Norwegian Labour Court on the Law Applicable to Industrial Action on the Norwegian Continental Shelf

Location of Ekofisk and the continental shelf borders at the North Sea. [Source Wikipedia CC BY-SA 3.0 – NordNordWest and Use Dedering]

Pursuant to Article 9 of the Rome II Regulation on the law applicable to non-contractual obligations, the law applicable to an industrial action is the law of the country where the action has been taken.

In a judgment of 5 February 2024, the Norwegian Labour Court relied on the  conflict-of-law rule enshrined in the above provision in a case concerning an industrial action taken by employees conducting work for the Norwegian oil drilling industry on the Norwegian continental shelf on international waters in the North Sea. Relying on Norwegian law instead of UK law, the Norwegian Labour Court held that the industrial action had been lawful.

Background

At the very centre of the North Sea, close to where the continental shelves of the UK, Norway, Denmark, Germany and the Netherlands almost intersect, a collective labour dispute arose regarding the employment conditions for oil workers. The concerned oil workers, all UK citizens living in the UK, were employed by a UK company to conduct well stimulation for an oil drilling platform located at the Ekofisk field on the Norwegian continental shelf from a Norwegian-registered ship operating out of Esbjerg, Denmark. When collective agreement negotiations between the UK company and the Norwegian trade union – in which the employees are members – broke down in 2023, the trade union called a strike.

To support the Norwegian trade union’s claim for a collective agreement, the Norwegian Confederation of Trade Unions (Landsorganisasjonen i Norge) called a sympathy action. In collective labour law, sympathy actions are taken to support fellow organizations, but may also be directed at a collective agreement party. It must here be noted that taking industrial actions toward a collective agreement party is an exception to the normally very strong peace obligation that follows a collective agreement. In the case at hand, the dispute was regarding whether sympathy actions were allowed under the collective agreement. Under the collective agreement, a sympathy action is allowed if it ‘supports a legal industrial action in Norway’. Hence, the task for the Norwegian Labour Court was to interpret whether the industrial action taken in the North Sea was to be considered a legal industrial action in Norway under the collective agreement.

Judgment

To interpret if the industrial action took place in Norway, the Norwegian Labour Court first held that the localization in the sense of the collective agreement was dependent on the industrial action’s connections to Norway. Here, the Labour Court found that the connecting factors relating to the employment conditions should be given priority. Decisive connecting factors were noted to be both that work was conducted only on the Norwegian continental shelf and that the employees claimed a Norwegian collective agreement.

The next issue for the Labour Court was whether the industrial action was ‘lawful’ in Norway. Here, the private international choice of law rules played a crucial role for the court’s argumentation. In Norway, which is not an EU member state, the EU choice of law regulations are not applicable. However, Norway’s close cooperation with the EU justifies the strong presumption set out by the Norwegian Supreme Court stating that Norwegian choice of law rules shall be consistent with EU choice of law rules unless Norwegian rules clearly deviate from the EU choice of law rules. First, the Norwegian Labour Court noted that collective agreement parties enjoy party autonomy, both under uncodified Norwegian private international law and under the Rome I Regulation on the law applicable to contractual obligations. Consequently, it would have been possible for the collective agreement parties to choose the law that would govern the legality of industrial actions for which sympathy actions are allowed. However, the collective agreement clause’s expression ‘in Norway’, was – in the view of the parties – not a choice of law clause but a referral to Norwegian choice of law rules.

The implicit contractual reference to Norwegian choice of law rules caused the Labour Court to take a preliminary stance on the law applicable to the primary industrial action. This choice of law issue is uncodified in Norwegian private international law, which has historically relied on an individualizing method to point out the applicable law. However, as was mentioned above, modern Norwegian private international law is strongly influenced by EU private international law. Therefore, the Norwegian Labour Court also in this matter consulted the EU conflict-of-law rule for industrial actions in Article 9 of the Rome II Regulation to establish the law applicable to the industrial action.

Article 9 of the Rome II Regulation prescribes that the law applicable to an industrial action shall be the law of the country where the industrial action is taken (lex loci delicti). This is an exception to the general rule in Article 4 that points out the law in the country where the damages occurs as applicable (lex loci damni). According to Recital 27, the reason for the industrial action exception is to protect employees’ and employers’ rights. Noting this, the Labour Court dealt with the delicate issue of localizing the industrial action that was taken at international sea. Here, the Labour Court noted that the industrial action in question was a strike. Holding that a strike under Article 9 of the Rome II Regulation must be located to the place where the work would have been conducted, the Norwegian Labour Court concluded that Norwegian law was applicable.

As an obiter dictum, the court further stated that also if article 9 had not been applicable due to the fact that the industrial actions were taken at international sea, the alternative solutions would give the same conclusion. Under Article 4(3) of the Rome II Regulation, the law of a country to which the tort ‘is manifestly more closely connected’ shall be applied. Applying the escape rule to the facts of the case, the Labour Court held that the industrial action was manifestly more closely connected to Norway than to the UK. Lastly, the Labour Court held that it would make no difference for the conclusion if the connecting factors were weighed under Article 4(3) of the Rome I Regulation or under the Norwegian individualizing method. Norwegian law would apply in either case.

As the primary industrial action was lawful under Norwegian law, the sympathy action was allowed.

Comment

Article 9 of the Rome II Regulation has never been applied by the Court of Justice. National case law is also scarce. In legal literature, different interpretations of Article 9 have been suggested. The above factors have resulted in a situation of uncertainty regarding the this provision. For a party that intends to take industrial action in an international context, this unclarity is detrimental. If the applicable law is not foreseeable, it is hard to predict whether an industrial action would be lawful. Therefore, the Norwegian judgment is important, as it stresses the role of the law applicable to an industrial action for the regulation of collective agreements in a certain labour market.