In December 2004 two Swedish trade unions, the Swedish Building Workers’ Union and the Swedish Electrican’s Union took industrial action against a Latvian construction company, Laval, which was carrying out construction work at a school in the town of Vaxholm. The Swedish unions demanded that Laval should enter into a Swedish collective agreement for workers posted to Sweden from Latvia. When Laval refused to sign such collective agreements the unions initiated a blockade of the work place. As such, Laval was forced to end its work (a Swedish construction company taking its place).
Laval argued that the industrial action was in breach of the European Community Law of free movement of individuals and services. The Swedish unions contended that the industrial action was consistent with the European Community Law and cited the Posted Workers Directive (96/76/EC).

On 9 January 2007 the case (known as either Laval or Vaxholm) was heard by the European Court of Justice (ECJ). The main issue for the ECJ to consider was whether Swedish trade unions have a right to take industrial action to compel non-Swedish EU companies, which carry out temporary work in Sweden, to sign collective agreements on the same terms as Swedish employers. The ECJ decision will be of great value to the Swedish labour market where employment conditions are largely regulated by collective agreements.

The ECJ is also considering whether the Swedish Act “Lex Britannia” (which in certain cases allows Swedish unions to initiate industrial action in order to encourage foreign companies to sign Swedish collective agreements even where the foreign company is bound by domestic collective agreements) is consistent with European Community Law.

The final judgment from the ECJ is expected at the end of this year.