Collective Labour Relations and Private International Law

The right to take industrial action is not unlimited; on the contrary, it is likely to be restricted for the sake of other collective interests. The legal or illegal nature of industrial action is determined on the basis of this rationale and within the boundaries established in accordance with the regulatory models already outlined.⁵⁰ Industrial action is usually understood to be the last resort in attempts to reach a collective agreement; at the same time, the need for this type of compromise means that it is not allowed by peace obligations while a collective agreement is in force or that industrial action might be suspended if the parties agree to take their differences to arbitration.

The regulation of industrial action, including the right to strike, is based on a thorough assessment of the interests and rights at stake, and at the moment this assessment is undertaken only at national level, as already mentioned. The opening up of borders and the globalisation of markets for goods, services and capital lie behind forms of industrial action going beyond the borders of the territory for which the assessment was originally undertaken; the actions therefore have a cross-border impact, in the same way business operations do, so their lawfulness is subject to different legal systems. When industrial action occurs in the framework of an economically integrated area, the prevailing rules there can also determine the legality or otherwise of industrial action. The question is especially relevant in the context of the European Union, in particular with reference to the way that EU market freedoms interact with the right to strike. Many rules and a great deal of case law and literature have already been produced on the topic, and given their relevance to maritime trade they will be described in the following section.

Because of the way the European Union has developed, the first contradictions arising over the right to industrial action were related to the free movement of workers and goods.⁵¹ Companies can try to alleviate the consequences of strikes by hiring foreign workers to replace strikers; manoeuvres of this type have normally received due response from domestic law, usually in favour of the right to strike and prohibiting this type of employment. Conversely, the European Union has responded far more directly when the free movement of goods has been at stake since this involves cross-border transfer and strikes in sectors such as transport are likely to drastically restrict this freedom.

Following the farmers’ riots in France and the CJEU judgment of 9 December 1997,⁵² the European Union enacted Council Regulation (EC) No. 2679/98 of 7 December 1998 on the functioning of the domestic market in relation to the free movement of goods among the member states.⁵³ As its name indicates, the Monti Regulation, as it is also known, enables governments to take measures against actions that may severely disrupt or hamper the free movement of goods, whether actively or by omission. Omissions are defined in Article 1(2) as cases ‘when the competent authorities of a Member state, in the presence of an obstacle caused by actions taken by private individuals, fail to take all necessary and proportionate measures within their powers with a view to removing the obstacle and ensuring the free movement of goods in their territory’. If states do not act to restrict the untrammelled activities of individuals, the result can be a complaint from the European Commission for violating the principle of free movement of goods.

The Monti Regulation’s innovation lies in the fact that it expressly refers to the right to strike for the purpose of excluding it from the range of ‘acts or omissions’ likely to disturb or hinder the free movement of goods. Article 2 specifically states that the Regulation’s provisions cannot be interpreted ‘as affecting in any way the exercise of fundamental rights as recognised in Member states, including the right or freedom to strike’, so that ‘these rights may also include the right or freedom to take other actions covered by the specific industrial relations systems in Member states’. These provisions therefore aim to complement international recognition of the right to industrial action, so that market freedoms cannot simply prevail over these fundamental rights.

Following the Monti Regulation and the CJEU judgment referred to above, it was understood that the foundations for market freedoms to coexist with the right to strike had been laid in the European Union. Nevertheless, subsequent CJEU interventions linked with the freedom to provide services and freedom of establishment have certainly challenged the guidelines for the free movement of goods, which did seem to work.

The first and most important decision for our purposes is the Viking judgment on 11 December 2007,⁵⁴ as the member states’ freedom to reflag was at stake. The case arose as a consequence of the Finnish shipping company Viking Line voicing its intention to replace the Finnish flag flown by the ferry ‘Rosella’ with a different flag that would enable the company to scale down the labour costs to which it was obliged by a collective agreement signed with the Finnish Seamen’s Union (FSU). The ferry sailed between Tallinn (Estonia) and Helsinki (Finland), and the company intended to reflag it either in Estonia or Norway, as both nations allowed crews to be employed on lower wages.

Once notified of Viking’s intentions, the Finnish union expressed its opposition to the reflagging, or at least to the termination of the Finnish collective agreement and the possible redundancies involved. Viking rejected its claims, and the FSU was driven to undertake industrial action along ITF policy lines, of which it was a member. As seen above, the key instrument among the range of policies aimed at counteracting flags of convenience is one according to which only unions in the country where a vessel’s beneficial owner is based are authorised to conclude collective agreements relating to the vessel and its crew. As a result, even though Viking decided to reflag the vessel, the FSU would still be the only union with exclusive authority to negotiate working conditions on board the ‘Rosella’. The ITF was duly informed of the initiation of industrial action by the FSU and consequently sent a circular to all its union partners advising them to desist from working with Viking. ITF’s intervention was followed by a series of actions that culminated in the company committing itself not to leave Finland.

However, the case was given a new twist in 2004 when Estonia joined the European Union: Viking went back to its original decision and decided to sue both the FSU and the ITF in London, the latter’s base, for infringement of the freedom of establishment under Article 43 EC, now 49 of the TFEU, as the circular issued by the ITF and directed at all its members was still in force, thereby depriving the company of the benefits granted by the freedom of establishment such as reduced labour costs as a consequence of reflagging the vessel.

If the Viking case deals with freedom of establishment, the Laval and Rüffert cases concern the freedom to provide services under Articles 12 and 49 TEC, now 18 and 56 of the TFEU Treaty; both judgments deal with the posting of workers covered by Directive 96/71/EC, which includes fishermen but not seafarers, as already noted. Laval un Partneri was a Riga-based company (Latvia). In 2004, it moved to Sweden to carry out various construction works, among which was the building of a school in the city of Vaxholm. The work was done by Latvian workers subject to collective agreements signed in Latvia. Once work began, the Swedish trade unions Svenska Byggnadsarbetareförbundet, Svenska Byggnadsarbetareförbundets avdelning 1 and Byggettan contacted Laval to sign the Swedish collective agreement for construction. Various disagreements immediately arose, stemming from the peculiarities of the Swedish legal system according to which wages and other working conditions can only be negotiated after the collective agreement has been signed. Laval refused to sign it, as there was no wages agreement, and their refusal sparked off industrial action, including solidarity action by the electricians’ union Svenska Elektrikerförbundet. Laval ended up losing its contracts in Sweden as a result of these actions and became insolvent, resorting to the Swedish courts to ask them to declare the unions’ industrial action illegal, to remedy the infringement of the freedom to provide services, and for compensation for the damage inflicted.⁵⁵

The Rüffert case pitted the German state of Lower Saxony against Objekt und Bauregie, a German company that had won the tender put out by Lower Saxony for the building of a prison. The contract concluded by the two parties included provisions on working conditions, which specified that they had to be granted in accordance with the collective agreements in force at the place where the work was carried out. Objekt und Bauregie outsourced to a Polish company, and during the course of the work it emerged that the company was paying the Polish workers lower wages than were due to them according to the collective agreements. Under the circumstances, Lower Saxony wanted to terminate the contract with Objekt und Bauregie and required payment of the penalty scheduled for breach of conditions. In this context, the seized German court asked the CJEU whether the contractual imposition of a collective agreement establishing a salary that exceeds the minimum to which the Directive 96/71/EC refers infringes the freedom to provide services as granted by Article 49 TEC.⁵⁶

Also apropos Directive 96/71/EC, the CJEU issued a judgment on 19 June 2009 assessing the adequacy of its transposition into Luxembourg law.⁵⁷ The law interpreted the notion of national public policy broadly, thereby guaranteeing a series of labour rights contained in various legal and administrative sources, as well as in collective agreements. In line with Rüffert and Laval, the CJEU reaffirmed the restrictive nature of public order, particularly the idea that only the rights listed in Article 3(1) of the Directive can be imposed on foreign companies. In the case in question, the obligation imposed by the Grand Duchy on foreign companies to appoint an ad hoc agent resident in Luxembourg with a view to verifying compliance with Luxembourg working conditions by companies based in other member states was specifically rejected.

The CJEU response in all these cases accepts that individuals may also violate market freedoms,⁵⁸ and it is therefore possible that other individuals will seek redress against them in addition to declaring an infringement. This gives rise to a conflict rule that will be analysed in a later section of this chapter. Over and above this assertion, it is worth remarking at this point that the CJEU considers that the exercise of the right to strike and other industrial actions may indeed infringe both freedom of establishment and the freedom to provide services within the European Union, therefore rejecting the possibility that such action may be among the cases that justify the restricting of these freedoms, in a similar manner to the Monti Regulation. The CJEU is thus rejecting the possibility of resorting to industrial action to improve the living and working conditions of cross-border employees on the ground that companies’ interests in participating in other markets by taking advantage of the benefits provided by differences between legal systems, and more precisely by differences in labour costs, should be encouraged. In other words, the CJEU seems to support the race to the bottom within the internal market.⁵⁹ On the other hand, it does not take into account the fact that its case law puts companies that sign and stick to collective agreements at competitive disadvantage vis-à-vis companies that refuse to do so.⁶⁰

The arguments put forward by the defendant unions and various governments in order to exclude industrial action from the range of measures to protect the freedoms of establishment and provision of services were rejected on the ground that ‘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 Article 28 of the Charter of Fundamental Rights of the European Union reaffirms, those rights are to be protected in accordance with Community law and national law and practices’.⁶¹

Under the umbrella of these potential restrictions, the CJEU sets aside the objection raised by the defendant unions on the ground that industrial action in itself involves a violation of the freedoms of movement; a decision on whether it is allowed or not is therefore needed. In addition, industrial action is known to be part of the body of fundamental rights and cannot therefore be opposed on the ground that it clashes with market freedoms. The CJEU decision rejected this approach by focusing on the principle of proportionality, i.e., on the need to determine when restricting the freedoms of establishment and provision of services almost inevitably stemming from industrial action is necessary, proportionate and justified to the purpose intended.

The question of whether the restrictions on the freedoms in question caused by industrial action have a legitimate objective compatible with the TFEU and can be justified by overriding reasons of general interest must therefore be examined.⁶² While recognising that worker protection may meet these requirements,⁶³ the Court demands that industrial action be filtered through the screen of the principle of proportionality, so the seized court must decide whether it is necessary for the purpose intended—to ensure the protection of workers—instituting the use of an objective test: whether jobs and working conditions are being compromised or seriously threatened or not in the case in question.⁶⁴ Once this test has been passed, ‘it would then have to ascertain whether the collective action initiated by FSU is suitable for ensuring the achievement of the objective pursued and does not go beyond what is necessary to attain that objective’,⁶⁵ which also implies that industrial action is deemed a last resort action.

The CJEU itself applies the test to ITF policy, and even though it agrees that it certainly seeks to protect workers’ interests, it does not consider the policy adopted by ITF to fight against flags of convenience a proportionate measure: ‘in the context of its policy of combating the use of flags of convenience, ITF is required, when asked by one of its members, to initiate solidarity action against the beneficial owner of a vessel which is registered in a State other than that of which that owner is a national, irrespective of whether or not that owner’s exercise of its right of freedom of establishment is liable to have a harmful effect on the work or conditions of employment of its employees. Therefore, as Viking argued during the hearing without being contradicted by ITF in that regard, the policy of reserving the right of collective negotiations to trade unions of the State of which the beneficial owner of a vessel is a national is also applicable where the vessel is registered in a State which guarantees workers a higher level of social protection than they would enjoy in the first State’.⁶⁶ Exactly what the Court intended to convey in this section is unclear,⁶⁷ but it is necessary to point out that it seriously compromises the viability of ITF strategy within the European Area of Justice without providing solid arguments to justify its restriction, given that it can be essential for worker protection.⁶⁸

The reasoning in Laval and Rüffert is similar but is shaped by the applicability of Directive 96/71/EC, which leads the Court to the predictable conclusion in this context that ‘without prejudice to the right of undertakings established in other Member states to sign of their own accord a collective labour agreement in the host Member state, in particular in the context of a commitment made to their own posted staff, the terms of which might be more favourable – the level of protection which must be guaranteed to workers posted to the territory of the host Member state is limited, in principle, to that provided for in Article 3(1), first subparagraph, (a) to (g) of Directive 96/71, unless, pursuant to the law or collective agreements in the Member state of origin, those workers already enjoy more favourable terms and conditions of employment as regards the matters referred to in that provision’.⁶⁹ In short, when claims pursued by social partners exceed the minimum requirements set out by the Directive, any kind of industrial action they undertake will always infringe the freedom to provide services.⁷⁰

The position advocated by the CJEU puts collective bargaining in a very difficult position. A company can simply transfer its operations to the other side of the border to escape the obligations imposed by the domestic collective bargaining framework, a situation that seems to lie behind the Laval case. Laval is a Latvian company that owned 100 % of the shares in a Swedish company, which then subcontracted Laval to perform the work procured in Sweden.⁷¹ At European level, the lack of regulation of self-governance mechanisms such as the right to strike is a major obstacle for the resolution of this kind of situation, which can only be currently addressed at state level. Even in cases where industrial action is lawful according to the relevant legal system, CJEU case law requires the principle of proportionality to be strictly applied, on pain of incurring liability for infringing the freedoms of provision of services and establishment.⁷² Thus, precedence is given to market freedoms over social rights, not only severely restricting the social partners’ capacity to act but also thwarting policies linked to corporate social responsibility, such as the introduction of contractual clauses requiring certain collective agreements to be applied, either the collective agreements in force at the place the activity is carried out, as was the case in Rüffert,⁷³ or an ITF agreement.

The rationale should be precisely the opposite: given the fundamental nature of the right to collective bargaining and to strike, it is in fact the restricting of these rights that requires careful justification.⁷⁴ A brief overview of the different international instruments dealing with these rights clearly shows that they are not completely unlimited rights, but they can only be restricted in cases where health, public order or other equally relevant factors are at stake.⁷⁵ Apart from the peace obligations during the life of collective agreements and the use of arbitration, such limits are certainly modulated through the imposition of minimum services, which can only cancel out the impact of a strike in cases involving the provision of essential services. Granting preference to market freedoms over these considerations is equivalent to eviscerating these fundamental rights, therefore making it even clearer how urgently EU regulation in this area is needed, running—at least—in parallel with the development of the manifold financial regulations and instruments established for the operations of the domestic market.⁷⁶

Evidence of the magnitude of the attack on collective bargaining rights and industrial action was provided by the European Parliament’s reaction in the Resolution of 22 October 2008 on challenges to collective agreements in the EU,⁷⁷ which expressly underlined that ‘freedom to provide services is not superior to the fundamental rights contained in the Charter of Fundamental Rights of the European Union and in particular the right of trade unions to take industrial action, in particular since this is a constitutional right in several Member states. It therefore emphasizes that the abovementioned CJEU rulings in Rüffert, Laval and Viking demonstrate that it is necessary to clarify that economic freedoms as established in the Treaties should be interpreted in such a way as not to infringe upon the exercise of fundamental social rights as recognised in member states and by Community law, including the right to negotiate, conclude and enforce collective agreements and to take collective action, and not as infringing the autonomy of social partners when exercising these fundamental rights in pursuit of social interests and the protection of workers’ (at No. 5).

In the same Resolution the European Parliament calls for a more balanced treatment of the relationship between market freedoms and social rights while focusing on a potential revision of Directive 96/71/EC. The ending of the transposition period of Directive 2006/123/EC on services in the domestic market⁷⁸ has given a new dimension to the case law reported here and has led the Commission to propose a Council Regulation on the exercise of the right to take collective action within the context of the freedom of establishment and the freedom to provide services,⁷⁹ seeking to establish a clause in this area similar to the Monti Clause included in Regulation No. 2679/98. The fact is, though, that Article 2 of the proposal is nothing more than simply an emphatic statement, so is thus unable to resolve the dilemma posed by CJEU case law: ‘The exercise of the freedom of establishment and the freedom to provide services enshrined in the Treaty shall respect the fundamental right to take collective action, including the right or freedom to strike, and conversely, the exercise of the fundamental right to take collective action, including the right or freedom to strike, shall respect these economic freedoms’.

The Commission’s proposal has been rejected by several member states.⁸⁰ Among the most relevant objections is that it infringes the principle of subsidiarity since in accordance with Article 153(5) of the TFEU, the European Union cannot deal with such issues as they are a matter for individual member states. Another especially noteworthy objection is that it subverts the relationship between constitutionally enshrined rights in some EU member states such as Spain, where the right to collective bargaining and the right to strike are laid down in Article 28 of the Spanish Constitution, enjoying a protection that was not conferred on the economic rights set up in Article 38.

It has already been pointed out that the CJEU interpretation imposes a significant restriction on these social rights by granting priority to the freedoms of provision of services and establishment. The doctrine contained in the Demir and Baykara judgment requires a reassessment of the scope of this interpretation, taking into account not only EU accession to the ECHR but also the mandate contained in Article 52(3) of the European Charter of Fundamental Rights: ‘In so far as this Charter contains rights which correspond to rights guaranteed by the Convention for the Protection of Human Rights and Fundamental Freedoms, the meaning and scope of those rights shall be the same as those laid down by the said Convention. This provision shall not prevent Union law providing more extensive protection’.⁸¹

EU accession to the ECHR reinforces the meaning of this provision, and in this context recent ECtHR case law becomes even more relevant by encouraging a shift in the EU mindset, i.e., this is not about assessing when industrial action is proportionate and therefore compatible with market freedoms, but the other way around: the question that needs to be answered is when market freedoms may justify restrictions on the exercise of fundamental social rights.⁸² After all, the Viking and Laval doctrine is based on Article 28 of the European Charter of Fundamental Rights,⁸³ and, accordingly, the interpretation of this provision must necessarily be adapted to the ECHR’s evolution.

There has been no express ECtHR pronouncement on this interaction so far, but some have been issued by other supervisory bodies such as the Committee on Freedom of Association operating within the ILO, which has condemned the Australian Trade Practices Act’s interference with the right to undertake solidarity actions under the ITF campaign against flags of convenience, as well as the Act’s implementation by the Australian Competition and Consumer Commission. The Committee rejected the allegation of interference with trade and commerce and threat to cause significant damage to the economy as sufficient reasons to restrict strike action.⁸⁴ Given the ongoing dialogue between the ECHR and this body, as well as with those responsible for overseeing the European Social Charter,⁸⁵ this is the path ECtHR doctrine has chosen to take, and European legislation should join it on its journey.⁸⁶

The inadequacies of the division in national labour markets are obvious in cases involving seafarers and fishermen. It is easy to find collective agreements between an employer and a union where those represented are not union members. Furthermore, collective bargaining may take place hundreds or even thousands of nautical miles away from the employer’s company headquarters and the crew’s country of origin, and their employment contracts may also be subject to different laws. This background is in fact at the heart of the ITF-initiated campaign against flags of convenience, which is based on coordinated trade union action to avoid inter-union competition for a larger market share.

This coordination has prompted ITF trade unions to pull in the same direction, and although the process has been very uneven, the result is that shipowners sailing under what the ITF considers being a flag of convenience have been successfully pushed to sign one of the standard collective agreements drawn up by the ITF itself. Shipowners agreeing to do this are given a blue certificate, which means that ITF inspectors will refrain from impeding the respective vessel from sailing; otherwise, hurdles might well crop up in the form of boycotts or other industrial actions if the minimum living and working conditions on board as guaranteed by the collective agreement are not respected.

The Canadian jurisdiction provides a useful example of this type of litigation¹⁰⁰: a Filipino crew was employed on a ship flying a Liberian flag after a collective agreement had been signed between an Australian trade union and the shipowner in Australia. The crew had been recruited by the shipowner’s agent in the Philippines, meaning that the individual employment contracts were subject to Philippine law, and the crew was paid lower wages than those fixed by the collective agreement in question, which had been drawn up according to ITF standards. During a port stop in Montreal the crew decided to request the arrest of the vessel and claim the payments due in accordance with the collective agreement. In answer to the question as to whether shipowner and crew were bound by the collective agreement signed in Australia, the court concluded that the applicable law to decide on the existence, validity and scope of the agreement was the law of the flag, in this case Liberian law, although in the end the scope of the agreement was examined in the light of Canadian law, as the foreign law was not proved at the proceedings. The decision upheld the seafarers’ petition on the ground that the ITF is a representative trade union and the collective agreement was therefore also applicable to seafarers recruited after its conclusion.

The existence, validity and scope of a collective agreement may also be directly challenged by the owner seeking a declaration of invalidity, for example, on the ground that the agreement was concluded under duress.¹⁰¹ Another example of this kind of litigation is a case involving the Norwegian shipowner of a vessel owned by a Maltese company, flying a Maltese flag and crewed by Norwegian officers and Spanish seafarers. A Spanish union had concluded a standard ITF collective agreement—to which the trade union was affiliated—on behalf of the Spanish seafarers. The vessel operated between Swedish ports, an argument put forward by a Swedish union in order to request the ITF to include a clause that committed the shipowner to recruit Swedish seafarers in the agreement. The ITF agreed to denounce the collective agreement signed on its behalf by the Spanish trade union, but the union, which disagreed with the clause, instead renewed it on the ITF’s behalf. The vessel was boycotted on its arrival in Sweden, sparking off a dispute between the Norwegian company and the ITF in London, the key point of which was the scope of the collective agreement signed by the Spanish trade union on behalf of the ITF. The British Court of Appeal determined the law applicable to the collective agreement by taking into account the closest link, which led them to Spanish law.¹⁰²

The problems of international jurisdiction and conflict of laws posed by disputes dealing with the existence, validity and scope of a collective agreement are discussed below. They are covered by EU Regulations on private international law¹⁰³ and so need to be examined in the light of the provisions of the Brussels I bis Regulation¹⁰⁴—the Lugano Convention¹⁰⁵ is thus applicable here—and the Rome I Regulation¹⁰⁶: despite differences between legal systems, there is a certain degree of consensus as to the fact that collective bargaining gives rise to a contract. English case law expressly stated this in two cases involving the ITF,¹⁰⁷ while CJEU case law supports this conclusion by a broad interpretation of the term ‘contractual matters’, including situations in which one identifiable party voluntarily assumes obligations towards another identifiable party.¹⁰⁸

Disputes arising from collective agreements per se are also covered by the Brussels–Lugano system,¹⁰⁹ as they are characterised as civil and commercial matters and are not among the exclusions mentioned in Article 1 of the Brussels I bis Regulation and the Lugano Convention. As is already known, the application of these legal instruments depends on the defendant’s domicile being located in a member state,¹¹⁰ but they are also applicable in the event that there is a choice of a member state’s forum.¹¹¹

Following the structure of the Brussels–Lugano system, and given that this is not an exclusive matter, the first thing that needs to be checked is whether there has been a tacit submission or a choice of forum.¹¹² In the absence of these, plaintiffs can choose to file their claims either before the courts of the defendant’s domicile or the courts determined according to the principle of proximity to the matter in dispute, in this case those dealing with contractual matters.¹¹³ The lodging of a claim against a co-defendant before the courts where the defendant is domiciled is also foreseen,¹¹⁴ as this head of jurisdiction has already been resorted to bring the trade union in charge of carrying out the boycott before the courts of the ITF’s headquarters, with the aim of examining whether or not the collective agreement signed by the shipowner under the pressure of ITF strategy is valid, as occurred in the Dimskal case mentioned above.¹¹⁵

Signing a collective agreement necessarily involves the parties’ consent, and so the special head of jurisdiction on contractual matters may come into operation to determine whether the agreement is valid or not. The paradox here is that if the collective agreement is declared void, there would have been no consent. Nevertheless, the CJEU has already clarified that non-existence and invalidity issues also fall within the scope of Article 5(1) of the Brussels I Regulation and Lugano Convention, 7(1) of the Brussels I bis Regulation, since the real issue at stake is precisely the existence and validity of a contractual obligation.¹¹⁶

Further problems emerge when it comes to specifying the competent court, as the place where the obligation that is the basis of the lawsuit was, or is to be, fulfilled has to be determined. The head of jurisdiction—as stated in the provision mentioned above—contains two presumptions, but these only apply to the international sale of goods and provision of services. In all other cases, the seized court has to proceed to identifying the contractual obligation that gave rise to the lawsuit. When the existence and validity of a contract is in question, this obligation is the characteristic performance of the contract.

The point is that a collective agreement gives rise to complex obligations, none of them simply involving one party’s obligation to pay the other, and serious problems therefore arise regarding the determining of the characteristic performance of the contract, i.e., establishing the obligation that is at the root of the lawsuit.¹¹⁷ In view of the contents of collective agreements, it is advisable to identify this connection by locating the agreement’s centre of gravity, which suggests an approach based on the principle of proximity, i.e., seeking the closest link. Given the transnational nature of these agreements as well as their contents—focusing on improving workers’ living and working conditions—that could be the place where the employer has to fulfil these obligations, i.e., the habitual workplace.

If the defendant is not domiciled in a member state, the international jurisdiction must be determined according to national law. In the Spanish legal system, Article 25 of LOPJ states that in social matters, the Spanish courts have jurisdiction to deal with the legality of collective agreements entered into in Spain and with claims arising from collective labour disputes lodged in Spain. This provision seems to confirm the unilateralist approach prevailing in this area. In fact, Spanish lawmakers do not even address cases where disputes arise in respect of collective agreements that are potentially subject to a foreign law, for example if a collective bargaining dispute based on a transnational collective agreement is initiated against an employer domiciled in Spain. As a matter of fact, there is no case law here since no umbrella organisations are based in Spain—unlike England, which hosts the ITF headquarters in London. However, the assimilation of a collective agreement to a contract opens the door to Spanish jurisdiction for cases that not fall within the strict terms of Article 25(2). In these cases, Article 25(1) of LOPJ, which deals with individual employment contracts, may be of use and may provide a head of jurisdiction where stakeholders can discuss transnational collective agreements based, for example, on the fact that the terms of a foreign collective agreement have to be met in Spain.

The application of the law governing the collective agreement may be corrected by both overriding mandatory rules, as set out in Article 9 of the Rome I Regulation and the public order clause enshrined in Article 16 thereof. In the Nervion case, for example, the Swedish court applied Panamanian law exclusively, considering the collective agreement in question invalid as the industrial action behind it was illegal. This was the consequence of the Swedish court also submitting the latter issue to Panamanian law, for which reason the agreement was set aside in the end. Paradoxically, the industrial action had been carried out in Sweden, and the boycott would have been considered legal had Swedish law been applied. The decision was heavily criticised for this reason, and the outcome of the resulting dissatisfaction was a new provision in the law governing collective labour relations in Sweden, indicating that the invalidity of the collective agreement cannot be pleaded when the industrial action is undertaken legally in Sweden. This provision is deemed an overriding mandatory rule in the light of Article 9.¹⁴¹

In many jurisdictions, especially in countries in mainland Europe, collective agreements are legally characterised by their normative effect, which has raised many doubts with respect to determining conflict of laws issues, as seen previously.¹⁴² At this point, it must be emphasised that these normative effects impose certain conditions on the conclusion of collective agreements, in particular that the signatories have to be deemed to be representative by the legal system of reference and that they must follow a specific procedure, including, where appropriate, the publication of the collective agreement in an official journal. Thus, given the connection required between the scope of the collective agreement and the capacity to conclude it, as well as the publication requirement, the question arises whether these issues should be subject to the lex contractus as well.

The lex contractus does specify who is entitled to enter into a collective agreement—whether individual workers, trade unions or chambers of commerce—since this is not an issue of legal capacity or legal personality but rather an essential element of collective bargaining, which cannot be submitted to any law other than the one applicable to the agreement resulting from the bargaining process.¹⁴³ Other opinions point to the law governing the union,¹⁴⁴ i.e., the one dealing with the existence and features of the trade union in question. However, this law has no bearing on the problem under discussion—the bargaining power to conclude a collective agreement—since this issue is linked to the very existence, validity and scope of the agreement.

The same cannot be applied, though, to special requirements of form such as publication of the collective agreement in specific journals. Form requirements are submitted to the conflict rule provided by Article 11 of the Rome I Regulation, not establishing any special rule on collective agreements for which reason either the lex contractus or the lex loci celebrationis decides on this issue.

Collective agreement themselves may determine their personal, territorial and temporal scope of application, but their application to employment relationships depend on the law governing the latter. Thus, if a crew demands that a collective agreement be applied to their individual employment contracts, the first step is to find out about each lex laboris, as collective agreements are part of this.¹⁴⁵ In fact, the problem is that each employment contract may be subject to a different law, and the collective agreement aimed at covering all seafarers or fishermen on board a ship or a fleet may itself be subject to a different law from the law or laws governing the employment contracts.

In view of the fact that applying a collective agreement to all individuals working on board depends on the relevant lex laboris, it cannot be taken for granted that the agreement is binding on all seafarers. This is the reason why a number of doctrinal opinions seek to avoid this dissociation by submitting the collective agreement to the law of the negotiating union’s headquarters in the absence of choice of law and on the understanding that employment contracts are subject to the same law.¹⁴⁶ It has also been suggested that as many collective agreements should be concluded as lex laboris might be involved.¹⁴⁷ This opinion entails a collective agreement’s legal reception by each law governing an employment relationship, which runs the risk of ‘nationalizing’ the collective agreement, i.e., submitting it to the same requirements and conditions that would apply if it had been concluded in the country. The relevant law should therefore not be applied too strictly, to contribute to the legal reception of the collective agreement in question. This approach has the advantage of the ITF’s proved representativeness,¹⁴⁸ which means that it is accepted as a party with authorisation to conclude collective agreements. However, this does not solve the problem of the fragmenting of the collective agreement, i.e., its more than likely non-application to all employment contracts on board a vessel.

The connections set out in Article 8 of the Rome I Regulation enable us to reduce the number of cases of dissociation between the laws governing employment contracts on board and the law governing the collective agreements.¹⁴⁹ Employment contracts may be subject to different laws, but these can never deprive employees of the protection afforded to them by provisions that cannot be derogated from by agreement under the applicable law in the absence of choice of law, including the provisions contained in collective agreements. As seen above, this is usually the law of the habitual workplace, which leads us to the law of the flag in the maritime sector. As to collective agreements and in the absence of choice of law, the conflict rule resorts to the closest law, which may also point to the jurisdiction of the flag. In cases where there is a law that is closer to the employment relationship than the law of the place of the ship’s registration, this law comes into play through the escape clause set out in Article 8(4) and Article 4(4) of the Rome I Regulation with regard to collective agreements as this provision submits them to the law of the country with which they are most closely connected.

Such a coincidence is desirable and can be achieved, but not always. Divergences between the two laws can be overcome by resorting to the principle of equal treatment of workers who are subject to different employment laws but employed in the same workplace and by the same company.¹⁵⁰ The standard collective agreements drawn up by the ITF appear to be moving in this direction, as they seek to modify individual employment contracts by imposing obligations on employers with the aim of achieving equal living and working conditions for all those on board.¹⁵¹ In these cases, the workers’ implicit consent to the agreement is taken for granted, assuming that the working and living conditions guaranteed them by the collective agreement are more favourable than the ones already applicable.¹⁵² The case law to date is contradictory, and these agreements have not always been enforced,¹⁵³ but a change of interpretation needs to be advocated here, backed by the pro laboratoris principle, a general principle in both the shipping and fishing sectors, as can be inferred from Article 19(8) ILO Constitution, the MLC, 2006 Preamble, and Article 6(2) of WFC, 2007.

Different legal systems approach the right to take industrial action from equally different perspectives, in particular with respect to different types of measures and the cases and ways in which they may be adopted. Various disputes have therefore arisen around a core issue: the lawfulness or unlawfulness of industrial action.

The following scenarios are the most typical: first, industrial action is announced—or sometimes initiated—and the employer then seeks to prevent it or put an end to it by asking for an injunction, which can only be granted after a summary assessment of the lawfulness of the action in question. Second, the employer may ask the court to declare the action illegal; the main issue at both stages of the procedure is to assert the lawfulness of the industrial action. But this may also appear as a preliminary issue. Third, after an unsuccessful invitation to the employer to participate in the collective bargaining process, industrial action is taken, ending up with the conclusion of a collective agreement, which the employer then challenges by claiming that it was signed under duress.¹⁵⁴ For a decision on this issue to be made, the question as to whether the workers’ industrial action is lawful or not has to be answered, as the appreciation of duress often depends on such an assessment. Fourth, after being duly notified of the intention to undertake industrial action, the employer not only asks for the action to be declared illegal but simultaneously or subsequently seeks damages resulting from the threat or carrying out of the industrial action. Fifth, workers’ participation in the industrial action may have consequences on their individual employment contracts, as it may be considered breach of contract and consequently result in workers being dismissed or other kinds of retaliation. In this context, it is usually the workers who are interested in questioning the measures adopted by employers on the assumption that the industrial action was unlawful.

In all these cases, industrial action may end up taking on an international dimension since employers and workers in different states are pitted against each other, including the cases in which none of them have any contacts with the country where the conflict arises or with a country in which workers show solidarity with those in another state by beginning industrial action aimed at helping the latter improve their working conditions. The maritime sector provides numerous examples of international collective labour disputes resulting from the fact that crews normally undertake strike action in a port away from the flag state, or the sympathy or solidarity action occurs in a port state other than the flag state or other than the crew’s country or countries of origin. Such actions are usually carried out under the ITF umbrella;¹⁵⁵ as this is based in London, another internationalising factor thus enters the conflict.

In contrast, coordinated action against multinational corporations with establishments in different states is not labelled international, precisely because it involves the coordinating of national actions sharing the common feature of being directed against the same employer, or at least against employers belonging to the same corporate group. The legality of this concerted action and its potential consequences do not receive identical treatment, as they are considered legally independent from each other and therefore treated as domestic cases. In the other cases mentioned above, it is necessary to discover which law is applicable to the determining of the legality of the industrial action and its consequences.

The first problem to be addressed now is how the law governing the lawfulness of a strike or a similar action is determined since the conflict of laws issue has generated the liveliest discussion in these matters. The debate has not arisen in the issue of international jurisdiction because the lawfulness of a strike usually crops up as an incidental question, that is, the relevant head of jurisdiction is determined by taking into account the main issue, not on the basis of whether industrial action is legal or not. That is why the traditional order of issues to be dealt with has been altered.

In the cases commented on above, the issue that has to be resolved is whether industrial action is lawful or not, either as a main question or as an incidental question to the main claim, such as readmission to the workplace, compensation for damage resulting from the action or the declaration of invalidity of the collective agreement reached after the industrial action. All in all, the legitimacy of industrial action may be questioned separately or in connection with other claims, but in all cases it is decided according to the same law. Determining this law does not appear to be a controversial issue since all instances in which the issue has been dealt with take for granted that this law is closely linked to a fundamental right, even when it merits further regulation. In this framework, it is easy to turn to the law of the place where industrial action occurs or may occur.

The conclusion that the lex loci actus applies is arrived at on the basis of a unilateralist rather than a bilateral approach, given that the latter is not truly appropriate for an issue whose characterisation is complex: industrial action may arise in the context of a contractual relationship, but this does not mean that it is a contractual matter, nor that it is a non-contractual matter in cases in which unlawful action generates compensable damages.¹⁵⁶ Rather, it is a fundamental right that is limited by ordinary legislation and whose territorial scope of application has to be determined. Accordingly, decisions on conflict of laws issues are reached in accordance with the principle of territoriality, which decides on the applicability of a particular legal system to industrial action, and on the basis of which the system providing for the organisation and practice of the action also decides on its lawfulness.¹⁵⁷ This approach is underpinned by the fact that the provisions dealing with the conditions of its exercise are likely to be deemed overriding mandatory rules,¹⁵⁸ as can be confirmed by the previous discussion about their clashing with fundamental economic freedoms within the EU.¹⁵⁹

In this regard, a number of commentators have supported applying the law of the place where the industrial action was taken,¹⁶⁰ with reference to the law of the flag or the port in accordance with the industrial action in question and the place where it occurred.¹⁶¹ This viewpoint has been backed up by some—albeit rather scarce—decisions assessing the issue.¹⁶² In the maritime sphere, courts justify applying the law of the flag on grounds of the weakness of its connection to the port state¹⁶³ and on the assumption that the internal affairs of the vessel are subject to the law of registration.¹⁶⁴

Nevertheless, the interconnection between the lawfulness of industrial action and its consequences has generated a discussion as to whether the incidental question should be referred to the law governing events resulting from the illegality of the action. Doubts have mainly been raised in relation to the impact of industrial action on individual employment contracts, and these can best be summarised by the criticism expressed with respect to a small number of old cases decided by French courts. Commentators on these judgments assert that the lex laboris is better placed to protect workers’ rights than the lex loci actus as it provides for a stronger connection with obligations discharged towards the employer and the place where these are habitually performed.¹⁶⁵ In the cases reviewed, workers were posted abroad by French companies and allegedly participated in strikes in their host countries, which turned out to be illegal according to local regulations: the French Supreme Court declared the dismissals lawful by applying the law of the place where the industrial action was undertaken, the same law that had decided on the action’s legality.¹⁶⁶

In these cases, two laws seem to have come into play to decide on the workers’ dismissals; therefore, the potential non-adjustments of these laws need to be avoided, for example by applying one of them exclusively,¹⁶⁷ and to this end, the lex laboris is deemed the most suitable for protecting workers’ interests.¹⁶⁸ However, given the final outcome, the question arises as to which of the laws in fact requires the worker’s dismissal, whether it is the law governing the lawfulness of the strike or the lex laboris. In this light, it becomes apparent that the law applicable to the employment contract does not really have any chance of modifying the consequences of an illegal strike amounting to a breach of the employment relationship by employees who participate in it.¹⁶⁹

In addition to this, the prevalence of the lex loci actus is underpinned by the characterisation of the claim at stake: the suspension of the obligation to pay wages during the period of conflict, the suspension or dismissal of workers on the grounds of the industrial action and the obligations to reemploy workers are all key parts of the industrial action itself.¹⁷⁰ So, the fairness or otherwise of dismissal following a strike will escape from the lex laboris and be submitted to the law governing industrial action.¹⁷¹ Nonetheless, further consequences deriving from the termination of the employment relationship, such as the right to compensation, are submitted to the law governing the contract.

A similar discussion emerges in relation to the existence and validity of a collective agreement concluded in the framework of industrial action. The private nature of collective agreements and their assimilation to contracts determine their invalidity in the event of lack of consent. Duress is therefore frequently argued to support the invalidity of agreements whose conclusion has been preceded by some form of industrial action. Two laws are involved here, the law of the strike or the action undertaken and the law of the collective agreement. This is exemplified by the Dismkal case, brought in the United Kingdom against the IFT and a Swedish union that had carried out a solidarity action in Sweden. While this action was considered legal in Sweden, the English court ruled that the collective agreement signed after the action was invalid on the ground that the agreement was governed by English law and it was also up to this law to decide on the lawfulness of the industrial action. The same happens in Sweden, where the legality of an industrial action is not deemed an incidental question, so it is understood that the issue will be resolved by resorting to the lex contractus, the law governing the collective agreement.¹⁷² The Dutch courts provide further examples in cases where employers refuse to comply with the standard agreement signed after ITF boycotts, after which the law governing the seafarers’ employment contracts was applied to decide on both issues, i.e., the lawfulness of the industrial action and the validity of the agreement.¹⁷³

Interaction between industrial action and collective agreements does not end at this point since the former’s lawfulness may well depend on an incidental question as well, namely, whether or not the parties were bound by the peace obligations arising from a collective agreement in force since industrial action taken in violation of this is generally held to be unlawful. It is important to note at this point that the incidental question could end up subsuming the main issue such that the strike’s unlawfulness would merely be a consequence of the application of the law governing the relevant collective agreement, i.e., once the peace obligations’ binding effect on the social partners is established.¹⁷⁴ However, the unacceptability of this rationale was evidenced by the Swedish Lex Britannia.

Lex Britannia was drafted in response to the boycott launched by Swedish unions and coordinated by the ITF against the vessel M/S Britannia, which was sailing under a flag of convenience with the overt aim of concluding an ITF agreement on behalf of the crew on board. Since a valid collective agreement had already been signed in the Philippines, the seized Swedish court found that the solidarity action undertaken should be deemed illegal, as it was intended to subvert an agreement already in force. The subsequent discussion on social dumping was at the heart of the Lex Britannia, which limits the functionality of peace obligations to those falling within the territorial scope of the law governing collective labour relations in Sweden. The CJEU had already abolished the difference between Swedish and other collective agreements in the Laval judgment, on the ground of the prohibition of discrimination.¹⁷⁵ However, it becomes apparent from this case and the law mentioned above that the relevant issue is the close connection between peace obligations and the right to strike, such that it is advisable to adopt a functional approach aimed at placing these obligations within the law governing industrial action and not within the law applicable to the collective agreement.¹⁷⁶ Whether or not peace obligations are relevant for deciding on the lawfulness of an industrial action thus depends on the lex loci actus and not on the lex contractus governing the collective agreement.

This discussion also comes to the fore with respect to non-contractual obligations arising out of unlawful industrial actions. The DFDS Torline case, which in the end was decided by the CJEU,¹⁷⁷ can illustrate this issue. A Danish shipping company claimed damages against two Swedish unions on the ground that notice of a boycott that was allegedly unlawful in Sweden forced it to replace the ferry covering the route between Sweden and the UK. The Court of Justice had to pronounce on the heads of international jurisdiction to decide on the question of damage claims, despite the fact that when the incidental question was addressed to the CJEU the Danish courts had been asked for a declaration of unlawfulness exclusively for the industrial action. However, the Court decided on the merits on the basis that the declaration should be interpreted as a preventive damages action and both the lawfulness of the industrial action and of the tort claim should thus be allocated to the jurisdiction of the same state. Following a similar rationale, applying the law governing tort to the lawfulness of the industrial action was suggested.¹⁷⁸ Nevertheless, the dangers emerging from this possibility sparked intense political activity aimed at introducing a special conflict rule into the Rome II Regulation¹⁷⁹—Article 9—excluding precisely the question of the lawfulness of industrial action from its material scope of application. In accordance with Recital 27 of Rome II Regulation, as a general principle the European Union accepts that the law of the country where the industrial action was planned should apply.

All in all, subjecting the incidental question to the main question has to be dismissed for reasons of legal certainty, which also support the separate treatment of the lawfulness of industrial action to ensure the foreseeability of the applicable law,¹⁸⁰ hence regardless of whether this issue appears as a main or an incidental question in the dispute.¹⁸¹ Otherwise, different legal systems may be called to decide on the legality of the same industrial action, i.e., the lawfulness of a strike on board a ship flying a flag that is not the flag of the port where the action is undertaken may be subject to English law if ITF liability is claimed, but may also be subject to the law of the port if the claim is against the national union calling for the action, or to the law of the flag if deemed appropriate. Should the industrial action lead to a collective agreement being signed, its validity might be disputed and the law applicable to the agreement might also therefore come into play. Furthermore, if the owner decided to dismiss the seafarers or take some other kind of retaliation measures against them, the legality of the strike would depend on the law applicable to the corresponding individual employment contract, with the peculiarity that crew members might be treated differently even though the industrial action taken was the same. The same question could thus be decided in accordance with at least three different laws. In addition to reasons of legal certainty, attention should be paid to the fact that the application of a single law also serves to give propriety to the collective nature of the rights in question, giving due consideration to social dialogue and, since collective interests are at stake, to social peace.

Accordingly, the separate treatment given to the lawfulness of industrial action for conflict of laws purposes should also be applied in solidarity or sympathy actions, which are so common in the maritime sphere.¹⁸² These actions’ legality often depends on the lawfulness of the main action that they support; the relationship of dependence between primary and secondary actions requires the law governing the lawfulness of them both to be determined, and it also needs to be established whether both actions should be subject to the same law. There is in fact case law on the matter that applies the law governing solidarity actions to decide on the lawfulness of the primary action.¹⁸³ However, the collective interests mentioned above advocate analysing both the legality of the primary and secondary actions in accordance with the law of the place where either one or the other was called for.

The DFDS Torline judgment¹⁸⁴ gave the CJEU the opportunity to characterise the damage claims arising from the exercising of the right to strike as non-contractual, following well-established case law,¹⁸⁵ and consequently tort liability stemming from industrial action became subject to the Brussels–Lugano system. This case dealt with the prevention of and compensation for damages arising out of industrial action, but the ruling did not address the conditions affecting the action itself and whether they were subject to the Brussels Convention in force at the time. According to Article 153(5) of TFEU, the right to strike is outside the legislative competence of the EU, and Recitals 27 and 28 of the Rome II Regulation seem to pay due respect to this provision by recalling that industrial action and the conditions of its exercise are covered by national law. It could then be concluded that an injunction taken out against a trade union to prevent a strike is not subject to the Brussels–Lugano system either.¹⁸⁶

This conclusion does not stand up under close scrutiny though, as industrial action cannot easily be characterised as anything other than a civil matter. However, it is true that the reverse could also be argued, on the ground that industrial action seems to fall somewhere in a grey area between public and private laws; for example, injunctive relief amounts to assessing whether a fundamental right may be exercised under the circumstances in question, and so the action may be characterised in different ways depending on where the emphasis is placed. The CJEU disregarded the public dimension of the DFDS Torline case, for example, when it concluded that an action seeking to prevent the occurrence of damage, such as the action claiming the illegality of industrial action, is to be deemed a non-contractual matter and within the scope of the Brussels–Lugano system.¹⁸⁷ This assertion seems to have been amended in Recitals 27 and 28 of the Rome II Regulation, which pay due regard to the public dimension by acknowledging that this is about a fundamental right, for which reason the conditions of exercise of industrial action must be placed under the relevant national law.

Nevertheless, industrial action is to be deemed a civil matter as it ultimately concerns relationships between private individuals.¹⁸⁸