Viking C-438/05: Circumstances of the Case

Viking Line, a Finnish shipping company, operated a passenger ferry – the Rosella – between Helsinki and Tallinn in Estonia under the Finnish flag.

Even before Estonia joined the EU in 2004, the company wanted to reflag the Rosella to Estonia so they could use a crew of Estonian seafarers on lower wages. The Finnish Seamen’s Union (FSU) was effective at preventing this and in protecting jobs and wages. The FSU had called upon the International Transport Federation (ITF) to support them in accordance with their policy against flags of convenience and the ITF sent a circular to affiliates as a result.

Viking’s legal action
After Estonia’s accession to the EU, Viking tried again and began legal action in London in August 2004 against the FSU and the ITF to stop them preventing the company re-registering the Rosella. In essence the company argued that they had a right of establishment under Article 43 of the Treaty of the EU, which the FSU and the ITF could not interfere with by taking or threatening collective action. The right of establishment is a right for business to establish itself anywhere in the EU. In the alternative, the company argued that collective action constituted unlawful restrictions on freedom to provide services under Article 49 EC and even that it constituted a restriction on freedom of movement for workers under Article 39 EC.

The unions’ response
The FSU and ITF argued that the freedoms for business in the EU did not permit a private company to sue a union. They also argued that the right to take collective action to protect jobs and pay was a fundamental human right recognised in the EU and in other in international treaties and conventions. The right to strike – albeit with some scope for restrictions – is, as is common in modern constitutions, part of the Finnish constitution.

The ECJ’s ruling
The High Court in London referred the conflicting arguments to the European Court of Justice (ECJ). The ECJ ruled on 11 December 2007 in a judgment that broke new ground in deciding that a private company could sue a union or federation for losses as a result of threatened or actual collective action taken in the context of the company exercising the freedoms for business in the EU. The ECJ also recognised the right to take collective action. Effectively courts would decide whether the collective action was justified, proportionate and necessary. The ECJ referred the case back to London to apply their findings to the facts of the case.

The London court has not made a ruling, because the issue was settled in a confidential deal between Viking, the FSU and ITF. The ECJ judgment, however, was soon followed by others that “clarified” collective labour rights as of no practical effect in many circumstances in the context of freedom for business in the EU.