footnote 118 These two categories, namely employees working and based in Britain, are the same as the categories of employees who are covered by the connecting factor of the habitual place of work of the Rome I Regulation. With regard to expatriate employees, i.e. employees who are neither working nor are based in Britain at the relevant time, employment legislation forming part of English law is, in principle, inapplicable.Footnote 119 But if the employment relationship has a stronger connection with Britain than with the foreign country where the employee works, the employee will fall within the scope of employment legislation.Footnote 120 However, ‘[t]he case of those who are truly expatriate because they not only work but also live outside Great Britain requires an exceptionally strong connection with Great Britain and British employment law before an exception can be made for them.’Footnote 121
IV. CONCLUSIONS
By the time the referring court in Voogsgeerd renders its judgment, it will have taken around a decade for the applicable law in this case to be determined. The substantive issue before the Belgian courts is relatively simple so it should not take them too long to render a decision on the merits of the claim. A decade is an unreasonably long period of time for the resolution of a private international law issue in an employment dispute. In Voogsgeerd the delay was due to the uncertainties surrounding the interpretation of the connecting factor of the engaging place of business. If the Belgian courts had instead focused on finding the country with which the employment contract was most closely connected, they would have, arguably without major problems and delay, found Belgian law applicable. Not only was the employment contract concluded in Belgium, but the employee was obliged to report, received briefings and instructions in Belgium from a Belgian company, and he commenced and terminated his trips there.
This article shows that the connecting factor of the engaging place of business leads to excessive legal uncertainty, unforeseeability of the outcome of litigation, and does not support the objectives of employee protection and proximity. Furthermore, with regard to the Brussels I Regulation, Article 5(5) (jurisdiction over defendants who deal through ancillary establishments) seems to cover by and large the same range of situations as Article 19(2)(b) which, absent a habitual place of work, confers jurisdiction on the courts of the engaging place of business. It has been argued here that, for these reasons, the connecting factor of the engaging place of business should be abolished in European private international law. If that were done, the claimant employee who does not have a habitual place of work would be able to commence proceedings in the courts for each place of work with which there is a significant connection. Given that claimant service providers who provide services in more than one country without having a place of the main provision of services can commence proceedings in the courts for each place of provision of services, the abolition of the connecting factor of the engaging place of business in the Brussels I Regulation would equate the jurisdictional position of claimant employees with that of claimant service providers. Furthermore, the abolition of this connecting factor in the Rome I Regulation would mean that, absent a habitual place of work, the applicable law for an employment contract would be determined by direct application of the principle of the closest connection.
