Before the rulings were even handed down by the Court of Justice of the European Community (ECJ) in December of 2007, much ink had flowed on the subject of the Viking Line and Laval & Partnery judgments. The conclusions delivered by Advocates General Poiares Maduro and Paolo Mengozzi, together with the Court’s judgments, subsequently gave rise to numerous commentaries in European Union (EU) Member States. These rulings interested a wide range of legal scholars and experts in international law and labor law, as well as workers, employers, and professionals in the European Community. Fierce debate sparked when those close to the jurisdiction explained that these classic decisions could not be otherwise, even though the decisions were not in line with the conclusions of the two advocates generals. However, if it is true that these decisions could not have any other outcome, why did the European Parliament issue a report, and why was there a state of turmoil at the International Labour Organization in Geneva? The proximity of the two judgments shows the similarity of themes related to the international mobility of undertakings and of workers. The Viking Line case concerned ferries crossing the Baltic Sea, the reflagging of a vessel, and companies’ freedom of establishment in the Common Market. A Finnish ship-owner, who was losing money on his ferry line between Finland and Estonia, wanted to register his ferryboat “The Rosella” in Estonia to take advantage of a cheaper Estonian crew. The Finnish Seamen’s Association and the International Transport Workers’ Federation (ITF) campaigned to ensure that the Estonian Seamen’s Union would not sign a collective agreement. ITF also sought assurance that if “The Rosella” was reflagged, the ship-owner would comply with Finnish law and would keep the existing crew. Confronted by this industrial action, the ship-owner began legal proceedings in London to prohibit ITF and its subsidiary from hindering the ferry’s reflagging. The Court of Appeals in London referred the case to the ECJ for preliminary issues of interpretation. In the Laval & Partnery case, a Latvian company, “Laval,” won a contract to renovate a school building in Sweden. Laval intended to subcontract part of the work to its Swedish subsidiary, “Baltic Bygg,” using posted workers. The case hinged on businesses’ freedom to provide services within the Common Market. When negotiations between Laval and the Swedish trade union broke down, the unions blockaded the building site in an attempt to force the Latvian undertaking into signing the Swedish collective agreement for building trades and public works. Was this obstructive action on the worksite compatible with directive 96/71/EC of the European Parliament and the Council of December 16, 1996 on the posting of workers in the framework of the provision of services, and with the principle of non-discrimination? As a result of the blockade, Baltic Bygg filed for bankruptcy because it had no activity in the country where its headquarters were located. In both cases, the national judges questioned who had legal jurisdiction over these transnational union actions. Could a threat of collective action in Finland be subject to British law because ITF’s headquarters are in London? Would blocking a Swedish worksite come under Swedish law alone? Furthermore, would the transnational nature of collective action conflict with Community Law of the Internal Market? These two cases are also related to the European Union’s poorly controlled process of enlargement that took place in 2004 and that led to two negative outcomes for referendums in the Netherlands and in France in 2005. Companies often take advantage of social differentials in terms of pay and social protection, either by postings on land in the economic area or by reflagging a vessel. One example is Irish Ferries. In one instance, an Irish company plying a cross-Channel route that flagged its vessels in Cyprus fired its Irish seamen and hired seafarers from Baltic countries for regular ferry links between Ireland, Wales, and France. The company ultimately complied with the minimum wage in Ireland to put an end to the social conflict it had engendered. Allegation of union responsibility due to transnational collective actions forced the Court of Justice to make an initial decision about jurisdiction, including which judge is competent to hear a case. The Swedish Seamen’s Union threatened to blockade a Danish vessel in Sweden that belonged to a Danish ship-owner, was flagged under the international Danish registry, and was manned by cheaper Polish seafarers, in order to operate a regular line between Sweden and the United Kingdom (U.K.). Ship-owners employ rights inherent to freedom of establishment principles to reduce the cost of social contributions by flagging a vessel on the so-called international registry, which is adapted to global competition for vessels to be flagged freely, even when considering a regular line running geographically between Community countries. Social competition for “low cost” workers seems to be boundless. Legal recourse with respect to the licitness of a threat to strike applies to “matters of tort” as governed by Article 5.3 of the December 27, 1968 Brussels Convention on jurisdiction and the enforcement of judgments in civil and commercial matters. The plaintiff has the option of choosing either the court where the offence took place or where the defendant is domiciled. But where did the damage actually take place? Should the place where the causal event occurred have more importance than the place where the harm occurred? Damage resulting from a trade union’s industrial action in a Contracting State to which a ship registered in another Contracting State sails must not necessarily be regarded as occurring in the flag State, with the result that the ship-owner can bring an action for damages against that trade union in the flag State. In that case, the place where the event likely to give rise to tortious liability for the person responsible for the act could only be Sweden, since that is the place where the harmful event originated. It is for the national court to inquire whether such financial loss may be regarded as having arisen at the place where the enterprise is established. In that case, the Danish ship-owner could lay the matter before a Danish court to examine the legality of collective actions in Sweden. The territorial nature of the strike is asserted, but not exclusively so, meaning that the Court left the national judge with some leeway for action. In the course of that assessment by the national court, the flag State, i.e. the State where the ship is registered, must be regarded as being only one factor among others that can help determine where the harmful event took place. The nationality of the ship could only play a decisive role if the national court reached the conclusion that the damage arose on board the Tor Caledonia, in this instance. In the latter case, the flag State must necessarily be regarded as the place where the harmful event caused damage.
Reflagging A Vessel In The European Market And Dealing With Transnational Collective Disputes: ITF & Finnish Seamen's Union v. Viking Line,
Ocean & Coastal L.J.
Available at: https://digitalcommons.mainelaw.maine.edu/oclj/vol15/iss1/16