Chuah, J.

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     WestminsterResearch http://www.wmin.ac.uk/westminsterresearch   Freedom of establishment and threats of industrial action by unions of maritime workers  Viking Line ABP v International Transport Workers' Federation and Finnish Seamen's Union [2005] EWHC 1222 (Comm) English Commercial Court  Jason Chuah  School of Law    This is an electronic version of an article published in the Journal of International Maritime Law, 11 (4). pp. 298-301, 2005, and is reprinted her with the permission of the publisher.     The WestminsterResearch online digital archive at the University of Westminster aims to make the research output of the University available to a wider audience.  Copyright and Moral Rights remain with the authors and/or copyright owners. Users are permitted to download and/or print one copy for non-commercial private study or research.  Further distribution and any use of material from within this archive for profit-making enterprises or for commercial gain is strictly forbidden.        Whilst further distribution of specific materials from within this archive is forbidden, you may freely distribute the URL of WestminsterResearch. (http://www.wmin.ac.uk/westminsterresearch).   In case of abuse or copyright appearing without permission e-mail wattsn@wmin.ac.uk. INTERNATIONALANDREGIONALORGANISATIONSREVIEWANDANALYSISEUROPEAN UNIONSpecialist Editors: Dr Vincent J G Power; Jason ChuahFREEDOM OF ESTABLISHMENT AND THREATS OF INDUSTRIAL ACTION BYUNIONS OF MARITIME WORKERSViking Line ABP v International Transport Workers' Federation and Finnish Seamen's Union[2005] EWHC 1222 (Comm) English Commercial CourtJason ChuahThe factsReaders are likely to know that Viking Line ABP, one of the larger passenger shipping companies inthe world, is a company incorporated and registered in Finland. The present case involves one ofViking's less profitable lines ^ the Helsinki-Talinn route. The vessel in question is the Rosella whichwas originally registered under the Finnish flag.Viking had applied to reflag the Rosella under theEstonian flag as its principal competitors on the route man their vessels with Estonian crews, whichare significantly cheaper than Finnish crews. The company's position was that the reflagging wouldentitle them to crew the shipwith Estonian seamenwhichwould result in considerable savings.The trade unions (the Finnish Seamen's Union and the International TransportWorkers' Federation)were resolved to take industrial action in protest.Viking thus applied for various declarations andinjunctions in anticipation of strike action by the FSU, and action by the ITF requiring ITF affiliates inother jurisdictions, whichViking vessels visit, to participate in concertedboycott and other industrialaction against the Rosella and other Viking vessels. ITF argued that the English court lackedsubstantive jurisdiction to make such orders.Viking contended that any such action by the FSU and the ITF would be contrary:(a) to Article 43 of theTreaty establishing the European Community (EC), (the principle of thefreedom of establishment);(b) to Article 39 EC, (the principle of the freemovement of workers); or(c) Article 1 of Council Regulation 4055/86/EEC, (applying the principle of freedom to provideservices to maritime transport between Member States and between Member States and thirdcountries.The decisionThe first issue the court had to address was whether, despite the fact that under Article 2 of theBrussels Regulation 44/2001it had jurisdiction because the defendant, ITF, was domiciled in the UK,it should, for reasons of judicial comity, not permit the application to proceed because it would298 (2005) 11JIML : EUROPEANUNION : INTERNATIONAL ANDREGIONALORGANISATIONSinvolve, inter alia, a judgment as towhat Finnish law was and an assessmentof whether Finnish lawwas compatible with EU law. However, the court stressed that following the ECJ's ruling in CaseC^281/02 Andrew Owusu v N B Jackson trading as `Villa Holidays Bal-Inn Villas' & Others,1 the courtcannot take into account the doctrine of forum non conveniens to decline jurisdiction even thoughthe facts might point to another jurisdiction as having a closer connection with the dispute. As longas under the Regulation, the court of one Member State is seisedbecause the defendant is domiciledin that Member State, all other Member States must decline jurisdiction and the Member Stateconcerned should not refuse jurisdiction (unless permitted by the Regulation to do so ^ such aswhere the proceedings were in breach of an exclusive jurisdiction clause, or that proceedings havein fact been commenced earlier in another Member State in accordancewith the Regulation).It was argued that the English court should decline jurisdiction because any declaration or injunctiongiven by the English court would not be enforced in Finland. The court rejected that argumentholding that under the EU system of mutual recognition and enforcement of judgments, there wasno good or conceivable reason that a Finnish court would not recognise and enforce a judgmentfrom an English court.Once jurisdictionwas established,Gloster J proceeded to rule that themeasures in questionwere indanger of breaching Viking Line's rights under EU law and the injunctions sought should thus begranted.The court was also asked to make a reference to the ECJ for a preliminary ruling.Gloster J declined,holding that the case was a very fact-dependent case and the area of law in questionwas onewherethere is much developed jurisprudence already in existence. The court was also concerned that areference would result in considerable delay which would be injurious to Viking Line's interests.Therewas no need thus tomake a reference to the ECJ.CommentJurisdictionAs to the question of jurisdiction and the argument that a Finnish court would not recognise aninjunction granted by the English court, the court held that under Regulation 44/2001, a MemberState is duty bound to recognise and enforce judgments from another Member State unless thejudgmentwas contrary to the public policy of the Member State in which recognition is sought.Thecourt added thus that a declaration by one Member State that the proposed industrial action wasillegal under EU law would be recognised by the court of another Member State and that therewasno conceivable good public policy ground on which a Finnish court would decline to recognise andenforce it. As Gloster J said:Refusal and enforcement of such a judgment could therefore not be opposed in Finland on the groundthat the English court hadmisapplied Finnish or Community law in reaching its decision.2This is an important reiteration or restatement of the principle in Owusu (and also Case C^159/02Turner v Grovit 3) that jurisdiction establishedunder the Brussels Regulation should notbe given up onthe basis of judicially discretionary grounds, such as comity, bad faith etc. InTurner, co-operationbetween Member States is presumed.On that basis, an argument that a Finnish court would rejectan English judgment could not realistically be entertained as being valid by an English court because ifthe Finnish court did act contrary to the principle of mutual recognition and enforcement ofjudgments, that was a matter for the EUCommission to take upwith the Finnish authorities. It wasnot for the English court to anticipate the non-recognition of its judgment by a fellowMember Statetribunalwhere its own jurisdiction has been properly establishedunder the Brussels regime.1 [2005] 2 WLR 942. See analysis (2005)11 JIML182.2 See para 80 of the judgment.3 27 April 2004, ECJ.INTERNATIONAL ANDREGIONALORGANISATIONS :EUROPEANUNION : (2005) 11JIML 299Freedom of establishmentArticle 43, EC provides:Within the frameworkof the provisions set out below, restrictions on the freedom of establishment ofnationals of a Member State in the territory of another Member State shall be prohibited. Suchprohibition shall also apply to restrictions on the setting up of agencies, branches, or subsidiaries bynationals of any Member State established in the territory of any Member State. Freedom ofestablishment shall include the right to take up and pursue activities as self-employed persons and toset up and manage undertakings, in particular companies or firms within the meaning of the secondparagraph of Article 48, under the conditions laid down for its own nationals by the law of thecountry where such establishment is effected, subject to the provisions of the chapter relating tocapital.It is obvious that Viking possessed the right to establish itself in anyMember State by reflagging, freefrom any impedimentwhich couldnotbe justifiedunder theTreatyexceptions toArticle 43.Howeverit was arguedby ITF that they had no control over the shipping register in Estonia and as such, couldnot be said to prevent the reflagging of the Rosella. The FSU's contention was that they were onlytaking industrial action to protect employees' rights, not against the reflagging of the Rosella. Thejudge rejected these arguments, quite rightly, on the basis that the ITF had defined their industrialaction measures too narrowly. It was obvious the Viking Line would be very seriously affected bythe unions' threatened actions if it proceeded with the reflagging. Additionally, from documentaryevidence, it was clear that the ITF was wholly committed to fighting the reflagging. As far as EU lawis concerned, it is clear that any measure which is liable to hamper or to render less attractive theexercise by a national of a Member State of the freedom of establishment, is an obstacle to thatfundamental freedom guaranteed by theTreaty.4 Any measure which places an additional financialburden on a person so as to make the exercise of a freemovement rightmore difficult constitutes arestriction on that freemovement right.5It should also benoted that as far back asCaseC^221/89 Factortame,6 it has been the law thatwherea vessel is used as `an instrument for pursuing an economic activity which involves a fixedestablishment in the Member State concerned, the registration of that vessel cannot be dissociatedfrom the exercise of the freedom of establishment'.7 Thus, in the present case, it could notbe arguedthat there was no threat to Viking Line's freedom of establishment because industrial action wasdirected not at the general activities of the company, only one specific vessel.Consequently, it couldalso not be suggested that the company's right to establish in Estonia as a subsidiary or othercorporate structures was not impeded.It is conventional law that the freedom of establishment right is one owedby a Member State to theenterprise or undertaking.The question herewas, however, whether thatwas a rightowed toVikingby ITF and FSU, which are clearly not emanations of the state.This is perhaps the more interestingquestion ^ and onewhich, perhaps, the court should havemade a reference to the ECJ.Be that as itmay, it was held that therewas horizontal direct effect in Article 43.Thatmeans a private entity canclaim those rights against another private entity.The court accepted Viking's argument that the ECJestablishes that the freemovement rules apply not only to the action of public authorities but also tor`ules of any other nature aimed at regulating gainful employment in a collectivemanner'.8 Indeed, in4 Case C^55/94 Reinhard Gebhard v Consiglio dell'Ordine degli Avvocati e Procurati di Milano [1995] ECR I^4165 para 37; Case 249/81Commission v Ireland [1982] ECR 4005 paras1^3, 21^28.5 See, in particular,Case C^272/94Michel Guiot [1996] ECR I^1905 and Case C^435/00 GehaNaftiliaki EPE & Others v NPDDLimenikoTamio Dodekanisou (14 November 2002) OJ C323/17.6 [1991] ECR I^3905.7 ibid paras19^23.8 CaseC^415/93Union Royale Belge des Socie¨te¨ de Football Association ASBL&Othersv Jean-Marc Bosman&Others [1995] ECR I^4921asapplied in Case C^309/99Wouters v Algemene Raad van de Nederlandse Orde van Advocaten [2002] ECR II^2823.300 (2005) 11JIML : EUROPEANUNION : INTERNATIONAL ANDREGIONALORGANISATIONSWouters,9 the ECJ, in ruling that Article 43 could extend to professional rules imposed by theNetherlands Bar Council to lawyers, despite the fact that those rules are not public in nature, heldthat those rules were obviously designed to regulate, collectively, self-employment and the provisionof services. Article 43 should not be defeated simply by the contention that associations ororganisations which imposed restrictive and/or discriminatorymeasures are not governed by publiclaw.Gloster J was persuadedby the argument that the ITF'smeasures, appliedby the ITF and invokedby the FSU, constituted a set of r`ules' enforced by sanctions.The court also gave some emphasis tothe fact that the FSU actually performed a quasi-public function in regulating employment terms andconditions in accordancewith Finnish legislation.This approach seems consistent with the wider legislative aim of Article 43 to enable corporateentities established in one Member State to establish themselves in another Member State withoutbeing hindered by non-governmental measures which have a significant and considerable influenceover the industrial sector or profession in question. ECJ case law has extended the proscription inArticle 43 to sporting associations and professional bodies and there seems to be no good reason toexclude trade unions from the remit of Article 43, especially in the maritime sector where tradeunions wield so much power on the employment of workers which is central to the right ofestablishment formaritime undertakings.It was also contended by Viking that, as Article 39 (on free movement of workers) has horizontaldirect effect,10 and the aims of Article 39 are similar to those of Article 43, there was nojustification for treating Article 43 as not having same horizontal effect.Gloster J accepted thatargument. That said, it might be submitted that although the two articles promoted and pursuedthe same single market objectives, those objectives are expressed in a general way. Indeed, most ofthe freemovement provisions in theTreaty promoted the same convergence objectives of the singlemarket. Nevertheless, it must be said that this was a supplemental argument to the central thesisthat trade unions, by and large, have immense powers to control the labour market, therebyaffecting the freedom of establishment and as such, should be subject to free movement provisionsof the Treaty. Strong non-governmental bodies such as trade unions, sporting associations,professional bodies and trade associations, should not be allowed to claim the freemovement rightswithout being subject the duties implicit in those rules.Finally, as regards the issue as towhether themeasures taken by the unionswere discriminatory, thecourt was convinced from the evidence that they were intended to protect Finnish jobs. Suchprotective measures were intended to prevent the ship from being reflagged to take on Estoniancrew.They were therefore discriminatory. It might be noted that had the measures been to protectFinnish jobs on Finnish vessels and to pressure foreign vessels to improve the terms and conditions oftheir foreign crew, they would not have been discriminatory.This issue of discriminationmaymake itdifficult for trade unions acting in their members' interests not also to be found to be acting in adiscriminatorymanner.The crucial lesson for trade unions is that a measure taken to protect jobs inone country should not impede the right of the company to relocate to another Member State.9 ibid.10 Meaning that the right of free movement of workers was enforceable by a private individual against another private individual(C^281/98 Roman Angonese v Cassa di Risparmio di Bolzano SpA [2000] ECR I^4139).INTERNATIONAL ANDREGIONALORGANISATIONS :EUROPEANUNION : (2005) 11JIML 301

Freedom of establishment and threats of industrial action by unions of maritime workers.  Viking Line ABP v International Transport Workers' Federation and Finnish Seamen's Union

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Freedom of establishment and threats of industrial action by unions of maritime workers. Viking Line ABP v International Transport Workers' Federation and Finnish Seamen's Union

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