In May 2004, Laval un Partneri Ltd, a Latvian company, posted workers from Latvia to work on building sites in Sweden. The work was carried out by a subsidiary, L&P Baltic Bygg AB, and included the renovation of school premises in the town of Vaxholm.

In June 2004, Laval and Baltic Bygg, on the one hand, and the Swedish building and public works trade union, Svenska Byggnadsarbetareförbundet, on the other, began negotiations in order to determine the rates of pay for the posted workers and to make Laval sign the collective agreement for the building sector. However, the parties were unable to reach an agreement. Instead, Laval signed collective agreements with the Latvian building sector trade union. The Swedish union then initiated collective action in the form of a blockade of all Laval’s sites in Sweden. The Swedish electricians’ trade union joined in with a sympathy action. Due to that the work was stopped, Baltic Bygg was declared bankrupt and the posted workers returned to Latvia.

Laval brought proceedings before the Swedish Labour Court (Sw. Arbetsdomstolen) for a declaration as to the lawfulness of the collective action and for compensation for the damage suffered. For this reason, the court asked the ECJ if community law precludes trade unions from taking collective action in the circumstances as described above.

The ruling of the ECJ – 18 December 2007

Initially, the court accepts that the right to take collective actions must be recognised as a fundamental right which forms an integral part of the general principles of Community law, but that the exercise of that right may be subject to certain restrictions. In this case, the court points out that the right of trade unions of a Member State to take collective action by which undertakings established in other Member States may be forced into negotiations with the trade union in order to ascertain minimum wage and to sign a collective agreement (the terms of which go beyond the minimum protection guaranteed by Directive 96/71 concerning posting of workers) is liable to make it less attractive, or more difficult, for such undertakings to carry out construction work in Sweden, and therefore constitutes a restriction on the freedom to provide services. The court also pointed out that the action can not be justified by overriding reasons of public interest.

Finally, the court states that the Swedish national rules which fail to take into account collective agreements to which undertakings that post workers to Sweden are already bound in the Member State in which they are established, give rise to discrimination against such undertaking, insofar as under those national rules they are treated in the same way as national undertakings which have not concluded a collective agreement. Since the considerations of these national rules do not constitute grounds of public policy, public security or public health, such discrimination cannot be justified.