January 14, 2011
Amidst news this week that Ryanair has been forced to remove its operations and planes from Marseille due to a contractual dispute with French authorities, businesses operating abroad are warned to ensure that their contracts remain legally compliant.
The contracts in question were employment contracts for the company’s flight crew who were based in Marseille. The company used its Irish contracts, which did not comply with strict new French employment laws concerning social security and tax payments.
Despite moving its operations from the city, Ryanair has begun legal action against the French government for implementing laws which it believes are anti-competitive and contrary to EU legislation on the free movement of people and services. The company has also issued a petition to the European Commission to decree the laws invalid.
Any businesses doing business abroad should seek legal advice in relation to the laws that will govern their operations to ensure that their contracts remain fully enforceable in a different jurisdiction and also to ensure that they do not contravene foreign laws.
The European Commission is currently consulting on the issue of reforming contract law throughout the European Union by introducing a single unified system, in order to avoid problems such as those faced by Ryanair. However, many legal professionals are concerned that such reforms could drive businesses out of Europe and the House of Lords’ EU committee has equally described any such reforms as being of no value.
