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20 October 2010
In a recent decision by Oslo City Court, a boycott instigated by the Norwegian Maritime Union to raise wage levels on foreign-flagged vessels was held to be illegal. The demand for wage levels was considered to be an invalid attempt to dictate terms and, as a result, the attempted boycott was held to be illegal.
Shipping is by its nature international and a significant aspect of international maritime law is that all countries are permitted to choose which vessels can be registered under their flags. A vessel that is registered under a certain flag is subject to the laws and regulations of the relevant state, but is also protected against the interventions of other states. This principle ensures that vessels can trade around the world with a minimum of local interference.
One consequence of the 'flag state' principle is that wages and working conditions are determined by the law of the flag state, not the relevant coastal state where the vessel is operating. For decades the International Transport Workers' Federation has undertaken a global campaign against vessels registered under flags of convenience. The campaign's main objective is to ensure an international minimum standard of wages and working conditions for all seafarers. A secondary aim is to secure the employment of seafarers from traditional shipping nations, such as Norway.
Regardless of the controversy surrounding the federation's campaign and its intervention in affairs that are subject to the sovereignty of the flag state, some countries have, to some extent and under certain conditions, regarded boycott campaigns as legitimate legal remedies. Norway is one such jurisdiction. The federation and union have successfully boycotted vessels which have, for example, demonstrated irregularities in wage payments or where seafarers' wages are below the international minimum level set by the federation. Norwegian courts have held that boycotts are a valid remedy to ensure that all seafarers in international trade, regardless of origin, receive a wage above the minimum level.
During the past decade only a few boycott cases have been brought before the Norwegian courts, which suggests that most vessels arriving at Norwegian ports or operating on the Norwegian Continental Shelf apply agreements in line with federation principles and operate with wage levels at or above the minimum standard.
However, on March 19 2010 the union issued a boycott warning to a Norwegian shipowner operating Bahaman and Panamanian-registered vessels, partly within Norwegian territorial waters and partly on the continental shelf. The vessels employed, among others, Polish crew members earning wages that were below Norwegian wage levels, but above the minimum levels set by the federation. This case became a source of political controversy, as the shipowner won a tender for a contract with the Coastal Administration and, in the process, beat other vessels crewed by Norwegian seafarers. The union demanded that the shipowner sign a special agreement to raise the wages of all seafarers onboard its vessels to the Norwegian level. The boycott warning was supported by a resolution from the federation's taskforce, which endorsed the union's campaign to protect "Norwegian seafarers onboard offshore supply and service vessels operating in Norway".
The union's campaign was highly controversial, not only politically and commercially, but also with regard to national and international law. The purpose of the campaign - to protect Norwegian seafarers by de facto exclusion of seafarers from other nations - is arguably a significant step up from the federation's more traditional campaigns.
The legality of a boycott initiated in Norway is regulated by the Boycott Act. The act sets out certain procedural requirements which must be met by the boycotting party before a boycott can commence. Furthermore, the boycott may not be an unreasonable measure to force through an underlying demand. The rules are discretionary in nature, and the assessment of what is acceptable and what is not is largely left to the court's discretion.
The union and owners met in court in May 2010. Shortly after the hearing, the court ruled in favour of the shipowner. In its decision, the court stated that the campaign initiated by the union had the characteristics of a political campaign and that its legality should be determined by the legislature, rather than the courts. The court did not accept the union's argument that the campaign was enacted in sympathy with the foreign seafarers, but regarded its purpose as being simply to protect the interests of Norwegian seafarers on the continental shelf.
The court further held that the interest in protecting Norwegian seafarers' employment onboard vessels operating on the continental shelf did not, by virtue of the Boycott Act, outweigh the clear need for a shipowner to maintain its competitiveness by employing seafarers from other parts of Europe or elsewhere, with corresponding lower wages. Thus, the threatened boycott was held to be unfair and unreasonable and therefore illegal. The union was prohibited from commencing the action.
The union has demanded that all vessels operating on the continental shelf apply Norwegian level of wages for all crew. This demand has not been met by any shipowner to date. However, the union has appealed the court's ruling and so the validity of the threatened boycott may not yet have been finally decided.
For further information on this topic please contact Gaute Gjelsten, Knud Lorentzen or Morten Valen Eide at Wikborg Rein by telephone (+47 22 82 75 00), fax (+47 22 82 75 01) or email (firstname.lastname@example.org, email@example.com or firstname.lastname@example.org).
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