C-341/05, Laval [2007]

1. Facts:

• Background: Laval, a Latvian construction company, posted workers to Sweden for a project involving the construction of a school.

• Dispute: Swedish trade unions objected, blocking access to the construction site due to disagreements over the terms of employment and the wage rates. The unions argued that Swedish workers should be given the opportunity to do the work and that Laval's posted workers should adhere to Swedish collective agreements.

• Legal Question: Can free movement law be applied against private individuals or entities, such as trade unions? Yes, as demonstrated in Bosman, private entities can be subject to EU law when their actions impact the fundamental freedoms guaranteed by the Treaty.

• Trade Union Rights: While trade unions have the right to strike, this right must be exercised in a non-discriminatory manner. If the action is aimed specifically at foreign companies, it may breach EU free movement principles.

2. Outcome:

• Violation of Art. 56 TFEU: The ECJ ruled that the trade union’s actions were discriminatory because they were targeting Laval specifically due to its status as a foreign company. This constituted a violation of the free movement of services under Article 56.

• Damages: The trade union was held liable for damages, emphasising the protection of economic freedoms over the social rights of collective action.

3. Impact and Analysis:

• Economic vs. Social Rights: The ECJ's ruling highlighted its preference for safeguarding economic freedoms (such as free movement of services) over social fundamental rights like the right to collective action. This decision reinforced the primacy of economic freedoms in EU law.

• Impact on Sweden and Denmark: The ruling created tension in countries with industrial relations systems based on autonomous collective bargaining, such as Sweden and Denmark. In these systems, trade unions play a crucial role in negotiating wage and employment conditions.

• Lex Laval:

◦ 2010: Sweden introduced significant amendments to its laws regulating posted workers, referred to as "Lex Laval." These amendments restricted unions' ability to use industrial action against employers who refused to comply with Swedish collective agreements.

◦ 2017: The Swedish parliament repealed the Lex Laval regulation, citing concerns that the restrictions had led to reduced competition and fewer foreign companies operating in Sweden, which could impact the labor market and economic dynamics.