Departamento de Derecho Común, University of Santiago de Compostela, Santiago de Compostela, Spain
KeywordsCollective bargainingConflict of lawsFreedom of associationIndustrial actionInternational jurisdictionInternational Transport Workers’ FederationSeamen’s rights to information, consultation and participation in company decision-making bodiesThe right to strikeTransnational collective agreement
5.1 Introduction: The Role of Trade Union Activities in the Maritime Sector
The organisation of collective labour relations is still in state hands, and states are responsible for setting the conditions under which workers and employers can use the mechanisms of self-organisation, self-legislation and self-governance within their own territory. The traditional unilateralist approach to the rights to collective bargaining and industrial action is clearly behind the idea that stakeholder action needs to be assessed in the light of the legal system of reference. This system is selected on the basis of the territoriality principle, as evidenced by the fact that legislative power in the field of labour relations remains at state level even in an area of supranational integration such as the European Union.1 The result is a model designed to operate in a territory, the frontiers of which have, however, been surmounted by the transnational nature of all the stakeholders involved, including both companies and workers. It is therefore necessary to move forward towards the international regulation of these rights and overcome the current localism.2 There have already been some movements in this direction, but they are of little consequence from a regulatory perspective.
At the forefront of this trend is the maritime sector, the first area to feel the tensions behind globalisation and the consequent need to look for valid counterbalances in the face of national inability to impose domestic policies on companies operating internationally. Flags of convenience that allow shipowners to save on taxes and labour costs have facilitated the avoidance of domestic law, as is well known. In this framework, the ITF has provided a new approach to the issue in its fight against these flags: in addition to intense diplomatic activity to find a clear definition of the ‘genuine link’ between the flag state and the vessel, the ITF has set up an innovative strategy based on trade union coordination, which counts among the earliest reactions to capital mobility.3
This policy is based on the concept of beneficial ownership of the vessel, stemming from the assumption that the country where the beneficial ownership is located will also be the country where trade union activity will in fact be most effective. In a transnational context, measures are adopted with the aim of protecting workers’ interests, for example, by preventing shipowners from registering the vessel in a different country and taking the jobs somewhere else and by improving the living and working conditions of workers on board the vessel regardless of their nationality.
According to this policy, only unions operating at the place where the beneficial owner of the vessel is based have the necessary legitimacy to engage in collective bargaining and are therefore responsible for taking action if the company is not willing to negotiate. This would clearly be impossible in such an internationalised sector without the union coordination activity carried out by the ITF, which asks other unions to refrain from bargaining on the vessel or vessels concerned and, where appropriate, to undertake secondary industrial action such as sympathy or solidarity actions. As a matter of fact, these actions are essential for resolving international conflicts of interests and often lie behind shipowners agreeing to sign collective agreements consistent with ITF-imposed requirements.4
From an organisational perspective, the transnational character of companies and workers raises the question of how effectively freedom of association and trade unionism can be asserted at both individual and collective levels. In the current framework of state control over national labour markets, trade unions’ cross-border operations are limited by the unquestionable fact that, just like any other legal person, they are subject to the law of the country of incorporation or administration, which generally also determines their capacity to represent workers in a specific territory.
These limitations can be overcome through union coordination with the intervention of supranational union bodies such as the ITF,5 but more specifically with the support provided to unions’ international activity by the broad panoply of international instruments dealing with the rights and freedoms at stake here: beyond the scope of the relevant national legislation, international standards endorse union representation in cases that occur far away from their territory and that also involve non-union members. The following section provides an overview of the main international instruments in this area and of how they can contribute to supporting the role of ITF inspectors in preserving living and working conditions on ships that call at foreign ports.
Conventional international law recognises freedom of association and the right to collective bargaining and industrial action, but each individual nation develops these rights and freedoms according to the specific features of its own labour market. Domestic legislation therefore focuses on collective labour relations within the country’s boundaries, but does not address their international dimension. Nevertheless, globalisation provides numerous examples of international cases, which in the maritime domain are at the heart of the ITF campaign: among all the jurisdictions concerned, unions in the beneficial ownership state are in charge of collective bargaining on the ship or fleet in question. In these cases, the existence, validity and even scope of collective agreements signed under these conditions can be challenged, as they aim to bind workers who are neither members of the bargaining union nor resident in the state where the negotiations are being carried out.
As a matter of fact, these cases split into two distinct problems. While the existence and validity of a transnational collective agreement can be challenged, which involves establishing which courts will be seized and which law will decide on these issues, the collective agreement’s binding effect on workers depends on the law governing the relevant employment contract. Hence, concluding a collective agreement for a vessel does not mean it is applicable to each and every seafarer or fisherman on board, which depends on its being recognised by the relevant lex laboris; given that as many laws as there are workers on board may be applicable, the collective agreement’s scope remains uncertain. This stumbling block can be avoided by trying to match the law applicable to collective agreements with that affecting employment contracts and by resorting to general principles on the matter.
If a ship is flying a flag of convenience, ITF policy is to pursue industrial action by warning shipowners that if they do not agree to a standard collective agreement with the ITF, they will risk a ship boycott at any port in the world by any local union participating in the organisation. If an agreement is concluded, owners are given a blue certificate, which is a guarantee that the ship will not be immobilised. This strategy generates significant controversy, even within the European Area of Justice, where it has in fact been overtly rejected. The CJEU’s Viking judgment—and in fact three other decisions, namely, Laval, Rüffert and Commission v Luxembourg 6 —directly attacks ITF strategy,7 highlighting the fact that the right to go on strike cannot hinder freedom of establishment and the freedom to provide services, for example in cases in which industrial action aims to prevent a change of flag,8 making it patently obvious that there are also flags of convenience in the European Union.9 The right to strike is therefore limited by EU market freedoms, and a subsequent section of this chapter is devoted to this confrontation.
If the proportionality test between the contradictory fundamental freedoms and rights imposed by CJEU case law is not exceeded, industrial action may result in a right to compensation in favour of any company whose freedom of establishment or provision of services has been infringed, a right that is acknowledged by Article 9 of the Rome II Regulation on the law applicable to non-contractual obligations. Before examining this conflict rule, the issue of which law should decide on the legality of industrial action needs to be addressed, following which issues of international jurisdiction and the law applicable to the consequences of an illegal strike, such as tort liability, will be tackled.
No explicit transnational problems have arisen with respect to the rights to collective representation or assembly, information, consultation and participation in the activities of a company, perhaps due to the influence of the territoriality principle in this field. Nevertheless, they pose particular problems with respect to transnational companies, and these have led the European Union to draft various directives. Beyond harmonisation, the issue of the conflict of laws seems to have been resolved by giving prevalence to the law of the place where the headquarters of the company or the business is located. The law of the flag also comes into play in the shipping and fishing sectors, and the last section of this chapter is devoted to a discussion of the issues involved.
This chapter does not deal with the relationship between trade unions and their members or the question as to whether the latter have rights while serving abroad. Union activity in defence of members abroad is really quite frequent in the maritime field, but only rarely does it result in a dispute between the two parties. A good example of this is provided by a German judgment concerning a rescue ship flying the Cypriot flag, operating in Panamanian waters and registered by its owner in Hong Kong. The captain, who was German, had an accident at work, which, in tandem with other disagreements with the company, led him to lodge a claim in Panama. He requested the legal support of his trade union in Germany, which provided this by hiring a lawyer in Panama and undertaking the preemptive seizing of the ship, resulting in the shipowner being obliged to satisfy various wage claims in the captain’s favour. The captain still wished to claim compensation for the accident at work, but when he contacted the Panamanian lawyer to begin the process the union unilaterally decided not to dispute the proposed lifting of the ship’s arrest, and this cost the captain the opportunity to sue in Panama.10 All in all, union rights and obligations towards their members are generally subject to the law governing the former, including the obligation to provide services and support to members working abroad.
5.2 Freedom of Association and the Rights to Collective Bargaining and Industrial Action
5.2.1 International Treaties
Freedom of association, the right to collective bargaining and the right to collective action—including the right to strike—are not conceived as a single set of freedoms and rights so as such are not recognised as a unit, although they are closely intertwined. They are acknowledged by democracies the world over, as is demonstrated by freedom of association’s being incorporated into Article 22 of the International Covenant on Civil and Political Rights, as well as Article 8 of its counterpart, the International Covenant on Economic, Social and Cultural Rights, both of which specify the right to form trade unions as laid down in Article 23(4) of the 1948 Universal Declaration of Human Rights. A number of international instruments address these freedoms and rights more thoroughly and are therefore likely to have a greater impact on the way in which industrial relations are regulated within national boundaries: the regulatory models are certainly very different, but these instruments provide a lowest common denominator, especially in Europe. This minimum standard is particularly relevant when industrial action has a transnational impact, as the legitimacy of the action may be subject to different systems with differing consequences for those involved. Some international instruments benefit from the activity of interpretative bodies, and this helps increase the value of their rules in industrial relations management at state level.
Neither MLC, 2006,11 nor WFC, 2007,12 includes these rights within their scope, but they were referred to by a number of specific pre-existing ILO agreements on the matter, among which the 1948 ILO Convention No. 87 on freedom of association and protection of the right to organise and No. 98 on the right to organise and collective bargaining in 1949 are especially worthy of note. Both Conventions are of mandatory application for contracting nations and countries that have joined ILO Convention No. 147 on Merchant Shipping, as the latter classifies these freedoms and rights as minimum standards in this sector. In sectors other than merchant shipping, the ILO 1998 Declaration on Fundamental Principles and Rights needs mentioning as it considers freedom of association both essential and indispensable, while ILO Convention No. 135 and Recommendation No. 143, which complement these Conventions and concern the protection and facilities to be afforded to workers’ representatives in companies, should also be mentioned.
More specifically, ILO Convention No. 87 lays down the freedom to create an association and to join one, which actually entails the absence of a prior authorisation scheme, as well as the freedom to choose a union to join. Further guarantees of trade union activity are enshrined in the Convention, for example the guarantee that only the courts can order the suspension and termination of a trade union. The right to strike is not explicitly referred to, but after extensive reading the Committee on Freedom of Association considered that the right was included.13 It should also be noted that the personal scope of application covers all workers with no distinction of any kind, particularly on nationality grounds.14 This convention rule also serves the purpose of protecting ITF inspectors’ access on board ship, as their activity corresponds to workers exercising their freedom of association.15
The Council of Europe provides two relevant instruments in this area. The first is the European Social Charter, which is of minor significance as it is a programmatic text. However, this was not an obstacle to its being taken into account in Article 151 of the TFEU, for which reason the Charter is given specific consideration in the establishing of European Social Policy. Articles 5 on freedom of association and 6(4) on the right to strike, which also appears in the revised version,16 and Article 31(1) are especially noteworthy. According to the latter, neither these rights nor their exercise can be subject to restrictions or limitations that are not specified in the Charter, ‘except such as are prescribed by law and are necessary in a democratic society for the protection of the rights and freedoms of others or for the protection of public interest, national security, public health, or morals’.
The auctoritas of both this instrument and its supervisory committee has afforded them major influence over the interpretation of other international instruments, in particular the second instrument issued by the Council of Europe, the European Convention on Human Rights,17 and the interpretation rendered by the European Court on Human Rights.18
Article 11 of the ECHR enshrines the right to freedom of assembly and association, including the right to set up and join unions as well as the protection of their members’ interests. The article does not refer to further rights, and ECtHR case law did not help broaden its scope until very recently. Despite a certain degree of reluctance at the outset, ECtHR judgments soon reaffirmed both positive and negative aspects of freedom of association, i.e. the right to associate and the freedom not to associate with others.19 However, it was far less generous in protecting other rights that the ILO, for example, considers intrinsically linked with this freedom, namely, the rights to collective bargaining and industrial action.20 This stance has fortunately been reviewed,21 and in its judgments on Turkey’s attacks on government employees’ freedom of association the ECtHR accepted that both the right to collective bargaining22 and the right to strike are corollary rights to that of freedom of association, also enshrined in Article 11 of ECHR.23 As a consequence, ITF inspectors are also likely to invoke the ECHR in order to get access to vessels.24
The entry into force of the European Charter of Fundamental Rights involves an explicit acknowledgment of a number of rights that had already been mentioned by the TFEU, but only to emphasise that the European Union did not have legislative competence on these matters. Prior to this, the Charter of Fundamental Social Rights of Workers of 9 December 1989, where freedom of association and collective bargaining are explicitly enshrined, as well as the right to strike and to take other industrial action (item 13) is worth mentioning. However, this document’s programmatic nature required a much more binding statement, such as the one now provided by the European Charter of Fundamental Rights; the new Charter’s binding nature has not prevented European Union intervention on this issue from being piecemeal though, as the Union in fact lacks legislative competence on these matters. The European Union has however taken steps that involve explicit recognition of these rights in one way or another, such as addressing employee participation in the works councils of businesses set up according to EU Regulations on European companies.25
The EU has made progress in collective bargaining, and the maritime sector in particular has benefited from this major breakthrough: it is clear from Article 155(2) of the TFEU, formerly 139(2), that social dialogue can lead to an EU instrument being introduced, as evidenced by the transformation of ILO Conventions into EU legislation. For example, an agreement between ECSA and FST on 30 September 1998 led to the European Union issuing Directive 1999/63/EC,26 based on ILO Convention No. 180, on seafarers’ working hours. The European Union’s adoption of MLC, 2006, was also followed by a directive,27 and the same path is being taken to incorporate WFC, 2007.28
The European Union therefore promotes cross-border collective bargaining and seeks to guarantee workers’ rights to information, consultation and participation. However, throughout this process no steps forward have been taken to regulate the right to industrial action in cross-border cases, which is expressly excluded from the scope of Article 153(5) of the TFEU. Article 28 of the European Charter of Fundamental Rights confirms this exclusion; as previously mentioned, it acknowledges the rights, but in terms that are a good example of the limits of EU law: ‘Workers and employers, or their respective organisations, have, in accordance with Community law and national laws and practices, the right to negotiate and conclude collective agreements at the appropriate levels and, in cases of conflicts of interest, to take collective action to defend their interests, including strike action’.29 The following sections provide an overview of the different legal approaches to the rights in question, paying particular attention to industrial action and its vicissitudes within the European Area of Justice.
5.2.2 Regulatory Models and Resulting Legal Diversity with Special Reference to Industrial Action
Freedom of association is structured around two models: one single-tier and one two-tier. In the single-tier model, trade union activity is restricted to intervening in company life, whereas in the two-tier model they are allowed greater social participation and can play a part in forums outside the particular company or group of companies whose workers they represent.
A number of different systems of classifying collective bargaining, which have minor differences, have been suggested. A more general proposal only includes two models—one of a contractual nature and the other of a constitutional one—whereas a more specific proposal depicts three30: (1) a contractual model with no general rules according to which industrial relations are articulated through collective agreements by means of which industrial action, including the right to strike, is also regulated; examples of this model are Germany, Austria and Belgium; (2) in contrast, other states establish these rights constitutionally without major legislative developments, as is the case in Denmark and France; and (3) other nations, like Ireland and the Czech Republic, have a legal approach. Models (2) and (3) in fact comprise the constitutional model of the more general proposal, and many states combine both approaches, i.e., in addition to protecting these freedoms and rights constitutionally, nations such as Finland, Hungary, Lithuania, Portugal, Spain and Sweden legally regulate the conditions of their exercise.
All in all, the key difference between countries adopting either a contractual or a constitutional model is based on the fact that some nations have not undertaken a comprehensive legal development of industrial relations at national level, instead entrusting their exercise to self-regulation, i.e., relying on stakeholder involvement to resolve the conflicts of interest at stake, while other countries do have statutory provision for the conditions under which collective bargaining is conducted and industrial action undertaken.
Different approaches arise from these distinct models, in particular to the right to strike.31 In the non-interventionist model, both industrial action and the conditions of its exercise are left in the hands of the parties to the conflict, and their development is largely determined by case law. For example, in Germany the right to call a strike is granted exclusively to unions, and the conditions under which strike action can be declared, such as whether a vote is required, are regulated by the union’s articles of association. In Sweden, this is deemed a collective right that can be exercised by trade unions, employers and employers’ associations. The French Constitution, for its part, conceives this to be an individual right, although it can only be exercised collectively, leaving the technicalities to case law. In Denmark, strikes can only be called by unions but must be previously approved by 75 % of their members; in any event, giving employers prior notice is mandatory. These peculiarities are also legally regulated in other states such as Spain: in addition to Article 28 of the Spanish Constitution, the key piece of regulation is Royal Decree No. 17/1977, which covers the peculiarities of industrial action and allows not only unions but also groups of workers or the works council in a company to call strikes restricted to a particular business sector, while only unions are allowed to call general strikes; the company and the Ministry of Labour must be given prior notice, and negotiating is mandatory from that moment on.
This legal diversity has led in turn to different interpretations of the notion of industrial action depending on the legal system of reference.32 Germany and Austria, for example, consider the right to strike a corollary of the right to collective bargaining, as a result of which the former can only be exercised to improve the living and working conditions of workers and not for other purposes, such as the political and socio-economic demands accepted in Spain. Collective action can take the form of different initiatives, including boycotts, occupying the workplace, stoppages and go-slows, the legality of which varies from country to country. The most questionable actions are boycotts and occupying the workplace, which is not allowed, for example, in Germany or the UK. In contrast, other countries such as Holland, Spain and Italy give broad coverage to measures other than strikes themselves.
The most relevant differences for the purposes of organising cross-border collective action concern the admissibility of solidarity actions. Apart from in the UK, there is no legal regulation in this area as these measures are not directed against employers themselves. As their name suggests, they are shows of solidarity among workers in the same sector. In this sense, they may also be a kind of secondary action to the extent that they are organised in support of a primary action, namely, industrial action truly undertaken against an employer with a view to improving workers’ living and working conditions. Nevertheless, it should be noted that sympathy or solidarity actions do not always depend on primary actions since workers in whose support solidarity is exercised may not be able to organise a strike.33
Solidarity actions are not allowed in the UK,34 where shared professional interests are not considered sufficient to free workers from fulfilling their contractual obligations. They have been the object of restrictive interpretation in France35 and Germany,36 while countries such as Belgium, Spain, Finland, Holland and Italy encourage a much broader interpretation and Sweden even more so. In this context, it is worth recalling that ‘a general prohibition of sympathy strikes could lead to abuse and workers should be able to take such action provided that the initial strike they are supporting is itself legal’,37 according to the ILO Committee on Freedom of Association.
Solidarity and sympathy actions have an important role in the maritime sector, usually adopting the form of boycotts directed against shipowners who refuse to sign collective agreements or pay wages or who are bound by a standard collective agreement in force yet apply less favourable working conditions when hiring seafarers on an individual basis.38 In these cases. other workers such as dockers can show their sympathy with the crew by refusing to provide services to shipowners.
In fact, these actions play a key part in the ITF-launched campaign against flags of convenience; the ITF thus became the first union association to provide an organised response against the high mobility of capital.39 However, and as a consequence of the legal divergence mentioned above, this campaign has experienced serious setbacks in court,40 in particular in England and also in the Netherlands.41
The ITF headquarters are in London, and so shipowners have often resorted to this forum to apply for injunctions against planned primary or secondary industrial action by a union located in a different country, to claim damages arising from industrial action undertaken in another country or to request the nullifying of a collective agreement signed as a result of industrial action also carried out in a country other than the UK, on the basis that such action may amount to duress.42 The English courts’ response has been progressively restrictive, limiting the possibility of undertaking solidarity initiatives, through introducing legislation confining industrial action to cases in which workers act against their own employer, in addition to imposing procedural requirements that an organisation such as the IFT cannot meet, including any action needing to be approved by a given number of members.43
There have been some noteworthy cases in which solidarity action was legal under the law of the country where it was undertaken, but not according to English law in view of the above restrictions, which in turn entails some assessment of the validity of the collective bargaining agreement concluded as a result of the action. One such case is the Dimskal case44 against the ITF, where the subject matter was the declaration of annulment of a binding collective agreement that had been concluded after the intervention of Swedish trade unions in Sweden, where the contested action had been considered legal; the English courts found that the collective agreement was governed by English law, which led to its being declared invalid once the duress suffered by the company as a result of the sympathy action had been proved. Had the British courts applied Swedish law as the law governing the industrial action, the outcome of the case would have been totally different as Swedish law deemed the sympathy action to be lawful. In contrast, the finding of duress on the ground that such actions are illegal according to English law was a key element in this case.
Occupying the workplace as a form of industrial action also has special significance in the shipping and fishing industries, as it is about taking control of the vessel. The Spanish Supreme Court has ruled in three cases involving both Spanish and foreign seafarers employed by Spanish shipowners on board vessels flying the Spanish flag, who decided to go on strike in response to a call from their union.45 In all three cases, the crew remained on board the vessel, which was understood to be occupation of the workplace.
The Supreme Court’s stance was consistent with its previous jurisprudence in this sphere; it considers occupations lawful as long as they are peaceful, for which reason the authorities can only evict seafarers from the vessel if their occupation might cause disproportionate damage to other constitutional rights, such as property rights. The Supreme Court particularly emphasised that non-acceptance of the occupation would deny seafarers the opportunity to exercise their right to strike. In addition, the court highlighted the fact that the ship is indeed their place of accommodation. As a matter of fact, strikes on board generally involve occupying the ship, among other reasons because this kind of action helps workers avoid the risk of being replaced by another crew.46
Occupation of the workplace is generally allowed, with some restrictions,47 i.e., provided that the activity of workers who choose not to go on strike is not disrupted and the production process is therefore not disturbed or interrupted. However, seafarers are a case apart, and in the light of this the Spanish Supreme Court’s conclusions on the ship’s condition as the centre of seafarers’ lives takes on a whole new dimension.
The Spanish Supreme Court is also to address the issue of what happens with shipowners’ obligation to provide the crew with food during industrial action, i.e., whether non-provision might be comparable to non-payment of wages during strikes: this obligation is characterised as secondary in individual employment contracts but cannot be suspended during strikes for obvious reasons.48 Its link with issues affecting health and hygiene on board makes it deserving of different treatment, reinforced by the fact that the obligations to maintain security and safety on board vessels are binding on seafarers and fishermen and hence are not suspended during strikes.49
5.2.3 Industrial Action and EU Market Freedoms
22.214.171.124 The Root Causes of the Conflict
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.
126.96.36.199 The Outbreak of the Conflict: Viking, Laval, Rüffert and Commission v. Luxembourg
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.
In a similar vein, it is crucial to emphasise the major step taken by the ECtHR to protect the right to industrial action. Demir and Baykara is a leading judgment in assessing the right to strike as a corollary of the right to collective bargaining, both linked to the freedom of association protected by Article 11 ECHR. Paragraph two of this provision notes that ‘no restrictions shall be placed on the exercise of these rights other than such as are prescribed by law and are necessary in a democratic society in the interests of national security or public safety, for the prevention of disorder or crime, for the protection of health or morals or for the protection of the rights and freedoms of others’, in line with rights otherwise proclaimed in the European Social Charter and ILO Convention No. 87.
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
5.3 Cross-Border Collective Agreements
5.3.1 Classification of Problems: The Extraterritorial Application of National Collective Agreements and Transnational Collective Agreements
The different regulatory models mentioned above also have an impact on the existence, validity and scope of collective agreements,87 leading to legal discrepancies between countries. The sharpest differences are to be found in their scope of application, as a collective agreement can be binding exclusively on both parties or on third parties or have an erga omnes effect. This normally depends on who is allowed to engage in collective bargaining and the conditions under which they are allowed to do so. In some countries, the party or parties bound by the agreement depends on how representative the relevant trade union is, whether it is limited to its members or not and whether the agreement is signed by a trade union association or an employers’ association. A further relevant factor is the role granted by the legal system in question to the principle of non-discrimination between employees, which may oblige employers to apply a collective agreement to their entire workforce.88
Moreover, a collective agreement can be automatically incorporated into an individual employment contract as long as it has a normative effect, it can specifically require a compulsory and direct effect or it can be considered a gentleman’s agreement as in the UK, where such agreements are not binding unless explicitly declared part of an employment contract. As a consequence of all these differences, there are different types of collective agreement, but no significant problems of characterisation are posed insofar as these agreements continue to be the products of negotiations between social partners, who are granted the capacity to conclude them as they are considered equals in form and substance and thus enjoy equal bargaining power.
The terms in which collective bargaining is carried out depend on the legal system of reference, which generally constrains the existence, validity and scope of a collective agreement to the social partners who negotiate it and on condition that certain specific formal requirements, such as publication in an official journal, are met. In view of these constraints, the transnational nature of collective agreements has been approached from a unilateralist standpoint such as those in France89 and Germany,90 where in the absence of specific conflict rules national courts decide on the scope of application on grounds of the principle of territoriality, among other reasons, because collective agreements usually start with a clause along the following lines: it applies to all establishments in the country where the collective agreement has been approved, irrespective of their appurtenance to national or international companies and of the law governing the employment contracts of the workers providing services for these establishments.
This unilateral approach works smoothly when the employment contracts point to a single country. However, international contacts lead to considerations relating to the potential extraterritorial application of collective agreements, in particular in the light of the situation of workers posted to other countries. In this regard, by interpreting the personal scope of application of collective agreements, the German courts have resorted to the notion of Ausstrahlung—already used in relation to social security law—with a view to justifying extraterritoriality. The same interpretation has been used in France91: if the employees work abroad, the application of the relevant collective agreement rests on the maintenance of sufficient contacts with the country of origin and with the company located there.92 As a general rule, contacts are not held to be sufficient when employees spend all their time abroad, but exceptions have been made for cases in which the employment contract stipulated the right to return.
The debate on the establishment of a German international registry revealed this discussion to be present in the maritime and fishing sectors as well. The relevant law emphasised that seafarers who were not resident in Germany did not necessarily have to submit to the law of the flag, and the question then arose as to whether German unions could represent non-resident seafarers and conclude collective agreements on their behalf and whether foreign unions could conclude collective agreements with German shipowners subject to German law to be applied to vessels flying the German flag. The German Constitutional Court gave an affirmative response, although with the clarification that collective agreements in Germany could be applied to seafarers’ employment contracts if included in the law that governed the contracts.
This opens the door to the application of foreign collective agreements in another country, as it is not a matter of territoriality but of the law governing individual employment relationships; in other words, it applies if the law acknowledges the relevant collective agreements.93 Directive 96/71/EC on the temporary posting of workers supports this conclusion as it primarily embraces the application of the lex laboris, usually the law of employees’ country of origin, including its collective agreements, except for cases in which the law of the destination country improves specific workers’ rights, including cases in which these rights were granted by collective agreements. In short, the application of collective agreements to specific employment contracts depends on the law governing the latter and whether it recognises the agreement as such. Nevertheless, it should be noted that the scope of a collective agreement is equally relevant as it may exclude the contract in question, as it will apply on its own terms. At any event, it is important to bear in mind that, as a source of rights and obligations, the provisions of collective agreements may be applicable as overriding mandatory rules.
The problem identified above—collective agreements’ scope of application—concerns the nature of an agreement as a potential source of rights and obligations. As a collective agreement, it is likely to give rise to other disputes that are not related to it as a governance mechanism but whose subject matter is the collective agreement itself. According to Gérard Lyon-Caen,94 a collective agreement is both a source of rights and obligations as well as an instrument providing standards for employment relationships while at the same time being subject to rules to decide on its existence, validity and scope. The latter type of litigation requires establishing the law applicable to collective agreements as such.
In this regard, a bilateral instead of a unilateral approach is preferred, as the latter does not pay attention to truly transnational cases, i.e., those involving a company or group of companies operating in more than one state. A new category of collective agreement may therefore be established, transnational agreements, whose scope should not be made to depend on the rules applicable to national agreements as they are supposed to be applied in different countries. Against this background, what appears to be the first bilateral conflict rule on the matter has come into existence, Article 92 of the 2014 Panamanian Private International Law Code,95 whose wording reads as follows: ‘International collective agreements shall be governed by any clauses agreed between trade unions and the employer or, failing that, by the law of the place of performance’.96
Agreements of this kind are not unknown on this side of the Atlantic. Transnational collective agreements are currently part of European Social Policy and the subject of European social dialogue, as well as of numerous studies aimed at providing the ad hoc answer required by the topic in question,97 although rather unsuccessfully thus far. However, the prospects are not entirely gloomy, given that collective bargaining has flourished under the umbrella of Article 155 of the TFEU.
European social dialogue has been fruitful and produced Council Directive 2009/13/EC of 16 February 2009 implementing the Agreement concluded by the European Community Shipowners’ Association (ECSA) and the European Transport Workers’ Federation (ETF) with respect to MLC, 2006. So far there is no directive along these lines in the fishing sector, but the European Union has already requested and granted authorisation for member states to ratify WFC, 2007.98 In line with MLC, 2006, trade unions and business associations have reached an agreement at European level on its application that should enable the European Union to issue a directive with a view to harmonising the provisions laid down in WFC, 2007, within the European Area of Justice.99 This commitment to the Work in Fishing Convention is highly necessary, and we can only hope that it will soon come into force.
5.3.2 Transnational Collective Agreements and Private International Law
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 crew itself can bring about the signing of a collective agreement by resorting to strike action if necessary, or an agreement can be the result of action by a third party such as dockers, who might refuse to load and unload a vessel as a pressure tactic. All this may happen in a port other than the one where the ship is based or in a country other than the one where the vessel is registered. Hence, the signing of a collective agreement under these conditions may lead to various types of litigation, the most relevant being in cases where workers seek to bring about its implementation, for example if owners do not fulfil their obligations in terms of the wages established in the agreement. In principle, these are considered individual claims and are referred to in other sections of this book, as the applicability of a collective agreement depends on the law governing individual employment contracts. Nevertheless, and given the transnational nature of this kind of collective agreement, in addition to establishing its applicability to the employment relationship in question—decided in accordance with the relevant lex laboris as said before—it may be necessary to examine the collective agreement’s existence, validity and scope and, hence, what the applicable law there is.
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
188.8.131.52 International Jurisdiction
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.
184.108.40.206 The Law Governing Collective Agreements
Choice of Law Agreements
The relevant instrument in the conflict of laws field is the Rome I Regulation. Party autonomy is also admitted as a conflict rule, and Article 3 supports both the express and the implied choice of law.118 Collective agreements may contain a choice of law clause, but this is most likely to appear tacitly inasmuch as collective agreements usually contain a reference to the relevant national legislation such as the Spanish Workers’ Statute.119 Other important factors implying a choice of law are the signatories, i.e. the intervention of unions and business associations based in a given territory and, if applicable, the place where the collective agreement was published, since in countries where these agreements have normative force, publication in the relevant official gazette and other formalities are indeed required. In this regard, an implied choice could be inferred from the ITF’s conclusion of a collective agreement to be applicable to all ships flying the flag of the negotiating state.120 Along the same lines, the fact that owner and crew come from the same country has been considered a tacit choice of law.121
However, it is debatable whether party autonomy is indeed admissible in this matter, as it can be contradictory to the normative effects of some collective agreements: collective bargaining is designed to achieve social peace in a given territory, which is why the relevant market needs to be identified, not to give the parties the opportunity to choose the governing law and thereby avoid the social and economic order of reference.122 On the basis of this rationale, distinguishing between the normative and obligatory parts of a collective agreement has been proposed to limit the possibility of choosing the applicable law to the obligatory part, as it is only binding on the contracting parties.123
Other approaches have been suggested for the normative part of the agreement, such as considering these provisions overriding mandatory rules,124 or as a problem of the legal reception of a foreign rule, once again requiring the collective agreement’s territorial scope of application to be determined such that only an agreement signed by a party with representation in the territory where it will be effective would be enforceable. Against this background, union capacity to conclude collective agreements with effects in countries other than the one where they are based has been challenged.125
The proposal to split agreements into their obligatory and the normative parts for conflict of laws purposes has been contested on the ground that this differentiation is very difficult and only helps to denature collective agreements. In fact, as collective agreements are shaped in legal systems that grant them normative effect, the obligatory part only seeks to ensure the efficacy and effectiveness of the normative part, for which reason it would be meaningless to subject the two parts to different laws. Furthermore, normative collective agreements do not merit special treatment with respect to other legal sources, the application of which depends on conflict rules as well, i.e., the mandatory rules of a given legal system can be avoided in accordance with the country’s private international law system. In the same vein, the fact that a collective agreement has normative effects cannot be enough to invalidate choice of law as a connecting point, given that there is no consistent reason to consider the provisions dealing with collective bargaining as overriding mandatory rules.126 The mere possibility that private stakeholders might conclude a collective agreement suggests that choice of law clauses must be allowed in this area.
A third approach makes the point that distinguishing between the obligatory and normative parts of a collective agreement is indeed possible and it is hence equally feasible to determine the laws applicable to each of them separately, provided that the parts are severable, namely, that their differentiation does not break the internal harmony of the collective agreement.127 However, with the exception of this point, this stance concludes that the Rome I Regulation, including its conflict rule on party autonomy, should be applied to the normative part of collective agreements as well, on the grounds of the reasons mentioned above. All in all, there is no consistent reason for preventing choice of law clauses for collective agreements; indeed, Article 92 of the Panamanian private international law code has already enshrined this connecting point.
In any event, the discussion is of little practical consequence as the parties tend to apply for the closest law.128 The features of collective bargaining, linked to a labour market that is generally territorially bounded, for the most part leave no choice as to the law applicable to the collective agreement. When parties to the collective agreement decide to submit it to a foreign legal system in spite of this, the limitation to party autonomy imposed by Article 3(3) of the Rome I Regulation comes into operation, so that all mandatory provisions of collective labour law in force in the state to which all relevant elements of the case refer are applicable. The same must be held for Article 3(4) of the Rome I Regulation, taking into account EU law on these matters.
The Law Applicable to Collective Agreements in the Absence of Choice of Law
With respect to the Rome Convention, the Rome I Regulation modified the conflict rule through which the law applicable by default of choice of law is determined.129 But in essence, the law of the habitual residence of the party who has to perform the characteristic obligation remains as the general rule. The difficulties in identifying the characteristic performance in a collective agreement have already been highlighted;130 thus, the law applicable cannot be determined in accordance with paragraphs 1 or 2 of Article 4 but by resorting to the law of the country that the collective agreement has the closest connection with.
Commentators have identified a number of factors to be considered when establishing the closest law to the case in question, such as the territorial scope of the collective agreement, the state in which most employment relationships covered by the agreement are performed,131 nationality and habitual residence of the parties to the collective agreement,132 the language of the agreement and the contents of the provisions,133 the law applicable to most individual employment contracts covered by the agreement134 and the law of the place where the obligations set out in the agreement will be carried out.135
For our purposes, the common domicile of shipowner and union is relevant,136 as well as the place of origin of the crew benefited by the collective agreement137 and, in particular, the location of the workplace where it is to be applied.138 The Nervion case139 is a good example of how to determine the applicable law in these cases even though at that point neither the Rome I Regulation nor the Rome Convention was in force. The vessel, which was registered in Panama, manned by a Polish crew and owned by a company registered in Panama, was boycotted by a Swedish union and the ITF in a successful bid to improve the crew’s living and working conditions. The employer did not comply with the resulting agreement and was sued by the crew in Sweden. The defendant pleaded the invalidity of the collective agreement, and the court applied the law of Panama to decide on the issue, emphasising the fact that it was also the law governing the individual employment contracts. In a similar vein, a German decision also pointed to the flag state as the centre of gravity of the collective agreement in question.140
220.127.116.11 Public Order and Overriding Mandatory Rules
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
18.104.22.168 Scope of the Law Governing a Collective Agreement
As the Rome I Regulation is applicable, the scope of the law governing collective agreements is to be found in Article 12, which establishes that it governs their conclusion, content, modification and termination. The lex contractus consequently establishes the conditions under which a collective agreement is to be concluded, including non-existence and nullity; its contents, including the legal obligations attached to it, i.e. those inherent to the agreement even without the intervention of the parties’ consent, such as peace obligations and respect for the terms of the agreement; its interpretation; fulfilment of the obligations agreed on; the consequences of infringement; and the termination of the agreement. The same law governs the personal scope of the agreement, which may be binding exclusively on the contracting parties and their affiliates, and also on third parties.
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.
22.214.171.124 Collective Agreements and Plurality of Leges Laboris
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.
5.4 Industrial Action and Private International Law
5.4.1 The Lawfulness of Industrial Action
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.
126.96.36.199 Conflict of Laws Issues
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.
188.8.131.52 International Jurisdiction
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.