In its decision in Lawes v Fleet Maritime Services (Bermuda) Ltd on 17 May 2024, the Employment Appeal Tribunal (EAT) has highlighted the complexities of territorial jurisdiction, the procedural differences between employment tribunals and civil courts and the desirability of granting a stay of proceedings in the Employment Tribunal in order to allow issues to be determined in the courts.
Background
Mr Lawes was employed by Fleet Maritime Services (Bermuda) Ltd (FMS) as a ship’s captain on cruise ships. He had been recruited in Southampton, UK and had been “onboarded” there. FMS, although incorporated in Bermuda, managed some of its HR functions from Southampton. Mr Lawes’s employment contract provided for it to be construed in accordance with English law but did not contain an exclusive jurisdiction clause, which is often critical in determining the appropriate forum for proceedings.
Following the termination of his employment, Mr Lawes brought various claims in the Employment Tribunal (ET) including a claim for breach of contract in respect of holiday pay. He specifically reserved the right to bring additional contractual claims in the civil courts for amounts exceeding the statutory limits, primarily concerning notice pay. The ET dismissed Mr Lawes’ other claims following a PH which found that at the point of the alleged claims his was outside the territorial reach of the legislation he relied upon. There remained then only his contractual claim in the ET. The Employment Judge decided to stay his ET claim pending a claim in the courts. He did so, on the basis that there was an issue as to the territorial reach of the Extension of Jurisdiction Order 1994 (“the Order”) which it was preferable to have tried in the High Court, to avoid prejudicing the High Court’s jurisdiction over Mr Lawes’s claim for notice pay.
Mr Lawes appealed arguing that the judge should have refused a stay and should have reached a conclusion on his ET claim.
EAT’s Findings
The EAT upheld the tribunal’s decision, emphasising the importance of considering all relevant circumstances when deciding whether to stay proceedings. These circumstances include the complexity of the issues and the appropriateness of the procedures for resolving them.
The EAT identified two key elements in the ET’s decision:
In respect of the territorial issues, the EAT noted the difference in procedural requirements between the Civil Procedure Rules (CPR) in the civil courts and ET Rules of Procedure. In particular, the CPR requires permission to be granted for service outside the jurisdiction whereas Rule 8(2)(d) of the ET Rules of Procedure specifies that the ET “has jurisdiction to determine the claim by virtue of a connection with Great Britain and the connection in question is at least partly a connection with England and Wales“. However, the ET only has jurisdiction to hear contractual claims if there is jurisdiction to do so in the Civil courts and that engaged the territorial issues under CPR.
As to the hierarchy of the Courts, the EAT cited with approval the decision of the EAT in Lycatel Services Ltd v Robin Schneider [2023] EAT 81 that an ET in deciding whether to stay proceedings in a claim over which it had jurisdiction but where the same issues were to be resolved before the High Court has to take into account all the relevant circumstances. Those circumstances will include, amongst other matters, the complexity of the issues and the appropriateness of the procedures. By taking that approach, the employment tribunal can reach a conclusion as to which forum a claim could be most conveniently and appropriately tried.
The EAT also expressed the view that in a case where proceedings in the courts had not yet commenced and a claimant’s position was simply reserved, it would not usually be appropriate for the judge to fail to decide the issue before the tribunal. In such circumstances, it would be insufficient to rely solely upon the hierarchy of the courts as a reason to avoid exercising jurisdiction. However, in this case, the additional element of territorial jurisdiction and the important procedural differences in respect of service of proceedings provided a basis for the grant of a stay.
Since the Employment Judge’s decision was essentially a case management decision, the EAT refused to intervene to overturn the stay because the decision was not “certainly wrong”. Accordingly, the appeal was dismissed and the holiday pay claim remained stayed.
The case underscores the intricacies and complexities that are often involved in disputes where territorial jurisdiction is contested. Employment contracts involving international elements often present challenges in determining the appropriate legal forum. The EAT’s decision reflects a careful balancing act between respecting legal hierarchies and ensuring that claims are resolved in the most appropriate jurisdiction.
For practitioners, this case also serves as a useful reminder to give careful thought to the drafting of exclusive jurisdiction clauses and the strategic implications of reserving rights to bring claims or elements of claims in the civil courts as well as the ET.
David Reade KC from Littleton Chambers represented the successful Respondent in both the ET and the EAT.
The full judgment of the EAT can be read here
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