Obstacles to trade

On 26 November 1997, the European Union Commissioner for the Internal Market, Mario Monti, proposed a Regulation "creating a mechanism whereby the Commission can intervene in order to remove certain obstacles to trade". Two weeks later, on 9 December 1997, the European Court decided Case C-265/95: Commission of the EC v. French Republic.

Both were addressed to Member States [read France] which were failing, in the words of the Court (paragraph 66) "to prevent the free movement of fruit and vegetables from being obstructed by actions by private individuals [read French farmers]".

The Commission's power to enforce EC law against defaulting Member States in the European Court under Article 169 of the EC Treaty has a major defect, highlighted in the Commission's Explanatory Memorandum (paragraph 5):

"The litigation process remains lengthy, with a minimum of two years elapsing... In the intervening period, no legally binding instrument will be available particularly to help economic operators enforce their rights quickly and effectively...".

This slow process may be contrasted with the Commission's power to enforce competition rules (the Commission issues binding Decisions enforceable against individuals), or the rules against State aid (the Commission issues Decisions requiring Member States to abolish or alter such aid).

 

Strikes and free movement

The Monti proposal is aimed at "clear, unmistakable and unjustified obstacles to the free movement of goods...originating in an action or inaction on the part of a Member State" (Art. 1.1). "Inaction" is failure to implement measures "in the presence of actions taken by private individuals" (Art. 1.2).

Industrial action by private individuals often affects free movement of goods. Its objective is precisely the situation described in the Preamble to the Regulation (Recital 5): "a breakdown in trade and the contractual relations which underlie it".

The scope of the Monti proposal is not limited to unlawful action by private parties. Under EU law, action which is perfectly lawful in a Member State (or even takes the form of national legislation) may violate the free movement of goods guaranteed by superior EU law.

The proposed Regulation authorises the Commission to "address a Decision to the Member State directing it to take the necessary measures to remove the said obstacles within a period which it shall fix" (Art. 2). This Decision amounts to a Commission order of mandatory State intervention in many strike situations.

The Regulation prescribes a procedure of Commission Decision-making with a maximum of only 15 days from the time the Commission opens the procedure to when it makes a Decision directing the Member State to take the necessary measures (Art. 3). Failure by the Member State to adopt the measures removing the obstacles may lead to the Commission instituting proceedings before the European Court (Art. 4).

 

The full Monti: UK courts and strikes

But the real danger posed by the Commission's Decision lies in its enforcement, not through the European Court, but through litigation in the national courts. The Commission's Decision provides a legal basis for those affected by industrial action to seek remedies in the national courts.

The Commission's Explanatory Memorandum is enough to freeze the blood of any union lawyer seeking to defend industrial action before the UK courts (paragraph 18):
"The Commission Decision produces immediate legally binding effects in the national legal systems. The individuals affected will be able to invoke the Decision rapidly before the national authorities responsible, in particular the courts.

They will thus be able to obtain, within the ways and means of the national redress,
provisional measures coupled, if appropriate, with penalty payments or fines, to prevent any extension or aggravation of the consequences of the obstacle concerned, to remove the obstacle, or to achieve compensation for the loss suffered".

As if this was not bad enough, one comment on the decision of the Court in Case C-265/95: Commission of the EC v French Republic, referred to "the Commission's request to be granted the power of injunction, in order to be able to summon a Member State to remove obstacles to free movement without having to go through the lengthy procedure of going before the Court of Justice" (Agence Europe No. 7117, 10.12.87, p. 8).

In sum: at first glance, the Regulation seems aimed at enforcing Commission Decisions against Member States in the European Court. But the real threat is of individuals or employers using the Commission's Decision against other individuals in national courts.

References to "provisional measures" (paragraphs 6 and 18 of the Commission's Explanatory Memorandum) indicate that the remedies available may not be limited to compensation; temporary (interim) injunctive orders are envisaged.

Is Monti empty?

The Commission tried to pre-empt criticism by arguing in its Explanatory Memorandum that the proposed Regulation "does not affect the exercise of fundamental rights, recognised in national legal systems, such as the right to strike, rights which are not as such affected by Community law" (paragraph 15). Three safeguards were said to be provided, None of these is at all reliable.

First, "[T]his Regulation applies to... unjustified obstacles to the free movement of goods..." (Art. 1.1). But it is far from clear that strike action is a "justified" obstacle. Secondly, the Regulation is to apply "without adversely affecting the exercise of fundamental rights recognised under national law" (Art. 1.2).

But there are Member States, not least the UK, where the right to strike, far from being recognised as fundamental under national law, is bound up with legal restrictions.

Finally, liability arises when a Member State "fails to implement any necessary and proportionate measure available to it for safeguarding the free movement of goods" (Art. 1.2). This leaves the Courts with rather more discretion in deciding proportionality than a union lawyer would like.

Rights to strike in the EU

Unanimous approval of the Member States in the Council of Ministers is needed for the Regulation to pass. Opposition in some Member States where the right to strike is highly valued (Austria, Denmark, Finland, the Netherlands and Sweden) is balanced by others (including the UK).

The Legal Service of the Council of Ministers has questioned whether the Commission has any mandate for powers to make Decisions directing Member States to take such action.

However, the proposal may yet emerge in the form of revised proposals. Such a threat to the right to strike should never have reached this stage without consultation, and challenge, by the Commission's Directorate-General for Social Affairs and the trade unions.

The proposal demonstrates the question of transnational trade union rights in the context of European economic integration is unavoidable. The impending consequences of monetary union mean that consideration of this issue cannot be much further delayed.