Jurisdiction of the European Court of Justice, General Court to determine contractual disputes

In a request for a preliminary ruling by JF a United Kingdom national (the “applicant”) to the European Court of Justice, General Court (the “Court”), the applicant sought on the basis of article 263 TFEU[1] and article 272 TFEU compensation for damages he suffered as a result of a decision taken by EUCAP Somalia in relation to the termination of his employment contract. EUCAP Somalia is an EU mission set up to assist Somalia in building its maritime security, under which the applicant was recruited as an international contract staff member, not to renew his contract of employment.

The applicant had signed a number of successive fixed-term employment contracts with EUCAP Somalia. The last contract, which ended on 31 January 2020, provided that the contract of employment could be terminated early if the United Kingdom ceased to be a member of the European Union.

By means of a written notice sent to the applicant dated 18 January 2020, the head of mission of the EUCAP Somalia informed the applicant that owing to the possible withdrawal of the United Kingdom withdrawing from the European Union (the “Union”) his employment contract would end on the date of the UK’s withdrawal from the EU. The termination of the employment contact of the applicant was subsequently communicated to the applicant on the 29 January 2020, and he was informed that his contract would end on the 31 January 2020.

The applicant’s action sought to annul the acts of termination and also requested damages which he allegedly suffered as a result of those acts by virtue of EUCAP Somalia’s termination of employment, and that the acts be declared unlawful. The actions sought by the applicant were principally on the basis of Articles 263 and 268 of the TFEU.

By a judgement of the General Court delivered on the 13 July 2022, the Court dismissed the actions bought by the applicant in its entirety. The Court ruled on the admissibility and nature of the action and on the possibility of not determining the applicable national law to resolve a dispute in contractual matters. The Court also examined the pleas alleging infringements of EU’s law in the context of contractual disputes and clarified the application of the principle of non-discrimination on the grounds of nationality, as was brought forward by the applicant in this case.

In delivering its judgement the Court assessed whether the application for annulment of the contested acts was inadmissible based on Article 263 of the TFEU. It observed that the conditions of employment and the rights and obligations of the employer were defined by contract, so the employment relationship between the applicant and his employer was contractual in nature. It further noted that the withdrawal of the UK from the EU was a contractual cause for termination of the employment contract, and this was duly communicated by the employer to the applicant. The Court further assessed that those acts were not intended to produce binding legal effects outside the contractual relationship between the parties, thus same acts were contractual in nature and their annulment could not be sought on the basis of Article 263 TFEU.

The Court also dismissed as inapplicable the claim for damages for the non-contractual liability of the Union for the actions of the employer, based on Article 268 of the TFEU on the basis that a contractual context surrounds that claim so the claim itself falls within the contractual liability of the Union. It followed that there was a genuine contractual context surrounding the applicant’s claim for compensation in that the claim fell within the scope of EU’s contractual liability and therefore the claim, which was principally based on article 268 of the TFEU and having its object the non-contractual liability of the EU for actions of the employer, was rejected as inadmissible.

With respect to the applicable law, the Court noted the principles that the Union’s contractual liability are governed by the law applicable to the contract concerned. On the matter relating to the breach of the applicant’s right to be heard, the Court considered that the principle of the right to be heard did not require the employer to hear the applicant prior to the drafting of the note of the 18 January 2020, and that in the context of an action of a contractual nature, that even supposing that the applicant had a right to be heard prior to the drafting of the note, the procedure could not have led to a different result if the applicant had been able to exercise that right.

Considering the applicants claim relating to discrimination on grounds of nationality, the Court pointed out that the applicant, as a national of a Member State which had initiated the procedure for withdrawal from the EU, was not objectively in a situation comparable to that of employees who were nationals of another Member State. Consequently, the head of the mission of Somalia could decide not to renew the applicants’ contract of employment without that constituting discrimination on grounds of nationality.

The Court concluded that disputes arising during the performance of a contact must in principle be decided on the basis of the contractual terms. Interpretation of the contract in the light of the provisions of national law applicable to the contract is justified only in the event of doubt as to the content of the contract, or the meaning of certain of its terms, or where the contract alone does not make it possible to resolve all aspects of the dispute.

This article was first published in the Malta Independent (14 September 2022).

[1] The Treaty of the European Union.