Italy: An Important Clarification From The European Court Of Justice On Social Security Provisions For Seafarers

Last Updated: 12 September 2019
Article by Ulrich Eller

The maritime employment relationship is intrinsically characterized by important elements of internationality, which frequently impose the operator and seafarers to cope with juridical systems of other States and to question which legal regulations apply to the employment relationship. As a matter of fact, it commonly happens that seafarers residing in one State are hired by shipowners of another State, in order to be employed on ships flying the flag of a third country.

In said context, supranational sources of law are of particular importance, including international law (and, in particular, ILO Convention on maritime labor of 2006) and Community law (i.a. Regulation (EC) No. 883/2004).

With regard to the social security system, Regulation (EC) No. 883/2004, which introduces – at the level of the European Union, of the European Economic Area and Switzerland – the so-called common "conflict-of-law rules", is the pivotal point for Union regulations.

The Regulation does not provide for a common social security scheme, but merely coordinates the various national schemes, establishing common principles, aimed at identifying the national legislation applicable to the specific case, with the stated objective of (i) avoiding situations in which several national laws are simultaneously applied and (ii) avoiding that persons falling within the scope of the Regulation remain without social protection due to the lack of rules applicable to their specific case.

Article 11, paragraph 4, of Regulation (EC) No. 883/2004 provides for specific rules for seafarers, establishing that:

– an activity normally pursued by people employed on board a vessel at sea flying the flag of a Member State shall be deemed to be an activity pursued in the said Member State;

– in so far as a person employed on board a vessel flying the flag of a Member State (i) is remunerated for such activity by an undertaking whose registered office is in another Member State and (ii) resides in that State, the activity shall be subject to the legislation of the latter Member State.

The legal framework applicable to seafarers has now been enriched by the decision of the European Court of Justice of 8 May 2019 in Case C-631/17, which extends the scope of application of the Regulation also beyond the cases expressly provided for in the mentioned provision.

The Court has now specifically addressed the case:

– of a seafarer resident in Latvia

– hired by a shipowner based in the Netherlands

– in order to work on board a vessel flying the flag of Bahamas during a trip in international waters in the North Sea.

By decision of 8 May 2019, the European Court of Justice stated that the fact that the work was carried out outside the territory of the European Union (with the consequent inapplicability of the general rules on seafarers summarized above) cannot be deemed a sufficient reason to exclude the applicability of Regulation (EC) No. 883/2004, if the employment relationship has a sufficient connection with the territory of the European Union.

The Court explained that the place of residence of the seafarer in one Member State (in the case at hand, Latvia) and the fact that he was hired in another Member State (in the case at hand, the Netherlands) must be regarded as sufficient grounds to attract the employment relationship within the scope of applicability of the Regulation.

Hence, examining the rules of the Regulation, the Court observed that (i) neither the general rules for seafarers (Article 11, paragraph 4, of the Regulation), (ii) nor the provisions ruling the special cases envisaged in Articles 12-16 of the Regulation could be applied in the case at hand, given that objectively said case could not be subsumed in any of the regulated hypothesis. Nor did one of the cases referred to in Article 11, paragraph 3, letters a)-d) of the Regulation exist, which would have permitted to apply the social security laws of one Member State to the case at issue.

On the basis of that assumption, the Court held that the closing rule in Article 11 paragraph 3, letter e) was applicable, making it clear that the expression "any other person not falling within the categories set out in points (a) to (d)" is of a general nature and that its interpretation cannot be restricted by referring it only to "non-active persons" (as suggested by the Explanatory Notes and the Practical Guide relating to the law applicable in the European Union, the European Economic Area and Switzerland mentioned below).

Applying the criteria set forth in Article 11, paragraph, 3, letter e) of the Regulation, the Laws of the Member State of residence of the seafarer were identified as applicable law.

So, in the present case (a worker resident in Latvia who was taken on board by a shipowner from the Netherlands on a vessel flying the flag of the Bahamas on a voyage to the North Seas), the Court decided that Latvian social security laws are applicable.

Finally, it is worth mentioning the Court's clarification according to which the Explanatory Notes and the Practical Guide to the legislation applicable in the European Union, the European Economic Area and Switzerland (drawn up and approved by the Administrative Commission for the Coordination of Social Security Systems and providing an interpretation of Article 11, paragraph 3, letter e) of the Regulation) cannot be considered as having a binding effect for the Court of Justice and/or national courts. Indeed, according to the Court, the Explanatory Notes and the Practical Guide are only one of the possible criteria of interpretation of the European legislation, and do not exclude different constructions.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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