Introduction

On July 26 2016 the Federal Labour Court confirmed its judgments from August 2015 denying compensation to a third party as a consequence of a strike (for further details please see "No damages to third party after unlawful strike?"). Two airlines claimed compensation for profit losses incurred by a strike. However, the direct opponent of the striking union, the employer and operator of Frankfurt Airport (Fraport AG), successfully claimed compensation.

Following Fraport's complaint against the strike initiated by the Air Traffic Control Personnel trade union, the court held the strike to be unlawful. Consequently, the trade union must pay compensation for damages suffered by Fraport due to the cancellation of flights as a consequence of the strike and stoppage of work.

Facts

The claimant and employer, Fraport, demanded compensation from the union on grounds of liability in tort and other infringements it suffered as a result of the unlawful strike. The union represents the interests of airport security personnel and air traffic controllers in Germany.

Fraport and the union had concluded a collective agreement which exclusively stipulated the work conditions for Fraport's employees. Sections 5 to 8 of the collective agreement could not be terminated before December 31 2017, but all other provisions could be terminated by December 31 2011. The union partially terminated the collective agreement with effect from December 31 2011. Due to the (partial) termination the employer and union started an arbitration procedure to negotiate a new collective agreement. The arbitrator recommended a new collective agreement, including amendments to the un-terminated part of the agreement (Sections 5 to 8). The union then called a strike to enforce the agreement proposed by the arbitrator. The strike ended after 14 days, following a court injunction which held it to be unlawful.

Decision

The Federal Labour Court overruled the previous instances and granted Fraport a right to compensation because the strike violated the industrial peace obligation and was therefore unlawful.

The court ruled that the strike itself must be considered as one act which cannot be divided into a lawful and an unlawful part; thus, the union's strike was, in total, unlawful. The court argued that the union used the strike to pursue the implementation of provisions which, even if amended, remained part of a valid collective agreement. Accordingly, industrial peace must be obeyed and respected regarding the provisions of the (un-terminated) agreement. The strike violated this obligation. When announcing the strike's goals, the union did not differentiate between the terminable and non-terminable provisions of the collective agreement. It was legally impossible for the union to enforce the amendments of the non-terminated part of the agreement using strike action.

In addition, the court did not follow the union's argument that it would have called the same strike, even if there had been no amendments to the un-terminated part of the collective agreement. The court stated that it would have been a different goal and therefore a different strike.

Comment

Following the August 2015 judgments, this new decision came as no surprise. The court has strengthened its jurisdiction by denying compensation to third parties affected by unlawful strikes. However, after having given only the theoretical prospect of damages in cases of unlawful strike, the court now grants such compensation to employers. In addition, the court clarified that a strike becomes unlawful in total even if only a part of its goals violate the industrial peace obligation.

Trade unions face uncertain times regarding damages, as strikes that they have called may be considered disproportionate. The direct opponent not only suffers its own direct losses, but may compensate the airlines' losses and include them in its claim against the unions.

For further information on this topic please contact Stefanie Gilcher or Hans Georg Helwig at Arnecke Sibeth by telephone (+49 69 97 98 85 0) or email (sgilcher@arneckesibeth.com or hhelwig@arneckesibeth.com). The Arnecke Sibeth website can be accessed at www.arneckesibeth.com.

This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.