Two European Court of Justice rulings, Viking Line and Laval, have a potentially far-reaching impact on the lawfulness of industrial action in the UK. In both cases, employees sought to strike to protest against plans to replace workers from one EU country with lower-paid workers from another. The central legal issue was the tension between the freedoms of movement and establishment (under articles 49 and 43 of EC Treaty) and the lawfulness of industrial action that could limit those freedoms. Daniel Ornstein focuses on three aspects of the rulings. First, they place new limitations on the lawfulness of industrial action. Secondly, where industrial action is potentially incompatible with community law, they require the UK courts to adopt a radically new approach to applications for injunctive relief to prevent industrial action. Thirdly, while on the surface the rulings are limited to where there is an international element involving more than one community member state, the influence of the decisions may nonetheless be far-reaching
Latvian construction company Laval posted workers to Sweden to work for its Swedish subsidiary, Baltic Bygg. The Swedish construction union sought to persuade the subsidiary to enter into a collective agreement that provided for more favourable terms. When talks broke down, the union blockaded one of Laval's building sites. As a result, the contract that Baltic Bygg was working on was terminated and subsequently Baltic Bygg was declared bankrupt. Laval then began proceedings in Sweden for a declaration that the industrial action was illegal on the grounds that the union was infringing its rights under article 49 of the EC Treaty to freedom of movement (and specifically its rights to provide services in Sweden). The court referred the matter to the European Court of Justice (ECJ).
Viking Line operated a ferry, the Rosella, between Finland and Estonia. The Rosella sailed under the Finnish flag and employed its crew under a collective agreement with the Finnish Seaman's Union (FSU), which meant the crew were paid at Finnish wage levels.
The Rosella was operating at a loss and Viking Line wished to reflag it as an Estonian ship and enter into a collective bargaining agreement with an Estonian union, which would have led to lower wages. The FSU objected to the reflagging and in support the International Transport Workers' Federation (ITF) asked all affiliated member unions not to negotiate with Viking Line. This prevented Viking Line dealing with the Estonian union. The FSU then gave notice of its intention to start industrial action.
In response, Viking Line agreed not to start reflagging. However, once Estonia became a member of the EU, Viking Line applied to the High Court for an injunction requiring the FSU not to interfere (by taking industrial action) with Viking Line's rights to freedom of establishment (ie the right to reflag the Rosella). The High Court found in Viking Line's favour. This decision was appealed to the Court of Appeal, which referred the issue of whether Viking Line could rely on the right to freedom of establishment to challenge the actions taken by a trade union to the ECJ.
In both cases, the ECJ held that the right to take industrial action is a ''fundamental right which forms an integral part of the general principles of community law''. This might appear a significant pronouncement. However, its significance is undermined by the extent to which the rulings then qualify the right.
The ECJ held that the consequence of recognising that the right to take industrial action has its origins in community law is that the right can only be exercised in a manner that is compatible with that law. The important consequence of this is that the right is fettered in so far as it restricts freedom of movement and freedom of establishment such that where industrial action restricts freedom of movement or establishment, it will only be lawful if it is both justified and proportionate.
The ECJ held in both cases that the issue of whether industrial action is justified and proportionate is a matter for national courts. Nonetheless, it provided guidance as to how to address these issues.
As to justification, the ECJ held that ''the right to take collective action for the protection of workers was a legitimate interest, which in principle justified a restriction of one of the fundamental freedoms guaranteed by the Treaty''. As to proportionality (only addressed in Viking Line), it was held that national courts should assess whether the union taking industrial action has ''other means at its disposal which were less restrictive of freedom of establishment'' and has ''exhausted those means''.
These requirements impose significant new restrictions on when industrial action is lawful in the UK. For example, the requirement under UK law for lawful industrial action to relate to a trade dispute (defined in s.218 of Trade Union and Labour Relations (Consolidation) Act and interpreted broadly by the courts), appears wider than the requirement from the ECJ that lawful industrial action must protect workers' rights. Where community rights apply, the narrower ECJ test rather than the broader TULR(C)A will apply.
In addition, the guidance that the ECJ has given on proportionality suggests that the lawfulness of industrial action will depend on matters including the steps a union has taken to try to resolve a dispute, the alternatives to taking industrial action and the level of impact that the issues in dispute has on employees - matters that have no bearing on the lawfulness of industrial action under UK domestic law.
Before Laval and Viking Line, when determining whether to grant an injunction, the UK courts do not need to address the merits of a dispute. Viking Line and Laval radically change this. The need for industrial action to be legitimate and proportionate, together with the ECJ's guidance on these requirements, means that where community rights apply, the UK courts will have to consider the merits and background of a trade dispute, such as whether it would in fact protect workers' rights and the steps taken to resolve the dispute.
Moreover, because the key to obtaining injunctive relief is to persuade the court that there is a serious issue to be tried, employers will not have to show that community law actually applies or that the action proposed by a trade union is in fact unjustified or disproportionate. Rather, if an employer can merely show that there an arguable case that the proposed industrial action will infringe its rights under community law, there will be good prospects of obtaining an injunction.
First, Viking Line and Laval confirm that the magnitude of any restriction to the freedom of movement or establishment is irrelevant. This means that an act of a trade union can be challenged by an employer on community law grounds even if it only results in a trifling restriction to free movement or establishment.
Thirdly, it is arguable that the ability to invoke community rights only where there is an international element is of itself a restriction of community rights. This is on the grounds that if an employer has lesser protection against industrial action in relation to, say, a move from Manchester to Liverpool than a move from Manchester to Lodz, this of itself operates (albeit indirectly) as a restriction of an employer's freedom of movement and establishment in the UK because the employer is less free to operate in the UK than in Poland.
There are therefore arguable grounds that the rules governing the lawfulness of industrial action should be as set out by Laval and Viking Line, regardless of whether there is a direct international element. Historically, the ECJ has not been sympathetic to such arguments. However, there have been some indications that the ECJ may be increasingly receptive to applying community rights to purely domestic situations.
These two rulings impose substantive new restrictions on the lawfulness of industrial action and require the UK courts to adopt a new approach to the grant of injunctive relief, at least where there is a direct international element. Moreover, they may also apply where there is very little or even no direct international element. There is therefore every reason to conclude that Viking Line and Laval have provided employers with a potent new weapon with which to oppose industrial action.
Laval un Partneri Ltd v Svenska Byggnadsarbetareförbundet & ors
International Transport Workers' Federation & anor v Viking Line ABP & anor Case C-438/05