Social Europe The European Project after Viking and Laval Hans-Böckler-Stiftung (geen stakingen meer)

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Magazin Mitbestimmung English online

Social Europe? The European Project after Viking and LavalLAW The European Court of Justice (ECJ) rulings in the Viking and Laval cases haveimposed restrictions on strike action by trade unions - in the name of free movement ofservices and freedom of establishment. By Martin Hpner.

MARTIN HPNER, political scientist at the Max Planck Institute forSocial Research in Cologne and co-editor of a book on the politicaleconomy of European integration, takes a long, hard look atEurope's liberalisation policy./Photo: picture alliance

Consider two landmark cases on the future of the Europeanproject. The first concerns ferry company Viking, which operatesunder Finnish law on the short 80km route across the Balticbetween Estonia and Finland. Viking wanted to make use of Article

43 of the Treaty establishing the European Community, which lays down the right ofestablishment, to re-flag one of its ships under the Estonian flag so as to circumventFinnish collective agreements. The Finnish trade unions were horrified and threatened astrike, to try to ensure that Viking would be bound by Finnish labour standards even if thevessel were re-flagged.

The International Transport Workers' Federation, which campaigns against flags ofconvenience, urged its national member associations to boycott Viking so as to avoidundermining Finnish standards. The case was brought before the ECJ, which had to rule onwhether the union's action was compatible with the European Treaties. Did the right ofestablishment give Viking the right to exploit lower wage costs in Estonia by re-flagging?Were the Finish trade unions allowed to strike? The second case also concerns two otherBaltic neighbours, Latvia and Sweden. Under the free movement of services underpinned

by Article 49 of the European Treaty, construction company Laval, which operates underLatvian law, posted workers to Vaxholm in Sweden to build a school for a Swedishsubsidiary of the company.

The construction workers' union initiated industrial action in an attempt to force thecompany to negotiate and to apply the conditions laid down by the Swedish constructionagreement. Laval claimed that this collective action was illegal. The Swedish police arguedthat the blockade organised by the union was permissible under national law and declinedto assist the company. This case, too, came before the ECJ. For Laval, the main attractionof the right of establishment was precisely that it would not be bound by Swedish pay andconditions. And, it argued, the European Treaties guaranteed free movement of services.Was it really legal, then, for the Swedish union to organise this action? And could theSwedish authorities permit it?

A RULING WITH FAR-REACHING CONSEQUENCES_The ECJ delivered its judgments

on 11 December 2007 (C-438/05) and 18 December 2007 (C-341/05) in the Viking andLaval cases respectively. Two key points emerge. The first is confirmation that the right tostrike is a basic right within the legal framework of the European Union. The second, whichis more significant, is that exercise of the right to strike may not unreasonably restrict the"four freedoms" laid down in the Treaties - the rights to free movement of capital, goods,persons and services. Any restriction of one of these freedoms is reasonable only whereoverriding reasons of public interest require such action, "provided that it is establishedthat the restriction is suitable for ensuring the attainment of the legitimate objectivepursued and does not go beyond what is necessary to achieve that objective" (Point 3 ofthe Viking judgment). In other words, the right to strike is not exempt from the scope ofapplication of the "four freedoms".

After ruling on these principles, the ECJ referred the Viking case to the jurisdiction of thenational courts but set a high threshold for assessing "overriding reasons". In the Lavalcase, the judges ruled that the action of the Swedish workers' representatives breachedEuropean law; the industrial action, which was "liable to make it less attractive, or moredifficult" for Laval to make use of the right to free movement of services (Point 99 of the

judgment), was not covered by "overriding reasons of public interest". This ruling hasfar-reaching consequences for the right to strike in many member states as a

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"proportionality check" on strike action has hitherto been unusual or, indeed, completelyunprecedented in Germany and elsewhere. Robert Rebhahn has explained theseconsequences in his paper in "Wirtschaftsrechtliche Bltter" (see Rebhahn 2008).

It may be useful to take a step back and reflect on what is actually going on here. Theright of employees to strike in support of their claims is a valuable asset in the structurallyasymmetrical dependency of a capitalist employment relationship. In Germany, its originslie in the fundamental principles of what German calls a sozialer Rechtsstaat - a socialstate governed by the rule of law - and freedom of association; because it is protectedunder the Constitution rather than under legislation on freedom of economic action, such a

right cannot be touched.

Many years ago, governments concluded treaties that aimed to reduce the trade barriersbetween EC Member States and to achieve a common market in Europe. The guidingprinciple was that nationals of other Member States should enjoy exactly the same rightsas nationals of the Member State concerned in terms of investment, labour markets, tradein goods and provision of services. The European institutions - the Commission and the ECJ- were given the responsibility of ensuring that these principles were upheld. Bothinstitutions are thus legitimated by the Treaties rather than directly. Over time theCommission and the ECJ gradually freed themselves and increasingly shifted theboundaries between national law and European law to the detriment of the MemberStates.

In particular, they granted the "four freedoms" the status of a supranational constitutionthat has precedence over national legislation even national constitutions and thusappropriated the right, without consulting the Member States, to pass liberalisationmeasures that would never have been viable at national political level. Cologne-basedpolitical economist Fritz Scharpf has referred to the "constitutionalisation of competitionlaw". The immediate response may well be that such action is unacceptable - but willcontinue to happen so long as there are no serious challenges to it.

BUILDING BLOCKS OF EU LIBERALISATION POLICY_The Viking and Laval judgmentsare a building block in a long history of the Commission's and ECJ's legal - rather thanpolitical - implementation of European liberalisation policy. Essentially, they say thatnational rights must be subordinated to the "four freedoms" laid down in the Treaties. Keystages in the history of European liberalisation policy include the deregulation oftelecommunications, air and freight transport, energy markets and postal services;examples in Germany include the lifting of the former Federal Labour Office's monopolyrole as an employment agency and restrictions on national broadcasting and on theliability of public regional administrative bodies for regional banks and savings banks (seeScharpf (2008) for detailed discussion of these areas).

The Centros, berseering and Inspire Art cases saw the ECJ deny member states the rightto require companies operating exclusively on their sovereign territory to comply withnational company law; it is not yet clear what effects that will have on co-determination atcompany level. The ECJ also recently ruled that it was incompatible with the freemovement of services to attach a condition to public procurement contracts stipulating thatcollectively agreed wage structures should be adhered to.

The "four freedoms" are nothing other than the freedom of capitalist activity. The notionthat the right to strike should be subordinate to these freedoms is bizarre from a nationalperspective. Let us for a moment disregard the European dimension and imagine aGerman court requiring trade unions to forgo industrial action where such action would

impede commercial freedom unless there were "over-riding reasons of public interest".There would be an outcry. Yet this is exactly what is happening at European level:Bremen-based legal experts Christian Joerges and Florian Rdl have called it "arelativization of the right to strike by quasi-constitutional commercial freedom".

If Swedish and Finnish unions are no longer able to embark on collective action againstdeliberate exploitation of European law to circumvent national collective agreements,surely this amounts to nothing less than claiming a basic right to unimpeded socialdumping. There is no such right, however, and nothing authorises the ECJ to proclaim oneor to reorganise national rights to strike or other basic rights protected by law.

Labour and social legislation has just one aim - to impose constraints on capitalist activityand steer it towards social acceptability. If it is to be subordinated to the freedom ofcapitalist activity, then in principle it can be dismantled piece by piece. Why, for example,

asks Robert Rebhahn, a Vienna-based lawyer, should train-drivers have the right to strikeif that impedes the national or international transportation of goods? And, in the wake ofthe Viking judgment, could it not be argued that employee co-determination ofsupervisory boards is incompatible with European law if investors can be found who claimthat such co-determination prevented them from exercising their right to make cross-border investments?


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Discussion of the Viking and Laval judgments should go beyond mere critical exegesis.Sadly, large swathes of the political elite tend to defend the European project for better orworse. While ineffective 'soft law' and the 'open method of co-ordination' in the social field,along with non-binding common positions on the part of the EU social partners, are beingpresented as social progress, the force with which liberalisation policy is implementedthrough 'hard law' tends to be deliberately ignored. As if liberalisation policy were merelyan interim stage in the formation of a 'social Europe'.

ETUC Secretary-General John Monks said of the Laval judgement "Unions across Europeare now busy defending their national systems - and there is a risk of protectionist

reactions . The Laval case in particular could damage ratification of the EU Reform Treatyas awareness of its implications spreads".

Well, I disagree. The problem with the Viking and Laval judgments is not that they mayprovoke criticism. It is rather that they are an attack on employee rights. Trade unions'defence of rights laid down in national legislation has nothing in common withprotectionism or nationalistic reflexes. Uncomfortable truths are no less true for beinguncomfortable: it is the nation states, rather than the European Union, that remain theplace where social inequities are tackled. The Viking and Laval judgements offer us oneopportunity, though - the opportunity to replace counterfactual assertions about a 'socialEurope' with a hard look at the facts. These cases are not merely about two or three'wrong' judgments by the ECJ but rather about a process of European union that isforegrounding capitalist freedoms and thereby clearing the way for more such judgments.

By way of conclusion, we could ask why judgments such as those in the Laval and Vikingcases are actually perceived as legitimate. Why is there not greater resistance to aprocess of European economic integration that has exceeded its terms of reference andappears to be well on the way towards subordinating democratic social states to a singleEuropean competition state, as those voting in referenda on the Lisbon Treaty seem tohave concluded? There may be two reasons. First, the legal material is highly complex.Second, there is a conspiracy of silence. It is hardly surprising that neo-liberals are failingto protest about European liberalisation policy; they are, by definition, in favour ofeconomic liberalisation. What is surprising, though, is that there is also silence from thosewho have been actively committed to the European project. This results from afar-reaching misjudgement: subordinating social affairs to the freedom to operate incapitalist markets is no less explosive because it comes from Europe. Let us stopromanticising European economic integration, seeing it as a democratic, social project. Itis neither democratic nor social.

Translatet from Magazin Mitbestimmung 5/2008

More information

Martin Hpner, Armin Schfer (2008): Grundzge einer politkonomischen Perspektive aufdie europische Integration. In: ibid. (ed.), Die Politische konomie der europischenIntegration. Frankfurt/New York: Campus, S. 11-45.

Christian Joerges, Florian Rdl (2008): Von der Entformalisierung europischer Politik unddem Formalismus europischer Rechtsprechung im Umgang mit dem "sozialen Defizit" desIntegrationsprojekts. Ein Beitrag aus Anlass der Urteile des EuGH in den RechtssachenViking und Laval. ZERP Discussion paper 2/2008. Bremen: Zentrum fr EuropischeRechtspolitik.

John Monks: Presentation to the Employment and Social Affairs Committee of theEuropean Parliament, Brussels, 26.2.2008, Download (pdf)

Robert Rebhahn (2008): Grundf reiheit versus oder vor Streikrecht. In:Wirtschaftsrechtliche Bltter 22, pp. 63 - 69.

Fritz W. Scharpf (2008): Positive und negative Integration sowie Nachwort. In: MartinHpner, Armin Schfer (eds.), Die politische konomie der europischen Integration.Frankfurt/New York: Campus, S. 49-99.


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Social Europe The European Project after Viking and Laval Hans-Böckler-Stiftung (geen stakingen meer)