Viking, a large ferry operator, was incorporated under Finnish law. FSU was a Finnish union of seamen with about 10.000 members. The crewmembers of the Rosella, a ship, are all members of the FSU. The ITF is an ‘International Federation of Transport workers’ union with its headquarters in London. Viking wanted to reflag Rosella by registering it in either Estonia or Norway, to which FSU opposed to. ITF asked all the affiliates to refrain from entering into negotiations with Viking. No union could negotiate with Viking because of ITF’s message. The crew of Rosella went into a strike. Viking wanted ITF to withdraw the circular.
Relevant legal questions :
- Does a collective action of the trade union fall within the scope of article 49 TFEU?
- Does article 49 TFEU have a horizontal direct effect?
- Can the collective action be considered as a restriction within the meaning of article 49 TFEU?
- Can a restriction on the freedom of establishment be justified?
Answer of the Court of Justice
Article 49 TFEU must be interpreted as that a collective action can be initiated by a trade union or a group of trade unions against an undertaking to induce that undertaking to enter into a collective agreement, which falls within the scope of the article. The article can confer rights to private undertakings that can be invoked against trade unions or an association of trade unions. The collective action makes it less striking, or useless, for Viking to invoke the freedom of establishment. In Viking there was a restriction of article 49 TFEU. The restriction is only justified if there is an overriding reason of public interest, such as the protection of workers and provided that it is established that the restriction is suitable for ensuring the attainment of the legitimate objective that is pursued. It should not go beyond what is necessary to achieve the objective.
Analysis of case law, implications and application
The scope of article 49 TFEU
Article 49 TFEU has a material scope and a personal scope.
The requirements for the material scope are that there has to be an economic connotation, which means it needs to be up for remuneration and it has to be a lawful activity. It also has to consider fundamental rights, which in principle fall within the scope of application. In addition, it also applies when a Member State is incompetent. The scope of competition law is not the same as the scope of free movement law.
The personal scope requires that there has to be (limited) horizontal direct effect. For the horizontal direct effect there are three requirements. Firstly, it requires an establishment. Article 49 TFEU may be used by private undertakings against a trade union. Secondly, there have to be services; but this is not compulsory. Lastly in some cases there is a joint application of free movement rules and EU competition.
Furthermore there is no ‘de minimis’. For an establishment it does not matter, in order to fall under the scope, whether it is concerning goods that only make up a small percentage of its turnover.
Horizontal direct effect
Article 49 TFEU have vertical direct effect because it applies to regulatory bodies and Member States. The ECJ also shows a horizontal direct effect, where individuals – just like Member States – can rely on the rights of the Treaty. The Court also mentioned that article 49 TFEU in circumstances can be relied on by a private undertaking and that the article can be invoked against an association of trade unions or just a trade union by itself. In the present case of Viking it is not about individuals, but about the collective power of the trade union, which is why the Court did not give any further explanation about the horizontal direct effect.
The collective action is a restriction
Viking has not received the same kind of exercise of the freedom of establishment as other established operators in the Member State. According to the ECJ, article 49 TFEU has horizontal direct effect, because the freedom of establishment is used by a private undertaking and a trade union. In the Viking case the ECJ ruled that what ITF did was enough to restrict Vikings right of freedom of establishment and so the ECJ did not determine whether in this case it was about primary or secondary action.
Justification restrictions
The ECJ gives in settled case law four conditions to justify restrictions. The first condition is that it may not discriminate. The second condition is that it has to be supported by imperative requirements in the general interest. The third condition requires the national measures to be suitable for securing the attainment of the objective which they pursue. The last condition holds a proportionality check.
In this case the ECJ mentioned about the second condition that the right to take collective action is a lawful interest which justifies a restriction. About the third condition the ECJ said that for Member States collective action is to be considered normal and in some cases the most important way of protecting the interest of the members by trade unions themselves. About the last condition the ECJ mentioned that it must not go beyond what is necessary in order to attain it.
The ECJ ruled that it is up to national courts to see if the objectives of the action taken is concerning the protection of workers. In order for the justification to be restricted, there a few factors that have to be taken into consideration. Firstly there must be a serious threat regarding the jobs or conditions of employment at issue. Secondly whether the measures taken were suitable. Lastly whether the available means are exhausted – the proportionality check. In the Viking case the restrictions on article 49 TFEU could not be justified. So the ECJ leaves it up to Member States to decide whether this kind of secondary action is justified or not.