Earlier this week the ECJ gave its ruling in case C-438/05 International Transport Workers’ Federation and Finnish Seamen’s Union v Viking Line – often simply called the Viking Line case. It’s the case Lord Wedderburn was worried about back in October, and it’s an important judgment, about the extent to which trade union activity, such as strikes and strike threats, are compatible with EU law. Lord Wedderburn seemed to be concerned that the case would lay down an enforceable right to strike; it doesn’t, although it does recognise that trade union action is in principle legitimate. But it’s more important because it means trade union activity is now in effect subject to review on EU law grounds, a development that must have the trade union giants of the past turning industrially in their graves.
In short, Viking Line wanted to free itself from the terms of the collective agreement with the Finnish union which applied to its Finnish-registered ships, so it wanted to “re-flag” them as Estonian. That’d mean being able to pay Estonian seamen lower wages. The FSU understandably objected, fearing Finnish http://www.gooakley.com/ redundancies: it threatened to strike and got the ITWF involved, which told its member unions not to negotiate a new, Estonian agreement with Viking Line. The result being aimed at was, of course, to stop Viking Line exercising its right to establish in Estonia – a fundamental EU freedom under article 43 of the EC Treaty. The facts get very complex after that, involving undertakings and various court proceedings; but the key point is that Viking Line went to the High Court in London, seeking an injunction to prevent the Union’s actions, which it claimed unlawfully restricted its freedom of establishment. That case then went to the Court of Appeal, which referred the matter for a ruling from Luxembourg.
The Court of Appeal asked lots of complex questions, but the ECJ has answered as it so often does, more simply. There were basically three questions: first, does EU freedom of establishment law apply to strikes at all? Or is union activity in a specially immune legal category? Second, do the rules on freedom of establishment apply horizontally – in other words, can an employer use EU law in court to stop a union from striking? Or do the rules only stop governments doing things that prevent free movement? And third, if strikes can restrict free movement, and employers can complain about that, in what circumstances can strike action be justified in EU law?
On the first question, the ECJ ruled that free movement law does not apply only to the actions of public authorities but also to rules of any other nature aimed at regulating in a collective manner gainful employment, self-employment and the provision of services; and cheap oakley sunglasses limiting the scope of free movement law to acts of a public authority would risk creating inequality in its application. Strikes, then, are covered.
And on the second question – really just an aspect of the first, and flowing logically from it – the ECJ built on its “indirect horizontal effect” rulings in cases C‑265/95 Commission v France (the Spanish Strawberries case) and C‑112/00 Schmidberger. Those cases were complaints about the failure of the state to intervene to prevent restrictions on free movement caused by private individuals, but the ECJ goes on to rule that that article 43 EC is capable of conferring rights on a private undertaking which may be relied on against a trade union or an association of trade unions.
Some people, in both unions and in business, will think this a radical step; I remember arguing with City lawyers about it in the past when they told me their view was that article 43 only governed the actions of states. But I think that approach fails to reckon with the radical nature of EU internal market law. How many mini-Factortame moments will be needed before we realise EU law aims at abolishing all unjustified barriers to cross-border trade – whatever their nature? The ECJ had no difficulty in ruling that the union action restricted free movement: its very aim to was stop re-flagging.
Finally, on the trickiest question of all – whether strikes and union action like this is justified in EU law – the ECJ predictably bottled out, largely, saying it was for the national court to determine this. But it did give some guidance. First, it suggests union action will only be justified where cheap oakley jobs and conditions really are at risk; if an employer has made legally-binding undertakings protecting workers, further restrictive action may be legally unjustifiable. And secondly, it suggests that blanket policies like that of the ITWF which ask members to block re-flagging operations regardless of the effect on conditions are probably unjustified. The court was concerned about the fact that the ITWF’s policy of blocking re-flagging and renegotiation applies even where where that would lead to a higher level of social protection for workers.
So, an important step in EU law. Union action, say against incoming foreign firms, or against outsourcing of work to eastern Europe, will be reviewable by the courts on the basis of EU law. I don’t expect a huge rush of attempts by employers to obtain injunctions, but I do expect some to be obtained. And this may become one more reason why old-fashioned union activity starts to become the preserve of the public sector, which is of course less mobile that private business.
You have failed to mention that the ECJ recognised the right to strike as a fundamental right and general principle of EC law meaning that Member States must at least respect the essence of the right to strike. In this sense the case was a victory for the Trade Unions and this might lead to the UK being required to respect a right to strike. In my opinion it circumvents the UK’s opt out from the Charter of Fundamental Rights, which was specifically aimed at excluding the right to strike, becuase the ECJ will simply address the right to strike as a fundamental principle of EC law and will not rely on the Charter alone. Therefore if a case concerning the right to strike is brought before the ECJ it might render the opt out redundant in relation to the right to strike.
I’ve always thought the “clarifying” protocol on the Charter is a nonsense, though.
The fact is that the right to strike in the Charter is limited anyway by the fact that it is clearly “tied back” to national laws: it never was going to require any change to UK law on strikes and I thought the CBI collywobbles about it were always pathetic!
I think the “opt-out” (it isn’t one, actually – merely a clarification) is rubbish anyway. badly drafted (quite possibly in a late-night, last-minute panicky horse trading session). The government made a rod for its own back with it, because it is so weak. Ironic, because the Charter won’t affect the right to strike in the UK anyway!
I think your view only makes sense, with respect, if you think UK should be changed so that there’s an absolute ban on strikes. I agree, if we did that, that would seem difficult to square with what the ECJ said and with the Charter. But is it really imaginable that the UK government would do that?
If your reply is “but if Parliamentary sovereignty is intact, we should be able to do so” then I have two re-replies.
First, you should in that case be equally concerned about, and want an opt-out or clarification of, the freedom to conduct a business which is also guaranteed by the Charter, “in accordance with national laws” (just like the right to strike). Why no fear that the ECJ has power to impose commerce on Britain? Why no insistence that Parliament should be able to abolish enterprise?
Second, Parliament can always repeal the European Communities Act 1972 and take us out of the EU. That’s sovereignty.
I certainly agree with your views on the protocol.
However, I probably wasn’t as clear as I should have been by what I meant with regards to the UK being required to respect a right to strike. If a case came before the ECJ concerning a strike undertaken by UK workers and Community law was engaged then the ECJ would, if it felt that the strike was proportionate and pursued a legitimate objective, uphold the workers’ right to strike and require that the essence of the right to strike was meaningfully respected i.e. it might rule against UK stringent controls on collective action. Furthermore, the ECJ referred to the ILO in finding that the right to strike was a fundamental right. If the ECJ used ILO standards in a future case to judge UK protection of the right to strike then we would find ourselves in trouble as the ILO supervisory bodies have frequently criticised UK handling of the right to strike.