On 14 July 1994, a group of Greek seamen living in Greece concluded contracts in Greece with Panagia Malta Ltd, a Maltese company, under which they were engaged to work on board a cruise ship flying the Maltese flag, that was owned by that company. The contracts were governed by Maltese law.

The cruise ship had been detained in the Port of Piraeus since September 1992, but was due to be chartered during the summer of 1994. However, the charter did not ultimately materialise, and the seamen were not paid during the period they remained on board following their engagement. As a result, the seamen terminated their contracts on 15 December 1994.

The court of first instance in Piraeus, Greece, ordered Panagia Malta to pay the seamen the wages due, plus interest, and expenses. However, Panagia Malta was subsequently declared insolvent, and the seamen did not receive any payments, given the lack of realisable assets of the company. 

The seamen then brought proceedings against the Greek state as a result of its alleged failure to provide the crew of seagoing ships with access to a guarantee institution as required under EU Directive 80/987.

The Greek court of first instance dismissed their application, but this decision was appealed, and the Administrative Appeal Court, Athens, set aside the first instance decision, and held that EU directive 80/987 was applicable to the case, and when it was transposed into national law, the Greek state had erred by failing to provide employees, such as the seamen, with the protection afforded by the directive.

The Greek state lodged an appeal before the Greek Council of State. The Greek Council of State referred 2 questions to the Court of Justice of the European Union (CJEU) for determination. 

Held: The guarantee covering wage claims established by EU Directive 80/987 must be provided irrespective of the maritime waters (the territorial sea, the exclusive economic zone or the high seas) in which the vessel (on which the seafarers worked) sailed.

The Greek government’s argument that as the vessel in question flew the flag of a non-EU member country (Malta was not a member of the EU in 1994) and that as the employer’s registered office was located outside the EU, this meant that EU law was not applicable to the main proceedings, was rejected.  The employment relationship between the seamen and their employer had sufficient link with the EU.

Art 92.1 of UNCLOS concerns the exclusive jurisdiction enjoyed ‘on the high seas’ by a State whose flag a vessel is flying. Art 94.1 and art 94.2.b of UNCLOS provide that every State is to effectively exercise its jurisdiction and control in administrative, technical and social matters over ships flying its flag, and that every State is to assume, in particular, jurisdiction under its internal law over each ship flying its flag and its master, officers and crew in respect of administrative, technical and social matters concerning the ship.

The introduction of a mechanism such as that provided for by Directive 80/987 (under which a guarantee institution of a EU Member State is to pay the outstanding wage claims which seafarers previously employed on a vessel are entitled to make against their employer who has been declared insolvent by a court of that Member State) does not prevent the UNCLOS State whose flag such a vessel is flying from effectively exercising its jurisdiction over that vessel or its crew as regards social matters concerning the vessel, as provided for by UNCLOS.

The answer to referred Question 1 was:  

EU Directive 80/987 must be interpreted as meaning that seamen living in an EU Member State who were engaged in that state by a company (with its registered office in a non-member country but its actual head office in that Member State, to work as employees on board a cruise ship owned by the company and flying the flag of the non-member country, under an employment contract designating the law of the non-member country as the law applicable) must, after the company has been declared insolvent by a court of the Member State concerned in accordance with the law of that state, be eligible for the protection conferred by the directive as regards their outstanding wage claims against the company.

The answer to referred Question 2 was:

As regards employees in a situation such as the seamen, the protection provided by Greek law did not constitute ‘protection equivalent to that resulting from the Directive.