Triangular labour-hire structure is at the heart of a cross-border jurisdiction ruling
A New Zealand governing law clause in a labour-hire contract failed to bring Korean Air Lines before a New Zealand court on 5 March.
In Locke v Rishworth Aviation Asia Pacific Limited, Judge Kathryn Beck of the Employment Court stayed proceedings brought by Gregory Aaron Locke against Korean Air Lines Co., Ltd (KAL), ruling that South Korea – and not New Zealand – stood as the clearly and distinctly more appropriate forum for the dispute.
The case turned on a triangular commercial arrangement. Rishworth Aviation Asia Pacific Ltd, a New Zealand-registered company, contracted with Mr Locke, describing him as "an independent contractor on assignment to KAL." Mr Locke flew for KAL for 26 years in total, although he only entered into an agreement with Rishworth in 2019. Through this agreement, he was engaged by KAL as an A-330 pilot on internal South Korean and international flights. KAL held no direct written contract with Mr Locke.
The Rishworth-Locke agreement nominated New Zealand law as the governing law and conferred exclusive jurisdiction on New Zealand courts and tribunals. KAL's own agreement with Rishworth, however, named South Korean law as the governing law.
On 21 October 2022, Mr Locke's contract with Rishworth ended with immediate effect following an unsuccessful medical examination. Mr Locke raised a personal grievance and sought a declaration that he was either an employee of Rishworth with KAL as a controlling third party under the Employment Relations Act 2000, or that both companies jointly employed him. Both Rishworth and KAL denied he held employee status.
The Court confirmed it held both personal and subject-matter jurisdiction over the employment status question, drawing on the Supreme Court's approach in Brown v New Zealand Basing Ltd [2017] NZSC 139. Judge Beck then applied the forum non conveniens test and found that KAL discharged its burden of showing South Korea to be the more appropriate forum.
Several factors drove that conclusion. Mr Locke held no New Zealand citizenship or residency and provided no services in New Zealand. KAL's New Zealand office, which employed six people mostly in sales and customer service, played no role in his recruitment, engagement, or work. All dealings with KAL and all performance of his work took place outside New Zealand. Rishworth paid him in USD to an overseas bank account. The parties also disputed Mr Locke's home base: KAL argued it was Seoul, South Korea, while Mr Locke maintained it was Kuala Lumpur, Malaysia, though he did not suggest Malaysia as the appropriate forum.
The New Zealand governing law clause in the Rishworth-Locke contract did not anchor jurisdiction against KAL. Because KAL was not a party to that agreement, the Court gave the clause no determinative weight. Absent that clause, the Court found no evidence of a real and substantial connection to New Zealand.
The Court distinguished the case from Brown v New Zealand Basing Ltd, where the pilots held New Zealand citizenship, received pay in NZD, and began and ended their tours of duty in Auckland. Mr Locke, by contrast, spent no time in New Zealand and flew to no New Zealand airports.
Mr Locke argued that a stay raised public policy concerns and that limitation periods had likely lapsed, but the Court rejected these as falling short of the "special circumstances" threshold required to override the forum non conveniens finding. The Court also accepted expert evidence from Mr Jin, a former judge and practising labour and employment law practitioner, that South Korean courts could determine employment relationships in the absence of a contract and that the Labour Relations Commission offered a specialist dispute resolution pathway.
The Court stayed the proceedings against KAL and reserved costs. Should the parties fail to agree, KAL has 14 days from the date of judgment to file and serve a memorandum and supporting material, with Mr Locke having a further 14 days to respond and any reply due within a further seven days.
