International Transport Workers’ Federation and anor v Viking Line APB and anor

European law says that there should be no restrictions on the freedom of nationals in member states to set up and manage companies and firms in other member states. The European Court of Justice (ECJ) has now ruled in International Transport Workers’ Federation and anor v Viking Line APB and anor that that the right to take industrial action is a "fundamental" right of "overriding public interest", but that courts can, in certain circumstances, scrutinise the objectives of unions when taking industrial action.

Basic facts

Viking (a Finnish passenger ferry operator) owned a ship called the Rosella which operated under a Finnish flag on the route between Estonia and Finland. As it was making a loss, the company decided to re-flag the ship to operate under a “flag of convenience” in Estonia or Norway in order to avoid collective agreements with Finnish trade unions and cut jobs and terms and conditions.

Following a request from the Finnish Seamen’s Union (FSU), the International Transport Workers’ Federation issued an instruction to affiliates to boycott Viking’s activities. The FSU also called for strike action by its own members.

Viking brought proceedings in the High Court in London, arguing that its right to freedom of establishment under EC law was infringed by the industrial action under article 43 of the EC Treaty, and their right to provide services under article 49. The unions argued that they had a fundamental right to take action to preserve jobs recognised by Title XI of the EC Treaty and article 136.

ECJ decision

The ECJ said that:

  • The right to take collective industrial action is “fundamental” and of “overriding public importance”
  • The EC Treaty provisions protecting an organisation’s right to freedom of establishment apply to industrial action and can be relied upon by non-state employers
  • Industrial action represents a restriction on the right of freedom of establishment if it makes the exercise of that right “less attractive”, but is acceptable if it pursues a legitimate aim and is justified by overriding reasons of public interest (such as the protection of workers and jobs that are “under threat”)
  • The industrial action must also be “suitable” for achieving the objective, having regard to whether the union has other means of achieving it which are less restrictive of the employer’s right to freedom of establishment.

Comment

Although the ECJ has said that the right of unions to take industrial action “must be recognised as a fundamental right which forms an integral part of community law” it has also ruled that exercising that right can be subject to certain restrictions. In other words, that unions’ rights to take industrial action must be balanced against the competing EC law rights of employers.

Up until now, this kind of balancing exercise has not been allowed in the UK. Provided that the subject matter of the trade dispute came within the relatively wide ambit of section 244 Trade Union and Labour Relations (Consolidation) Act, industrial action could not be challenged in the courts (provided that the onerous balloting and notification requirements were satisfied).

But this ECJ judgment now allows closer scrutiny of unions’ objectives to be achieved through industrial action. It encourages national courts to superimpose their own views as to whether jobs and terms and conditions are actually at risk, and to consider whether the action represents a proportionate means of achieving that objective, taking into consideration what other means may have been available to the union.

For the time being, scrutiny of the objectives of the industrial action, and assessment of proportionality, will be limited to circumstances where employers assert a competing EC law right.

The immediate concern is other employers seeking to challenge industrial action in the UK on the basis of their existing and competing EC law rights. The longer term, and more profound, concern is the threat of future changes to domestic industrial action law to increased scrutiny by the courts.