Marta Michałek

Fundamental Freedoms v. Fundamental Rights - how the European Court of Justice created a new “fundamental hierarchy”.

I. Introduction

The cases in which the European Court of Justice1 is called upon to engage in a balancing

of seemingly equivalent fundamentals have become more frequent. The aim of this paper is to

examine the deferential approach that the ECJ presents while having to challenge the question

of the conflict of two basic values, namely fundamental human rights and fundamental Common

Market freedoms. Do human rights differ from the other grounds of justification of the obstacles to

the Common Market freedoms and thus call for a special approach of the Court?

In the search for a answer to this question, the present contribution will proceed as follows.

Firstly, it will briefly contemplate on the issue of fundamental values, focusing on the nature

and origins of these two concepts.

Secondly, to better illustrate the main problem, it will go through cases in which human

rights and Common Market freedoms stood in the opposition to each other. Nevertheless, since it is

not intended to dwell on the general analysis of all possible tensions arising as the result

of fundamental rights' invocations by Member States in the context of the Common Market

freedoms, the scope of the subject elaborated hereinafter will be narrowed to two examples in which

the free movement of goods and the free movement of services were involved, namely to the cases

C-112/00 Schmidberger2 and C-341/05 Laval3.

Finally, some conclusions will be made in order to conceptualize the rule set by the ECJ

when encountering with the challenge of the reconciliation of the fundamental rights protection

and the Common Market freedoms.

II. Fundamental values

The European Union4 presents a complex constitutional landscape within which the EU

struggles to construct and maintain its own culture and identity while respecting simultaneously 1 Hereinafter: “ECJ” or “Court”.2 Judgement of the European court of Justice of 12 June 2003, C-112/00 Eugen Schmidberger, Internationale

Transporte und Planzüge v Republic of Austria, OJ C 184 of 02.08.2003, p. 1; hereinafter “Schmidberger”.3 Judgement of the European Court of Justice of 18 December 2007, C-341/05 Laval un Partneri Ltd V Svenska

Byggnadsarbetareförbundet and Others OJ C 51 of 23.02.2008, p.9; hereinafter: “Laval”. 4 Hereinafter: “EU”.

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those of its Member States5.

Since one of the most pending Community's objectives is to remove obstacles to the establishment

of the internal market6, one can notice that the EU has placed so far considerable emphasis

on the goal of safeguarding the coherence of the Common Market, namely by framing

the harmonized rules and principles required for its functioning. The term ‘fundamental freedoms’

refers to the economic freedoms which are the pillars for the establishment of the Common market7.

This category consists of: free movement of goods, free movement of persons (workers), freedom

of establishment8 and free movement of services9 as well as free movement of capital.

Nevertheless, while the traditional freedoms still play a crucial role, the European Union's

explicit commitment to the fundamentals of a democratic society entails the duty to respect

the basic rights of its citizens. Also the Member States, rather than simply relying on the decisions

of the European Court, stressed the importance and the necessity of safeguarding of their

fundamental rights, e.g. in the Treaty on European Union.

The term ‘fundamental rights’10 refers to the rights and principles enshrined in the European

Convention for the Protection of Human Rights and Fundamental Freedoms11, the EU Charter

of Fundamental Rights and as they result from the constitutional traditions common to the Member

States12. There is no doubt that human rights are a stable and necessary element of each legal

order13. For this reason, the European courts (i.e. the ECJ and the European Court of Human Rights)

as well as national courts (especially constitutional courts) are to control the observance of these

rights and, on the same time, to ensure relatively uniform standard of their protection. However,

some difficulties in the task of uniformity arise due to the fact that human rights are included

in three formally separate legal orders, i.e. in: convention law14, EU law15 and domestic law16.

5 A. Sweeney, Margin of Appreciation’ in the Internal Market: Lessons from the European Court of Human Rights, (2007) Legal Issues of Economic Integration 34 (1), p. 27.

6 M. Tzanou, Can the balancing of fundamental rights affect fundamental freedoms? Some reflections on recent ECJ case-law on data protection, EUI Florence.

7 See Kombos, Fundamental Rights and Fundamental Freedoms: A Symbiosis on the Basis of Subsidiarity, (2006) European Public Law 12, 433, 435. For a general overview see inter alia Wyatt & Dashwood’s, European Union Law, Fifth Edition, Sweet & Maxwell 2006, 535 subseq.; Barnard, The Substantive Law of the EU- The Four Freedoms, OUP 2004.

8 Free establishment of nationals of a Member State in the territory of another Member State.9 Freedom of nationals of Member States established in one Member State to provide services in another Member

State.10 Which has not only one common understanding (the group of norms that form the category of 'fundamental rights'),

but can be regarded differently subject to its content and nature. Further: J. Morijn, Conflicts between Fundamental Rights or Conflicting Fundamental Rights Vocabularies? An Analysis of Diverging Uses of 'Fundamental Rights' in the Context of International and European Trade Law, Conflicts Between Fundamental Rights, Eva Brems (ed.), Antwerp/Oxford: Intersentia, 2008.

11 Hereinafter: ”ECHR” or “European Convention on Human Rights”.12 See Article 6 (1) and (3) Treaty on European Union (hereinafter: “TEU”).13 A. Wróbel, Bosphorus “Solange”?, Europejski Przegląd Sądowy 2006/6, p. 114 Namely in the European Convention on Human Rights.15 Where fundamental rights are recognised as general principles of the EU law. 16 In which fundamentl rights are enshrined in national constitutions.

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III. The Schimdberger case

The case C-112/00 Eugen Schimdberger Internationale Transporte Planzuege v. Republik

Oesterreich was the first case in which the ECJ had to face directly the oppositional relationship

between the free movement of goods and the freedom to assembly17.

Before dealing with the facts at stake, to better understand the significance of this case, it has to

be pointed out briefly that the freedom of assembly understood as the right to organize and to

participate in assemblies is granted to every individual and is protected at all levels of legal order,

namely: international, EU and domestic one. Moreover, this freedom is in particular closely

connected with other political and personal rights (for instance freedom of expression),

and therefore its influence on the emergence and shaping of democratic societies and states can be

described as enormous18.

Thus, the guarantee of free enjoyment of this fundamental freedom constitutes the duty

of the democratic public authorities. Its restriction may result only from an express provision

of statutory law provided that it is necessary to safeguard legitimate values that are specified

in international law and the national constitution. Public authorities have to bear in mind this

consideration particularly when they intend to prohibit an assembly or a demonstration because

of the purposes for which it is convened or due to protection of public order. Since freedom

of assembly is also one of general principles of the EU law the right to organize and to participate

in assemblies should be consequently protected by the Community legal order as well.

Turning to the facts, the case started in 1998, when the Transitforum Austria Tirol19,

an association “to protect the biosphere in the Alpine region”, gave notice to the Innsbruck

provincial government20 of its intention to hold a protest demonstration, resulting in the Brenner

motorway (A13) being closed to all traffic on the particular section21 for approximately 30 hours22.

Considering that the demonstration was lawful as a matter of Austrian law, the Innsbruck provincial

government decided not to ban it.

To avoid any redundant confusion and problems, the chairman of the TAT gave a press conference

following which the Austrian and German media disseminated the announcement concerning

17 M. Avbelj, European Court of Justice and the Question of Value Choices. Fundamental human rights as an exception to the freedom of movement of goods, Jean Monnet Working Paper 06/04, New York University School of Law.

18 A. Wróbel, Freedom of assembly, Europejski Przegląd Sądowy 2006/2, p. 1.19 Hereinafter: “TAT”.20 Bezirkshauptmannschaft Innsbruck.21 From the Europabrücke service area to the Schönberg toll station. 22 From 11.00 hrs on Friday 12 June 1998 to 15.00 hrs on Saturday 13 June 1998.

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the closure of the Brenner motorway. Moreover, the German and Austrian motoring organisations,

that had been also informed, offered practical information to motorists, advising them in particular

to avoid that motorway during the period in question.

Schmidberger is an international transport undertaking based in Germany whose main activity

is the transport of timber from Germany to Italy and of steel from Italy to Germany. For this

purpose the Schmidberger's vehicles, namely articulated heavy goods vehicles with ‘reduced noise

and soot emission’, generally use the Brenner motorway.

Schmidberger brought an action before the Innsbruck Regional Court23 claiming damages against

the Republic of Austria on the basis that since the A13 motorway is the sole transit route for its

vehicles between Germany and Italy, its lorries were in fact unable to circulate for four consecutive

days24. The company alleged that failure on the part of the Austrian authorities to ban

the demonstration and to intervene to prevent this trunk route from being closed amounted

to a restriction of the free movement of goods. Since, according to the applicant, the decision taken

by the authorities could not be justified by the protesters' right to freedom of expression

and freedom of assembly, the alleged restriction constituted a breach of Community law

and consequently the Member State concerned should incur liability.

The Republic of Austria raised the argument that the claim should be rejected on the grounds

that (1) the decision not to ban the demonstration was taken following a detailed examination

of the facts, (2) information as to the date of the closure of the Brenner motorway had been

announced in advance in Austria, Germany and Italy, and (3) that the demonstration did not result in

substantial traffic jams or other incidents. The restriction on free movement arising from

a demonstration is permitted provided that the obstacle it creates is neither permanent nor serious.

Assessment of the interests involved was to lean in favour of the freedoms of expression

and assembly since fundamental rights are inviolable in a democratic society.

The IRC dismissed the action by the judgment of 23 September 199925. Schmidberger lodged

subsequently an appeal against that judgment before the District Court of Innsbruck26.

The DCI considered that since te claims were founded on the Community law, it was necessary

in this regard to determine firstly whether the principle of the free movement of goods, possibly

in conjunction with Article 527 of the Treaty establishing the European Economic Community28, 23 Landesgericht Innsbruck, hereinafter: “IRC”. 24 The Austrian legislation prohibits in general the movement of lorries in excess of 7.5 tonnes most of the time at

weekends and on bank holidays and in 1998, Thursday 11 June was a bank holiday in Austria, whilst 13 and 14 June were a Saturday and Sunday.

25 The court stated that the transport company had neither discharged the burden (under Austrian substantive law) of making out and proving its claim for pecuniary loss nor complied with its obligation (under Austrian procedural law) to present all the facts on which the application was based and which were necessary for the dispute to be determined.

26 Oberlandesgericht Innsbruck,; hereinafter: “DCI”.27 Current Art. 4(3) of the Treaty on European Union;ehreinafter „TEU”.28 Hereinafter: „EC Treaty”.

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requires a Member State to keep open major transit routes and whether that obligation takes

precedence over fundamental rights such as the freedom of expression and the freedom of assembly

guaranteed by Articles 10 and 11 of the European Convention for the Protection of Human Rights

and Fundamental Freedoms29.

By pointing that the resolution of the dispute required an interpretation of the EU law, the DCI

decided to suspend proceedings and to refer the relevant question to the ECJ asking for

a preliminary ruling concerning the interpretation of the Articles 28 – 30 of the Treaty on European

Community30 in connection with the Art. 531 thereof (the general duty of cooperation and solidarity),

as well as the prerequisites that have to be met to find the breach of the Community law made

by the Member State is sufficiently serious to give rise to State liability.

The ECJ started its justification by stating that the free movement of goods is one

of the fundamental principles of the Community. This principle must be understood as intended

to eliminate all barriers, whether direct or indirect, actual or potential, to intra-Community trade.

As laid down by the court in Community v. France32, this covers not only action taken by Member

States that impede the free movement of goods, but also the failure by Member States to take

appropriate measures to deal with obstacles created by private parties. For these reasons, the court

concluded that the failure by the Austrian authorities to ban the demonstration should be regarded

as constituting a measure of equivalent effect to a quantitative restriction that is an infringement

of Community law33 unless it could be objectively justified.

Subsequently, the Court pointed that it is apparent from the files of the main case that

the Austrian authorities were inspired by considerations linked to the respect of the fundamental

rights of the demonstrators, i.e. the freedom of expression and the freedom of assembly, which are

enshrined in and guaranteed by the ECHR34 and the Austrian Constitution35.

Moreover, according to settled case law, since fundamental rights form an integral part

of the general principles of law, the Court ensures their observance. For this reason, the ECJ is to

draw inspiration from both the constitutional traditions common to the Member States

and the guidelines supplied by international treaties for the protection of human rights36 on which

29 Hereinafter: “ECHR”.30 Current Articles 34-36 of the Treaty on functioning of the European Union, hereinafter “TFEU”.31 Current Art. 4(3) TEU.32 Case C-265/95.33 As is incompatible with the Community law obligations arising from Articles 30 and 34 of the EC Treaty (Current

36 and 40 TFEU) read together with Article 5 (Current Art. 4(3) TEU).34 European Convention on Human Rights Art.11(1) provides that everyone has the right, “... to freedom of peaceful

assembly and to freedom of association with others, including the right to form and to join trade unions for the protection of his interests”. Paragraph 2 states that, “... no restrictions shall be placed on the exercise of these rights other than such as are prescribed by law and are necessary in a democratic society in the interests of national security or public safety, for the protection of disorder or crime, for the protection of health or morals of the protection of the rights and freedoms of others ...”.

35 Para. 69.36 In particular from the ECHR that has a special significance in that respect.

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the Member States have collaborated or to which they are parties37. Then the Court reminded that

measures which are incompatible with observance of the human rights are not acceptable

in the EU38.

Nevertheless, even though the national authorities relied on the need to respect fundamental rights

guaranteed by both the ECHR and the Constitution of the Member State, a restriction on one

of the fundamental freedoms enshrined in the EC Treaty cannot be imposed automatically. The ECJ

found it obligatory to weigh the interests involved having regard to all the facts of the case in order

to determine whether a fair balance was struck in between.

The ECJ emphasised that the circumstances in question are clearly distinguishable from

the situation in the case giving rise to the judgment in Commission v. France39 and presented

the comparison of the relevant facts of both cases40.

Firstly, the demonstration in the main proceedings took place following the request

for authorisation presented on the basis of national law and after the competent authorities

had decided not to ban it.

Secondly, due to the questionable event, traffic by road on the motorway A13 was obstructed

only on a single route, on a single occasion and during a period of only 30 hours41.

Thirdly, indisputably, by manifesting in public an opinion considered to be of importance to

society, citizens were exercising their fundamental rights, and, what needs to be highlighted,

the purpose of this public demonstration was not to restrict trade in goods of a particular type

or from a particular source42.

Fourthly, it cannot be overlooked that in the Schmidberger case various administrative

and supporting measures were taken43 by the competent authorities, including the police,

37 See, inter alia, Case C-260/89 ERT [1991] ECR I-2925, paragraph 41; Case C-274/99 P Connolly v Commission [2001] ECR I-1611, paragraph 37, and Case C-94/00 Roquette Frères [2002] ECR I-9011, paragraph 25.

38 Para. 73, see also case C-260/89 ERT, para. 41, and case C-299/95 Kremzow [1997] ECR I-2629, para. 14.39 Case C-265/95 Commission v. France [1997] ECR I-6959, Referred to by Schmidberger in the course of its legal

action against Austria as a relevant precedent. The case in question related to the systematic campaign undertaken by French farmers to restrict the supply of agricultural products from other Member States which led to vandalism and destruction of the products imported from other Member States. These incidents continued through 1997. It was alleged that French officials did little or nothing to to eliminate the disturbances and maintain the free movement of goods, i.e. to stop French farmers from destroying agricultural goods from other Member States and to protect foreign trucks and products. In the judgment rendered 9 of December 1997 the ECJ held that “by failing to adopt all necessary and proportionate measures in order to prevent the free movement of fruit and vegetables from being obstructed by actions by private individuals, the French Republic has failed to fulfil its obligations under Article 30 of the EC Treaty, in conjunction with Article 5 of that Treaty, and under the common organizations of the markets in agricultural products”.

40 Paras 84 – 89 of the Schimdberger judgement.41 Furthermore, the obstacle to the free movement of goods resulting from that demonstration was limited by

comparison with both the geographic scale and the intrinsic seriousness of the disruption caused in the case giving rise to the judgment in Commission v France.

42 By contrast, in Commission v France, cited above, the objective pursued by the demonstrators was clearly to prevent the movement of particular products originating in Member States other than the French Republic, by not only obstructing the transport of the goods in question, but also destroying those goods in transit to or through France, and even when they had already been put on display in shops in the Member State concerned.

43 Well before the date on which it was due to take place, an extensive publicity campaign had been launched by the

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cooperating with the organisers of the demonstration and various motoring organisations in order to

limit, as far as possible, the disruption to road traffic and to ensure that the demonstration would

pass off smoothly.

Furthermore, as the demonstration was the isolated event, it did not give rise to “a general

climate of insecurity” such as to have a dissuasive effect on intra-Community trade flows

as a whole44.

Lastly, in relation to the other possibilities to be adopted45, bearing in mind the Member States'

wide margin of discretion, the ECJ held that in circumstances at stake the competent national

authorities were entitled to consider that an outright ban on the demonstration would have

constituted unacceptable interference with the fundamental rights of the demonstrators to gather

and express peacefully their opinion in public.

The Court noted further that although an action of that type usually entails inconvenience for

non-participants, in particular as regards free movement, the inconvenience may be

in principle tolerated provided that its objective was essentially a public and lawful demonstration

of an opinion.

Consequently, the ECJ concluded46 that the decision of the authorities of a Member State not to

ban a demonstration in circumstances in question was not incompatible with Articles 30 and 34

of the EC Treaty47, read together with Article 548 thereof, since the national authorities were

reasonably entitled49 to consider that the legitimate aim of that demonstration could not be achieved

in the present case by measures less restrictive for intra-Community trade.

There has been quite a positive feedback of the judgement in Schmidberger case that constituted

the first case to raised the question of the respective scope of freedom of expression and freedom

of assembly50, on the one hand, and of the free movement of goods, on the other hand, where

the former are relied upon as justification for a restriction of the latter. The ECJ clearly

and reasonably reconciled the requirements of the protection of fundamental rights

in the Community with those arising from the fundamental freedom enshrined in the Treaty.

media and the motoring organisations, both in Austria and in neighboring countries, and various alternative routes had been designated, with the result that the economic operators concerned were duly informed of the traffic restrictions applying on the date and at the site of the proposed demonstration and were in a position timeously to take all steps necessary to obviate those restrictions. Furthermore, security arrangements had been made for the site of the demonstration.

44 Unlike, the serious and repeated disruptions to public order at issue that took place in the case giving rise to the judgment in Commission v France.

45 Envisaged by Schmidberger with regard to the demonstration in question.46 Paras 93 -94.47 Current Art. 36 and 40 TFEU.48 Current Art. 4(3) TEU.49 Having regard to the wide discretion which must be accorded to them in the matter.50 Guaranteed by Articles 10 and 11 of the ECHR.

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Nevertheless, one can come across some critical remarks that “using [by the Court] the language

of prima facie breach or restriction of economic rights suggests that, even if the restriction is

ultimately justified, it remains something which is at its heart "wrong", but tolerated51”.

IV.The Laval case

The case Laval un Partneri Ltd52 constitutes an important example of the case giving rise

to antoher fundamental questions under the Community law, namely whether the EU law can

restrict or prohibit trade unions in one Member State taking industrial action.

Concerning the fundamental rights at stake, the right to collective bargaining and collective

action is guaranteed in a multitude of international sources (for instance in Article 11 of the ECHR,

Articles 5 and 6 of the European Social Charter, as well as in Article 28 of the Charter

of Fundamental Rights of the EU and the ILO Conventions No. 87 and 98). On the national lever,

this right is guaranteed in the constitutions of the majority of the Member States53. The exercise

of the right concerned may be however subject to some procedural requirements, i. e. notice

periods, ballots to be held before a strike is iniciated and conciliation54. Equally, some restrictions55

on the right to take collective action are normally allowed. In general, collective actions seems to be

strongly linked to the particular national industrial relations systems56.

Passing to the complex facts of the case, Laval un Partneri Ltd is a Latvian company

with its principal offices in Riga. Laval in 2001, through the wholly owned subsidiary57

L&P Baltic AB58, established in Sweden a Swedish corporation with its registered offices

in Stockholm County. Baltic after having conducted operations with its own employed personnel,

decided to cease this model and to acquire labour from the parent corporation and from

subcontractors.

Byggnads is a labour union gathering workers within the Swedish construction industry. This

51 C. Brown, Gloss to the ECJ’s judgement of the June 12, 2003, C-112/00, common Market Law Review 2003/6, p. 1199.

52 Hereinafter: ”Laval”.53 The exceptions are Austria, Belgium, Ireland, Luxembourg, Malta, the Netherlands and the United Kingdom. In

Finland and Germany, whereas, the right to take collective action derives from the freedom of association.54 W. Warneck, Strike rules in the EU27 and beyond. A comparative overview, ETUI-REHS, Brussels, 2007, p. 11.55 For example the peace obligation, the need to strive for peaceful settlement of disputes before embarking on

collective action, or the need to provide minimum services during a strike in certain sectors procedures. Also some groups of workers may be excluded from this right in general, e.g. public servants or members of the armed forces.

56 W. Warneck,op. cit., p. 5.57 That, according to its articles of association and bylaws, conducts operations consisting of repairs, renovations and

construction additions of buildings as well as therewith consistent activities.58 Hereinafter: “Baltic”.

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entity is organised into 31 sections59 including ”Byggettan” - the Swedish Building Workers' Union60

(Section 1).

The work at the centre of the conflict concerned renovation and building additions to a school,

Söderfjärdsskolan, in Vaxholm owned by the City of Vaxholm. The work at Söderfjärdsskolan was

procured by the City of Vaxholm in accordance with the regulations in the law61 in the framework

of a public procurement, based on the comparable EC directive on procurement. The City

of Vaxholm decided on 27 of May 2004 to hire Baltic as contractor for the construction and building

of the school.

The work in Vaxholm was in fact performed with manpower from Latvia, namely by Laval's

employees. The Latvian employees stayed in Sweden temporarily and only in the aim to perform

the construction work at issue. Laval, which had signed on 14th September and 20 October 2004

in Latvia collective agreements with the Latvian building sector’s trade union, was not bound

by any collective agreement entered into with Byggnads, Byggettan or Elektrikerna. Moreover none

of the Laval's employees was a member of those unions.

A number of negotiation meetings as to the signing of a collective agreement occurred between

Byggettan and the representative for Baltic/Laval during the period from June – September 200462.

During the negotiations Laval63 focused on the level of wages64 - the issue that was finally pushed to

its extreme and resulted in the contractual negotiations felling apart. As no agreement was reached,

Byggettan requested the central organisation Byggnads65 to take measures to initiate the collective

industrial action, namely the blockade, against Laval for refusing to sign the application

agreement66.

The decided industrial actions came into force on 2 of November 2004. Thereafter, in December

59 Byggnads organises workers including carpenters, cement workers, bricklayers, floorers, construction workers and road workers as well as plumbers.

60 Approximately 87 % of the country's construction workers are members in Byggnads.61 1992:1528.62 Byggettan requested that Baltic/Laval sign a typical Swedish collective agreement. The type of collective agreement

signed with employers who are not members in the Swedish employers' union – Baltic/Laval is not a member in the Swedish employers' union – is referred to as an application agreement (hängavtal). The application agreement contains a very limited number of provisions and in general refers to the national agreement (Byggnads’ Collective Agreement). This latter agreement has been entered into between the central employers' union, Sweden's Construction Industry, and Byggnads, the central organisation on the workers' side.

63 That was regarded as the formal counterpart since the work was to be performed by it.64 Laval wished to resolve the level of wages at the same time as the collective agreement was to be signed. It seems

that the issue of wages unfortunately has received an incorrect and altogether too large a place in the debate regarding the dispute at issue. One could argue that the wages requested by Byggettan have no relevance as to Laval's refusal to enter into a collective agreement with Byggnads, due to the fact that Laval was offered at the mediation meeting before the impartial mediator on the 1st of December, 2004, and also at the negotiations before the Swedish Labour Court on the 20th of December that same year, the opportunity to enter into a collective agreement without any connection to wage demands. Byggnads claimed that if these offers had been accepted, the industrial actions would have immediately ceased and the no-strike rule would have been applicable.

65 The entity that has the competence to make decisions as to industrial action.66 In accordance with the law (1976:580) as to employment (co-determination in the workplace), the Mediation

Agency – the state governmental authority with the task of mediating industrial conflicts – and Laval were given notice on the 18th and 19th of October 2004, respectively.

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2004, the collective action directed against Laval intensified, as the Electricians‘ Union gave notice

as to sympathy actions, which came into force on 3 of December 2004.

Mediation before an impartial mediator from the Mediation Agency took place on 1 of December

2004.

As stated, the industrial action67 consisted of a blockade, the labour union organisation

encouraged its members to not perform work at Laval's work-place68. The construction work

continued for approximately seven weeks without any impediment from the blockade.

Laval's workers went home at Christmas 2004 and did not thereafter return to the construction site.

In January 2005, other trade unions announced sympathy actions, consisting of a boycott of all

Laval’s sites in Sweden, with the result that the undertaking was no longer able to carry out

its activities in that Member State. The City of Vaxholm and Baltic agreed on 10 of February 2005

to terminate the contractor agreement69. Baltic was placed into bankruptcy on 24 of March 2005.

On 7 December 2004, Laval commenced proceedings before the Arbetsdomstolen against

Byggnads, Byggettan and Elektrikerna, seeking a declaration that both the blockading

and the sympathy action affecting all its worksites were illegal and an order that such action should

cease. It also sought an order that the trade unions pay compensation for the damage suffered.

By decision of 22 December 2004, the national court dismissed Laval’s application for an interim

order that the collective action should be brought to an end. Then, on 29 April 2005

the Arbetsdomstolen decided to make a reference to the Court of Justice for a preliminary ruling.

For this purpose, 15 September 2005, the national court refered the following questions

for a preliminary ruling: Is it compatible with rules of the EC Treaty on the freedom to provide

services and the prohibition of any discrimination on the grounds of nationality and with

the provisions of Directive 96/71/EC70 for trade unions to attempt, by means of collective action

in the form of a blockade, to force a foreign provider of services to sign a collective agreement

in the host country in respect of terms and conditions of employment, such as that described

in the decision71 of the Arbetsdomstolen, if the situation in the host country is such that

the legislation to implement Directive 96/71 has no express provisions concerning the application

of terms and conditions of employment in collective agreements?

As could be seen from the question itself, this case in general raised a number of important

issues72 before the European Court of Justice, however the main one was the assessment between 67 The above stated actions by Byggettan and Byggnads are typical reactions in the event an employer refuses to sign

an application agreement and it regardless of whether the employer is a Swedish or non-Swedish company.68 No physical impediments or violence arose.69 A Swedish construction company using Swedish labour has completed the work.70 Directive 96/71/EC of the European Parliament and of the Council of 16 December 1996 concerning the posting

of workers in the framework of the provision of services, Official Journal L 018 , 21/01/1997 p. 0001 – 0006.71 Decision of 29 April 2005 (collective agreement for the building sector).72 For instance: the interpretation of Article 137(5) EC Treaty and the division of power between the EU and the

member states as to the area of employment/labour law, the interpretation and scope of the Directive concerning the

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the EC-treaty's economic and social objectives. Should the right to negotiate and the right to strike

be recognized as fundamental rights? Do labour unions have the right with the support of industrial

action to insist on encouraging an employer from another member state within the EU to sign

a collective agreement upon the same terms and conditions applicable for the host country's

employees, with respect to temporary work to be performed in the host member state? Especially,

in the case at hands where the employer already have a collective agreement in its resident country.

To which extent industrial actions taken by individual labour unions, which limit free movement73,

may be legitimized?

The Court commenced its analysis by noting, that since the purpose of Directive 96/71 is not

to harmonize systems for establishing terms and conditions of employment in the Member States,

the latter are free to choose a system at the national level which is not expressly mentioned among

those provided for in the directive concerned, provided that it does not hinder the provision

of services between the Member States. Article 3(7) of Directive 96/71 concerning the posting

of workers in the framework of the provision of services cannot be interpreted as allowing the host

Member State to make the provision of services in its territory conditional on the observance

of terms and conditions of employment which go beyond the mandatory rules for minimum

protection.

The Court then turned to consider the nature of the rights in question and to the assessment of

the collective action at issue from the point of view of Article 49 of the EC Treaty74. According to

the ECJ, although the right to take collective action must be recognised as a fundamental right75

which undoubtedly forms an integral part of the general principles of Community law, the exercise

of that right may however be subject to certain restrictions. As is reaffirmed by Article 28

of the Charter of Fundamental Rights of the European Union, right of this kind must be protected

in accordance with Community law and national law and practices76.

The Court upheld its approach adopted in the earlier case law according to which protection

of fundamental rights is a legitimate interest that, in principle, justifies a restriction of the obliga-

tions imposed by Community law, even a fundamental freedom guaranteed by the Treaty. Neverthe-

posting of workers, the issues whether the Swedish Lex Britannia is compatible with EC law and how can workers who are stationed abroad and/or leased be protected etc.

73 Namely the freedom to provide services.74 Current Art. 56 TFEU.75 Para. 90: “It must be recalled that the right to take collective action is recognised both by various international

instruments which the Member States have signed or cooperated in, such as the European Social Charter, signed at Turin on 18 October 1961 – to which, moreover, express reference is made in Article 136 EC – and Convention No 87 of the International Labour Organisation concerning Freedom of Association and Protection of the Right to Organise of 9 July 1948 – and by instruments developed by those Member States at Community level or in the context of the European Union, such as the Community Charter of the Fundamental Social Rights of Workers adopted at the meeting of the European Council held in Strasbourg on 9 December 1989, which is also referred to in Article 136 EC, and the Charter of Fundamental Rights of the European Union proclaimed in Nice on 7 December 2000 (OJ 2000 C 364, p. 1)”.

76 Para. 91.

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less, the exercise of such rights does not fall outside the scope of the provisions of the Treaty and

must be therefore (1) reconciled with the requirements relating to rights protected under the Treaty

and (2) in accordance with the principle of proportionality77.

Consequently, the Court concluded that the fundamental character of the right to take collective

action is not of a such nature as to render Community law inapplicable to action in question78.

The right of trade unions of a Member State to take such collective action was considered liable

to make it less attractive, or more difficult, for undertakings to provide services in the territory

of the host Member State and therefore to constitute a restriction on the freedom to provide ser-

vices within the meaning of Article 49 of the EC Treaty79.

Revoking its previous case-law, the ECJ noted that since the freedom to provide services is one

of the fundamental principles of the Community80, a restriction on that freedom is, firstly, warranted

only if it pursues a legitimate objective compatible with the Treaty and, secondly, is justified

by overriding reasons of public interest. Therefore, such a restriction must be in accordance with

the principle of proportionality, i.e. suitable for securing the attainment of the objective which

it pursues and not go beyond what is necessary in order to attain it81. Referring to this point,

the Court found that the right to take collective action for the protection of the workers of the host

State against possible social dumping may constitute an overriding reason of public interest, within

the meaning of ECJ case law which, in principle, justifies a restriction of one of the fundamental

freedoms guaranteed by the EC Treaty82 that in the case at stake consisted in the freedom to provide

services.

It should be added that, according to the EC Treaty, the activities of the Community are to include

not only an internal market characterised by the abolition, as between Member States, of obstacles

to the free movement of goods, persons, services and capital’, but also ‘a policy in the social

sphere. Article 2 of the EC Treaty83 states that one of the Community's tasks is inter alia the promo-

tion of a harmonious, balanced and sustainable development of economic activities and a high level

of employment and of social protection.

77 Para. 94.78 That is taken against an undertaking established in another Member State which posts workers in the framework of

the transnational provision of services.79 Current Art. 56 TFEU.80 See, inter alia, Case 220/83 Commission v France [1986] ECR 3663, paragraph 17, and Case 252/83 Commission v

Denmark [1986] ECR 3713, para.17.81 Case C-398/95 SETTG [1997] ECR I-3091, parag.21; Case C-451/03 Servizi Ausiliari Dottori Commercialisti

[2006] ECR I-2941, parag. 37, and Case C-94/04 Cipolla [2006] ECR I-11421, para. 61.82 See, to that effect, Joined Cases C-369/96 and C-376/96 Arblade and Others [1999] ECR I-8453, para.36; Case

C-165/98 Mazzoleni and ISA [2001] ECR I-2189, para.27; Joined Cases C-49/98, C-50/98, C-52/98 to C-54/98 and C-68/98 to C-71/98 Finalarte and Others [2001] ECR I-7831, para. 33, and Case C-438/05 International Transport Workers’ Federation and Finnish Seamen’s Union [2007] ECR I-0000, para. 77.

83 Current Art. 3(3) TEU.

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Since the Community has not only an economic but also a social purpose, the rights under the pro-

visions of the EC Treaty on the Community freedoms must be balanced against the objectives pur-

sued by the social policy. These obejctives include e.g. improved living and working conditions,

proper social protection and dialogue between management and labour.

However, in the circumstances at stake an obstacle of this nature cannot be justified with regard

to the objective of protecting workers. Even if blockading action that is undertaken by a trade union

of the host Member State and striven for ensuring that workers84 have their terms and conditions

of employment fixed at a certain level falls in principle within this objective, collective action such

as the one at issue cannot be justified in the light of the public interest objective. It is because

the negotiations on pay85 “form part of a national context characterised by a lack of the EU provi-

sions, 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 as regards minimum pay86”.

Furthermore, such blockading action must be regarded in the framework, falls, as a result

of the coordination achieved by Directive 96/71, to observe a nucleus of mandatory rules for min-

imum protection in the host Member State.

Thus, as it emerges from aforementioned, the ECJ eventually stated that “Articles 49 and 50

of the EC Treaty87 preclude a prohibition in a Member State of trade unions undertaking collective

action with the aim of having a collective agreement between other parties set aside or amended

from being subject to the condition that such action must relate to terms and conditions of employ-

ment to which the national law applies directly88”. Since such prohibition does not take into account

the content of collective agreements by which undertakings are already bound in the Member State

in which they are established, and treats these entities in the same way as national undertakings

which have not concluded a collective agreement, it discriminates against undertakings posting

workers to the host Member State 89.

Moreover, such discrimination cannot be justified either by the aim of allowing trade unions

to take action to ensure that all employers active on the national labour market pay wages and apply

other terms and conditions of employment in line with those usual in that Member State,

or by the aim of creating a climate of fair competition, on an equal basis, between national employ-

ers and entrepreneurs from other Member States. Those reasons do not definitely constitute grounds

84 Posted in the framework of a transnational provision of services.85 Which that action seeks to require an undertaking established in another Member State to enter into,86 Para. 110 of the Laval judgment. See also, to that effect, the ECJ judgement of 23 November 1999 in Joined cases

C-369/96 and C-376/96 Arblade and Others, para. 43.87 Current Articles 56 and 57 TFEU.88 Para. 120 of the Laval judgment.89 See point 5 of the Laval judgment.

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of public policy, public security or public health within the meaning of Article 46 of the EC

Treaty90, applied in conjunction with Article 55 of the EC Treaty91.

The Laval judgement has not been immune from criticism92. Firstly, it has to be stressed that

in the Laval case Advocate General Mengozzi, contrary to the final judgement, opined93 that funda-

mental freedoms enshrined in the ECHR, including the freedom of association and the right to re-

sort to collective action, should effectively be prioritised over the exercise by an undertaking of its

freedom to provide services, even if the latter constitutes a fundamental freedom guaranteed

by the EC Treaty.

One cannot be surprised that the European Trade Union Confederation94, whose position has

always been for equality for migrant workers according to the conditions of the host country,

was disappointed by the ECJ ruling, as it indicated that the right to strike is a fundamental right,

however not fundamental enough to outclass the right of businesses to provide cross-border

services. According to the ETUC “the ruling amounts to a license for social dumping, and key

features of national industrial relations systems face being superseded by the free movement

provisions” 95.

Also other commentators96 opted for contrary solutions, arguing that workers and trade unions,

as important market participants, should be allowed to take collective action to ensure their voice is

heard and their interests are taken into account In consequence, one can raise that collective

bargaining, collective agreements and collective action are even essential to the effective

and equitable functioning of the labour market.

V. Conclusions

Before wrapping up the discussion, one reservation has to be made. It is important to understand

that in the preliminary ruling cases the role of the European Court of Justice is not to decide

the case materially, but rather to give a guiding preliminary decision97 as to the interpretation

90 Current Art. 52 TFEU.91 Current Art. 61 TFEU.92 The ECJ was said to be totally subordinate to the internal market prerogatives. 93 Opinion of A.G. Mengozzi delivered on May 23, 2007 in Case C-341/05, Laval un Partneri Ltd v Sven zka

Byggnadsarbetareförbundet.94 Hereinafter: „ETUC”.95 See http://www.etuc.org/r/847.96 B. Bercusson, Assessment of the Opinions of the Advocates General in Laval and Viking and Six Alternative

Solutions, Kins's Collega London, October 2007. 97 However, it is raised that when sending in fact the matter back to the national courts, the ECJ might in effect

endanger the coherence of then internal market and undermined the equivalent level of protection of fundamental rights in the enlarged EU.

14

of the underlying EU legal regulations98. Laying down boundaries of jurisdiction of the ECJ

in matters of observance of human rights conventions in the course of enforcing Community law is

of utmost importance99. Thus, the Court treads very carefully in enforcing Community rights when

there is a possibility of a clash with human rights laid down in national constitutions

or in the European Convention on Human Rights.

Nevertheless, on the basis of aforementioned cases, one can notice that in the event

of the conflict of values, namely the human rights and the Common Market freedoms, it's not

always the case that the former would justify the infringement of the later. While the ECJ recognise

and underline the general supremacy of human rights, each time the Court carries out the necessity

and proportionality test concerning the restraints of the union freedom in question.

Eventually, it's the test of proportionality that decides on the balancing of the competing values –

these of Member States enshrined in the ECHR and the economic ones established within the EU.

With regard to the EU law, the European Court of Justice confirmed many times that the principle

of proportionality is one of the general principles of the EU. By virtue of this principle,

the lawfulness of the prohibition of an economic activity is subject to the condition

that the prohibitory measures are appropriate and necessary in order to achieve the objectives

legitimately pursued by the legislation in question; when there is a choice between several

appropriate measures recourse must be had to the least onerous, and the disadvantages caused

must not be disproportionate to the aims pursued.100

This principle seems to constitute the main reason for which the ECJ ruled differently the cases

presented above. As aforementioned, in the Schimdberger judgement which related to the collision

of the freedom of assembly with the free movement of goods guaranteed by the Treaties, the ECJ

settled in favour of the fundamental right. After having conducted the detailed analysis of the facts

at hand, the Court held that the restriction placed upon intra-Community trade was proportionate

in the light of the legitimate objective pursued. In the Laval judgment, despite having quite

consistently upheld its earlier standpoint that fundamental rights, such as the right of a trade union

to take collective action, may in some circumstances constitute a justified restriction upon

a freedom guaranteed by the Treaty101, the ECJ declared the restriction in question unjustified

because, based on the results of the Court examination to which extent the protection of the workers

98 Nevertheless, despite this limitation to perform an interpretative role, sometimes it can be hard to discern the borderline between interpretation and application. See also J. Goyder, EU distribution law, Hart Publishing, Oxford 2011, 5th edn., p. 5.

99 A. Wróbel, Bosphorus “Solange”?, op. cit., p. 1.100 See for example, Judgment of the ECJ of 13 November 1990, in case C-331/88 The Queen v Minister of

Agriculture, Fisheries and Food and Secretary of State for Health. Para. 13; See also C. Canenbley, M. Rosenthal, Co-operation between antitrust authorities in - and outside the EU: what does it mean for multinational cor- porations?, E.C.L.R. 2005, 26(3), 178-187.

101 A. Wróbel, Basic right and fundamental rights – conflict or restrictions?, Europejski Przegląd Sądowy 2008/2, p. 1.

15

has already enforced by the provisions of the adequate directive102, the ECJ decided that the restraint

did not meet the prerequisite of indispensability.

As it emerged hereinbefore the ECJ's reasoning in Schmidberger and Laval cases is not immune

from criticism103 both from the point of view of fundamental rights protection, as well as from

the standpoint of business interests104. Numerous arguments on different levels have been raised and

alternative approaches proposed. Nevertheless, while bearing in mind the debate over

aforementioned cases, it has to be noted that some other EU law areas seem to be even more

contentious in the context of the opposition of competing values. Albeit it's not within the scope

of this paper, it is recommended to have a closer look at the cases where the conflict of two different

fundamentals arose over the issue of data protection105 or over the competition law106.

Warsaw, June 2011

102 I. e. whether the steps taken could be nevertheless found necessary. 103 See for instance: J. Morijn, Balancing Fundamental Rights and Common Market Freedoms in Union Law:

Schmidberger and Omega in the Light of the European Constitution, European Law Journal, Vol. 12, January 2006, No. 1, pages 15-40; C. Brown, op. cit.,: “It could be said that, as a matter of principle, it should not be for those who are invoking protection of their human rights in effect to have to justify themselves.”

104 J. Morijn, op.cit.105 Which recently has been for the first time expressly recognized by the EJC as enjoying the status of a fundamental

right within the Community legal order. See Case C-275/06 Productores de Música de España (Promusicae) v Telefónica de España SAU, judgment of 29 January 2008; Maria Tzanou, Can the balancing of fundamental rights affect fundamental freedoms? Some reflections on recent ECJ case-law on dat.a protection, EUI Florence, p. 14.

106 Namely in relation to the collision between the investigative powers of the European Commission and right to respect for private life W. Weiss, Human Rights and EU antitrust enforcement: news from Lisbon, European Competition Law Review 2011, 32(4), p. 186-195; E. M. Ameye, The interplay between human rights and competition law in the EU, European Competition Law Review 2004, 25(6), 332-341; P. Berghe, A. Dawes, "Little pig, little pig, let me come in": an evaluation of the European Commission's powers of inspection in competition cases, E.C.L.R. 2009, 30(9), 407-423 ; C. Canenbley, M. Rosenthal, op. cit.; C. Rizza, J. T. Lang, Ste Colas Est v France (37971/97) (Unreported, April 16, 2002) (ECHR), E.C.L.R. 2002, 23(8), 413-416.

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