Mahamdia v People's Democratic Republic of Algeria [Court of Justice of the European Union (Grand Chamber).]

• Jurisdiction: European Union
• Judge: Fernlund,Mengozzi,Skouris,Silva de Lapuerta,Arabadjiev,Bonichot,Ó Caoimh,Toader,Bay Larsen,Tizzano,Von Danwitz,Rosas,Lenaerts,Levits
• Court: Court of Justice of the European Union
• Date: 19 July 2012
• Docket Number: (Case C-154/11)

Court of Justice of the European Union (Grand Chamber).

(Skouris, President; Tizzano, Lenaerts and Bonichot, Presidents of Chambers; Rosas, Silva de Lapuerta, Levits, Ó Caoimh, Bay Larsen, Von Danwitz, Arabadjiev, Toader (Rapporteur) and Fernlund, Judges; Mengozzi, Advocate General)

(Case C-154/11)

Mahamdia

and

People's Democratic Republic of Algeria1

State immunity — Jurisdictional immunity — Employment — Employment at embassy — Dual German and Algerian national employed as driver at Algerian Embassy in Germany — Employment dispute—Whether Algeria entitled to immunity from jurisdiction of the German courts — EU Regulation No 44/2001 — Whether embassy to be treated as branch, agency or other establishment — Contractual clause giving exclusive jurisdiction to the courts of Algeria

Relationship of international law and municipal law — Effect of international law in the law of the European Union — International law on State immunity — Uncertain scope of international law — The law of the European Union

Summary:2The facts:—Mr Mahamdia, of dual German and Algerian nationality, worked at the Algerian Embassy in Berlin as a driver. His contract of employment contained a clause conferring exclusive jurisdiction over disputes arising from the contract on the courts of the People's Democratic Republic of Algeria (‘Algeria’). In 2007, Mr Mahamdia initiated proceedings against Algeria in a German court, claiming unpaid overtime accrued over the previous two years. He was subsequently dismissed, upon which he appended an additional claim for unlawful dismissal and sought compensation and reinstatement until the end of the dispute. Algeria objected to the jurisdiction of the German court, invoking both international law on State immunity and the exclusive jurisdiction clause in the employment contract.

The Labour Court, Berlin, concluded that the applicant's activities were related to the embassy's diplomatic functions and therefore upheld Algeria's claim to immunity. On appeal to the Higher Labour Court, Berlin-Brandenburg, the judgment was partially quashed on the basis that the applicant's activities were in fact ancillary to the exercise of sovereign powers, thus excluding the immunity of the State from jurisdiction. In addition, the Court found that, notwithstanding the exclusive jurisdiction clause, German courts had jurisdiction to hear the case on the basis of Regulation No 44/2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters of the European Union (‘EU’). Article 18(2) of Regulation No 44/2001 provided that, where an employee entered into an employment contract with an employer who was domiciled outside the EU but who had ‘a branch, agency or other establishment in one of the Member States, the employer shall, in disputes arising out of the operations of the branch, agency or establishment, be deemed to be domiciled in that Member State’. Article 19 of the Regulation provided that an employee might sue an employer either in the State in which the latter was domiciled or in the State where the employee habitually carried out his work. Article 21 stated that a jurisdiction agreement concluded prior to the dispute might depart from the provisions of the Regulation where it allowed the employee to bring proceedings in courts other than those indicated in Section 5 of Chapter II of the Regulation. The Higher Labour Court considered that the embassy constituted an ‘establishment’ for the purposes of the Regulation and that the jurisdiction clause did not apply since it did not satisfy the conditions set out in Article 21.

Algeria appealed on a point of law to the Federal Labour Court (Bundes-arbeitsgericht), which set the judgment aside and remitted the case to the Higher Labour Court, with directions to determine, inter alia, whether the applicant's activities could be regarded as participating in Algeria's sovereign functions and which court should have jurisdiction to hear the main proceedings. The lower court then referred the following questions to the Court of Justice for a preliminary ruling, in accordance with Article 267 of the Treaty on the Functioning of the European Union (‘TFEU’):

Opinion of the Advocate General

Held:—(1) When adopting secondary legislation, the EU was bound to observe international law in its entirety, including customary international law (para. 17). However, notwithstanding a discernible trend towards relative immunity for acts of State committed jure gestionis, the divergences in national approaches with regard to a State when acting as an employer were so pronounced as to cast doubt on the actual existence of a rule of customary international law (paras. 19–24).

(2) Algeria could not invoke immunity from jurisdiction since, in the view of the referring court, Mr Mahamdia did not participate in the exercise of Algeria's sovereign powers. As such, the State was to be treated in the same way as any private employer. The fact that the employee was posted at the embassy of a non-EU State was not sufficient in itself to frustrate the application of Articles 18 and 19 of Regulation No 44/2001 (para. 32).

(3) An embassy of a non-EU State situated in an EU Member State must be treated as a ‘branch, agency or other establishment’ for the purposes of Article 18(2) of Regulation No 44/2001 in a dispute concerning an employment contract concluded by that embassy in its capacity as a representative of the sending State where the worker was recruited and performed his functions in the Member State, provided those functions were unconnected with the exercise of public authority by the sending State (para. 51).

(4) In light of the purpose of the special rules of jurisdiction governing employment disputes under Regulation No 44/2001, namely the protection of the weaker party to the contract, a jurisdiction clause in an employment contract must be understood as allowing the employee to bring proceedings in other courts in addition to the courts normally having jurisdiction under Articles 18 and 19 of Regulation No 44/2001, thereby allowing him a choice (para. 60).

Judgment of the Court of Justice

Held:—An embassy was an establishment for the purposes of Regulaton No 44/2001 on jurisdiction and the recognition and enforcement of judgments.

(1) To determine the meaning of ‘branch, agency or other establishment’ under Regulation No 44/2001, it was necessary to have regard to the purpose of those provisions, which was to protect employees as the weaker contracting party. Two criteria were determinative. First, the entity had to be a centre of operations which had the appearance of permanency, such as the extension of a parent body, with a management and the equipment to negotiate business with third parties, so that they did not have to go to the parent body. Second, the dispute had to concern acts relating to the management of those entities or commitments entered into by them on behalf of the parent body, if those commitments were to be performed in the State in which the entities were situated. Both conditions were satisfied and, consequently, an embassy was an ‘establishment’ within the meaning of Article 18(2) of Regulation No 44/2001 with regard to a dispute concerning a contract of employment concluded by the embassy on behalf of the State, where the functions carried out by the employee did not fall within the exercise of public powers (paras. 48–51 and 57).

(2) In the present state of international law, the immunity of a State from jurisdiction was not absolute and might be excluded where legal proceedings related to acts performed jure gestionis which did not fall within the exercise of public powers. In view of the content of the customary international law rule on immunity of States from jurisdiction, the application of Regulation No 44/2001 could not be precluded in a dispute between an employee and the State employer, where the court seized was satisfied that the functions carried out by that employee did not fall within the exercise of public powers or where the proceedings were not likely to interfere with the security interests of the State (paras. 53–6).

(3) Article 21 of Regulation No 44/2001 must be interpreted as meaning that a jurisdiction agreement concluded before a dispute arose fell within that provisionin so far as it gave the employee the possibility of bringing proceedings not only before the courts ordinarily having jurisdiction under the special rules in Articles 18 and 19 of that regulation but also before other courts, which might include courts outside the European Union. It could not be applied exclusively so as to prohibit the employee from bringing proceedings before the courts which had jurisdiction under Articles 18 and 19 (paras. 62–6).

The text of the judgment of the Court commences at p. 79. The following is the text of the Opinion of Advocate General Mengozzi:

OPINION OF ADVOCATE GENERAL MENGOZZI1

1. The present reference for a preliminary ruling raises the question of the interpretation of the notions of ‘agency’, ‘branch’ or ‘other establishment’ within the meaning of Article 18(2) of Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters2 in an unprecedented situation: a dispute concerning the validity of the dismissal of a worker who had been employed as a driver by a non-member country at one of its embassies in a Member State.

I LEGISLATIVE FRAMEWORK

A Regulation No 44/2001

2. Article 2(1) of Regulation No 44/2001 provides that ‘[s]ubject to this Regulation, persons domiciled in a Member State shall, whatever their nationality, be sued in the courts of that Member State’.

3. Under Article 4(1) of Regulation No 44/2001, ‘[i]f the defendant is not domiciled in a Member State, the jurisdiction of the courts of each Member State shall, subject to Articles 22 and 23, be determined by the law...