Saga Subsea - EFTA Court advisory opinion: EEA law applies to the Norwegian Continental Shelf

The two claimants, Akselsen and Granlund, were employed by Saga Subsea, a Norwegian staffing agency, and posted to work on board Norwegian-registered multipurpose vessels engaged in petroleum operations on the Norwegian continental shelf. Although they performed the same work as the client companies' own employees, they were paid less. A key question in the case is whether the equal treatment principle in the EU Temporary Agency Work Directive applies to the claimants' work. To answer the question, the Norwegian courts also need to decide whether the EEA Agreement extends to petroleum activities on the Norwegian continental shelf.

The City Court rejected the claim of equal treatment. However, the Gulating Court of Appeal reversed that decision on 6 February 2024, holding that the Working Environment Act, including the equal treatment provision in section 14-12a, applied to the claimants' work on multipurpose vessels, and ordered Saga Subsea to pay back wages to the claimants. Saga Subsea appealed to the Supreme Court on the question of law.

Saga Subsea and the Norwegian State argued that the Directive does not apply to the claimants on the basis that they are seafarers and that the Directive does not apply to seafarers. The Norwegian State argued that if the legislature had intended the Directive to apply to seafarers, this would have been expressly stated in the text of the Directive, and that the Directive's protective purpose did not warrant a different interpretation because the assumption was that seafarers' protections were covered by the instruments specifically applicable to seafarers under EEA law.

The EFTA Court rejected this argument. The Court held that there is no provision in the Directive explicitly excluding seafarers from its scope. The Directive applies to any person performing work who is protected as a worker in the relevant EEA State, and the primary characteristic of an employment relationship is independent of where the work is physically performed. Persons working on vessels therefore fall within that definition. The protection afforded by Directive 2008/104 supplements and does not conflict with the instruments specifically applicable to seafarers under EEA law.

An interpretation implicitly excluding seafarers from the Directive's scope would be inconsistent with the purpose stated in Article 2, which is to ensure the protection of agency workers and improve the quality of agency work by ensuring that the principle of equal treatment applies to agency workers. Accordingly, the EFTA Court held that neither the wording, context, nor purpose of the Directive supports such an interpretation.

The second, and more significant, question was whether the EEA Agreement extends to petroleum activities on Norway's continental shelf.

The Norwegian State, supported by Saga Subsea, argued that EEA Agreement Article 126 must be interpreted as precluding the application of EEA law to the Norwegian continental shelf, and further argued that, in the light of Court of Justice of the European Union case law on the application of EU law to EU Member States' continental shelves, EEA law applies to the continental shelves of EU Member States but not to those of EFTA States.

The Norwegian State argued that the wording of EEA Agreement Article 126(1) is drafted differently with respect to EU Member States than with respect to EFTA States, not referring to the states' own territories, but to the territories to which the EU Treaties apply, and that the geographical scope of the EEA Agreement under Article 126 is therefore differently formulated for EFTA States and for the EU and its Member States.

The EFTA Court firmly rejected this reasoning. The Court held that a differing geographical scope for the EU and its Member States on the one hand and for EFTA States on the other under the EEA Agreement would be fundamentally incompatible with the equality, reciprocity, and overall balance of benefits, rights, and obligations enshrined in the fourth recital of the EEA Agreement's preamble. Such a divergent geographical scope, imposing different obligations on certain contracting parties and departing from the principles of equality and reciprocity, would need to be solidly anchored in the text of the EEA Agreement. The EFTA Court is of the opinion that there is no basis for such an interpretation.

Consequently, the EFTA Court is of the opinion that since an EEA State has sovereignty, although functional and limited, over the adjacent continental shelf, work performed on fixed or floating installations or ships on the continental shelf in connection with exploration for and/or exploitation of natural resources must be regarded as work performed on the territory of that State for the purposes of EEA law.

The significance of this advisory opinion extends well beyond the individual claims of Akselsen and Granlund. The Norwegian State's position was not a novel legal argument advanced for the purposes of this litigation alone. It reflected a long-established practice, embedded in the structure of Norwegian law, under which the Working Environment Act was understood not to apply to work on vessels engaged in petroleum related activities. The framework regulations governing health, safety and environment in the petroleum sector explicitly excluded from the Working Environment Act vessels performing construction, pipeline, or maintenance activities in petroleum operations. For workers employed on board Norwegian ships, the Ships Labour Act provided the applicable framework.

The parties to the dispute were unable to agree on whether the scope provisions of the Working Environment Act and the Ships Labour Act, together with the framework regulations, could be read to allow section 14-12a of the Working Environment Act, or the Act as a whole, to apply to work on multipurpose vessels. The EFTA Court has now made clear that the underlying assumption on which that legislative framework was built, that EEA law does not require equal treatment of agency workers in this context, is incorrect.

The Court reminded national courts that, in accordance with the purpose of the EEA Agreement, a national court applying national law is obliged, within the limits of its competence, to interpret national law in conformity with EEA law, using the methods of interpretation recognised in national law in the light of the wording and purpose of the relevant directive, and applying the interpretation of the national rules that is most consistent with that purpose.

Unlike the CJEU's preliminary rulings, the EFTA Court's advisory opinions are formally not binding on the referring national court. 

The Supreme Court has consistently held that advisory opinions carry "vesentlig vekt" (significant weight) and has articulated, in various cases, that departing from an EFTA Court advisory opinion requires "særlig tungtveiende grunner" (particularly weighty reasons).

The advisory opinion leaves the Supreme Court with little room to depart from the result reached by the Court of Appeal. The EFTA Court has answered unambiguously that Article 5 of Directive 2008/104/EC must be interpreted as applying to workers employed by a staffing agency domiciled in an EEA State during periods when they are posted to work for a user undertaking domiciled in the same EEA State on board a vessel in connection with petroleum activities on that State's continental shelf.

The assessment before the Supreme Court raises long-debated sensitive political issues on Norwegian sovereign rights over the continental shelf. In that respect, one cannot rule out that the Supreme Court finds that this particular case meets the requirements "særlig tungtveiende grunner" (particularly weighty reasons) and thus might want to deviate from the interpretation of the EFTA Court. If the Supreme Court finds that the EEA Agreement applies in full to the continental shelf, this could have far-reaching consequences of how the legal framework governing Norwegian petroleum activities may need to be adapted to adjust to non-implemented EEA secondary legislation, hereunder with regards to technical standards, procurement requirements, health and safety, and environmental requirements. Schjødt shall appreciate to advise on such implications.

This client alert is provided for general informational purposes only and does not constitute legal advice. For specific guidance on how this development may affect your operations, please contact your usual advisor at Schjødt.