Introduction and parties
V. and its claim
1 This is the trial of an action in which the claimant, V. Line ABP ("V."),
a company incorporated and registered under the laws of Finland, seeks
certain declaratory and injunctive relief against the first and second
Defendants, respectively the I. T. W. F. ("the ITF") and The F. S. U. ("the
FSU"). At the hearing V. were represented by Mr Charles Hollander QC, Mr
Mark Hoskins and Mr Colin West; the ITF by Mr David Vaughan QC and Ms
Kassie Smith and the FSU by Ms Helen Davies.
2 V. is the 13th largest passenger shipping company in the world. It is the
registered owner of a passenger and cargo ferry, the R., the subject of
this action, ("the R." or "the Vessel") which is currently a Finnish flagged
vessel with a predominantly Finnish crew. Since 17 August 2003, the R.
has traded on the route between Helsinki in Finland and Tallinn in Estonia.
It owns and manages six other vessels, all on routes between Finland
and the Nordic states of which one, the C., was reflagged to Sweden on 1
September 2003 after cooperation negotiations with the unions. Finland
has been a member of the EU since 1995. Estonia became a member on 1
May 2004.
3 It is V.'s case that it has been unable to make any money on the
Helsinki-Tallinn route and that the R. is loss-making. It contends that
its principal competitors on the route man their vessels with Estonian
crews, which are significantly cheaper than Finnish crews. V.'s stated
position in the action is that it wishes to reflag the R. under the Estonian
flag in order to man the vessel with an Estonian crew. V.'s stance is that
it cannot continue with a position where the R. is loss-making and that,
if it is not able to reflag, it will need to sell the R.. Its stated position is
that, unless this Court grants the declarations and injunctions which V.
seeks in its Amended Particulars of Claim, it will not be able to reflag
the R., because of anticipated strike action by the FSU, and action by
the ITF, effectively requiring ITF affiliates in other jurisdictions, which
V. vessels visit, to participate in concerted boycott and other industrial
action against the R. and other V. vessels. V. contends that any such
action by the FSU and the ITF would be contrary (a) to Article 43 of the
Treaty establishing the European Community ("EC"), (the principle of the
freedom of establishment); (b) to Article 39 EC, (the principle of the free
movement of workers); or (c) Article 1 of Council Regulation 4055/86/
EEC, (applying the principle of freedom to provide services to maritime
transport between Member States and between Member States and third
countries).
4 V.'s case is that it wishes to take steps to permit it to reflag the R. as
soon as practicable after 1 March 2005.
The FSU
5 The FSU is an autonomous Finnish trade union representing
seamen. ..It is based in Helsinki, Finland.. . It is a member of the Central
Organisation of F. T. U. ("the SAK"). It has no assets or other physical
presence in the U.K. Its only connection with the U.K. is that it is an
autonomous national affiliate of the First Defendant, the ITF. It is similarly
an affiliate of the E. T. F. ("the ETF") which is based in Brussels and the
N. T. W. F. ("the NTF"). The activities of the FSU include negotiating
terms of collective bargaining agreements with shipowners' associations
in Finland, and also directly with individual shipowners with regard to
pay and terms and conditions onboard vessels owned in Finland and/
or that operate into or out of ports in Finland. In this context, the FSU
frequently concludes such agreements for non-Finnish owned vessels,
with non-Finnish employers and/or with non-Finnish crew, even though
it does not have any members onboard the vessels. It has also in the
past initiated industrial action in Finland against such non-Finnish owned
or flagged vessels (including Estonian flagged vessels), for the purpose
of securing acceptable collective agreements, and has been held by the
Finnish Supreme Court to have been perfectly entitled to do so. …
The ITF
6 The ITF is a global federation of transport workers' unions with its
Secretariat based in London. It has described its functions as, inter alia,
co-ordinating industrial action on a worldwide basis. …Today, seafarers
and dockers constitute approximately 22 per cent of the ITF membership,
the largest memberships being in road transport and in railways. …
Currently there are approximately 600 trade unions in more than 140
countries around the world affiliated to the ITF. Together these unions
represent over 4.6 million transport workers. The membership of the ITF
is divided up into eight industrial sections. …
9 The aims and objectives of the ITF …are to promote respect for trade
union and human rights worldwide; to work for peace based on social
justice and economic progress; to help its affiliated unions defend the
interests of their members; …Although the range of ITF activities is very
wide, they can be divided into three categories: representation (in relation
to employer and government organisations); information (provided to
affiliates regarding international queries); and practical solidarity.
10 The methods by which the ITF seeks to achieve its aims …can be
summarised as follows:
i) establishing and promoting close relations amongst affiliates;
ii) assisting affiliates in their drive to organise the unorganised;
iii) promoting and co-ordinating schemes of mutual assistance amongst
affiliates and supporting, by appropriate means, affiliates engaged in
disputes;
iv) disseminating information to affiliates and other interested parties
through its publications or documentation and by initiating and co-
ordinating activities on an international basis;
v) assisting workers in the transport and allied industries by providing or
helping to provide financial or material aid to such workers. …
12 One of the ITF's campaigns is the F. of C. ("FOC") campaign, which is
directed by the F. P. C. ("FPC"), a joint co-operation between members
unions of the Seafarers' Section and the Dockers' Section of the ITF. …
13 …Paragraph 235 of that document defines flags of convenience as:
"Where the beneficial ownership and control of a vessel is found to lie
elsewhere than in the country of the flag the vessel is flying, the vessel
is considered as sailing under a flag of convenience. In cases, however,
where the identification of the beneficial owner is not clear, any vessel
where there is no genuine link between the flag state and the person(s),
or corporate entity, with effective control over the operation of the vessel
shall be considered as sailing under an FOC."…
15 It was clear, therefore, that the ITF was concerned to ensure that
the FOC policy should extend to cases where the vessel was owned
by a company registered in the flag state, but where the entity having
"effective control" of the vessel, was registered or otherwise located in
another state. …
The relief sought
16 The injunctive relief sought by V., as refined during the course of
argument before me, is in the following terms:
"Draft Order for Final Injunction
UPON V. Line Abp undertaking to this court on its own behalf and on
behalf of all companies within the V. Group of companies ('V.') that they
will not by reason of
(a) the transfer of the registration of the R. to a Member State other than
Finland ('the reflagging') or proposed reflagging
(b) negotiating with a trade union in a member state other than Finland in
relation to the R.
(c) employing nationals of Member States other than Finland as crew on
board the R.
terminate the employment of any person employed by V. as at the date of
this order, whether on shore or offshore …
17 The declaratory relief sought by V. is in the following terms:
"Further, or alternatively, V. asks this Honourable Court to declare that
it is contrary to Article 1 of Council Regulation 4055/86, further or
alternatively Article 39 EC, further or alternatively Article 43 EC for the
ITF and the FSU (or either of them) to take action with the purpose or
effect of preventing or restricting the ability of V. to
(a) transfer the registration of the R. to a Member State other than
Finland;
(b) negotiate with a trade union in a Member State other than Finland in
relation to the R.;
(c) employ nationals of Member States other than Finland as crew on
board the R.."
Summary of relevant facts
…
19 On 17 August 2003 …, the R. was transferred to the Helsinki-Tallinn
route. At that time, rather than agreeing a new manning agreement,
the FSU and V. agreed that the then existing manning agreement should
remain in force for a period of three months (i.e. until 17 November
2003) and that before the end of that three month period they would
enter into a new manning agreement. There was a dispute between
the parties as to whether, in the absence of the conclusion of a new
agreement within that period, the old agreement remained in force on a
de facto basis (V.'s contention) or whether at the end of the three month
period it automatically expired as a result of effluxion of time (the FSU's
contention).
20 In the period 29 August 2003 to 16 October 2003, there was
discussion at various meetings of V.'s Management Board and Main Board
respectively as to the lack of competitiveness of the R., and the possibility
of reflagging her to the registry of another EU State. On 16 October 2003
V.'s main board decided to initiate co-operation negotiations in relation to
the possible transfer of the R. to a foreign ships' register. …Mr Jan H., V.'s
General Legal Counsel, said in evidence that the negotiations were taken
with a view to transferring the R. to a different ship's registry, although at
that stage the nationality of that registry had not been finally determined.
… As the co-operation proceedings required a period of 7 1/2 months
there was no prospect of the reflagging taking place prior to Estonia
becoming a part of the EC on 1 May 2004; the board envisaged that the
process should be finalised by end May/early June 2004, well before the
peak season began.
21 A notice to the crew dated 21 October 2003 informed it of the
proposed reflagging and of the initiation of co-operation proceedings
on that date. …On the same day V. sent a formal negotiation request
to Mr D., the trade union representative. …The notification identified
jobs affected as 185, i.e. all the crew on the R.. …Mr H. made it clear
this was not the position, responding on each occasion that Finnish
legal requirements necessitated this wording, that these were the jobs
potentially affected, and that did not in any sense mean that all those
employees would definitely lose their jobs, rather that they would either
be offered jobs elsewhere in the V. organisation or would be offered
voluntary redundancy. Indeed, in evidence, he made clear, which I
accept, that this fact would be known to the FSU, and that the procedure
had been similar in the case of the reflagging of a sister ship, the C.,
where the early documents had been couched in similar terms but no
compulsory redundancies had occurred. …
23 The next meeting took place on 4 November. Mr D. and other trade
union representatives were present. The crew representatives made
it clear that salary conditions could not be changed nor could payroll
conditions be changed. Mr Nils-Erik E., the V. Managing Director, stated
that all vessels within the fleet had to produce a result and it was not
acceptable that one vessel should be subsidised by others. …Thus it must
have been apparent to the crew representatives, from what had happened
at the meeting, that V. had in mind the real possibility of reflagging the R.
to Estonia and employing an Estonian crew in place of the Finnish crew, or
a mixed crew.
24 It was against this background that, on 4 November 2003, the FSU
sent an email to Mr M. of the ITF and Mr Ch. of the E. T. W. F., informing
them of the negotiations that had been commenced by V., requesting
them to inform all affiliated unions about the matter and requesting them
not to start any kind of negotiations with V.. The email was sent to the ITF
by a Mr Simo N., but Mr Z. accepted it had been approved by him before
sending. The email was in the following terms:
"Si. Line and V. Line are major passenger ferry and cruise line operators
in the Northern Baltic area. Both companies are Finnish and they operate
ferries that are under Swedish and Finnish flags. …Si. Line has announced
that they will flag out the famous gas turbine passenger ferry Fi. (IMO
7359632) to unknown flag and at the same time sack Finnish seafarers
(300). V. Line has started the same kind of negotiations regarding the
passenger ferry R. (IMO 7901265). …R. is trading between Helsinki and
Tallinn.
The vessels of these two companies are beneficially owned in Finland and
effectively controlled by Finnish companies and we therefore have and
keep the negotiations rights within FSU.
You are kindly asked to inform all affiliated unions about the matter and
request them not to start any kind of negotiations regarding the two
above named vessels or any other vessel belonging to Si. or V..
We would appreciate it if you could also ask affiliates to inform us
immediately in case the companies contact them in order to cover their
vessels elsewhere than in Finland.
Thanks in advance and best regards
Simo N. on behalf of FSU/Simo Z.". …
28 It seems to me to be clear that the email was intending directly to
invoke the ITF FOC policy and that this is clear, not merely from the words
of the email themselves, which reflect that policy, but also from Mr Co.'s
evidence. …
29 On 6 November 2003, in response to the email request from the FSU,
Mr M. of the ITF sent a circular letter to all affiliates organising seafarers,
inspectors and co-ordinators, informing them of the situation in Finland
and asking them to refrain from negotiating with V. ("the ITF Circular").
The ITF Circular was in the following terms:
"Dear Friends
Re: Fin. R. & Fin. Fi.
For your information, the above vessels are owned by V. Line and Si. Line
respectively, and are soon to be re-flagged from the Finnish register. …
Please be advised that since the vessels are still beneficially owned in
Finland, our Finnish affiliates still retain negotiating rights. Please refrain
from entering into negotiations with either company. In addition, if either
company contacts your union, please inform ITF London and the FSU
immediately.
Thanks for your solidarity.
Yours fraternally,
Konstantin M.
Head of Agreements Unit."
30 V. were not aware at the time that the ITF Circular had been sent by
the ITF. It only became aware of the fact when, on 24 November 2003,
at a meeting with the union representing the masters, Mr H. had read out
to him the terms of the ITF circular, although his request to be provided
with a copy was not acceded to. V. first received a copy of the letter on 5
December 2003. No communication was made direct by the FSU with any
other union. The FSU preferred to deal through the ITF. Mr Co. explained
why the email was sent to the ITF rather than by the FSU themselves to
other unions:
"… Yes, because the ITF's job is to communicate with the local unions in
the countries concerned and it would certainly not have the same value if
it came from Mr N. himself."
Mr Co. also said that he expected that affiliates would comply with the
ITF's requests…
31 …The ITF received no responses to the ITF Circular, either from its
affiliated unions or from V. itself, even once it saw a copy of the letter in
December 2003. In fact, the ITF had no contact at all with V. until it was
served with these proceedings on 1 September 2004.
32 On 14 November, the FSU set out its first formal demands. It
contended that the manning agreement for the R. expired on 17
November, the effect of the expiry of the manning agreement being that
the obligation of industrial peace under Finnish law would be at an end
and they would be at liberty to commence strike action. The FSU offered
to renew the manning agreement on the following conditions: first, that
the number of the crew for which the manning agreement provided
should be increased by eight persons; second, that V. should end the co-
operation negotiations which it had started in relation to R.; third, that it
should put an end to any plans to re-flag the Vessel; and fourth, that it
should commit itself to continue trading under the Finnish flag. …There
was a further meeting as part of the co-operation negotiations on 14
November. Mr D., on behalf of the FSU, made clear that the FSU would not
accept any dismissals and would presume that all permanent employees
would be offered employment in the future. On 17 November V. wrote to
the FSU accepting the proposed increase in crew numbers in the manning
agreement. They set out a draft as to the way in which the increased crew
number would be deployed under the new agreement, the FSU not having
in their original proposal been precise as to deployment. In its response,
V. also indicated that it did not consider the co-operation negotiations
(i.e. relating to the reflagging) had anything to do with the negotiations
relating to the Manning Agreement, and that such negotiations would not
be terminated. It also threatened that, if the FSU took action to force the
cooperation proceedings to be terminated, it would be forced to "perform
measures which would lead to dismissal".
33 On the same day, V. commenced proceedings before the Finnish
Labour Court seeking a declaration that the then existing manning
agreement remained in force after 18 November 2003, even if no new
agreement had been reached before that. This was in an attempt to
pre-empt the FSU from taking strike action. On 18 November V. wrote
to the crew explaining that they had written to the FSU conceding the
FSU's request to increase by eight persons the manning level under the
agreement, and that the FSU's attempt to link the manning agreement
with the reflagging was unjustified. The FSU responded to V.'s draft
manning agreement by letter dated 18 November 2003, under cover of
which it provided a further revised draft manning agreement. …
34 Because the negotiations in relation to a new manning agreement had
not resulted in agreement and because in the FSU's view the previous
manning agreement had by then terminated, by the same letter the FSU
gave notice in accordance with the Finnish Act on Mediation in Labour
Disputes that it intended to commence industrial action measures in
relation to the R. at 19:00 hours on 2 December 2003. …
36 An FSU press notice on 18 November justified the call to strike by
stating "it is now a matter of the jobs of the Finnish seamen.". On 20
November the Finnish Labour Court gave the parties notice to attend a
preparatory meeting on 2 December. …It was thus apparent to V. that it
would not be able to obtain a judgment of the Labour Court (if it were in
V.'s favour, confirming the continued existence of the manning agreement,
and therefore the FSU's inability to call for strike action because of the
continued obligation of "industrial peace") prior to the start of the FSU's
threatened strike action. …
38 …on 24 November, at a meeting with the union representing the
masters, Mr H. had read out to him the terms of the ITF circular. At a
meeting with Mr Z. on the same day Mr H. told Mr Z. he knew the ITF had
sent this letter and Mr Z. did not deny it. In his evidence, Mr H. explained
the effect of the ITF circular on V.'s thinking. Mr Vaughan suggested to
him in cross-examination that the ITF circular had, in fact, had no effect
at all on V.'s thinking. I accept Mr H.' evidence on this point. In essence
his evidence was that reflagging needed to be achieved so that Estonian
wage rates could be obtained in such a way that the FSU, who were
threatening strike action, would not interfere. …
39 On 25 November 2003, V. commenced proceedings in the Finnish
District Court seeking an urgent interim injunction restraining the FSU
from initiating the threatened industrial action against the R. plus a fine
of euro500,000 against the FSU. The grounds asserted for such relief
included the allegation that the proposed industrial action was unlawful
under Finnish law and secondly that the threatened strike was a breach of
Community law. The latter assertion was made specifically with reference
to the right of free provision of shipping services under EC Regulation
4055/86 and to the right of freedom of establishment under Article 43
of the EC Treaty. These claims were all denied by the FSU. V. made no
reference to the ITF's Circular in its application to the Finnish District
Court despite the fact that V. had become aware of the ITF letter on 24
November.
40 On 26 November FSU sent strike instructions to the crew of the
R., warning them of the severe consequences of strike breaking and
appealing to the crew on the basis that the aim of V. was to replace
"Finnish seamen" with a cheaper labour force.
41 On the same day at a meeting with Mr Sa. Mr H. told Mr Z. and the
FSU that the reflagging would be effected without any redundancies. Mr
Sa. proposed that the strike should be deferred but Mr Z., knowing by
now that the Labour Court would only conduct the preparatory hearing on
2 December and thus no doubt appreciating that a delay could only give
V. a better chance of getting a court ruling, declined. By this time, V.'s
position in the negotiations had clearly weakened and this was reflected
in the terms which it was offering. At this meeting, Mr H. proposed three
options for the R.:
i) the vessel's flag be exchanged for another European flag that would
accept Estonian wage levels (the Estonian flag being one such flag,
although there were also others). The deck and engine crew, as well
as the catering officers would remain Finnish. Some of the crew in
the catering department would be replaced by Estonians. All current
staff affected by the proposal would be guaranteed current terms and
conditions and would be transferred to other vessels.
ii) The vessel would continue to sail under the Finnish flag, but with the
benefit of an agreement providing for Estonian wage levels for 38 crew
members in certain occupational groups.
iii) The vessel would be taken out of service.
42 Mr Z. requested that these proposals be put in writing, which V. did
by its letter dated 27 November 2003. In this letter, V. indicated that it
accepted the FSU's revised draft manning agreement, but that it did not
accept any of the FSU's other demands. In this letter, V. also expressly
undertook that in the event that the R. was re-registered to a ships
register that permitted Estonian salaries and employment law to be
employed:
"the employment of Estonian crew will be limited to the catering
department and that the personnel within V. Line which is affected by
shortage of work will not be made redundant or be dismissed."
43 Two further meetings with the National Conciliator took place on 28
November and 1 December 2003. At the first of these meetings, Mr Z.
re-iterated the FSU's position that V. was entitled to change the flag of
the R., but that under Finnish law, the FSU nonetheless had the right to
demand that the vessel comply with Finnish terms of employment and
Finnish law, in so far as the latter were not in contradiction with the laws
of the flag state. …The final proposal was put to V. on 1 December and
accepted by it on 2 December, hours before the strike was due to start.
The result was, in effect, a total capitulation by V.. Under the terms of
the settlement agreement, it agreed the FSU's terms as to manning,
although the port cleaning of hotel and restaurant could be carried out by
external labour provided this did not affect the jobs of the crew. It agreed
to discontinue the actions in the Finnish Labour Court and the District
Court. Most importantly, it agreed to restrain from reflagging the R. until
28 February 2005 and to notify the crew that all plans to change the flag
were given up. …Also on 2 December 2003, and in accordance with the
terms of the settlement agreement, the parties also entered into a revised
Manning Agreement for the R..
44 I accept the evidence of Mr H. and Mr E., V.'s Managing Director, that
V. was forced to capitulate because of the threat of strike action. …
45 The Claim Form in these proceedings was issued, without any warning
to either Defendant, on 18 August 2004. They were not served on either
Defendant until 1 September 2004. …
46 The obligation under the settlement agreement not to reflag the R.
expired on 28 February 2005. The evidence of the V. representatives,
which I accept, is that, up until 15 December 2004, they believed that,
in a similar manner to November 2003, on 1 March 2005 the FSU would
have used the termination of the settlement agreement as a basis for
strike action: …As part of the 2005 CBA, the FSU, the FSA and the ÅR
further agreed that all current manning agreements such as the one
applicable to the R. will also continue to be valid until 29 February 2008.
It is common ground that this means that so long as the R. remains
under the Finnish flag, and V. has not announced any intention of re-
flagging, the parties are subject to the obligation of industrial peace until
29 February 2008….
V.'s plans for the future
…
48 …V. has not yet formally taken the decision to reflag the R.. As Mr H.
accepted, before that decision could finally be taken, it will be necessary
for V. to undertake a further round of co-operation negotiations in which
it will be necessary for V. to explore the alternatives available for the R.
at that precise time and the arrangements that can be made to minimise
the impact of any proposal on the existing workforce. In accordance with
the Finnish legal requirements, these co-operation negotiations will take a
minimum of six weeks. …
49 V. does not believe that it will be possible to reflag the R. without the
protection of the court by way of injunctive relief, given the previous
history of the matter. It believes that, unless they are restrained by a
Court order, the ITF and the FSU will take steps to prevent or restrict V.
from:
i) reflagging the R. with the flag of a country other than Finland, including
the flag of another Member State;
ii) negotiating and entering into a collective bargaining agreement with a
trade union based in a country other than Finland, including trade unions
based in other Member States; and
iii) employing non-Finnish nationals as crew, including nationals of other
Member States. …
The issues
52 The ITF and the FSU contend that the case has always been put by V.
on the basis that what both of the Defendants are seeking to prevent is
the reflagging of the R.. However, the Defendants say that …they have
no objection to the reflagging per se; rather, they say, their concern is,
and remains, as to the terms and conditions of employment that will be
applied on the vessel in the event that such reflagging of the R. occurs…
54 The issues that arise may be summarised as follows, in the order in
which I propose to determine them:
i) Should this Court refuse to entertain V.'s claim on the grounds of comity
or analogous discretionary grounds? ("The comity issues").
ii) Does V. on the balance of probabilities intend to reflag the R.?
iii) Are the anticipated future actions of the ITF and/or the FSU contrary to
one of the Community rules on freedom of movement?
i) The comity issues
55 The Defendants submit, by way of a threshold point, that this
Court should decline to act in this matter on the basis of 'comity' or on
analogous discretionary grounds. …
56 There was little dispute as to the correct articulation of the principle of
comity. Comity is a principle of international law. As Diplock LJ explained
in Buck v Attorney-General [1965] Ch 745, at p 770, the rules of comity
comprise
"the accepted rules of mutual conduct as between state and state which
each state adopts in relation to other states and expects other states to
adopt in relation to itself."
Comity is accordingly not a question of exercising restraint as a matter of
discretion, but is rather a principle of public international law. …Thus the
general principles are that the English court should refrain from exercising
jurisdiction if to do so would involve an adjudication upon the legality of
actions of foreign sovereign states. …
58 In Westland Helicopters Limited v Arab Organisation for
Industrialisation [1995] QB 282 Colman J stated:
"it is not open to the English courts to determine issues of public
international law the result of which determination is likely to affect
foreign sovereign states. In particular, the adjudication of the question
of the validity of the act of a foreign sovereign state measured by the
principles of public international law is no more appropriate in the English
courts than is adjudication of the validity of the acts within its own
territory of a foreign sovereign state by reference to its own constitutional
powers. The latter exercise has long been held to be contrary to the
doctrines of sovereign immunity."
59 It follows from this principle that the English courts should not
determine whether a foreign sovereign state is in breach of any
international treaty obligations, even in an action between private parties:
Westland at pp 292-294.
60 It was common ground before me …that, under Finnish domestic law,
without regard being paid to EU law, the FSU would prima facie have the
right to initiate industrial action in Finland against V. in the circumstances
of this case. This right derives from Article 13 of the Finnish Constitution
which enshrines the right to freedom of association…
61 Thus, it is clear that, if V. were to reflag the R. and to negotiate a
CBA with an Estonian union…, then, as a matter of Finnish domestic
law, looked at in isolation and without any regard being paid to EU law,
the FSU would have the right to initiate industrial action against the
R. and other vessels in the V. fleet, in order to defend its interest in
having its own collective agreement. Moreover, the FSU would have this
right, whether or not V.'s proposals involved the loss of jobs for any FSU
member on the R. or elsewhere in the V. fleet. If the proposals did involve
such job losses, this would constitute a further justification for industrial
action, but it is not a necessary precondition to it. For this reason, V. has,
throughout this action, quite properly accepted that in order to obtain any
relief in this case, it needs to win on Community law.
62 Further, it was common ground before me that, since Finland's
accession to the EU in 1995, Community law obviously forms an integral
part of the legal system of Finland, which the Finnish courts are bound
to apply; see Case 6/64 Flaminio Costa v ENEL [1964] ECR 585 at 593.
Moreover, by virtue of the doctrine of supremacy, directly effective or
directly applicable provisions of Community law take precedence over
any incompatible provisions or measures "of any kind whatever" of the
domestic law of Finland. …
64 In my judgment neither the principle of comity, nor related
discretionary principles, are engaged here so as to prevent me from
deciding whether or not to grant permanent injunctions. My reasons,
which are largely based upon the submissions advanced by Mr Hollander
upon behalf of V., are as follows.
65 The provisions of Finnish law on which the Defendants rely are
permissive rather than mandatory. They provide the FSU with a right to
organise strike action, but do not require it to do so in the circumstances
of the case. Finnish law thus accords a right to strike, but leaves it to the
FSU to determine how to exercise that right. It is the way in which the
FSU has exercised that right which, V. alleges, has led to (or will lead to)
illegality under Community law. The illegality thus attaches to the actions
of the FSU and not to any provisions of Finnish law.
66 Moreover, it is plain from the primary Finnish legal materials before the
Court that there is no inconsistency between Finnish law and Community
law, in that Finnish law has expressly decided that the prima facie right to
strike must be exercised in accordance with Community law. …
68 Thus no provision of Finnish law or any acts on the part of the Finnish
state are contrary to Community law. A ruling by this Court in the
Claimant's favour would not involve a finding that Finnish law, or some
action on the part of the Finnish state, is contrary to European law. All
it would involve is a finding, that, because Finnish law now incorporates
Community law, the extensive rights to take industrial measures afforded
under purely Finnish law, had been restricted. The Claimant's case under
Community law is directed at the intended actions of the FSU and the ITF,
and not at any provision of Finnish law or any acts of the Finnish state.
It does not appear to me that a decision by me, in the circumstances of
this case, that the wide right existing under Finnish domestic law prior
to its entry to the EU, to take industrial measures has, as a matter of
Finnish law, to be restricted, because the exercise of that right by the
FSU would otherwise be incompatible with Community law, involves any
encroachment by me upon the principle of comity. …
70 The second reason why, in my judgment, the invocation of principles
of comity, or analogous principles, is inappropriate is that this Court's
jurisdiction, which is conceded by both Defendants, arises under
the Brussels Regulation (Regulation 44/2001). Where jurisdiction is
founded on the Brussels Regulation (or on its predecessor, the Brussels
Convention) the Court has no power to decline to exercise that jurisdiction
on the ground that it would be more suitable for the dispute between
the parties to be litigated before the courts of another state. Jurisdiction
against the ITF, which is domiciled in London, is based on Article 2 of the
Regulation…
Jurisdiction against the FSU is based on Article 6(1) of the Regulation…
72 In the present case, jurisdiction as against the ITF is based on
its domicile in England. …Conflicts of jurisdiction can arise under the
Regulation. …The Regulation mechanism for resolving such conflicts is set
out in Article 27. …
73 The Regulation resolves these conflicts of jurisdiction, therefore,
by asking which court was first seised. In the present case the English
court is the only court which is 'seised'. Its jurisdiction has, furthermore,
already been established. The effect of Article 27 in the present case
is therefore that if this Court were to decline jurisdiction, the courts of
Finland would have no power to hear the case. That would certainly be so
if the English court were to stay the proceedings, since it would remain
'seised' of them. …As Mr Hollander submits, the fundamental point is
however that the Regulation resolves conflicts of jurisdiction by according
to the parties a choice of where to sue. In the usual course, it will be the
Claimant's choice. The Regulation therefore recognises the Claimant's
choice, in cases where the Courts of more than one Member State have
jurisdiction, to sue in the Court of his election. There is therefore no
scope under the Regulation for the Claimant's choice of jurisdiction to be
defeated by the Court, either of its own motion or on the application of
the Defendant, by declining to exercise its jurisdiction on the ground that
it considers that the Courts of the alternative jurisdiction would be more
suitable to hear the claim. This is consistent, in my judgment, with the
approach taken in cases before the European Court of Justice in which the
issue of compatibility of the doctrine of forum non conveniens with the
Regulation has arisen; see e.g. the opinion of Advocate General Léger in
Andrew Owusu v N.B. Jackson trading as "Villa Holidays Bal-Inn Villas"&
Others [2005] 2 WLR 942 and Turner v Grovit & Others (Case C-159/02,
27 April 2004). In the former case the A-G opined that the application
of the doctrine of forum non conveniens is contrary to the Regulation
in a case where the clash of jurisdiction is between a Member State
court and the courts of a non-Member State; that view was upheld by
the judgment of the Court of Justice handed down on 1 March 2005. Mr
Hollander submitted that, a fortiori, that must be the case which involves
the choice of jurisdiction between the courts of two Member States. I
agree. In Turner v Grovit the Court of Justice held that it was incompatible
with the Brussels Convention for the Courts of one Member State to issue
an anti-suit injunction preventing a party to litigation before that Member
State from proceeding with related litigation before the Courts of another
Member State. Although the present case is not concerned with anti-
suit injunctions, nevertheless, Turner demonstrates that it is not open
to national Courts within the Community to seek to go behind the rules
of jurisdiction in the Brussels Regulation. Rather than issuing anti-suit
injunctions, the Courts in one Member State must leave it to the Courts of
the other Member State before which the second litigation is proceeding
to determine the scope of their own jurisdiction and to determine for
themselves how to dispose of the litigation before them. …
Likewise, in a civil or commercial case over which the English court has
jurisdiction, but which may touch upon Finnish matters, the Finnish courts
must 'trust' the English court to exercise that jurisdiction, just as the
English courts must 'trust' the Finnish courts in the converse case. Turner
v Grovit also underlines the "compulsory" system of jurisdiction amongst
Member States in the Community; that is to say, a system in which the
Courts which are accorded jurisdiction under the Regulation must exercise
that jurisdiction, except in those specific cases where the Regulation
provides the contrary. …
78 Related to the Defendants' comity arguments was the argument that I
should not grant relief as a matter of discretion, because any such order,
they submitted, would not be recognised or enforced in Finland. However,
the expert evidence before me, in particular that of Professor Bruun,
certainly did not go anywhere near establishing that, if I were to find in
favour of V. and grant injunctions or declarations, the Finnish Court would
either decline to enforce any such order, or would in fact be entitled to
do so under the Regulation. There is, of course, a mechanism within the
Regulation by which concerns of purely national public policy may be
accommodated. Article 34.1 provides as follows:
"A judgment shall not be recognised:
1. If such recognition is manifestly contrary to public policy in the Member
State in which recognition is sought."
Thus, if the judgment of the Courts of one state on a civil or commercial
matter did indeed raise issues involving the public policy of another
Member State, that latter state could refuse to recognise enforce the
judgment of the courts of the first State. However, there is no parallel
provision in the jurisdiction section of the Regulation which enables the
Court of the first State to refuse to exercise its jurisdiction simply on
the ground that the case raises issues of public policy in the second
Member State. Further, although the Courts of the state of enforcement
can review the compatibility of the substance of the judgment with their
own public policy, in no circumstances can they review the jurisdiction of
the adjudicating Court. Article 35(3) of the Regulation states that:
"The test of public policy referred to in point 1 of Article 34 may not be
applied to the rules relating to jurisdiction."
79 Thus, the mere fact that the case was brought in a particular Member
State can never provide a ground for refusing to enforce the judgment
in another Member State. Likewise, in the circumstances of this case,
my provisional view …is that the Finnish courts would be obliged by
Community law to recognise and enforce any judgment of the English
court without first making a reference to the ECJ. …Moreover Renault
SA -v- Maxicar SpA & Another (Case C-38/98) [2000] ECR I-2973
paragraphs 26-34 establishes that a court that is called upon to enforce
a judgment may not rely on the public policy exception in Article 34(1) of
Regulation 44/2001 to refuse recognition of a decision emanating from
another Contracting State on the ground that it considers that national or
Community law was misapplied in that decision.
80 In the present case, it is common ground that, as demonstrated by the
Rakvere, the right to strike in Finnish law is subject to directly effective
Community law rights. The English court is being expressly invited to take
account of EC law as applied in the Finnish legal system to the right to
strike. Refusal and enforcement of such a judgment could therefore not
be opposed in Finland on the ground that the English court had misapplied
Finnish or Community law in reaching its decision. There would therefore
be no basis for a preliminary reference to be made by the Finnish court
concerning the substance of the English court's judgment.
81 Article 34.1 can only apply, therefore, where the substance of the
judgment is considered to be contrary to public policy in the Member
State where enforcement is sought. But, in my judgment, it is not for me
to second guess the possible attitude of the Finnish Courts in this respect.
If I were to hold that, in present circumstances, the right under Finnish
law to bring industrial action had indeed been restricted by Community
law, then it is difficult to see what scope there would be for the invocation
before the Finnish Courts of Article 34.1. Accordingly, with the greatest
respect and deference to the Finnish Courts, I do not regard the fact
that there is a possibility that the Finnish Courts may not enforce any
judgment of mine as a reason that can or should affect my determination
of the issue as to whether I should entertain this claim.
82 It follows that I decide against the Defendants on their threshold
arguments in relation to comity and associated discretionary matters.
Does V. on the balance of probabilities intend to reflag the R.?
…
91 Accordingly, I find the following as facts:
i) V. treats each vessel as a separate business unit for the purpose of its
forecasts. It has seven vessels and therefore seven business units. The R.
is a separate unit. Each unit has to be profitable on a free standing basis
and also make a contribution to overheads of the company as a whole.
ii) Although no final decision had yet been made, it is the directors'
settled intention, provided that the position in relation to the Defendants'
threats of industrial action could be addressed, whether by relief granted
by this court, or otherwise, to re-flag the R. to Estonia so as to reduce
manning costs and to put the R. in a competitive position on the Tallinn
route. It was accepted by the Defendants (in a witness statement of
Mr Z.) that an Estonian crew would cost less than a Finnish crew, and
that the only dispute was to the extent of the saving. That issue is not
material, since it does not undermine V.'s evidence as to its intentions.
iii) If re-flagging were not possible, the real likelihood is that the vessel
would be sold, because it could not continue to run on a profitable basis.
iv) Although V. had, for the purposes of comparison, obtained a costings
quotation from Ha., a manning agency (which proceeded on the basis that
Ha. would provide all management services for the crew), V. would in fact,
it if re-flagged the R. wish to employ a crew itself, rather than through a
crewing agency. Mr H. told me that the use of a manning agency as an
employer was not V. company style. It would prefer to be the employer
itself. The intention was to use an Estonian crew with an Estonian CBA
entered into itself, thereby expecting to improve significantly upon the
terms offered by Ha.. As Mr H. made clear
"All of the options would however involve the employees of the R. being
covered by an Estonian CBA with an Estonian union affiliated to the ITF".
v) V. has not yet decided what would be the precise method of conducting
the R.'s business, or on what steps it would take in respect of crew
management to achieve the transfer to an Estonian crew, if the vessel
were re-flagged. One possibility initially envisaged was a bareboat charter
to its existing Estonian subsidiary, which would then become the employer
of the crew. …
92 Accordingly, it follows that I am against the Defendants on their
submission that there is too much uncertainty about V.'s intentions to
form the basis of relief for the grant of injunctions. I am satisfied that V.
has proved that it does indeed intend to re-flag the R. in Estonia.
Are the anticipated future actions of the ITF and/or the FSU contrary to
one of the Community rules on freedom of movement?
93 As Mr Mark Hoskins, junior counsel on behalf of V., submitted, …in
order to determine whether an act or a threatened act is contrary to one
of the free movement rules, it is necessary to ask the following series of
questions: (see Case C-288/89 Stichting Collectieve Antennevoorziening
Gouda & Others -v- Commissariaat voor de Media [1991] ECR I-6839
paragraphs s 9-16:
i) Is there a restriction on free movement?
ii) If so, does the particular article relied upon give a direct remedy to
V., as being an article which applies as between private parties? In other
words, does the article have horizontal direct effect?
iii) Is the restriction directly discriminatory?
iv) If so, is it justified by a public policy, public safety or public health
objective?
v) If the restriction is not directly discriminatory, but is indirectly
discriminatory or indistinctly applicable:
a) Is it objectively justified by a public interest requirement?
b) Is that public interest already protected in another relevant Member
State (mutual recognition)?
c) If not, are the measures taken appropriate to achieve the intended
objective?
d) If so, are the measures taken proportionate, i.e. limited to what is
necessary to achieve that objective?
Restriction upon the freedom of establishment
95 …Article 43 EC provides as follows:
"Within the framework of the provisions set out below, restrictions on
the freedom of establishment of nationals of a Member State in the
territory of another Member State shall be prohibited. Such prohibition
shall also apply to restrictions on the setting up of agencies, branches, or
subsidiaries by nationals of any Member State established in the territory
of any Member State.
Freedom of establishment shall include the right to take up and
pursue activities as self-employed persons and to set up and manage
undertakings, in particular companies or firms within the meaning of the
second paragraph of Article 48, under the conditions laid down for its own
nationals by the law of the country where such establishment is effected,
subject to the provisions of the chapter relating to capital".
V.'s pleaded case under Article 43 EC is found at paragraph 20(c) of
its Particulars of Claim. V. pleads that the acts of the Defendants that
"would prevent or restrict [it] from being able to re -flag the R. in another
Member State" are in breach of Article 43 EC.
Will the Defendants' anticipated future acts amount to a restriction on V.'s
freedom of establishment?
…
99 …In my judgment, the Defendants' actions in 2003, and the
implementation of the ITF's FOC policy at that time, would, if repeated
after any future announcement by V. of its intention to reflag to Estonia,
amount to a restriction on V.'s freedom of establishment under Article
43. Further, on the evidence which I have heard, I conclude that it is
overwhelmingly likely that, even if V. were to give the undertaking which
it has offered this Court not to make any existing permanent employees
on the R. redundant, the same or a similar course of action would be
pursued by the Defendants. On the evidence which I heard, I do not
regard it as uncertain what action the Defendants are likely to take.
100 My reasons are as follows. The ITF's FOC campaign is directed at
preventing/restricting reflagging. The primary objective of the FOC
campaign is to prevent shipowners from flagging vessels in a country
which is different from the nationality of the beneficial owners of the
vessels. The basic principle applied is that the unions in the country of
beneficial ownership of a vessel own the negotiating rights in respect of
that vessel, regardless of where it is flagged. The ITF has no discretion
in the application of this rule. The FOC campaign is enforced by boycotts
and other solidarity actions. …So far as the role of the ITF in the present
dispute in relation to the R. is concerned, it was clear that both the e-mail
sent by Mr N. to Mr M. dated 4 November 2003 and the ITF circular were
sent consistent with, and pursuant to, the ITF's FOC policy ….
101 Moreover, the evidence made it clear that the ITF is not maintaining
its stance merely because, at the time when the FSU called on the ITF
for assistance, there was a possible threat to the jobs of the crew of the
R.. That is clear from the fact that, as Mr Co. accepted, the application
of the ITF's FOC policy is not dependent on a threat of redundancies.
It is triggered wherever a ship is beneficially owned in one country and
flagged in another. Whenever this condition is fulfilled, the ITF has no
discretion on this issue. It is also self-evident that the ITF has maintained,
and intends to maintain, its circular in force despite the fact that V. has
indicated that it is prepared to give an undertaking that there will be no
involuntary redundancies as a result of the re-flagging of the R..
102 Nor do I accept the assertion made by the Defendants that V. would
be prevented from negotiating a CBA with any Estonian union, not as
a result of the ITF's circular, but rather as a result of the relationship
between one of the Estonian unions, namely the ESIU, and the FSU (and
therefore nothing to do with the conduct relied upon as the basis for the
grant of injunctive relief). Mrs Va. (a representative of ESIU) explained
in her evidence that the ESIU's compliance with the ITF's FOC policy is
one of the reasons why the ESIU would not negotiate with V. without first
consulting the FSU. Furthermore, there are two other Estonian unions
which V. could negotiate with were it not for the ITF circular.
103 Likewise I find the FSU's contentions that it has no objection to
the actual reflagging, and, therefore, that its acts have not and will not
hinder or restrict V.'s freedom of establishment, as having a total air of
unreality about them. The ITF circular was procured by the FSU pursuant
to the ITF's FOC policy and within the scope of that policy. It will only
be countermanded either by court injunction or if the FSU asks for it to
be countermanded. The FSU's attitude is manifest both from its press
releases and from its attitude in the dispute in October/November 2003.
…
106 It is clear on authority that V.'s intention to re-flag the R. to Estonia
will …amount to a further establishment of V. in a Member State. The
concept of establishment is a broad one which covers any participation,
on a stable and continuous basis, in the economic life of a Member State
other than that of origin; see Gebhard (above) at paragraphs 23- 25. Re-
flagging of a vessel in a Member State clearly involves the exercise of
an establishment right. Thus in Case C-221/89 Factortame [1991] ECR
I-3905 paragraphs 19-23, the ECJ held that:
"... where the vessel constitutes an instrument for pursuing an economic
activity which involves a fixed establishment in the Member State
concerned, the registration of that vessel cannot be dissociated from the
exercise of the freedom of establishment."
In the present case, the R. is already used to pursue an economic activity
which involves a fixed establishment in Estonia, by way of V.'s existing
Estonian subsidiary. The registration of the R. in Estonia would constitute
an additional act of establishment. …
108 Accordingly, in my judgment, the anticipated future actions of the
Defendants would indeed amount to a restriction on V.'s right to freedom
of establishment within the scope of Article 43 EC and V. has indeed
proved that it intends to establish itself in Estonia within the meaning of
that Article.
Does Article 43 give a direct remedy to V., as being an article which
applies as between private parties? Or, in other words, does the article
have horizontal direct effect?
109 The Defendants accept that Article 43 is "directly effective" in that it
confers rights on individuals and can therefore be invoked and enforced
by individuals in national courts; see paragraph 148 of their closing
submissions and Case 26/62 Van Gend en Loos v Netherlands [1963] ECR
1. However, the Defendants contend that the question at issue is against
whom, and in respect of what, can these free movement provisions be
enforced. …
111 Mr Hollander and Mr Hoskins put forward three reasons why Article
43 has full horizontal direct effect. …
I do not consider that such distinction, if any, provides any rational
explanation for the non-application of the relevant article between private
persons. The freedom of establishment likewise impacts directly on the
labour market. Accordingly, in my judgment, V. can invoke Article 43 in
this case.
Are the anticipated acts of the Defendants directly discriminatory
restrictions?
116 …A directly discriminatory restriction may be defined as one which
is applicable on the basis of a person's origin or nationality (see Gouda
above). For example, in Case 167/73 Commission v French Republic
[1974] ECR 359, the ECJ confirmed that provisions of the French Maritime
Code that required that a certain proportion of the crew of a ship to be
of French nationality were contrary to Article 39. Similarly, in Case 2/74
Jean Reyners v Belgian State [1974] ECR 631, the ECJ held that Article 43
caught professional rules that refused admission to the Belgian Bar to a
Dutch national who had received his legal education in Belgium solely on
the basis that he was not a Belgian national. …
119 … I find proved that, in relation to the R., the FSU's principal purpose
was and is to protect Finnish jobs. In my judgment that is directly
discriminatory. Any purpose that the FSU may have had to protect the
interests of Baltic seafarers generally, if indeed it had such a purpose, I
hold to be a secondary and very much a subservient purpose.
120 Accordingly, I conclude that, based upon what occurred in 2003,
and the evidence which I have heard, that the anticipated conduct of the
Defendants would be directly discriminatory.
Is the directly discriminatory restriction justified by a public policy, public
safety or public health objective?
121 The Defendants contend in the alternative to their submission that
there was no relevant restriction, that any impediment or restriction of
V.'s exercise of its freedom of establishment under Article 43 EC caused
by the Defendants' actions is justified. …
122 A directly discriminatory act may only be justified pursuant to an
express exemption in the EC Treaty (see Case C-288/89 Gouda (above)
paragraph 11). Article 46 EC provides an exemption for:
"provisions laid down by law, regulation or administrative action providing
for special treatment for foreign nationals on grounds of public policy,
public security or public health."
124 …The ECJ has held that the power to invoke the public policy
exception must be appraised by reference to fundamental rights,
in particular as articulated in the ECHR: see Case C-260/89 Elliniki
Radiophonia Tileorassi AE v Dimotiki Etaria Pliroforissis & Another ("ERT")
[1991] ECR I-2925 and Case C-112/00 Eugen Schmidberger v Austria
[2003] ECR I-5659 which underline that the ECJ will pay special attention
to the European Convention on Human Rights, and that measures that
are incompatible with the observance of rights there recognised are not
acceptable in the Community. In my judgment, however, it cannot be the
case that the exercise of fundamental rights of freedom of association
or expression, or to take industrial action, (whether enshrined in Articles
10 and 11 of the ECHR, or Article 13(2) of the Finnish Constitution
or elsewhere), can, without more, authorise or justify discrimination
on grounds of nationality or, to take the example used in argument,
discrimination on the grounds of sex. …
125 Article 14 ECHR provides:
"The enjoyment of the rights and freedoms set forth in this Convention
shall be secured without discrimination on any ground such as sex,
race, colour, language, religion, political or other opinion, national or
social origin, association with a national minority, property, birth or other
status."
126 In my judgment, it cannot, compatible with Article 14, be said, for
example, that workers have a fundamental right to strike to prevent
women being employed on ferry boats. Likewise, if, as I have held,
the anticipated actions of the FSU and the ITF are indeed directly
discriminatory on grounds of nationality, I do not see how the exercise
or enjoyment of the right to take industrial action to prevent the re-
flagging can possibly be characterised as a "fundamental right" recognised
by Community law or characterised for the purposes of Article 46 as
a "provision[s] laid down by law, regulation or administrative action
providing for special treatment for foreign nationals on grounds of public
policy". …
128 If I am right on the above points…, it follows that the Defendants'
anticipated actions will be in breach of Article 43 EC. …
Conclusion
140 In my judgment, the Defendants' anticipated actions will involve an
unlawful restriction on V.'s freedom of establishment, which this Court is
entitled to restrain by the grant of injunctive relief.
Alternative free movement provisions
141 If I were wrong in my conclusion that V. can rely on the freedom
of establishment (because it does not have horizontal direct effect or
because the freedom of establishment is not engaged), I would conclude,
somewhat hesitantly, that the freedom of movement of workers was
engaged, or, if that were wrong, that the freedom of the provision of
services was engaged. However, in the light of my decision in relation to
establishment, it is not necessary to burden this already lengthy judgment
with the reasons for those views.
Discretion and reference to the ECJ
142 Having decided the comity issues adversely to the Defendants, and
subject to one point, I do not consider that there are other factors that
would, in the exercise of my discretion, dissuade me from exercising my
discretion to grant a permanent injunction. That one point is this: if I
were of the view that I should refer the questions of EC law to the ECJ
in order to obtain a preliminary ruling, then I would decline to make a
permanent injunction and would have to give consideration as to whether
I should grant interim relief pending the reference. Accordingly, it is to the
question of reference that I now turn.
143 This Court is given jurisdiction to refer questions to the ECJ by Article
234 of the EC Treaty…
154 I have decided, in the exercise of my discretion, and not without
some hesitation, that it is not appropriate for this Court to order a
reference to the ECJ. …
vii) I have given serious consideration to whether it would be appropriate
to make a reference so as to give the Finnish Government an opportunity
to intervene. As indicated by Bingham J in Commissioners of Customs
& Excise v Samex ApS [1983] 1 All ER 1042 at 1055, the opportunity
for other Member States to intervene is a relevant factor. However, for
the reasons stated, I do not accept the Defendants' submission that this
court has effectively been asked to "disapply Constitutional provisions of
Finland, Finnish legislation and caselaw on the fundamental right to take
industrial action", or that I am taking "a definitive view to the legality of a
[Finnish] law….
155 Accordingly, in the exercise of my discretion I decline to make a
reference.
Conclusion
156 It follows that I will make permanent injunctions and declarations
substantially in the form sought by Mr Hollander on behalf of V., with
appropriate amendments to reflect the terms of this judgment. I will
require V. to give the undertakings offered as to its current permanent
employees on the R.. I will hear further argument as to the precise terms
of the order. …