International Transport Workers’ Federation v Viking Line ABP: Case C-438/05

ECJ: V Skouris (President); P Jann, A Rosas, K Lenaerts, U Lohmus and L Bay Larsen (Presidents of Chamber); R Schintgen, R Silva de Lapuerta, K Schiemann, J Makarczyk, P Kuris, E Levits and A O Caoimh (Judges); M Poiares Maduro (Advocate General): 11 December 2007

The first claimant, a Finnish ferry operator, owned a vessel which flew the Finnish flag and sailed between Finland and Estonia, and the wages of whose crew were regulated by a collective agreement in Finland. Since the vessel was operating at a loss, the claimant proposed to reflag the vessel in Estonia, where crew wages were lower than those in Finland, with a view to entering into a collective agreement with an Estonian union. The first defendant, an international association of trade unions, issued a circular calling on its affiliates not to enter into negotiations with the claimant, and the second defendant, the Finnish crewmen's union, threatened strike action intended principally to compel the claimant to maintain the existing terms and conditions of the crew members in the event of reflagging. The claimant, and its Estonian subsidiary, brought proceedings before the High Court for, inter alia, a declaration that the actions taken by the defendants infringed the claimants’ right of establishment in Estonia, contrary to article 43EC. The High Court granted the orders sought, and the defendants appealed.

The Court of Appeal referred to the Court of Justice of the European Communities for a preliminary ruling the questions, inter alia, whether article 43EC conferred rights on private undertakings which could be relied on against other private parties, in particular trade unions or associations of trade unions in respect of collective actions, and whether collective industrial action such as that in question fell within the scope of article 43EC, and if so whether in the circumstances it constituted a restriction of the freedom of establishment which (if that was the case) was justifiable.

The Court of Justice held:
(1) Since the abolition, as between member states, of obstacles to freedom of movement for persons and freedom to provide services would be compromised if the abolition of state barriers could be neutralised by obstacles resulting from the exercise by associations or organisations not governed by public law of their legal autonomy, article 43EC should be interpreted as being capable of conferring rights on a private undertaking which could be relied on against a trade union or an association of trade unions.
(2) In principle, collective action initiated by a trade union or a group of trade unions against a private undertaking, in order to induce that undertaking to enter into a collective agreement whose terms were liable to deter the undertaking from exercising freedom of establishment, was not excluded from the scope of article 43EC. Collective action such as that at issue, which sought to induce a private undertaking whose registered office was in a given member state to enter into a collective work agreement with a trade union established in that state and to apply the terms set out in that agreement to the employees of a subsidiary of that undertaking established in another member state, constituted a restriction within the meaning of article 43EC. But such restriction could, in principle, be justified by an overriding reason of public interest, such as the protection of workers, provided that it was established that the restriction was suitable for ensuring the attainment of the legitimate objective pursued and did not go beyond what was necessary to achieve it.

UK appearances: Mark Brealey QC and Marie Demetriou (Legal Department, International Transport Workers’ Federation) for the defendants; Mark Hoskins (Ross & Co) for the claimants; David Anderson QC, Sarah Lee and Jonathan Swift (Treasury Solicitor) for the United Kingdom Government.