Do You Think About Your Jurisdiction Clause?
A recent case suggests that you may want to adapt your standard wording in some circumstances.
The Employment Appeal Tribunal (EAT) has held that a clause in an employment contract giving the Scottish courts exclusive jurisdiction was a relevant factor in determining whether an employee's claim could be heard in the UK, despite the employee living and working abroad.
Hexagon Sociedad Anonima v Hepburn
Mr Hepburn is a UK citizen and his employment contract stipulated that his home location was Scotland. Whilst he worked on a vessel moored in Equatorial Guinea territorial waters he was a UK passport holder, lived in Scotland when not working and paid UK taxes.
His employer, Hexagon Sociedad Anonima (Hexagon), was registered in Equatorial Guinea but part of a multinational group of companies whose parent company was registered in the UK and headquartered in Scotland.
Mr Hepburn's employment contract stated that it was governed by the laws of Scotland. It provided for the exclusive jurisdiction of the Scottish Courts and Tribunals. After his dismissal, Mr Hepburn submitted a whistleblowing claim in the Scottish employment tribunal.
Hexagon argued that the dispute should be heard in Equatorial Guinea and that the contractual jurisdiction clause was irrelevant.
Why Was The Jurisdiction Clause Relevant?
The employment tribunal held it did have jurisdiction to hear the case and Hexagon appealed. The EAT upheld the tribunal decision.
It noted that the general rule is that normally employment disputes should be resolved in the jurisdiction where they arise, but a claim may be brought in the UK if the claim has a sufficiently strong connection with the UK.
In this case a key determining factor for the EAT was that the employer had drafted the specific jurisdiction clause because:
- Mr Hepburn had a UK passport
- workers from Equatorial Guinea had a local jurisdiction clause
- all other workers had a USA jurisdiction clause
The EAT considered that it was inconsistent to draft and agree a term only to disown it when a claim was brought. As a result the wording of the contract was a relevant factor to be considered in relation to jurisdiction.
What Can Employers Learn?
This case is particularly fact specific but it provides important contract drafting points for employers to consider. Jurisdiction clauses are more than a simple choice of forum and may demonstrate that the parties consider there is a strong connection with the UK.
Typically, employment contracts entered into by UK-based employers provide that the courts of England and Wales shall have exclusive jurisdiction. This is on the basis that it is the legal system with the which the employer is most familiar.
In light of this case employers may want to give a bit more thought to the wording of jurisdiction clauses, and review them in each case. For example, they may want to consider using non-exclusive jurisdiction clauses when engaging staff to work in their overseas operations. Such clauses may suggest that the parties consider there to be a weaker connection with the UK. Much will depend on the circumstances and we would be happy to talk matters through with you.