The Supreme Court has ruled that under certain conditions a trade union may be liable for damages if industrial action has taken place in violation of the European Convention on Human Rights. Before this judgment, the general opinion was that employers' organisations and trade unions could not be liable for such damage claims. The decision is especially significant for small companies, which are more affected by such industrial action.
In this case, the Supreme Court considered whether the trade union was liable to pay damages to the entrepreneur for damages that the company had incurred due to industrial action, if it could be proved that the industrial action violated Article 11 of the convention and Article 1 of the convention's first supplementary protocol. Article 11 stipulates the right of freedom of association and Article 1 stipulates the right of ownership.
The entrepreneur had three employees and went bankrupt due to the trade union's industrial action. None of the employees were members of a trade union. The trade union wanted the company to sign a collective agreement which contained a system of examination fees that were intended to cover the union's expenses for supervising the collective agreement. At this time, the system of examination fees was the subject of a trial in the European Court of Human Rights (Evaldsson v Sweden, 75252/01, February 13 2007). The European Court of Human Rights concluded that the system violated the right of ownership according to Article 1. The system was considered to violate the first supplementary protocol due to the lack of transparency regarding how fees were used within the trade union.
There were several reasons why the company did not want to sign the collective agreement. However, the main reason was the system of examination fees and the trade union initiated industrial action against the company in 2006. In 2007 the company signed a local collective agreement with the trade union after a new collective agreement which contained no system of examination fees was developed. Shortly after the local collective agreement was signed, the company became insolvent. According to the administrator in bankruptcy, the industrial action taken by the trade union was the main cause of the company's insolvency.
The Supreme Court concluded that the right to take industrial action under the Constitution does not include measures that violate an individual's rights according to the European Convention on Human Rights. The Constitution does not cover industrial action in violation of the convention. However, the Constitution does not stipulate a penalty when industrial action violates the convention and therefore does not prevent industrial action in violation of the convention triggering a liability in tort. The court also stated that according to tort law and case law, there should be liability for purely economic loss in non-contractual situations where the violation of a right is to be regarded as improperly qualified.
The court stated that if the trade union's industrial action was in violation of the convention, it did not automatically mean that the union was liable to pay damages to the entrepreneur. Even if liability for damages could not be directly founded on the violation of the convention, the court held that such violation may incur liability for damages under tort law.
Whether the industrial action taken by the trade union is to be considered as improperly qualified and in violation of the convention is to be decided by the Stockholm District Court. A first-instance judgment is expected later in 2016.
For further information on this topic please contact Jörgen Larsson at Wistrand Advokatbyrå by telephone (+46 31 771 21 00) or email ([email protected]). The Wistrand website can be accessed at www.wistrand.se.