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Legal alerts / 18.9.2017

Forum clause as an impairment of an employee’s rights

The Supreme Court of the Russian Federation has adopted Decision No. 75-KG 17-4 dated 14 August 2017 (the Decision), in which it has been established that the terms of an employment contract limiting the right of an employee to choose the forum of any dispute against an employer will be deemed to impair the employee’s right of access to justice.

Background

The plaintiff (the employee) and the defendant (the employer) had entered into an employment contract. The forum clause of the contract stated that all disputes arising out the contract were to be resolved by the court of Krasnodarsky Krai, which is where the employer was located.

The employee resided and performed his job duties under the contract in question in the Republic of Karelia. The employer was fully aware of this fact.

After the contract was terminated, the employee brought an action against the employer, claiming payment of outstanding amounts of salary, in the court where the employee resided. To substantiate that the court in the Republic of Karelia had jurisdiction, the employee referred to part 6.3, Art. 29 of the Civil Procedure Code of Russia establishing his right to submit the claim in the court at the place of his residence. He further noted that he was actually living and working for the employer in the Republic of Karelia.

The employer filed a motion to transfer the case to the court of Krasnodarsky Krai based on the forum clause of the employment contract.

The court of first instance granted the employer’s motion. The appellate court upheld that decision, stating that the employee had duly exercised his right to the choice of forum by signing the employment contract containing the forum clause.

The Supreme Court has dissented and vacated those judgments.

Legal rationale

The Supreme Court stated that an employee has a statutory right to choose the forum of any employment dispute: at the place where the employee resides and at the place where the employee has performed job duties under the employment agreement. Such regulation is intended to be an additional tool to create for the employee the optimum conditions for resolving employment disputes. The Supreme Court’s stance is that terms of an employment contract that restrict such right of the employee impair his statutory right. As a result, such a term should not be applied based on Art. 9 of the Labour Code of Russia.

For employers to note

In our view the Decision may have an impact not only on court practice but also the position of the State Labour Inspectorate when it carries out checks of compliance with the requirements of labour law.

There was previously a different position in court practice on the matter at hand (e.g., the Decision No. 33-6040/2015 of Leningrad Regional Court dated 19 November 2015, and Appeal Decision No. 33-2392/2016 of Moscow City Court dated 8 April 2016). In our view, therefore, the Decision has closed the door on the matter of whether it is legally possible for the parties to agree in the employment contract on the choice of forum.

We recommend that employers should take this position of the Supreme Court into consideration in their future operations.

Should you need any advice or other legal assistance in view of the above, please feel free to contact the Borenius Russia team. Our lawyers are always happy to be of assistance.

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