• Following Case C-438/05 Viking Line [2007], the right to take collective action can be an objective justification to an infringement to the free movement of services.
  • In this case though, the Court of Justice of the European Union (CJEU) stated that the right to take collective action was not an objective justification, because the national law was unclear as to what the position was with regards to the nature of the workers’ collective action.

Facts of the case:

  • Laval Ltd entered into a contractual agreement with Sweden to renovate a number of schools.
  • Laval Ltd entrusted Latvian workers to complete the work in the schools, as oppose to Swedish workers, because Latvian workers were able to be paid less than what Swedish workers would have been.
  • The Swedish Builders Workers Union requested that Laval Ltd sign its agreement, which would have offered better terms to the posted Latvian workers.
  • Laval Ltd did not sign the collective agreement, and the Swedish Building Workers Union went on strike, to block the building sites.
  • Laval Ltd therefore could not do any work in Sweden, and it claimed that the blockade offended its right to the free movement of services under Article 56 Treaty on the Functioning of the European Union (TFEU)

Issues in Case C-341/05 Laval [2007]:

  • The issue in the case was whether the blockade and strike action of the construction sites constituted an impingement to Article 56 TFEU, and whether The Union’s actions can be deemed compatible with Article 56, on the grounds of an objective justification (on public policy).

Held by the CJEU:

  • The CJEU held that, despite the decision in Case C-438 Viking Line [2007], there was an impingement of Article 56, and that there was no objective justification available.
  • No objective justification defence was available because Sweden’s collective bargaining laws and mechanisms was not “sufficiently precise and accessible” for the company to know its obligations in advance.

The CJEU specifically stated:

  • “Collective action such as that at issue in the main proceedings cannot be justified in the light of the public interest objective referred to in paragraph 102 of the present jgment, where the negotiations on pay, which that action seeks to require an undertaking established in another Member State to enter into, form part of a national context characterised by a lack of provisions, of any kind, which are sufficiently precise and accessible that they do not render it impossible or excessively difficult in practice for such an undertaking to determine the obligations with which it is required to comply with”

Editors’ notes:

  • This case is important, and useful, because it allows us to see that when it comes to objective justifications grounded on reasons such as public interest, there needs to be a degree of specificity with regards to national labour law so as to deem it as justified.
  • This case demonstrates that in situations where there is a balancing of different interests, the courts will generally prefer to protect the economic freedoms, such as the free movement of services, as oppose to the public interests of a particular Member State.