Court upholds Viking's right to negotiate with foreign unions on reflagged ship

A court ordered in June 2005 that the Finnish Seamen’s Union and its international parent organisation, ITF, must respect Viking’s right to negotiate with foreign unions on a ship it plans to reflag to Estonia. According to Viking, the ruling represents a major victory of principle and a precedent for the whole industry while the Seamen’s Union deemed it an attack against the European trade union movement.

The Finnish shipping company Viking Line has for several years planned to reflag its m/s Rosella vessel from Finland. The management of the company maintains that the ship which transports passengers between the Finnish port of Helsinki and Tallinn in Estonia cannot compete with its Estonian rivals because its labour costs are two times higher than theirs. By reflagging the ship the company hopes to acquire foreign labour for which a cheaper collective agreement could be applied. The Finnish Seamen’s Union (Suomen Merimies-Unioni, SM-U) which represents the staff on Rosella and has negotiated their current collective agreement which is valid until February 2008 recognises Viking’s, and other shipping companies’ right to reflag their ships and to hire staff anywhere within the EU. It is, however, firmly of the opinion that the Finnish collective agreement and legislation must continue to be applied at all reflagged vessels. The International Transport Workers' Federation (ITF) supports the position of SM-U in the matter. In November 2003 it indicated this by issuing a circular letter to among its affiliates in the Baltic Sea region urging them to respect the right of SM-U to negotiate over pay and working conditions on m/s Rosella.

In preparation for the reflagging of its ship, Viking sought a ruling from the High Court of Justice in London against SM-U and ITF over the matter. Viking wanted the court to declare first, that the union organisations may not infringe in any way upon its right to negotiate with any third party in the EU over a collective agreement for a reflagged Rosella and, second, that the International Monetary Fund (IMF) must issue a statement revoking the message put forward in its circular. On 16 June the London court gave out its ruling in which it upheld both the demands by Viking on basis of Article 43 of the EC Treaty which grants businesses the freedom to relocate their operations within the EU.

Viking welcomed the court verdict and argued that it represented a major victory of principle and a precedent for the whole shipping industry. SM-U strongly disagreed. It argued that the ruling was an attempt to limit the fundamental freedoms of action of trade unions and as such it was an attack on the whole European trade union movement. The union plans to appeal against the verdict.

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