Balancing Economic Freedoms & Fundamental Rights

The challenge of balancing EU objectives: Economic Freedoms Versus Fundamental Rights

The EU Charter of Fundamental Rights, the European Convention on Human Rights (ECHR) and the European Union (EU) Treaty establish two core yet competing objectives-that is, the exercise of economic freedoms and the observance of fundamental rights. Underlying economic freedoms of the common market are four ‘cornerstone’ agreements established by the EU.^[1] The freedoms are divided between commodities and the workforce, consisting of free movement of goods, services, capital and people.^[2] Originally, the purpose of the freedoms was to encourage economic development but also to ensure that social rights would be protected.^[3] Despite this aim, social rights did not develop from the established freedoms leading to-what some have termed-a social deficit.^[4] It was established that other rights were needed to tackle the social deficit. It was therefore unsurprising that the ‘fundamental’ rights were enshrined.^[5] Since an analysis of all of the freedoms and rights is beyond the scope of this work, this essay explores whether the EU has been successful in reconciling the conflicting objectives of the right to collective action and the free movement of services only. This conflict will be critically analysed by an analysis of the EU case law and UK case law. The analysis reveals that the EU has not been successful in reconciling these objectives and that this is unlikely to change.

It should first be noted that the EU has a small role to play in reconciling interests. Part of this is due to reluctance and the other part is due to scope of powers. This former is illustrated by the fact that the theory of conflicting rights having equal status not being borne out in practice.^[6] This is partly the case because the EU has been reluctant to define the legitimate scope for those rights in practice.^[7] On the latter, it is apparent that the EU has limited ability to further social rights because the competency for exercising social rights remains with Member States.^[8] The EU is only able to provide a framework for reference for Member States.^[9] Therefore, the focus here is not the EU.

Instead, the focus is on the judiciary who exercise power to reconcile conflicts. This encompasses the national courts but the focus here is the European Court of Justice (ECJ). The ECJ undertakes a ‘balancing exercise’ when attempting to reconcile conflicts.^[10] It achieves this by reaching conclusions on the intensity of an infringement, the satisfaction of the competing principle and an evaluation of where the balance lies.^[11] The process of balancing the competing interests is detailed by Alexy^[12] who states that ‘the question is not how important somebody thinks [freedoms are] but how important they actually are’.^[13] This approach raises obvious criticisms about procedural unfairness. When judges are afforded significant discretion then decisions are less likely to be considered according to objective criteria. This is particularly concerning where the judges give subjective interpretations and value judgments.^[14] It is also fundamental to recognise that the role of the ECJ is one of protector of economic freedoms rather than social rights-a point illustrated in the case law concerning the right to collective action.

This essay focuses on two ECJ cases-Laval^[15] and Viking.^[16] They involved a conflict between the freedom to provide services (Laval) and the right of employees to strike against the employers’ economic freedoms of establishment (Viking). Whilst the issue in Laval is of specific relevance to this essay, both cases highlight important principles. Viking is relevant because of the ECJ’s case law which seeks to balance social rights and economics freedoms.^[17] Laval is more relevant to the implementation of EU law at a national level.^[18]

The cases are important for three reasons. Firstly, they both decided that community law recognised the fundamental right to collective action. To support this, the EU Charter of Fundamental Rights, the International Labour Organisations Convention, the Community Charter of the Fundamental Social Rights of Workers and the European Social Charter were all cited.^[19] Secondly, it was held that where the employer had the right to establishment and provide services then the right to strike held to be a viable defence. These latter economic rights could have horizontal effect against the social rights enjoyed by unions.^[20] Davies criticised this approach by arguing that economic rights were supported at the expense of placing limitations on the right to strike.^[21] However, it is equally the case that economic interests can be restricted and limited by social rights. This is why restrictions on the freedom to provide services is prohibited in Article 56 of the Treaty on the Functioning of the European Union (Treaty). To that end, the court considered whether the agreement to strike infringed the Treaty on the basis that it would be more difficult for the firm to enjoy its economic freedoms which the court believed it would.^[22] Thirdly, the court undertook a proportionality test on the restriction, holding that the negotiations were too onerous, uncertain and went beyond what was required to protect workers meaning that their actions could not be justified.^[23]

The use and implementation of the proportionality test has been subject to much criticism in academia. It was criticised by Davies because the manner in which it was used ‘substantially undermines the significance of [the court’s] recognition of the right to strike as a fundamental right’.^[24] Perinetto more dramatically argued that the cases ‘cast a dark shadow over the future of social protection’ because they do not protect collective action against the economic assault of companies.^[25] Reich was more concerned about the uncertainty that would be generated because the judgments may be used against other types of social action in the future.^[26] Zahn echoed those concerns when noting that it resulted in difficulties in interpreting where the balance was to be struck.^[27] The most pertinent symptom of the cases is most likely to be seen at the national level where because judicial autonomy coupled with distinct legal systems could result in vastly different interpretations of what is to be protected with regards to collective action.^[28] Taking a more optimistic stance, Apps notes that domestic national courts may not necessarily disregard a wider balancing approach when determining liability-although she concedes that this cannot alleviate the uncertainty which has been generated.^[29] The biggest concern is that unions may become stifled in carrying out their basic legitimate right.^[30] Finally, Reich asks, ‘who is to judge the legitimacy of this social policy if it may have a detrimental effect on free movement?’^[31] On a similar note, Syrpis and Novitz question the appropriateness of the courts in determining proportionality.^[32]

Therefore, attempts by the ECJ to reconcile these competing interests are subject to much criticism. These criticisms arise ultimately because the EU has limited means for furthering social integration.^[33] It is left to the courts to undertake this exercise which results in unsatisfactory outcomes. This is also the case in domestic courts because of diverging models of social policies.^[34] This is reflected in Laval and Viking where the ECJ noted that Finnish and Swedish law did not unconditionally guarantee the right to strike. This is not dissimilar to the position in United Kingdom (UK) in the case of National Union of Rail, Maritime and Transport Workers v Serco Ltd.^[35] In Serco, Lord Justice Ellias stated that ‘the common law recognises no right to strike’.^[36] However, he explained that the Human Rights Act 1998 (HRA) gives effect to the ECHR which confers the right of freedom of association under article 11(1).^[37] This is seemingly strengthened by the Laval and Viking cases which recognise the right to strike as a fundamental right. Unfortunately, most of the academic literature does not develop this point, considering it as a protection when in fact it is a very weak protection for the right to strike.

Indeed, the issues in Serco help to illustrate that whilst it appears that the UK courts are furthering the EU’s objective of reconciling freedoms and rights, the legislature may also be synchronously undermining that objective. In Serco, employers had sought to block strike action by employees. They sought to do this by arguing that the employee unions did not follow proper procedure in initiating the strikes. The court rejected this, finding that the infringements in procedure were ‘minor and inconsequential’.^[38] Whilst the court was settled on this point, the issue of strike actions is a very political one in the UK. This controversy came to light with the passage of the Transparency of Lobbying, Non-Party Campaigning and Trade Union Administration Act 2014. The latter part of the Act concerned the rules surrounding trade union membership lists. Part 3 of the Act confers a duty upon unions to maintain a register of the names and addresses of its members. Whilst seemingly inconsequential, there are fears that the provision was created to make the obtaining of injunctions against strike actions by employers easier. As such, the right to strike is not well protected against economic interests.^[39] Employers would only need to argue that lists were not properly maintained and an injunction could be granted.^[40] Furthermore, the courts are placed in a difficult position, having to dabble in political decision making.^[41] Therefore, to an extent, the national courts in the UK are tasked with reconciling competing interests. Even though they did so successfully in Serco, this could easily be undermined in the future because of political motives by the government. Progress towards reconciling is thus stifled.

One final consideration is what would happen if decisions on such conflicts were undertaken by the European Court of Human Rights (ECtHR) as opposed to the ECJ. There was an agreement for the EU to accede to the ECtHR. This may have resulted in cases being considered by the ECtHR and thus very different outcomes to the reconciling of rights. When making decisions, the ECJ begins its reasoning by asserting the employers’ economic rights. The burden of proving that the restriction of rights is proportionate falls on those asserting their social rights.^[42] The problem is that the right to strike will be harder to justify where it is more effective because it restricts the employer’s free movement rights.^[43] Instead of taking economic rights as the starting point, the ECtHR would take the Convention rights as its starting point before assessing the proportionality of restrictions on those rights.^[44] Indeed, Schlachter finds that the outcome of a similar case put before different bodies might ‘vary considerably according to that body’s respective approach’.^[45] However, in December 2014, the ECJ rejected the possibility that the EU should accede to the ECHR on the basis that a draft agreement on the matter would be incompatible with EU law.^[46] Therefore, whilst interesting, this unfortunately remains a theoretical argument has little impact on the reconciling of competing rights.

In conclusion, the EU has not been successful in reconciling the conflicting objectives to a large extent. Whilst it has established the existence of fundamental rights, these at times feel subordinate to the economic freedoms enjoyed by others. The problem is that the EU has not defined the scope of those competing rights. The task of reconciling them where there is a conflict is thus left to the courts. This essay focussed on competing rights of the right to strike and freedom of services. It was seen that the ECJ favoured economic over social rights based on controversial reasoning. From the UK perspective, the courts have favoured social rights but this is ultimately undermined by legislation. The courts are thus left to make political decisions which is unsatisfactory. Decisions could have different outcomes if they were considered by the ECtHR but this is unlikely to happen and in any case does not deal with the overarching problem. That is, that the EU must set clear boundaries and take the lead for reconciling conflicting rights. Further, as long as Member States continue to have diverging schemes, then reconciliation will be uncertain, uneven and potentially unfair. Until the EU takes the lead then conflicts will continue.

Footnotes

^[1] European Commission, ‘General Policy Framework’ (EC, 2015) Click here to read the full article accessed 25 October 2015.

^[2] ibid.

^[3] Monika Schlachter, Reconciliation between fundamental social rights and economic freedoms (IAAEG, 2011) 1.

^[4] ibid 1.

^[5] ibid 1.

^[6] See Case C271/08 Commission v Germany [2010] ECR I7087 on adopting symmetrical approaches to reconciliation.

^[7] Phil Syrpis and Tonia Novitz, ‘Economic and social rights in conflict: political and judicial approaches to their reconciliation ‘ [2008] European Law Review 411, 412.

^[8] Schlachter (n 3) 1.

^[9] ibid 2.

^[10] Sybe A de Vries, ‘Balancing Fundamental Rights with Economic Freedoms According to the European Court of Justice’ (2013) 9(1) Utrecht Law Review 169, 170.

^[11] ibid.

^[12] Robert Alexy, A Theory of Constitutional Rights (OUP 2010) 102 104.

^[13] ibid 102.

^[14] de Vries (n 10) 170.

^[15] C-341/05 Laval un Partneri Ltd v. Svenska Byggnadsarbetareförbundet [2007] ECR I-000.

^[16] C-438/05 International Transport Workers’ Federation v. Viking Line ABP [2007] ECR I-000.

^[17] Rebecca Zahn, ‘The Viking and Laval Cases in the Context of European Enlargement’ (Web Journal of Current Legal Issues, 2008) 10 Click here to read the full article accessed 25 October 2015.

^[18] ibid 10.

^[19] ACL Davies, ‘One Step Forward, Two Steps Back? The Viking and Laval Cases in the ECJ’ (2008) 37(2) Industrial Law Journal 126, 131; Laval un Partneri Ltd v. Svenska Byggnadsarbetareförbundet (n 15) para 90; International Transport Workers’ Federation v. Viking Line ABP (n 16) para 24.

^[20] Davies (n 19) 132.

^[21] ibid 127.

^[22] ibid 132.

^[23] ibid .132; Laval un Partneri Ltd v. Svenska Byggnadsarbetareförbundet (n 15) paras 3 & 94; International Transport Workers’ Federation v. Viking Line ABP (n 16) para 46.

^[24] Davies (n 19) 141.

^[25] Patrick Actis Perinetto, ‘Viking and Laval: An Italian Perspective, A Case of No Impact’ (2012) 3(4) European Labour Law Journal 270, 273 & 274.

^[26] Norbert Reich, ‘Free Movement v. Social Rights in an Enlarged Union – the Laval and Viking Cases before the ECJ’ (2008) 9 German Law Journal 125, 160.

^[27] Zahn (n 17) 11.

^[28] Ibid, p.11; Severine Picard, ‘Collective Action vs Free Movement: The Laval and Viking Cases’ [2008] Transfer 1 160, 164.

^[29] Katherine Apps, ‘Damages claims against trade unions after Viking and Laval’ [2009] European Law Review 141, 144 & 154.

^[30] Syrpis and Novitz (n 7) 426.

^[31] Reich, 154.

^[32] Syrpis and Novitz (n 7) 425.

^[33] Schlachter (n 3) 1.

^[34] ibid 1.

^[35] [2011] ICR 848.

^[36] Serco, ibid, p853, para 8.

^[37] Serco, ibid, p853, para 8.

^[38] Serco, ibid, p870, para 151.

^[39] Mark Freedland and Jeremias Prassl (eds), EU Law in the Member States: Viking, Laval and Beyond (Hart 2014) 267.

^[40] Thompsons Solicitors, ‘Transparency of Lobbying, Non-Party Campaigning and Trade Union Administration Bill: Certification of trade union membership details, Thompsons Response (August 2013)’ (TS, 2013) Click here to read the full article accessed 25 October 2015.

^[41] Davies (n 19) 146.

^[42] ibid 141.

^[43] ibid 142.

^[44] Phil Syrpis, ‘The Treaty of Lisbon: much ado… but about what?’ [2008] Industrial Law Journal 219, 234.

^[45] Schlachter (n 3) 3.

^[46] Court of the Justice of the European Union, The Court of Justice delivers its opinion on the draft agreement on the accession of the European Union to the European Convention for the Protection of Human Rights and Fundamental Freedoms and identifies problems with regard to its compatibility with EU law (CVRIA, Press Release No 180/14 2014) 3.