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CJEU - C 438/05 / Judgment

International Transport Workers’ Federation and Finnish Seamen’s Union v Viking Line ABP and OÜ Viking Line Eesti

Deciding Body type:
Court of Justice of the European Union
Deciding Body:
European Court of Justice (Grand Chamber)
Decision date:
Key facts of the case:
Viking Line, a Finnish shipping company, indented to reflag the Rosella, a ferry flying the Finnish flag and plying the route between Tallinn and Helsinki by registering it in Estonia in order to be able to enter into a new collective agreement with a trade union established in that State and to employ an Estonian crew, whose wages are lower than those paid in Finland.
Following that notice, the ITF sent a circular to its affiliates asking them to refrain from entering into negotiations with Viking Line, as a result of which Viking Line was prevented from holding talks with Estonian trade unions. At the same time, the FSU announced its intention to strike, demanding inter
alia that a collective agreement be concluded which provided that, during the reflagging, Viking Line would continue to comply with Finnish employment law and not lay off the crew.
Viking Line then brought an action before the High Court of Justice (England & Wales), Queen's Bench Division (Commercial Court) in the United Kingdom, where the ITF has its headquarters, requesting that the ITF be ordered to withdraw the circular and the FSU be ordered not to infringe its right of establishment with regard to the reflagging of the Rosella. The Court of Appeal, before which an appeal against the decision granting Viking’s application was lodged, referred to the Court 10 questions for a preliminary ruling concerning the provisions on the freedom of establishment and the
restrictive nature of the measures adopted by the ITF and the FSU under those provisions.
Results (sanctions) and key consequences of the case:
The Court acknowledged that the right to take collective action, including the right to strike, constitutes a fundamental right which forms an integral part of the general principles of Community law (in this regard, reference is made
to the Charter of Fundamental Rights). It added that that right must, however, be reconciled with the fundamental freedoms within the internal market, such that exercise of that right may be subject to certain restrictions, in accordance with the principle of proportionality.
The ECJ held despite that the right to strike and take collective action is recognised as fundamental rights in EU law, they do not automatically override Treaty rights related to the freedom of establishment. A determination by a national court has to be made whether a restriction to such freedom can be justified on the basis of the protection of the fundamental rights concerned and that the restriction pursues “a legitimate aim compatible with the Treaty and is justified by overriding reasons of public interest. But even if that were the case, it would still have to be suitable for securing the attainment of the objective pursued and must not go beyond what is necessary in order to attain it”  In reaching its judgment the ECJ considered the nature of the right to strike and take collective action within the EU’s legal framework..
Interpretation of article(s) and implications for the resolution of the case:
FRC - Article 28: The ECJ held that “the right to take collective action, including the right to strike, is recognised both by various international instruments which the Member States have signed or cooperated in”. (para 43) “Although the right to take collective action, including the right to strike, must therefore be recognised as a fundamental right which forms an integral part of the general principles of Community law the observance of which the Court ensures, the exercise of that right may none the less be subject to certain restrictions. As is reaffirmed by Article 28 of the Charter of Fundamental Rights of the European Union, those rights are to be protected in accordance with Community law and national law and practices. In addition … under Finnish law the right to strike may not be relied on, in particular, where the strike is contra bonos mores or is prohibited under national law or Community law.” (para 44) 
The ECJ went on to hold that “the fundamental nature of the right to take collective action is not such as to render Article 43 EC [Freedom of Establishment] inapplicable to the collective action at issue”.(para 47) “Article 43 EC is to be interpreted as meaning that, in principle, collective action initiated by a trade union or a group of trade unions against an undertaking in order to induce that undertaking to enter into a collective agreement, the terms of which are liable to deter it from exercising freedom of establishment, is not excluded from the scope of that article.” (para 55) 
Finally, the ECJ held that “collective actions which seek to induce a private undertaking whose registered office is 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, constitute restrictions within the meaning of Article 43. Such collective action has the effect of making less attractive, or even pointless, the exercise by an undertaking of its right to freedom of establishment, inasmuch as it prevents that undertaking from enjoying the same treatment in the host Member State as other economic operators established in that State. Similarly, such collective action, seeking to prevent shipowners from registering their vessels in a State other than that of which the beneficial owners of those vessels are nationals, must be considered to be at least liable to restrict an undertaking’s exercise of its right of freedom of establishment. Those restrictions may, in principle, be justified by an overriding reason of public interest, such as the protection of workers, provided that it is established that the restriction is suitable for ensuring the attainment of the legitimate objective pursued and does not go beyond what is necessary to achieve that objective.” It is for the national court to determine the question on the facts.