Could Danish law become a threat to Swedish industrial conflict rules?

In February 2004, the European Court of Justice (ECJ) issued its judgment in a case referred to it by the Danish Labour Court, which related to industrial action notified to a Danish shipowner by a Swedish trade union in Sweden in 2001. After examining the question of jurisdiction, ECJ ruled that the case should be handled in Denmark. This may lead to serious consequences for Swedish industrial conflict rules, according to Swedish Confederation of Trade Unions.

On 5 February 2004, the European Court of Justice (ECJ), issued a preliminary ruling in a case (C-18/02) referred to it by the Danish Labour Court (Arbejdsret). The case related to proceedings before the Danish court between the Danish Shipowners' Association (Danmarks Rederiforening), acting on behalf of DFDS Torline A/S, and the the Swedish Confederation of Trade Unions (Landsorganisationen, LO), acting on behalf of the seafarers' section of its affiliate, the Trade Union for Service and Communication (SEKO Sjöfolk, Facket för Service och Kommunikation).

Background

The dispute in the main proceedings in the case concerned the legality of a notice of industrial action issued by SEKO against DFDS Torline A/S, which operated cargo shipping on the route between Göteborg, Sweden and Harwich, England. SEKO wanted to establish a collective agreement for the Polish crew of the cargo ship Tor Caledonia, which was operating out of a Swedish port. The Tor Caledonia was registered in the Danish international ship register and subject to Danish law. At the time of the events in question, the Polish crew were employed on the basis of individual contracts, in accordance with a framework agreement between a number of Danish unions on the one hand, and three Danish associations of shipping companies on the other. Those contracts were governed by Danish law. After DFDS rejected a request by SEKO on behalf of the Polish crew for a collective agreement, on 21 March 2001 SEKO served a notice of industrial action, with effect from 28 March 2001, instructing its Swedish members not to accept employment on the Tor Caledonia. The notice also stated that SEKO was calling for sympathy action. Following this request, the Swedish Transport Workers' Union (Svenska Transportarbetareförbundet, Transport) gave notice, on 3 April 2001, of sympathy action with effect from 17 April 2001, refusing to engage in any work relating to the Tor Caledonia, which would prevent the ship from being loaded or unloaded in Swedish ports.

On 4 April 2001, DFDS brought an action in the Danish Labour Court against SEKO and Transport, seeking an order that the two unions acknowledge that the principal and sympathy actions were unlawful and that they withdraw the notices of industrial action. 10. On 11 April, the day of the first hearing before the Danish Labour Court, SEKO decided to suspend the industrial action pending the court's final decision, while Transport's notice of industrial action was withdrawn on 18 April 2001. However, on 16 April, the day before the planned start of the sympathy action called by Transport, DFDS decided to withdraw the Tor Caledonia from the Göteborg-Harwich route, which was subsequently served by another ship leased for that purpose.

DFDS also brought an action for damages against SEKO before the Danish Maritime and Commercial Court (Sø- og Handelsret), claiming that the defendant was liable in tort for giving notice of unlawful industrial action and inciting another Swedish union to give notice of sympathy action, which was also unlawful. The damages sought were for the loss allegedly suffered by DFDS as a result of immobilising the Tor Caledonia and leasing a replacement ship. The Maritime and Commercial Court decided to stay its decision on the action for damages pending the decision of the Labour Court.

Taking the view that, in order to decide on questions concerning its jurisdiction and the lawfulness of the industrial action in question, an interpretation of Article 5(3) of the Convention of 27 September 1968 on jurisdiction and the enforcement of judgments in civil and commercial matters (the 'Brussels Convention') was necessary, the Danish Labour Court decided to stay its proceedings and to refer a number of questions to the ECJ for a preliminary ruling. Thus, the Danish Labour Court, before dealing with the main dispute about the allegedly unlawful labour actions in Sweden (partly carried out and partly suspended before they were due) sought to establish which country, Denmark or Sweden, should handle the case (ie whose law was to be used), and where possible claims of damages should be pursued in the event that the conflict actions were judged unlawful. Such matters are dealt with by the Brussels Convention, which states that a person domiciled in a contracting state (ie a country covered by the Convention) may, in another contracting state, be sued 'in matters relating to tort, delict or quasi-delict, in the courts for the place where the harmful event occurred'.

Ruling

The ECJ ruled that the Article 5(3) of the Brussels Convention 'must be interpreted as meaning that a case concerning the legality of industrial action, in respect of which exclusive jurisdiction belongs, in accordance with the law of the contracting state concerned, to a court other than the court which has jurisdiction to try the claims for compensation for the damage caused by that industrial action, falls within the definition of tort, delict or quasi-delict'.

Further, for the application of Article 5(3) of the Convention to a situation such as that in the dispute in question,'it is sufficient that that industrial action is a necessary precondition of sympathy action which may result in harm.'. Also, the application of Article 5(3) is 'not affected by the fact that the implementation of industrial action was suspended by the party giving notice pending a ruling on its legality'.

The ECJ concluded that in circumstances such as those in the main proceedings, Article 5(3) must be interpreted as meaning that the damage resulting from industrial action taken by a trade union in a contracting state to which a ship registered in another contracting state sails can be regarded as having occurred in the flag state (ie the country of registration), with the result that the shipowner can bring an action for damages against that trade union in the flag state.

In short, the ECJ ruling means that the pending proceedings at the Danish Labour Court may continue between the Danish and Swedish parties. It means also that Danish law will most probably be used in judging whether the Swedish unions concerned performed illegal actions towards DFDS and, if so, in deciding what damages should be paid.

Commentary

The right to take sympathy action (or secondary action) to support or express sympathy with a party involved in an industrial conflict is particularly extensive in Swedish law (SE0302102F). In recent years, sympathy actions have been used above all by trade unions to force employers operating foreign ships, or ships flying a foreign flag, to conclude a Swedish pay agreement for the crew. These seafarers are often low paid and have poor working conditions. Primary industrial action - like that started by SEKO (see above) - in such cases is ineffective, according to the trade unions. However, if Swedish dockworkers decide to stop loading and unloading a ship, this kind of action has proved effective more than once.

The Swedish Co-Determination Act (Medbestämmandelagen 1976) regulates the right to take sympathy action and other conflict actions. It is always permitted to start secondary action, or sympathy action, if the primary action is lawful and the 'central' trade union decides on the sympathy action, which should follow all the general rules about notice periods.

This Swedish right to take both sympathy and primary action will in the DFDS case be challenged if the Danish Labour Court decides that the actions planned by SEKO and Transport, whether carried out or not, are unlawful according to Danish law. The Swedish trade union movement is deeply troubled about the situation, though the consequences are not yet clear. There is a general fear that the Danish example, which might result in high damages because of that country's law on illegal industrial conflict actions, might spread to other countries sending ships to Sweden, thus causing further problems for Swedish industrial conflict law. (Annika Berg, Arbetslivsinstitutet)