European Court of Justice - Common Market or Protectionism?

Today, Advocates Generals to the ECJ rendered their opinion on two much anticipated cases involving the role of trade unions within the EU. In both cases, trade unions had braced themselves against the downsides of the EC principle of freedom to provide services.

In Laval un Partneri Ltd. v. Svenska Byggnadsarbetareförbundet and Others (opinion)Laval, a company from Latvia, had been hired for the renovation and extension of school premises in the town of Vaxholm (Stockholm area). A Swedish trade union entered into negotiations with Laval in order to have a Swedish collective agreement for the building sector applied to Laval's Latvian workers. When negotiations failed, the Swedish trade union started collective action which resulted in Laval's workers returning to Latvia and Laval's subsidiary company becoming subject to liquidation proceedings. Laval commenced proceedings before the Swedish labor court which found that the case involved issues of community law and referred them to the ECJ for a preliminary ruling. The case basically boils down to the question whether collective agreements of a member state can be universally applicable. The Advocate General answered in the affirmative pointing out, however, that principles of proportionality should apply.

"Directive 96/71/EC of the European Parliament and of the Council of 16 December 1996 concerning the posting of workers in the framework of the provision of services and Article 49 EC must be interpreted as not preventing trade unions from attempting, by means of collective action in the form of a blockade and solidarity action, to compel a service provider of another Member State to subscribe to the rate of pay determined in accordance with a collective agreement which is applicable in practice to domestic undertakings in the same sector that are in a similar situation and was concluded in the first Member State, to whose territory workers of the other Member State are temporarily posted, provided that the collective action is motivated by public-interest objectives, such as the protection of workers and the fight against social dumping, and is not carried out in a manner that is disproportionate to the attainment of those objectives."

In The International Transport Workers' Federation and the Finnish Seamen's Union v. Viking Line ABP and OÜ Viking Line Eesti (opinion), a Finnish passenger ferry operator planned to change its place of establishment to Estonia in order to benefit from lower wage levels. A Finnish trade union threatened with strike and boycott in order to prevent the relocation from happening; it received support by International Transport Workers' Federation. Viking Line brought an action in the Commercial Court in London seeking declaratory and injunctive relief which required, inter alia, the trade unions not to interfere with Viking Line’s right to freedom of movement. The Commercial Court granted injunction and the trade unions appealed. The Court of Appeal found that the case involved questions of community law and referred them to the ECJ for a preliminary ruling. The main issue in this case was whether trade union actions to prevent a company from relocating to another member state unduly interfered with the company's right to freedom of establishment (as granted by Article 43 EC). The Advocate General answered this question in the negative pointing out, however, that it would not be in accordance with EC law to systematically prevent the hiring of workers from a specific member state:

"Article 43 EC does not preclude a trade union or an association of trade unions from taking collective action which has the effect of restricting the right of establishment of an undertaking that intends to relocate to another Member State, in order to protect the workers of that undertaking. It is for the national court to determine whether such action is lawful in the light of the applicable domestic rules regarding the exercise of the right to collective action, provided that cases of intra‑Community relocation are not treated less favourably than cases of relocation within the national borders.
Article 43 EC precludes a coordinated policy of collective action by a trade union and an association of trade unions which, by restricting the right to freedom of establishment, has the effect of partitioning the labour market and impeding the hiring of workers from certain Member States in order to protect the jobs of workers in other Member States."

While trade unions expressed their contentedness with the opinions, critics are concerned about a possible adverse effect on the common market and the promotion of protectionism. As opinions by Advocates Generals generally tend to be very persuasive, it still remains to be seen how the ECJ judges will decide the two cases. In a few months we should know...