In that regard, a sufficiently close connection between the employment relationship in question and the territory of the European Union derives, inter alia, from the fact that a European Union citizen, who is resident in a Member State, has been engaged by an undertaking established in another Member State on whose behalf he carries on his activities.

The mere fact that a worker carries on his activities outside the territory of the European Union is not sufficient to exclude the application of the EU rules on the free movement of workers, as long as the employment relationship retains a sufficiently close connection with the Union.

Regulation No 1408/71, in the version amended and updated by Regulation No 118/97, as amended by Regulation No 307/1999, must be interpreted to the effect that the persons covered by it include an employed person who is a national of a Member State, in which he resides and in which his income is subject to tax, is employed on a pipe-laying vessel flying the flag of a third State and operating in various parts of the world, in particular above the part of the continental shelf adjacent to certain Member States, was previously employed by an undertaking established in his Member State of residence, changes employer and thereafter is employed by an undertaking established in the Swiss Confederation (a State treated as a Member State for the purposes of Regulation No 1408/71), whilst continuing to reside in the same Member State and to sail on the same vessel.

The provisions determining the national legislation applicable, which are contained in Title II of Regulation No 1408/71, in the version amended and updated by Regulation No 118/97, as amended by Regulation No 307/1999, must be interpreted as meaning that a national of a Member State, or of the Swiss Confederation (a State treated as a Member State for the purposes of applying the regulation), who is employed on board a vessel flying the flag of a third State and carries out his activities outside the territory of the European Union — including above the continental shelf of a Member State — but who is employed by an undertaking established in the Swiss Confederation, is subject to the legislation of the State in which his employer is established.

The applicable legislation is derived from the provisions of Title II of Regulation 1408/71, account being taken of the factors connecting the particular situation with the legislation of the Member States. When the worker does not reside in any of the Member States where he works, it is normally the legislation of the Member State where his employer has its registered office or place of business which applies. Support for that finding is given by the first sentence of Article 14(2)(a) of Regulation No 1408/71. That provision indicates the scheme of the regulation with regard to persons whose work is essentially itinerant and carried out in circumstances that do not permit it to be connected to one particular place; under that provision the legislation of the Member State in which the employer has its registered office or place of business is applicable to those persons. Even though Article 14 of Regulation No 1408/71 contains — as is apparent from its title — rules applicable to persons other than mariners, the situation of an employee carrying out his work outside the territory of the European Union on board a vessel flying the flag of a third State is comparable to that of persons directly concerned by that provision, inasmuch as neither the flag State nor the place of work is connected with the legislation of a Member State.

However, if, pursuant to Regulation No 1408/71, application of the legislation of the State in which his employer is established results in him being insured under a voluntary insurance scheme or not being insured under any social security scheme, the national concerned will be subject to the legislation of his Member State of residence.

(see paras 57-60, 64, operative part 2)