The High Court and Court of Appeal have recently addressed, for the first time in the English courts, the issue of whether industrial action should be restrained by reference to the European laws of freedom of movement.
The context was an interim injunction brought by Govia Thameslink Railway (GTR) to injunct the proposed high-profile strike action by Southern rail network drivers. This was the first time in 8 years that a trade union anywhere in Europe has won a challenge based on the cases of Viking and Laval, decisions which recognised the fundamental nature of the right to take industrial action. Significantly, the right was found to be qualified: where industrial action restricts freedom of establishment or freedom to provide services, it will only be lawful if it is both justified and proportionate.
ASLEF, the drivers’ union, successfully opposed GTR’s application in the High Court, which found that there was no serious issue to be tried and that the attempt to circumvent the immunity granted by Parliament to trade unions by relying on the EU law of free movement to prevent a strike should fail.
The matter came before the Court of Appeal for an expedited hearing within a few days of the High Court handing down its ex tempore judgment. The Court of Appeal rejected GTR’s appeal.
Background – Viking and Laval
The case of International Transport Workers’ Federation and another v Viking Line ABP and another  ECR I-10779 concerned what is now Article 49 of the TFEU (freedom of establishment). The court held that the right to take collective industrial action is “fundamental” and of “overriding public importance” but that the provisions applying to freedom of establishment do apply to industrial action and can be relied upon by non-state employers. However, whilst industrial action represents a restriction on the right of freedom of establishment if it makes the exercise of that right “less attractive”, it is acceptable if it pursues a “legitimate aim”, is “suitable for securing the attainment of the objective pursued” and “does not go beyond what is necessary in order to obtain it”.
The case of Laval un Partneri Ltd v Svenska Byggnadsarbetareförbundet  ECR I-11767 concerned what is now Article 56 of the TFEU (freedom to provide cross-border services) and applied the same principles to freedom to provide services as were held in Viking in relation to freedom of establishment. Again, the provisions can be relied on by non-state employers, industrial action represents a restriction on the freedom of provision of services where it makes the exercise of that right less attractive, but is acceptable if it is to pursue a legitimate aim and is justified by overriding reasons of public interest. Likewise, it must be “suitable for securing the attainment of the objective which it pursues and [does] not go beyond what is necessary in order to attain it”.
Consequently, in each case, subject to the proof of justification and proportionality, the measure in question was regarded as unlawful as against the entity from the other Member State when it would not have been unlawful as against a domestic entity.
The instant case
The instant case arose following a ballot of ASLEF’s members to take industrial action arising out of a dispute over the use, or expansion of the use of Driver Only Operated (Passenger) trains (DOO(P)). The outcome of the ballot was 87.3% in favour of strike action.
GTR did not challenge the lawfulness of the industrial action under English domestic law, instead it applied for an interim injunction arguing that the strike was unlawful under the EU law of free movement. GTR, being part French-owned, argued that industrial action taken against it by ASLEF was unlawful because the industrial action hinders or makes less attractive their right of establishment in the UK, contrary to Article 49 (freedom of establishment). As regards Article 56 (freedom to provide cross-border services), GTR argued that it can complain, or it can complain by reference to passengers who use its trains to travel to Gatwick Airport, hence on to the EU, of restrictions placed on freedom of movement by ASLEF. It highlighted inter alia Gatwick’s dependence, unique among UK airports, upon a single rail operator (96% of all rail services to Gatwick Airport are provided by GTR) and its high proportion of passengers travelling to or from the EU. Moreover, it claimed, the strike action was disproportionate.
In response, ASLEF argued that the provisions of freedom of establishment and free movement of services are mutually exclusive and that neither was engaged in the instant case. In relation to freedom of establishment, there was no authority for the proposition that simply pointing to part foreign-ownership was sufficient to demonstrate the necessary cross-border element and, in any event, no infringement of free movement of establishment can be said to occur where the impact is indirect or uncertain, as in this case where the part French-owned company had been established now for 20 years in the UK. Regarding the freedom to provide services, Article 56 was not engaged since Article 58, stipulating that freedom to provide services in the field of transport was governed by Title VI of the TFEU, had led to the passing of Directive 2012/34/EU (establishing a single European railway area). There was, it was argued, no precedent that Article 58 could be evaded in a rail transport case by reliance on Article 56. In any event, the proposed action was proportionate, particularly when viewed in light of the constitutional importance of the right to strike recognised in Viking and Laval and when placed in the context of the UK’s comparatively restrictive rules relating to industrial action.
The court held that:
Permission to appeal was granted by Sir Michael Burton, sitting as the Judge at first instance.
The Court of Appeal decision
The Court of Appeal agreed to expedite the case, hearing the appeal on Monday 12 December 2016, 4 days after judgment in the court below. Delivering an ex tempore decision, Elias LJ (sitting with Lewison and Lloyd Jones LJJ) rejected GTR’s appeal, without reasons. The full judgment was handed down on 20 December and can be access HERE.
In addressing the cases of Viking and Laval, the court noted that the measure which was likely to hinder or make less attractive the exercise of the freedoms was “the impact of the purpose or object of industrial action, as opposed to the industrial action itself, which justifies giving horizontal effect to the Treaty Articles in such situations”. This is an important distinction.
The court accepted and proceeded on the basis of the union’s concession that 35% ownership by a foreign company satisfied the necessary cross-border element.
By reference to the case of Holship Norge AS v Norsk Transportarbeiderforbund Case E 14/15, a (non-binding) decision of the EFTA court, the Court of Appeal further accepted that an Article 49 claim was not barred where, like here, the company had been established for 20 years in the UK. The decision confirms that Article 49 is not just concerned with the initial establishment but, as Holship shows, restrictions which make it less attractive to remain. As it did in relation to Viking and Laval, the court noted that the critical feature which constituted a potential deterrence was not the fact that there was a boycott of, or the damage such action would cause to, the company; it was the purpose for which the boycott was being pursued:
The court went on to elaborate on its concerns should the industrial action itself rather than the object of the action be the relevant restriction. Were that to be the case, every strike by workers in a particular EU state may be said at some level to make it ‘less attractive’ for a company in another EU state. Every strike with a cross-border element would prima facie involve a breach of Article 49 and the legality of the action would be placed each time into the court’s hands to determine if the action was disproportionate; an outcome incompatible with freedom of association or the fundamental right to strike.
Their Lordships concluded in relation to freedom of establishment that Article 49 does not protect companies from what it called “strong or even bloody-minded trade unions” and that the prospect on these facts of such action deterring a company from establishment, or further expansion, was “too uncertain, indirect or insignificant to have the requisite deterrent or dissuasive impact”.
In relation to the freedom to provide services, GTR advanced its Article 56 argument on a narrower basis than in the court below, arguing only that the interference related to the rights of GTR’s passengers to provide and receive cross-border services pursuant to Article 56 rather than any interference with the provision of such services by GTR itself. This was no doubt a result of the lower court’s finding that, if relying on the company’s own provision of services, GTR could only succeed by pointing to a contravention of the Directive. The High Court found no such contravention to be evident. Therefore, the only option was for GTR to, in the words of the court, “[ride] upon the coat tails of some of the passengers”.
The court commented, obiter, that the freedom to provide services in the field of transport was governed by Article 58 and that it would be surprising if a rail company could avoid it by, as the court (aptly) put it, “free-wheeling in the slip stream” of its passengers. To that end, the decision raised the interesting question, again obiter, of whether the substantive law of the EU permits the rights of others to be invoked in these circumstances. Rejecting as non-analogous or unhelpful the authorities cited by GTR in support, the court went no further than noting it was unnecessary to give a determined view for the purposes of the present appeal.
The court did draw attention to the fact that the court below had concentrated on the industrial action itself in reaching its conclusion that the effect was too uncertain or indirect. In fact, GTR did not suggest before the Court of Appeal that the purpose or object of the industrial action interfered with the right to provide or receive services but instead advanced the argument that it was the strike action itself which potentially interfered with the rights of the passengers. Based on the court’s interpretation of Viking, Laval and Holship – that the purpose, not the action itself, was relevant – GTR’s argument failed.
Under the heading of justification, their Lordships briefly touched on the danger of opening the floodgates:
Having reached its decision on “purely legal grounds”, the court deemed it inappropriate to address further the issue of justification. For the same reason, the court left the issue of proportionality, and whether or not this particular strike was disproportionate, tantalisingly unanswered.
This article was written by Jeremy McKeown, a pupil at Littleton.