#5210 - Sayers V. International Drilling - Conflict of Laws BCL

Sayers v. International Drilling

Facts

Mr. Sayers is a Yorkshireman whose home is at 12 Lease Mires Avenue, Easingwold, Yorkshire. He is a highly skilled worker on oil drilling rigs. One of the big companies who drill for oil is the Offshore Company of Houston, Texas. They have subsidiaries in many parts of the world. One of them is an English company, the International Drilling Co. Ltd., which has its head office in London and has drilling rigs in the North Sea. Another subsidiary is a Dutch company, the International Drilling Co. N.V., which has its head office at The Hague and has drilling rigs in various parts of the world. The Dutch company has a London representative in the office of the English company.

In 1967 Mr. Sayers was working for the English company at drilling rigs in the North Sea. He was based at Great Yarmouth. The local man there of the English company was Mr. Swift. The Dutch company wanted to recruit men to go out to Nigeria to work on a drilling rig off the Nigerian coast. They got Mr. Swift at Great Yarmouth to approach men there. One of these men was Mr. Sayers. He agreed to go to Nigeria.

On September 4, 1967, at Great Yarmouth he signed an application form which was accepted by Mr. Swift on behalf of the Dutch company. Under it he was employed as a derrickman at a pay of 120 a month and a bonus of 35 a month, together with a rig allowance of 2 a day when actually on the rig. The agreement contained a provision stating that in case of accidents to a man, the company had a “Disability Compensation Program” and it gave particulars. The agreement however contains this important exempting clause (clause 8):

“In consideration of having this Program maintained for me, I hereby agree that, in the event I am accidentally injured or sustain disability of any kind during my employment with the company, I will accept those benefits to which I may be entitled under the Compensation Program as my exclusive remedy in lieu of any other claims, rights, demands, or actions, whether at common law or under the statutes of United Kingdom, or any other nation, which may accrue to me by virtue of such accidental injury…”

On October 4, 1967, Mr. Sayers flew out to Nigeria and started work. Just over two weeks later, on October 20, he was injured in an accident. He was on the drilling rig engaged in “unstringing.” Some of his fellow employees were negligent. They pulled on a rope too soon and caused Mr. Sayers' foot to be entangled in a rope.

Arguments: The Dutch company put in a defence in which they recognised their responsibility under the Disability Compensation Program, but said that by reason of the exempting clause he had no further claim against them. Mr. Sayers in reply relied on the English statute, the Law Reform (Personal Injuries) Act 1948, which abolished the defence of common employment and also rendered void any term in a contract of service giving such a defence. Section 1(3) says:

“Any provision contained in a contract of service or apprenticeship, or in an agreement collateral thereto, (including a contract or agreement entered into before the commencement of this Act) shall be void in so far as it would have the effect of excluding or limiting any liability of the employer in respect of personal injuries caused to the person employed or apprenticed by the negligence of persons in common employment with him.”

The Dutch company, however, seek to avoid that English statute. They say that Mr. Sayers' contract of service was not governed by English law, but by Dutch law.

Question

The issue shortly is whether the Dutch company can rely on the exemption clause as an answer to the action.

Holding

Denning LJ (Minority)

On the one hand, the claim by the plaintiff is a claim founded on tort. In considering that claim, we must apply the proper law of tort, that is, the law of the country with which the parties and the acts done have the most significant connection.

On the other hand, the defence by the defendants is a defence based on contract. In considering that defence we must apply the proper law of the contract, that is, the system of law with which the contract has its closest and most real connection.

But it is obvious that we cannot apply two systems of law, one for the claim in tort, and the other for the defence in contract. We must apply one system of law by which to decide both claim and defence. To decide it I would ask this question: What is the proper law by which to determine the issues in this case? And I would answer it by saying: it is the system of law with which the issues have the closest connection.

So far as the claim in tort is concerned, the accident took place in the territorial waters of Nigeria. But it took place on an oil drilling rig owned and controlled by a Dutch company and manned by employees of that company. The Nigerians had nothing to do with the rig. So Nigeria is out. The injured man was English, but his fellow employees (who were negligent) may have been English or American or of some other nationality. The only common bond between them was that they were employed by the Dutch company. So Dutch is in. If I were asked to decide the proper law of the tort (apart from contract) I should have said it was Dutch law.

So far as the defence in contract is concerned, the contract with Mr. Sayers was negotiated and made in England. It was for the services of Mr. Sayers, an Englishman, asking him to go overseas for a spell of work. It was in the English language. His salary was to be paid in the English currency, sterling. He was insured under the English national insurance scheme. He was to come back on leave to his home in England. True it is that the employers were Dutch (who employed personnel of all nationalities), but the contract was administered in London. The records were kept in London, Texas and Holland. If I were asked to decide the proper law of the contract (apart from the tort) I should be inclined to say that it was English.

But seeing that the action is founded on tort and the proper law of the tort is Dutch, I would say that, as between the two systems, English or Dutch, the issue of liability should be determined by Dutch law.

Salmon LJ

The action is for damages for negligence. The defendants by their defence deny negligence and allege contributory negligence. They take the preliminary point, however, that the proper law of the contract of employment is Dutch law, that in Dutch law this contract is what is known as an international contract, and that accordingly clause 8 of the contract, which excludes the plaintiff's right to recover damages otherwise than under what is called the Compensation Program, is a complete answer to the claim for damages for negligence. The plaintiff contends that the contract of employment is governed by English law and that accordingly the exclusion clause is rendered nugatory by section 1 (3) of the Law Reform (Personal Injuries) Act 1948.

It follows that the only point on this appeal is: was the judge right in coming to the conclusion that the proper law of the contract of employment is Dutch law?

We are left to try and discern by inference from the contract itself which is the system of law by which the parties intended that it should be governed. Sometimes it is said that the test — and it is a very useful test — is: what system of law has the closest and most real connection with the contract?

The contract was made with an Englishman in England; it is in the English language and payment under it is to be made in sterling. I do not, however, think that in this case those factors have very much significance. Looking at the contract itself, one finds that it is entered into on a printed form of contract drawn up by the Dutch company for the purpose of engaging European personnel. The printed form leaves a blank for the country of origin of the servant to be engaged under the contract. He may be of any European...