Home » Stena Drilling PTE v Smith: jurisdiction

Stena Drilling PTE v Smith: jurisdiction

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Last updated 19th June, 2024.

The EAT said that to have jurisdiction in an Equality Act (EqA) claim, an employment tribunal needs “international jurisdiction” (under ss.15C or 15D CJJA if the dispute relates to an individual contract of employment), and also the dispute must fall within the territorial reach of the EqA under cases such as Lawson and Ravat (“territorial jurisdiction”). One of these alone is not enough to give jurisdiction. My comments below.

2024, Employment Appeal Tribunal (EAT). [2024] EAT 57. Full decision www.bailii.org/uk/cases/UKEAT/2024/57.html

Facts

Stena Drilling PTE (SD) was a company incorporated in Sweden. It was part of the Stena group. The group owned and operated vessels used to support drilling from oil and gas wells offshore in deep sea locations throughout the world.

From July 2011 the claimant worked as a seafarer on various vessels operated by the Stena group. Until November 2012 his home address for tax purposes was in Liverpool. His home address then changed to France, at which point he entered an employment contract with a different Stena group company, AMS. From June 2021 his home address changed back to Liverpool, and he was again employed by SD. However he was absent from work due to ill health when that new contract began. He undertook no work for SD from then until his dismissal in October 2021.

All the vessels on which the claimant worked were registered in the UK. Apart from a brief period when he started in 2011, none of his work was in UK territorial waters.

His employment contracts with SD and AMS said the contract was to be governed by and construed in accordance with Singapore law. He was paid in sterling. When employed by SD, his pay was subject to deductions for UK income tax and National Insurance. When employed by AMS, he took steps to ensure he did not become UK tax resident.

Another Stena group company, SDHR, provided HR administration, payroll services, and other services under commercial agreements with SD and AMS. It did this from offices in Aberdeen, and was incorporated in the UK. When the claimant was offered employment by SD in 2011, the offer letter was sent to him at his home address in Liverpool, and he was asked to confirm his acceptance in writing to SDHR in Aberdeen. SDHR was the claimant’s point of contact on HR issues with whichever of the Stena group companies he was working for from time to time.

The claimant made claims under the Employment Rights Act 1996 (ERA) and the Equality Act 2010 (EqA).

ET decision

The Employment Tribunal (ET) said it had to consider as a preliminary issue whether it had territorial jurisdiction to consider the claims. The ET said jurisdiction “could be determined” by s.15C of the amended Civil Jurisdiction and Judgments Act 1982 (CJJA), but decided that on the facts s.15C did not give jurisdiction. After considering the applicable law of the contract, the ET looked at territorial jurisdiction under s.199(7) ERA and/or Serco v Lawson (Connection of employment with Great Britain>”Sufficient connection” test) and, for the EqA claim, under the 2011 regulations on ships and hovercraft. Having done so, the ET concluded that it had jurisdiction to determine both claims. [§22-25]

EAT decision

International jurisdiction vs territorial jurisdiction

The EAT held that where an issue of jurisdiction arises before an employment tribunal, forum jurisdiction (otherwise known as “international jurisdiction”) and the territorial reach of the particular statute (“territorial jurisdiction”) are separate questions, and must be considered separately (Simpson v. Interlinks). [§13]

For cases commenced after the end of 2020 involving individual contracts of employment, ss.15C and 15D CJJA represented the only route through which international jurisdiction may be established. (S.15D was not relevant here.) [§14-16]

The EAT discussed cases on “the separate issue of territorial jurisdiction” such as Lawson and Ravat (Connection of employment with Great Britain>”Sufficient connection” test). In Lawson, Lord Hoffmann noted that the right to pursue a claim for unfair dismissal under the ERA is necessarily subject to implied territorial limitations, and set out guidance on what those limitations are. The same general test for territorial jurisdiction under the ERA usually applied also to EqA claims (Hottak case). [§17-20]

The EAT said the ET did not appreciate the important distinction between international and territorial jurisdiction, and that these issues needed to be considered separately. The ET wrongly interpreted Simpson v. Interlinks as authority for the proposition that in any claim involving an individual contract of employment, alternative routes to establishing international jurisdiction might exist beyond those provided in ss.15C and 15D CJJA. The ET wrongly thought that the rules on territorial jurisdiction could confer international jurisdiction. [§32]

International jurisdiction in this case

Although the ET had not applied the law correctly, the claims in this case should not simply be dismissed for want of international jurisdiction.

Firstly, given the role of SDHR in Aberdeen, s.15C(2)(c) CJJA might confer jurisdiction. It could do so “where the business which engaged the employee is or was situated (regardless of the domicile of the employer)”. An EU court decision on the Rome Convention – potentially relevant to the similarly worded provision of the recast Brussels Regulation which s.15C(2)(c) was intended to replace – had held that the expression “the place of business through which the employee was engaged” referred “exclusively to the place of business which engaged the employee and not to that with which the employee is connected by his actual employment”. The EU court said that a court or tribunal should, therefore, consider only those factors “relating to the procedure for concluding the contract, such as the place of business which published the recruitment notice and that which carried out the recruitment interview, and it must endeavour to determine the real location of that place of business”. [§33-35]

In the light of this, findings of fact by the ET raised the possibility (the EAT put it no higher) that Aberdeen might be found to be the place where the business that engaged the claimant was situated. The case should therefore be remitted to the ET to consider the precise role SDHR played in the process of employing the claimant. [§36-37]

Secondly, the employer conceded that an argument about whether SDHR constituted a “branch” or “establishment” within s.15C(7) was not previously considered by the ET and remained to be advanced. [§37] [Note: Presumably this might give UK jurisdiction under s.15C(2)(a).]

Territorial scope in this case

As to whether this case fell within the territorial scope (or “territorial jurisdiction”) of the EqA, the EAT held the ET had not properly applied the Equality Act 2010 (Work on Ships and Hovercraft) Regulations 2011: see Connection of employment with Great Britain>Regulations: Ships and hovercraft. Therefore, if the ET decided it had international jurisdiction, it should also reconsider whether or not it had territorial jurisdiction over the EqA claim. [§43-44]

My comments

Both jurisdiction tests needed to be fulfilled

Most employment disputes on jurisdiction are about the “territorial reach”, or territorial scope” of the EqA (or of other claims such as unfair dismissal). The EAT calls his “territorial jurisdiction”. I discuss the rules for this at Connection of employment with Great Britain>”Sufficient connection” test), though there are different rules for ships.

There is also the separate issue of whether UK courts (rather than foreign courts) have jurisdiction to hear the case. The EAT calls this “international jurisdiction”. See Connection of employment with Great Britain>Complications of jurisdiction and choice of law.

For an employment tribunal to apply the EqA, the tribunal needs to have international jurisdiction, and also the case needs to fall within the territorial reach (or territorial jurisdiction) of the EqA. The employment tribunal here had gone wrong by thinking it had jurisdiction if just one of those tests was met.

A further issue that can arise, but did not here, is choice of law: Connection of employment with Great Britain>Which law?

Test under s.15C(2)(c) CJJA

This EAT decision is also of some interest on the test for applying s.15C Civil Jurisdiction and Judgments Act 1982, on international jurisdiction. The EAT indicates than even if the employer was outside the UK and the claimant worked wholly outside the UK, s.15C(2)(c) CJJA might confer jurisdiction if the claimant was recruited through a place of business in the UK. Here HR matters generally were handled by a group company in Aberdeen. [§33-35]

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