The United Nations Convention on the Law of the
Sea says that ships have the nationality of their flag state, and
that ships are subject exclusively to the flag state's
jurisdiction on the high seas. The flag state also has a duty to
assume jurisdiction over the ship, its officers and crew.
However, the European Court of Justice has recently held that
seafarers living in a Member State, who are hired to work on a ship
with a non-EU flag, may be protected under EU law if the company
EU insolvency protection
The EU Insolvency Protection Directive requires Member States to
guarantee certain claims by employees against insolvent
In the matter of Elliniko Dimosio v Stroumpoulis and others
(C-292/14), claims were brought by seven Greek seafarers who lived
in Greece, and who were employed by a Maltese-registered company to
work on board a cruise ship flying the flag of Malta. At that time,
Malta was not a member of the EU. Shortly after, the company which
employed the seafarers was declared insolvent by a Greek court.
When the seafarers were refused a payment from state funds by
the Greek Employment Agency for unpaid wages, expenses and
compensation for the termination of their employment, on the basis
that their claim fell outside the scope of the Insolvency
Protection Directive, they brought proceedings against the Greek
What the court said
The Greek court asked the ECJ whether the EU insolvency rules
applied to the seafarers. The ECJ concluded that these rules would
the seafarers lived in a member state, and
the employer had its head office in a member state, and was
declared insolvent according to the law of that member state, even
if the seafarers' contracts were governed by the law of a
non-EU country, and the flag state and the employer's
registered office were in a non-EU country.
The ECJ noted that the EU insolvency rules had a "social
objective" to guarantee employees a minimum level of
protection at EU level if the employer became insolvent.
What this decision means for marine employers
This case is a reminder for employers of the potentially
far-reaching ambit of EU protection laws. EU insolvency protection
rights can apply to seafarers who work outside the EU, even if
their employer is a non-EU company.
It is common practice for traders, usually when they are the sellers of the goods and the charterers of a vessel, to instruct the carrier to discharge cargoes without production of the original bills of lading and to agree to indemnify the carrier against the consequences of doing so.
The London Maritime Arbitrators Association (LMAA) has published a set of new terms, the LMAA Terms 2017, which are due to come into effect for appointments on or after 1 May 2017. They seek to improve the time and cost-efficiency of the LMAA, while maintaining its ‘light touch' approach.
In aviation, commercial relationships regularly have an international aspect: parties to a contract are often based in different countries, with "performance" of the contract possibly taking place in more than one country (e.g. fuelling and maintenance contracts and other contracts for the supply of goods and services).
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