Edited by Jürgen Basedow, Giesela Rühl, Franco Ferrari and Pedro de Miguel Asensio
Chapter E.6: Employment contracts, jurisdiction
I. General aspects
1. Protection of employees as leitmotif
Employment law generally aims at protecting employees against the superior bargaining power of employers. While, at the level of substantive law, this objective has been widely recognized ever since the emergence of labour law as a distinct field of private law, the same is not true with regard to the rules on employment matters at the level of private international law. For a long time, the prevailing view was that private international law should determine the competent courts and the applicable law in international disputes on the basis of ‘neutral’ and purely objective criteria, whereas policy-related issues such as the protection of weaker parties ought to be a matter solely for substantive law. Today, however, this perception has changed and it has become accepted that the law of conflicts may also serve, in some circumstances, as a regulatory tool for the achievement of certain policy goals. Thus, in a number of jurisdictions, the legislature has implemented special conflict rules with a view to strengthening the position of weaker parties such as consumers and employees. In particular, the choice-of-law rules regarding (individual) employment contracts generally seek to defend the interests of employees by imposing restrictions on the employer’s freedom to choose the applicable law and by resorting to →connecting factors which the employer cannot easily manipulate to serve his interests (→Employment contracts, applicable law). As will be shown subsequently, a similar approach is also adopted in relation to the private international law rules on jurisdiction. In this regard, Recital 18 of the Brussels I Regulation (recast) (Regulation (EU) No 1215/2012 of the European Parliament and of the Council of 12 p. 625December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (recast)  OJ L 351/1; →Brussels I (Convention and Regulation)) reflects the rationale not just of the EU rules on jurisdiction, but also of many other jurisdictional regimes: ‘In relation to insurance, consumer and employment contracts, the weaker party should be protected by rules of jurisdiction more favourable to his interests than the general rules.’ Though details vary among the different legal systems, some common features can be discerned. First, in order to facilitate access to justice for employees, most legal orders provide for alternative heads of jurisdiction in favour of employees, offering them the option of suing the employer not just before the courts in the country in which the employee is domiciled, but also in countries which show a close connection with the employment relationship (in particular, at the place of work). Generally, these special rules are ‘unilateral’ in the sense that they are not available for claims raised by the employer as the stronger party. A second common pattern of jurisdictional rules regarding employment matters concerns forum selection agreements: in most legal systems, the parties to the employment relationship are only allowed to conclude such agreements subject to strict limits.
2. Legislative developments
It is noteworthy that the implementation of special jurisdictional provisions for employment matters is a relatively recent phenomenon. In the EU, the 1968 Brussels Convention (Brussels Convention of 27 September 1968 on jurisdiction and the enforcement of judgments in civil and commercial matters  OJ L 299/32, consolidated version  OJ C 27/1) lacked any rules relating to employment relationships in its initial version, though it did provide for special bases of jurisdiction in favour of other ‘weak’ parties such as policyholders, as well as consumers in instalment sales and loans. It was only in the 1980s, during the negotiations leading to the →Lugano Convention (Lugano Convention of 16 September 1988 on jurisdiction and the enforcement of judgments in civil and commercial matters  OJ L 319/9), that the EFTA Member States asked for a specific rule on jurisdiction for individual employment contracts. The rule was added to the provisions of the convention dealing with jurisdiction over contractual claims (art 5(1) of the 1988 Lugano Convention). Soon after, in 1989, a similar rule was incorporated into the new version of the Brussels Convention (sometimes referred to as San Sebastian Convention (Convention of 26 May 1989 on the Accession of the Kingdom Spain and the Portuguese Republic  OJ L 285/1)), following the accession of Spain and Portugal. Later, when the Brussels Convention was replaced by the Brussels I Regulation (Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters  OJ L 12/1; →Brussels I (Convention and Regulation)), the issue of jurisdiction regarding employment contracts became the object of a separate specific section of the regulation (s 5 of Chapter II, arts 18–21); identical provisions can be found in arts 18–21 of the new 2007 Lugano Convention (Lugano Convention of 30 October 2007 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters  OJ L 339/3). Finally, the Brussels I Regulation (recast), which repeals the Brussels I Regulation and has applied since 10 January 2015, has brought only minor changes to the rules on jurisdiction in employment matters (arts 20–23).
Outside the EU, one can roughly discern two different approaches with regard to the protection of employees in private international law: while in some legal systems protective provisions can be found solely in the ambit of choice-of-law (eg →Brazil, →Tunisia and →Ukraine), other legislatures followed the EU model, also implementing specific jurisdictional provisions regarding individual employment contracts (see eg →Japan, South Korea, →Switzerland and →Turkey).
II. Jurisdiction in claims brought by employees
1. The ‘asymmetrical’ structure of jurisdictional rules in employment matters
Most jurisdictional regimes differentiate between claims brought by employees and claims brought by employers. The distinction rests on the consideration that workers are usually faced with difficulties if they are forced to conduct legal proceedings in a country other than that of their domicile or their habitual workplace, where too often the language and the legal system p. 626is unfamiliar. For employers, by contrast, it is generally comparatively easier for them to avail themselves of legal assistance in a foreign forum. This is particularly true in the context of cross-border labour relations where, frequently, the employers are multinational enterprises which can rely on the expertise of in-house legal counsel and, in addition, are often advised by international law firms with expertise in a wide range of jurisdictions.
The disparity described above is the reason why, in most legal systems, the rules on jurisdiction relating to contracts of employment can be said to have an ‘asymmetrical’ or unilateral structure: while the employer can bring a claim against the employee only in a very restricted number of places (in most jurisdictional regimes, the employer can only sue in one country, namely where the employee is domiciled), the situation is quite different with regard to claims raised by the employee. As will be shown in the following sections, workers are provided with a much wider variety of options as to where to institute proceedings against the employer. Essentially, employees have the choice between the following venues: (i) the country where the employer is domiciled; (ii) the place of habitual work; and (iii) in the absence of a habitual workplace, the place where the hiring company is based. Moreover, some jurisdictions grant employees the right to bring proceedings in the courts of the place in which they are domiciled. Finally, special jurisdiction rules may apply for claims raised by posted workers.
2. The country where the employer is domiciled
Usually, the special heads of jurisdiction for employment contracts supplement, but do not supersede, the general principle of actor sequitur forum rei, according to which the courts in the country where the defendant is domiciled are competent to hear a case. Thus, the employee is not precluded from suing the employer in the country in which the latter is domiciled. In some legal systems, this rule is expressly stated in the provisions dealing with jurisdiction in employment matters (see eg art 21(1)(a) Brussels I Regulation (recast); art 19(1) of the 2007 Lugano Convention; art 115(1) Swiss Private International Law Act (Bundesgesetz über das Internationale Privatrecht of 18 December 1987, 1988 BBl I 5, as amended); art 44 Turkish Private International Law Act (Turkish Private International Law Code (Code on Private International and International Civil Procedure Law of 27 November 2007 (Act No 5718) (Milletlerarası Özel Hukuk ve Usul Hukuku Hakkında Kanun), Resmî Gazete No 26728 of 12 December 2007))). In other countries, the employee’s right to institute proceedings in the country of domicile of the employer follows from the fact that the special rules vesting jurisdiction over employment contracts in the courts at the place of work are non-exhaustive (see eg arts 3–4(2) Japanese Code of Civil Procedure; art 28(3) South Korean Private International Law Act (Law 6465 of 7 April 2001, Amending the Conflict of Laws Act of the Republic of Korea)).
However, it should be mentioned that in practice, the domicile rule plays only a minor role in labour litigation. Where the place of the employer’s domicile and the place of work are different countries, the employee is more likely to start proceedings in the latter venue, where he is usually better acquainted with the legal system, than in a foreign forum.
In EU law, the domicile rule was the object of a controversy in the context of claims against multiple defendants (→Multiple defendants and joint liability). Initially, it was unclear whether the provision on co-defendants laid down in art 8, point 1 Brussels I Regulation (recast) (previously art 6, point 1 Brussels I Regulation) was also applicable to claims brought by an employee against several employers domiciled in different Member States. Under that rule, the courts for the place where any one of the co-defendants is domiciled have jurisdiction also over the claims against the defendants domiciled in other Member States, provided there is some form of connection between the different claims. In the Glaxosmithkline case (Case C-462/06 Glaxosmithkline v Jean-Pierre Rouard  OJ C 171/7), which was decided under the old Brussels I Regulation, the ECJ held that the special jurisdiction rule for co-defendants enshrined in art 6, point 1 Brussels I Regulation could not be applied to a labour dispute, arguing that the provisions regarding jurisdiction in relation to employment contracts were exhaustive and contained no reference to art 6, point 1. The ruling has been criticized for being too formalistic. In particular, it has been pointed out that, in comparison to plaintiffs involved in disputes concerning matters other than employment, workers were placed in a less favourable position as they might be forced, in p. 627certain circumstances, to pursue their claims in different Member States. This outcome was clearly at odds with the very purpose of the special jurisdictional rules for employment contracts, namely to afford better protection to employees. The Glaxosmithkline decision has prompted a reaction from the European legislature: art 20(1) Brussels I Regulation (recast) now makes clear that the special jurisdictional rule for co-defendants laid down in art 8, point 1 also applies to a claim brought by an employee against several employers.
3. Place of (habitual) work
In practice, by far the most important basis of jurisdiction in labour disputes is the place of work. Most legal systems vest jurisdiction over claims raised by the employee in the courts of the country in which the work is habitually carried out (see art 21(1)(b)(i) Brussels I Regulation (recast); art 19(1)(b)(i) 2007 Lugano Convention; art 28(3) of the South Korean Private International Law Act; art 115(1) Swiss Private International Law Act; art 44 Turkish Private International Law Act). Other jurisdictions adopt a slightly different approach, referring to the place of work stipulated in the employment contract (see art 3–4(2) Japanese Code of Civil Procedure). Essentially the same result is achieved in legal orders such as →Brazil, where, in the absence of special jurisdictional rules for labour disputes, employment contracts are subject to the general rule regarding contractual claims which confers jurisdiction on the courts for the →place of performance of the contractual obligation (see art 88(2) Brazilian Code of Civil Procedure (Código de Processo Civil, Lei No 5.869 of 11 January 1973)).
The workplace rule is in line with the goal of affording adequate protection to workers: it designates a forum to which the worker generally has a close connection, thus facilitating access to justice for employees and placing them in a better position to pursue their rights against the employer. Moreover, the workplace constitutes an objective connecting factor, which the employer cannot easily manipulate to serve his own interests (unlike, for instance, the place of establishment of the hiring business). In addition to strengthening the position of employees vis-à-vis their employers, the workplace rule also offers the advantage of promoting the proper administration of justice. First, as the ECJ has pointed out in several decisions, the courts at the workplace are best suited to take cognizance of the facts of the case and, hence, to resolve the labour dispute (see eg Case C-437/00 Giulia Pugliese v Finmeccanica SpA, Betriebsteil Alenia Aerospazio  ECR I-3573, para 17). Second, in most jurisdictions, the place of work constitutes – in the absence of a choice-of-law agreement – the primary criterion for determining the law applicable to the employment contract (→Employment contracts, applicable law). By relying on the same →connecting factor both for the purposes of jurisdiction and choice of law, the legislature ensures the synchronization of forum and applicable law. As a result, the courts can adjudicate the dispute on the basis of the →lex fori, thus avoiding the costs and uncertainties arising from the application of foreign law (→Foreign law, application and ascertainment).
In Europe, the ECJ has delivered several preliminary rulings on the interpretation of the habitual workplace rule. Though the decisions mostly concerned art 5(1) Brussels Convention (as amended by the 1989 San Sebastian Convention), the case-law of the Court is equally valid for art 19(2)(b) Brussels I Regulation as well as art 21(1)(b)(i) Brussels I Regulation (recast), which essentially reiterate the proviso formerly laid down in the Brussels Convention. Two aspects about the case-law of the ECJ deserve mention. First, the Court interprets the concept of ‘habitual workplace’ in the jurisdictional rules in a manner consistent with the equivalent term in the choice-of-law rules, namely art 6(2)(a) Rome Convention (Rome Convention on the law applicable to contractual obligations (consolidated version)  OJ C 27/34) and art 8(2) Rome I Regulation (Regulation (EC) No 593/2008 of the European Parliament and of the Council of 17 June 2008 on the law applicable to contractual obligations (Rome I)  OJ L 177/6; →Rome Convention and Rome I Regulation (contractual obligations)). Thus, for instance, in Invenel, a case dating back to the time prior to the introduction of the specific rule regarding jurisdiction in employment matters, the ECJ drew upon the habitual workplace rule laid down in the Rome Convention to determine, for the purposes of the Brussels Convention, the place of performance of a contractual obligation arising from an employment contract (see Case 133/81 Roger Ivenel v Helmut Schwab  ECR I-1891, paras 13 et seq). Likewise, p. 628when interpreting the concept of ‘habitual workplace’ in the context of the choice-of-law rules, the Court refers to its case-law regarding jurisdiction (see Case C-29/10 Heiko Koelzsch v État du Grand-Duché de Luxembourg  ECR I-1595, para 39). This model of ‘consistent interpretation’ pursued by the ECJ deserves approval: besides promoting coherency in EU private international law, it also enhances the synchronization of forum and applicable law.
The second aspect to be highlighted is the broad interpretation given by the ECJ to the habitual workplace rule. According to the Court, the rule plays a key role in facilitating the goal of affording effective protection to employees, as it enables employees to bring their claims in a forum with which they are familiar. The subsidiary rule laid down in art 21(1)(b)(ii) Brussels I Regulation (recast), on the other hand, which refers, in the absence of a habitual workplace, to the place of the engaging business, is generally believed to be less favourable to employees (see section II.4 below). Consequently, also in cases in which the worker performed his tasks in several countries, the Court has been eager to identify a habitual place of work and thus to reduce the scope of the engaging business rule. To determine the habitual workplace, the ECJ made reference, inter alia, to the place in which the worker has established the effective centre of his working activities (Case C-383/95 Petrus Wilhelmus Rutten v Cross Medical Ltd  ECR I-57, para 23) or, in the absence of an office, to the place in which the employee carries out the majority of his work (Case C-37/00 Herbert Weber v Universal Ogden Services Ltd  ECR I-2013, para 50). Previously, in Mulox (Case C-125/92 Mulox IBC Ltd v Hendrick Geels  ECR I-4075, para 24), the ECJ had held that, in the case of peripatetic workers, the habitual workplace may be (depending on the circumstances) the place from which the worker principally discharges his obligations towards the employer. The European legislature incorporated the criterion developed by the ECJ in Mulox into the Rome I Regulation: to determine the law applicable to the employment contract in the absence of a choice by the parties, art 8(2) Rome I Regulation refers to the law of the country ‘in which or, failing that, from which the employee habitually carries out his work’. A similar form of wording has been now inserted into art 21(1)(b)(i) Brussels I Regulation (recast).
4. Place of engaging business
Where a habitual place of work cannot be established, some legal systems confer special jurisdiction over claims raised by the employee on the courts of the country in which the business that hired the employee is located (see art 21(1)(b)(ii) Brussels I Regulation (recast); art 19(2)(b) 2007 Lugano Convention; art 3–4(2) Japanese Code of Civil Procedure; art 28(3) South Korean Private International Law Act). In practice, however, this venue is unlikely to differ from the domicile of the employer.
In EU law, the engaging business rule laid down in art 21(1)(b)(ii) Brussels I Regulation (recast) mirrors art 8(3) Rome I Regulation and, hence, facilitates the alignment of forum and ius. The ECJ has shed some light on the concept of ‘engaging business’ in the context of the Rome I Regulation. In particular, the Court clarified that the criterion refers exclusively to the place of business which concluded the contract of employment rather than to that with which the employee is connected by his actual employment (ECJ judgment of 15 December 2011, Case C-384/10, Voogsgeerd, paras 43 et seq). The European Parliament has recently voiced concern as to whether the reference to the engaging business sufficiently respects the interests of employees. In October 2013, it passed a resolution asking the European Commission to evaluate whether the current art 21(1)(b)(ii) Brussels I Regulation (recast) should be reworded so as to refer to the place of business from which the employee receives day-to-day instructions rather than to the engaging place of business (see Resolution of 8 October 2013 on improving private international law: jurisdiction rules applicable to employment, 2013/2023 (IMI)).
However, it should be noted that the scope of the rule is very limited in practice. As has been already mentioned, the ECJ leans towards an extensive interpretation of the connecting factor of ‘habitual workplace’ enshrined in art 21(1)(b)(i) Brussels I Regulation (recast). This approach has the effect of reducing the significance of the subsidiary connecting criterion, ie the place of the engaging business. The case-law of the ECJ rests on the consideration that the latter criterion is less favourable to employees as it designates a forum to which the employee may have difficulty accessing. Moreover, the criterion is susceptible to manipulation as the employer may decide deliberately to locate his business in a jurisdiction which suits his own interests p. 629and offers only a low standard of protection to employees. Given the extremely broad definition of ‘habitual workplace’ developed by the ECJ, one can hardly think of a situation in which it is impossible to determine such a place and therefore the engaging business rules applies.
5. Jurisdiction of the courts in the country of domicile of the employee
Some jurisdictions afford particularly favourable treatment to employees, allowing them to also sue the employer in the place of their own domicile or habitual residence (→Domicile, habitual residence and establishment). This is the case, for instance, in Switzerland (art 115(2) Swiss Private International Law Act) and Turkey (art 44 Turkish Private International Law Act). Similarly, the courts in the →USA have recognized a right of the employee to also commence proceedings in his home state where the work was carried out elsewhere, provided that the employer actively recruited the employee away from his home state (for an overview of the case-law, see P Hay, P Borchers and S Symeonides, Conflict of Laws (5th edn, West 2010)).
By contrast, the European rules on jurisdiction laid down in the Brussels I Regulation (recast) and in the 2007 Lugano Convention lack a provision conferring jurisdiction over claims raised by the employee against the employer in the courts of the country in which the employee is domiciled or habitually resident. At first sight, this finding may come as a surprise given that, with regard to consumer and →insurance contracts, the European rules on jurisdiction allow the weaker party to sue in the place of his own domicile (see arts 11(1)(b) and 18(1) Brussels I Regulation (recast); arts 9(1)(b) and 16(1) of the 2007 Lugano Convention). However, an important difference between consumer and insurance contracts, on the one hand, and employment contracts, on the other hand, lies in the fact that, under the relevant choice-of-law rules, the former are frequently subject to the law of the country in which the weaker party has his habitual residence (see art 6(1) and art 7(3) and (6) Rome I Regulation, respectively). Thus, by vesting jurisdiction in the courts of the place of the domicile of the consumer and the policyholder, respectively, the European legislature has sought to avoid discrepancies between forum and applicable law. The situation is different with regard to employment contracts, which are most often governed by the law of the country in which the work is habitually carried out (art 8(2) Rome I Regulation). If the courts of the place of the employee’s domicile were granted jurisdiction, they would usually have to resolve the dispute on the basis of foreign law.
6. Special rule on jurisdiction for claims by posted workers
In EU law, the Posted Workers Directive (Directive 96/71/EC of the European Parliament and of the Council of 16 December 1996 concerning the posting of workers in the framework of the provision of services  OJ L 18/1) provides for a special head of jurisdiction in the context of cross-border posting of workers. According to art 6 Posted Workers Directive, workers temporarily posted from an EU Member State to the territory of another Member State may sue before the courts of the host country to enforce the terms of employment guaranteed to them under the Directive.
In order to understand why the special jurisdictional rule in art 6 Posted Workers Directive is needed, it is necessary to recall the content and structure of that Directive. Generally, the employment relationship of workers who are temporarily posted abroad is governed by the law of the country of origin, since this is where the habitual workplace within the meaning of art 8(2) of the Rome I Regulation is situated. However, art 3 Posted Workers Directive sets out a ‘hard core’ of employment terms (eg as to maximum working hours, minimum rate of pay, etc) which ought to be subject to the law of the host state, regardless of the law applicable to the employment relationship under the ordinary choice-of-law rules (→Employment, posting of workers). The main rationale of this rule is to avoid the situation arising whereby companies based in low-wage countries and providing cross-border services in high-income states enjoy substantial cost advantages at the expense of local firms and their employees in the host state. Being subject to the higher (and therefore more expensive) labour standards of the host state, those foreign-based posting companies are deprived of their competitive advantage. What is noteworthy about art 3 Posted Workers Directive is that the rule is based on a model of unilateral application: only the courts in the host state are under an obligation to apply the protective provisions specified in art p. 6303. In contrast, the Directive imposes no such duty on the courts in other states – in particular, on the courts in the state of origin of the posted worker. From the perspective of the latter courts, the mandatory provisions of the host state are to be classified as foreign →overriding mandatory provisions within the meaning of art 9(3) (the application of which is discretionary). It follows that a posted worker seeking to enforce the ‘hard core’ of protective provisions under art 3 Posted Workers Directive has to sue before the courts of the host state to ensure that his claim is successful. However, under heads of jurisdiction set out in the Brussels I Regulation (recast), generally only the courts in the state of origin are competent to hear the case, since this is where the posted worker habitually works and where the employer is usually domiciled. Against this background, it was necessary for the European legislature to include a special rule on jurisdiction in the Posted Workers Directive allowing posted workers to also commence proceedings before the courts of the host state.
However, it appears doubtful whether art 6 Posted Workers Directive is really sufficient to ensure the effective enforcement of the Directive in practice. In particular, low-skilled workers (for instance, in the building industry) who are posted abroad for a temporary period of time may face considerable difficulties in instituting proceedings in a foreign forum. Thus, it seems that the ideal solution to improving the enforcement of the Posted Workers Directive would be to transform art 3 into a bilateral conflict rule so that also the courts in the state of origin are obliged to apply the ‘hard core’ of mandatory rules of the host state.
III. Jurisdiction in claims brought by employers
1. Domicile of the employee
While most legal systems provide the employee with a wide range of options as to where to start proceedings, the employer as the stronger party to the employment contract is much more limited in his choice. Frequently, the only head of jurisdiction available to him is the general rule according to which the courts in the country where the defendant is domiciled are competent. This is the case, for instance, in EU law, where art 22(1) Brussels I Regulation (recast) restates the general provision laid down in art 4(1) (the same applies to the 2007 Lugano Convention; see art 20(1)). In addition, Japanese law vests jurisdiction over claims raised by the employer exclusively in the courts in the place of the employee’s domicile (see art 3–4(3) in connection with art 3–2(1) Code of Civil Procedure). In both legal systems, the underlying idea seems to be that the place of domicile is the venue where an employee faces the least difficulty in defending himself against legal proceedings.
2. Place of habitual work
Some legal orders provide for an additional head of jurisdiction, allowing employers to also institute proceedings at the habitual workplace. Such rules can be found, inter alia, in South Korea (art 28(4) Private International Law Act), Switzerland (art 115(1) Private International Law Act) and Turkey (art 44 Private International Law Act). The same is true for legal systems where employment relationships are covered by the general jurisdictional rules for contractual claims, which refer to the place of performance and apply regardless of which party raises the claim. Moreover, the right of the employer to sue in the courts of the habitual workplace is recognized in the 1999 Hague Draft Convention on Jurisdiction and Foreign Judgments in Civil and Commercial Matters (see art 8(1)(b)(ii)), which was never signed, but nonetheless had considerable influence on national legislation.
Originally, EU law followed the same model: the habitual workplace rule in art 5(1) Brussels Convention as amended by the San Sebastian Convention covered claims raised by employees and employers alike. In the Brussels I Regulation, the European legislature modified that head of jurisdiction so as to apply exclusively to claims raised by employees (art 19(2)(a)); this provision remains unchanged in the Brussels I Regulation (recast) (now laid down in art 21(1)(b)(i)).
At a closer look, there is a strong case for allowing the employer to sue before the courts at the habitual workplace. First, the place of work cannot generally be regarded as being a less favourable venue for employees than the place of domicile (→Domicile, habitual residence and establishment). Where an employee is domiciled in one country, but pursues an occupation in a different country, it may be actually easier for him to litigate an employment dispute in the latter country, where, for instance, he may obtain legal advice from his trade union or other professional organizations. In a very p. 631similar vein, the ECJ took the view, prior to the adoption of the Brussels I Regulation, that the habitual workplace ‘is the place where it is least expensive for the employee to commence, or defend himself against, court proceedings’ (judgment of 13 July 1993, Case C-125/92, Mulox, para 19, emphasis added). Moreover, the habitual workplace rule offers the advantage of aligning forum and applicable law and thus of avoiding costs and legal uncertainty. The difficulties that might arise from the discrepancy between forum and applicable law in an action brought by the employer become apparent from an initiative to amend the Brussels I Regulation undertaken by the Netherlands in 2002 (see Initiative of the Kingdom of the Netherlands with a view to the adoption of a Council Regulation amending Regulation (EC) No 44/2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters  OJ C 311/16). The drafters of the reform proposal pointed out that in some jurisdictions, the employer may file for a judicial annulment of the employment contract instead of a dismissal (see eg art 7:685 of the Dutch Burgerlijk Wetboek (Stb 1991 No 600). Foreign courts, which are often unfamiliar with this kind of legal action, may encounter difficulties when dealing with such claims. Therefore, the Dutch proposal sought to introduce an additional head which would have conferred jurisdiction over claims by the employer for a judicial dissolution of the employment contract on the courts at the location of the habitual workplace. In those circumstances, the law applicable to the employment relationship and its termination would have usually been, on the basis of art 8(2) Rome I Regulation, the →lex fori, so that the problem of applying foreign law would not have arisen. However, the Dutch proposal received no support from the European Parliament and was eventually abandoned.
A flexible approach can be found in the Japanese Code of Civil Procedure: as already mentioned (see section III.1 above), Japanese law provides that the employer may only sue before the courts in the place of the employee’s domicile. However, according to art 3–7(6)(i) Code of Civil Procedure, the parties may stipulate, on the basis of a forum selection agreement concluded at the time of termination of the employment contract, that claims may also be brought before the courts of the country in which the work had been carried out. Such an agreement may be in the mutual interest of the parties, especially where the employee plans to move to a different country upon the termination of the employment relationship (eg for retirement). By conferring jurisdiction on the courts in the place of the last habitual workplace, the parties ensure that the employer does not have to bring a claim in a country that has no connection to the employment relationship.
IV. Restrictions on choice-of-court agreements
In the ambit of choice of law, one important regulatory measure for affording proper protection to employees is the limitation of →party autonomy. Given the inequality of bargaining power between the parties to the employment relationship, there is concern that the employer may use his superior position to impose a choice-of-law clause on the employee in favour of a law that offers only a low standard of protection to workers. Against this background, choice-of-law agreements in relation to employment contracts are subject to strict limits in most legal orders: some states ban such agreements altogether, while other jurisdictions allow them to the extent that they provide for the application of a law more favourable to employees than that which would have been applicable in the absence of choice (→Employment contracts, applicable law).
The situation is similar with regard to forum selection clauses. Such clauses pose a twofold threat for employees. First, the employer may hinder the employee from enforcing his contractual rights by conferring exclusive jurisdiction on the courts in a country to which the employee has little or no connection. Second, ‘forum shopping’ may be also used as a means for ‘law shopping’ (→Forum (and law) shopping): since the applicable law depends on the conflict rules of the forum, the employer may want the litigation to take place in a country whose conflict rules designate an employment law particularly favourable to him (and thus unfavourable to the employee).
As a response to the aforementioned risks for workers, many jurisdictions limit the freedom of the parties to the employment relationship to conclude forum selection agreements. In EU law, the issue of party autonomy in employment cases is dealt with in art 23 Brussels I Regulation (recast) (the same rule can be found in art 21 2007 Lugano Convention). According to art 23(1), forum selection agreements are given effect if they are entered into after the dispute p. 632has arisen. In addition, art 23(2) permits agreements which allow the employee to bring proceedings in courts other than those stipulated by the regulation. An important implication of the former rule is that the employer cannot rely on choice-of-court clauses incorporated into the standard terms and conditions of the employment contract. Such clauses do not relate to an actual controversy, but are meant to cover disputes which may arise in the course of the employment relationship. Employees generally tend to accept such clauses without paying attention to the content. The reason is that they frequently underestimate the likelihood of future disputes. Moreover, they often fear that objecting to the clause may put the conclusion of the employment contract at risk.
Similar restrictions can be found in other jurisdictions (see eg art 3–7(6) Japanese Code of Civil Procedure; art 28(5) South Korean Private International Law Act; art 47(2) Turkish Private International Law Act). The Swiss Private International Law Act, on the other hand, is silent on the issue; however, the courts, drawing on the rules on domestic jurisdiction (art 35 Code of Civil Procedure), have developed a number of requirements which forum selection clauses must meet in order to be effective. Finally, it should be mentioned that the Hague Choice of Court Convention (Hague Convention of 30 June 2005 on choice of court agreements, 44 ILM 1294), which seeks to enhance the effectiveness of choice-of-court agreements and thus to promote the role of party autonomy in the ambit of international jurisdiction, does not cover forum selection agreements relating to employment contracts (see art 2(1)(b) Hague Convention).
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