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VORDUR OLAFSSON v. ICELAND - 20161/06 [2010] ECHR 639 (27 April 2010)
URL: http://www.bailii.org/eu/cases/ECHR/2010/639.html
Cite as:
(2010) 56 EHRR 21,
[2010] ECHR 639,
(2013) 56 EHRR 21,
56 EHRR 21
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FOURTH
SECTION
CASE OF
VÖRĐUR ÓLAFSSON v. ICELAND
(Application
no. 20161/06)
JUDGMENT
STRASBOURG
27 April
2010
This
judgment will become final in the circumstances set out in Article 44
§ 2 of the Convention. It may be subject to editorial
revision.
In the case of Vörður Ólafsson v. Iceland,
The
European Court of Human Rights (Fourth Section), sitting as a Chamber
composed of:
Nicolas
Bratza,
President,
Giovanni
Bonello,
David
Thór Björgvinsson,
Ján
Šikuta,
Päivi
Hirvelä,
Ledi
Bianku,
Nebojša
Vučinić,
judges,
and
Fatoş Aracı,
Deputy Section
Registrar,
Having
deliberated in private on 24 March 2009, 5 January 2010 and
30 March 2010,
Delivers
the following judgment, which was adopted on the last mentioned
date:
PROCEDURE
The
case originated in an application (no. 20161/06) against the Republic
of Iceland lodged with the Court under Article 34 of the Convention
for the Protection of Human Rights and Fundamental Freedoms (“the
Convention”) by an Icelandic national, Mr Vörður
Ólafsson (“the applicant”), on 16 May 2006.
The
applicant was represented by Mr T. Child and Mr Einar Hálfdánarson,
lawyers practising in London and Reykjavik respectively. The
Icelandic Government (“the Government”) were represented
by Mrs Björg Thorarensen as their Agent.
The
applicant alleged, in particular, that the imposition of an
obligation by law to pay an Industry Charge to the Federation of
Icelandic Industries (“FII”) violated his right to
freedom of association under Article 11 of the Convention, as
interpreted in the light of Articles 9 and 10 of the Convention. He
further complained that the Industry Charge in effect amounted to a
separate taxation being imposed on a restricted group of citizens on
top of their ordinary tax in a manner violating Article 1 of Protocol
No. 1. Finally, he complained of discrimination in breach of Article
14 of the Convention taken in conjunction with Article 11 of the
Convention and Article 1 of Protocol No. 1.
By
a decision of 2 December 2008 the Court declared the application
admissible.
A
hearing took place in public in the Human Rights Building,
Strasbourg, on 24 March 2009 (Rule 59 § 3).
There appeared before the Court:
(a) for the Government
Mrs Björg
Thorarensen, Agent,
Mr Skarphedinn Thorisson, Attorney
General, Counsel,
Mr Gunnar Narfi Gunnarsson, Legal Expert,
of the Ministry of Justice and Ecclesiastical Affairs,
Mrs Elin
Flygering, Ambassador, Permanent Representative
of Iceland to the
Council of Europe, Advisers;
(b) for the applicant
Mr T. Child,
Solicitor, Counsel,
Mr Einar Hálfdánarson,
Supreme Court Advocate,
Ms C. Murray, trainee solicitor, Advisers.
The
Court heard addresses by Mrs Björg Thorarensen, Mr Skarphedinn
Thorisson, Mr Child and Mr Einar Hálfdánarson.
THE FACTS
I. THE CIRCUMSTANCES OF THE CASE
The
applicant, Mr Vörður Ólafsson, is an Icelandic
national who was born in 1961 and lives in Reykjavik.
A. The disputed Industry Charge
The
applicant is a master builder and is a member of the Master Builders'
Association (hereinafter “the MBA”). Pursuant to the
Industry Charge Act No. 134/1993 (hereinafter “the 1993 Act”),
he was under an obligation to pay a levy, the so-called “Industry
Charge”, to the Federation of Icelandic Industries (hereinafter
“the FII”), an organisation of which the applicant was
not a member and to which the MBA was not affiliated. The 1993 Act
provided that a charge of 0.08% should be levied on all industrial
activities in Iceland as defined in the Act. The definition included
all activities coming under activity code numbers enumerated in an
Appendix to the Act. Private-sector enterprises not covered by the
code numbers were not subject to the Industry Charge. This was the
case, for example, of enterprises in the meat-processing,
milk-processing and fish-processing industries. Other enterprises in
the food and drink industry were covered. Enterprises entirely in
public ownership or established by special statute were not covered
(section 2). Revenues from the Industry Charge were to be transferred
to the FII, and were to be used for the promotion and development of
industry in Iceland (section 3). The State Treasury was to receive
0.5% of the charge collected in order to cover the costs of its
collection (section 1).
More
than 10,000 persons (legal persons and self-employed individuals)
paid the Industry Charge. The FII's membership comprised between
1,100 and 1,200 members (enterprises and self-employed individuals).
The
Government supplied copies of the FII's reports to the Ministry of
Industry regarding the disbursement of the Industry Charge for the
years 2000, 2003 and 2006.
In
the FII's report for the year 2003 (dated 4 July 2004) it was stated:
“The Federation's accounts have not indicated
whether particular operational items are paid for with funds from
membership fees, capital income or the Industry Charge, because an
overwhelming proportion of its work benefits industrial companies
whether or not they are members of the Federation. The Ministry of
Industry has not expressed any reservation regarding this
arrangement, and legislation concerning the Industry Charge imposes
no other requirements.
The Federation and the Ministry of Industry are,
however, in agreement about the requirement for a more detailed
account of how the Industry Charge is disbursed, and that is done in
this report.”
Under
the title “Disbursement of the Industry Charge in 2003
according to the Federation's accounts”, the report included a
table showing the “income and expenditure according to the
Federation's audited accounts for the year 2003”. In a separate
column the table indicated the percentage of funds originating from
the Industry Charge in relation to each item and sub-item. This
included the following items: “Operating profits” and
“Operating expenses”. It also comprised “Further
itemisation of disbursement of the Industry Charge according to the
accounts”, namely: (1) “Wages and related expenses”;
(2) “Meetings and conferences”; (3) “Promotional
activities”; (4) “Publications”; (5) “Branches
and special projects”; and (6) “General and
administrative expenses”.
For
each of these sub-items the report contained explanatory notes,
providing information on the treatment of members as opposed to
non-members. For example, under sub-item (1) it was stated that 2.5
of the 20 man-years concerned work that benefited members only.
With reference to sub-item (3) it was stated that FII exhibitions
were open to everyone and that FII members enjoyed a discount on
participation fees. Under sub-item (5) it was stated that non-members
could access the quality management project but at a higher fee than
members.
From
the table it appears that in 2003 the FII's operating revenues
totalled 315,800,000 Icelandic krónur (ISK), of which ISK
197,359,000 had originated from the Industry Charge transferred to
the FII by the State Treasury; ISK 84,973,000 from membership fees;
and ISK 33,468,000 from other income. That same year, the operating
expenses had totalled ISK 289,654,000, of which ISK 234,617,000 (81%)
had been spent on public projects (comprising ISK 197,359,000 derived
from the Industry Charge and ISK 37,258,000 from membership fees and
other income).
The
Government explained that in fulfilling its role and objectives of
promoting Icelandic industry pursuant to section 2 of the 1993 Act,
the FII notably worked to publicise industry and to cultivate its
image, allocated large amounts of the funds obtained though the
Industry Charge to training, gave opinions on behalf of the business
community on draft legislation and regulations in the sphere of
environmental affairs, and instilled in public authorities the need
to observe restraint in public procurement and to observe clear and
transparent tender rules.
At
the material time, the applicant paid the following amounts in
Industry Charge for the years indicated: for 2001 ISK 23,023 (255
euros (EUR)); for 2002 ISK 20,639 (EUR 229); for 2003 ISK 12,567 (EUR
139); and for 2004 ISK 5,946 (EUR 66).
B. Judicial proceedings brought to challenge the
Industry Charge
On
8 November 2004 the applicant lodged proceedings against the State
with the Reykjavik District Court, requesting an order to invalidate
the charges imposed on him in respect of the years 2001 to 2004.
By
a judgment of 13 July 2005 the District Court found in favour of the
State and dismissed the applicant's action.
The
applicant appealed to the Supreme Court of Iceland, arguing, inter
alia, that section 3 of the 1993 Act in fact meant that all
individuals and companies engaged in particular business activities
had to pay membership dues to the FII, irrespective of whether they
were members. The applicant considered that Article 14 of the
Articles of the Federation, which provided for the membership charge,
clearly reflected its nature in that, as was provided therein, FII
members paying an Industry Charge which was transferred to the FII
should have that part deducted from their membership fees. Thus, by
the levy and collection of the charge, membership of the FII was in
fact made compulsory for others, although they enjoyed no rights
vis-à-vis the FII. Consequently the Industry Charge was
merely a membership fee to the FII. The applicant submitted that he
was a member of the Master Builders' Association, to which he paid
his dues and through which he considered his interests to be best
served, and he had no wish to be a member of the FII. The latter
pursued policies with which he disagreed and which were contrary to
his interests. The compulsory membership of the FII was incompatible
with his right to freedom of association as protected by Article 74 §
2 of the Constitution and Article 11 of the Convention. The applicant
in addition argued that by virtue of the 1993 Act, he was
unjustifiably taxed in excess of other taxes and that, under the Act,
a limited group was being taxed “for the benefit of another
limited group or the restricted interests of others”. Finally,
he submitted that the imposition of the charge amounted to
discrimination in breach of Article 65 of the Constitution, as
the taxation was dependent upon the ownership structure of an
enterprise, and the enumeration of activity code numbers, on which
the taxation was based, was haphazard in nature.
The
State disputed the applicant's submission that the Industry Charge
constituted a membership fee to the FII. They argued that by law it
was a tax levied by the State on particular groups of individuals and
legal persons, in accordance with general and applicable standards,
without anything being required in return. By the same Act the
decision had been taken to have the charge transferred to the FII,
which was to use it for the promotion and development of Icelandic
industry. Such an allocation of tax revenues to an association
provided for by law did not mean that those who paid the relevant tax
were thereby compelled by law to become members of it. The charge was
not expected to be used for the benefit of the members alone, but for
the benefit of all industries and industrial development in Iceland,
under the supervision of the Ministry of Industry. Any discounts on
membership fees were decided unilaterally by the FII, without any
connection to the assessment and collection of the charge. The State
also denied that the 1993 Act involved discrimination between persons
who were in the appellant's situation and those who enjoyed an
exemption from the charge. It was a reasonable and objective
arrangement to exempt public enterprises from the charge, and it was
in the nature of things that the considerations that applied to
companies in public ownership were different from those relating to
private enterprises. The State also argued that public support for
industry and industrial development sometimes took the form of
launching industrial activities that others were not capable of
initiating. Finally, the number of publicly owned industrial
enterprises had been greatly reduced in recent years. The State also
disputed the allegation that the enumeration of activity code numbers
governing the taxation had been haphazard.
By
a judgment of 20 December 2005 the Supreme Court, by four votes to
one, rejected the applicant's appeal and upheld the District Court's
judgment. It held as follows:
“As mentioned in the District Court's judgment,
the Supreme Court rendered a judgment on 17 December 1998 in case no.
166/1998, Gunnar Pétursson v. the Republic of Iceland,
published at page 4406 of the Court's Reports for that year. The
appellant in that case requested the invalidation of his assessment
of the Industry Loan Fund charge and the Industry Charge for the
years 1995 and 1996. He based his case on arguments that are to a
significant degree identical to those invoked by the appellant in the
present case. The view of the respondent is accepted that the
afore-mentioned case must be regarded as a precedent in the case now
to be resolved, to the extent that the issues raised by the
appellant's submissions in support of his present requests were
resolved in that case.
In the earlier case the appellant, as here, maintained
that as a result of the assessment of the Industry Charge payable by
him, which is to be transferred to the Federation of Icelandic
Industries, he was compelled to be a member of the Federation. The
Supreme Court mentioned in its judgment that although the charge was
transferred to the Federation, it was to be used for a certain
purpose (see section 3 of the 1993 Act), and did not constitute a
grant to the Federation. The use of the revenues was subject to
control by the Ministry of Industry. The Court accepted that this
arrangement did not involve obligatory membership of the Federation
of Icelandic Industries in contravention of the Constitution and the
European Convention. It also noted that even if the Federation of
Icelandic Industries might have exceeded the boundaries laid down in
the Act, this could not have the effect of invalidating the
assessment of the charge with respect to the appellant. With this in
mind, and in other respects by reference to the grounds stated in the
judgment appealed from, the Court must reject the conclusion that the
appellant's arguments in this regard may lead to a granting of his
request. Bearing in mind that the Federation of Icelandic Industries
is under a legal duty to use the revenues from the Industry Charge
for promoting Icelandic industries and industrial development, and
consequently for the benefit of the activities being taxed, the Court
cannot accept, either, that the legislature thus exceeded its powers.
The appellant submits that equality was not respected,
since enterprises in public ownership may be exempted from the
charge. As regards this argument, it must be noted that various
factors distinguish enterprises in public ownership from privately
owned enterprises, and in various fields their taxation is governed
by different considerations, as seen in Icelandic tax legislation in
general. In his case preparation, the appellant did not present a
comparison of his situation vis-à-vis any particular
public enterprises. It has not been established that any
discrimination has taken place between the appellant and the parties
to whom the exemptions of the Act apply. Finally, the appellant bases
his request on the assertion that the activity code enumeration, by
reference to which taxation under section 2(1) of the 1993 Act takes
place, is haphazard in nature. The charge is levied on industry,
subsequently defined as any activity coming under the activity code
numbers enumerated in the classification of Icelandic business
activities in an Appendix to the 1993 Act, as amended by Act No.
81/1996. Industry, thus defined, does not only cover manufacturing
industry, but also processing and services, including the
construction industry. This circumscribes the activities to be
included in the term 'industry' within the meaning of the Act,
distinguishing them from other fields of economic endeavour,
including activities that have developed within the fields of
agriculture and fishing. Such classification of economic activity has
furthermore been recognised as a basis for other forms of taxation
than the Industry Charge. The appellant's claim cannot be granted on
the basis referred to.”
The
dissenting member of the Supreme Court, Mr Justice Ólafur
Börkur Þorvaldsson, gave a separate opinion containing,
inter alia, the following reasons:
“I
The original Industry Charge Act was No. 48/1975. It was
stated in the explanatory notes to the relevant bill that it had been
submitted in accordance with a recommendation of the FII, the
National Federation of Craftsmen, and the Union of Icelandic
Cooperative Societies. These provided a detailed exposition, which
apparently was adopted verbatim in the explanatory notes. It included
the observation that '... it may be noted that industrial enterprises
and self-employed persons in industry collect various dues for public
authorities, both from their employees and from the consumers. The
tax collection they carry out and are responsible for amounts to
thousands of millions annually, entirely without remuneration. It
therefore seems reasonable that the State should undertake to
collect, for the organisation of these parties, a charge which
amounts to only a small fraction of what they collect for the State.
This source of revenue should create a financial basis for more
active participation by professional federations within Icelandic
industry in shaping future industrial development.' The Act also
contained a provision similar to that of the Act now in effect, that
the Ministry of Industry should annually be sent a report on the use
of the revenues derived from the charge. In this context, it was
mentioned in the explanatory notes that this was a 'provision
intended to ensure that public authorities will be given a reasonable
account of how the Industry Charge is used.'
Act No. 48/1975 was superseded by the present Act No.
134/1993. It was stated in the explanatory notes to that Act that
those liable for the charge would be the same as before, but a system
of reference to activity code numbers in accordance with the business
activity classification of the Bureau of Statistics was adopted in
order to 'remove any doubt as to who are liable for this charge.' It
was furthermore provided that the revenues derived from the charge
should be transferred to the FII in their entirety, whereas under the
previous Act they had been distributed between the Union of Icelandic
Cooperative Societies, the Canning Industry Sales Office, the
Federation of Icelandic Industrialists and the National Federation of
Craftsmen. At the same time the tax base determination standard was
changed, since the municipal business tax, by reference to which the
tax base had previously been determined, had been abolished.
II
According to its Articles, the FII is a federation of
enterprises, self-employed persons, trades and master craftsmen's
associations, who jointly wish to pursue common goals as enumerated
in Article 2. This Article states the purpose and role of the
Federation under ten points, as involving the promotion of Icelandic
industries in various ways and supporting the members in one way or
another as mentioned there in further detail. According to the
documents submitted, the association involves itself with political
issues, for example as regards membership of the European Union and
taxation in various fields. Pursuant to Article 8, each member of the
Federation enjoys voting rights at its meetings in proportion to his
paid membership fees. It is provided in Article 14 that the
membership fees are a maximum of 0.15% of last year's turnover, but
the board of the Federation may decide to collect lower membership
fees. The provision goes on to state: 'Parties paying an Industry
Charge that is transferred to the Federation shall have that part
recognised, and deducted when their membership fees to the Federation
are calculated. If the Industry Charge is no longer levied, this
deduction shall automatically be abolished. The voting right of each
member shall be calculated from his paid membership fee. Management
and decision-making within the Federation is, as generally within
associations, the responsibility of its board and the managing
director.'
Documents submitted from the FII relating to the period
to which the [applicant's] requests pertain do not contain a clear
breakdown of how the Industry Charge is used. It also appears from a
comment in the Federation's Reports on the use of the charge for the
years 2002 and 2003 that the Federation does 'not keep separate
accounts of whether the individual elements of the Federation's
operations are financed by monies derived from membership fees,
capital income, or the Industry Charge.' A similar declaration on
this point is found in the Report to the Minister in respect of the
year 2001, but a report for 2004 is not in the case file. The
Federation's Reports to the Minister are also in other respects
similar from year to year. In fact the case file seems to permit the
inference that part of the charge is used for the general management
of the Federation. It cannot be seen from the submissions in this
case that the Minister of Industry has made any observations
concerning the use of the charge, and in a letter to the Master
Builders' Association of 15 February 2002, following complaints
relating to the use of the charge, he expresses the following
opinion: 'As can be clearly seen from the Industry Charge Act, the
FII has the unrestricted power to decide how the charge is allocated,
and the Ministry of Industry cannot interfere with this as long as it
remains within the framework of the law.' It can be seen from the
submitted Reports of the Federation of Icelandic Industries for the
periods to which this case relates that the arrangement has been used
for granting those members of the Federation who pay the Industry
Charge a discount on their membership fees equal to the amount of the
charge. As an example, the following comment in the Federation's
Report to the Minister of Industry for 2003 may be quoted: 'It may be
pointed out that members who pay the Industry Charge have it deducted
in full from their membership fees to the Federation. It would not be
considered proper that companies within the Federation that are
liable to the Industry Charge should pay more to the Federation's
activities than companies that are members, but not liable to the
charge. In this way all the member companies of the Federation pay to
the Federation equally, irrespective of whether they are liable to
the Industry Charge. On the other hand other companies, standing
outside, only pay the Industry Charge and thus make a contribution to
the general protection of the interests of Icelandic industries.'
III
Provisions on freedom of association are found in
Article 74 of the Constitution ... They contain more detailed rules
on freedom of association than those directly expressed in Article 11
of the Convention ... Article 74 § 2 of the Constitution
provides: 'No one may be obliged to be a member of any association.
Membership of an association may, however, be made obligatory by law
if this is necessary in order to enable an association to discharge
its functions in the public interest or on account of the rights of
others.'
As noted above, the purpose of the Industry Charge is,
according to the 1993 Act, the promotion of Icelandic industry, but
it is also expressly provided that only the part of the charge
corresponding to the cost of its collection is to be transferred to
the State Treasury. The remainder is transferred to the FII, to be
used as the Federation decides. It also seems that an unspecified
proportion of the charge is used for the general activities of the
Federation as its board may decide. It can furthermore not be seen
from the provisions of the 1993 Act that the Minister of Industry is
adequately empowered to ensure that the charge is used in the manner
provided for in the Act; in this regard, the Minister simply receives
the reports of the Federation. For these reasons the provisions of
the 1993 Act cannot be regarded as ensuring that the charge will be
used for the activities the Act requires.
The payment of membership dues to an association is
generally a chief obligation of the members of an association that
requires such payments. The applicant is a member of the Master
Builders' Association. Neither he nor his association is a member of
the FII. The applicant does not agree with the Federation's
objectives in various fields, considering, as mentioned in the
judgment appealed from, that the Federation acts contrary to his
interests, and indeed also contrary to those of many others within
industry who also pay the Industry Charge without being members of
the Federation. Nevertheless, by virtue of the 1993 Act, the
[applicant] is bound by a duty to pay the charge, which, as
described, is transferred to a free association with the purpose of
protecting the interests of those active in Icelandic industries and
those of its members, as these interests are assessed at any
particular time by a decision of the managing director and the board,
without any significant involvement of public authorities.
When considering the above and the history leading to
the 1993 Act, and in view of the use of the charge, without
objection, for the general activities of the Federation, the
arrangement provided for in the Act must be seen as involving, in
fact, a duty on the part of the appellant to take a significant part
in the Federation's activities without his acquiescence. The above
provisions of Article 74 § 2 of the Constitution, concerning
people's rights to remain outside associations, must be interpreted
as prohibiting an arrangement such as provided for by the 1993 Act,
unless that arrangement fulfils the requirements laid down in the
Article's second paragraph. The Federation of Icelandic Industries is
not an association engaged in activities of the kind referred to
there. For this reason in itself, the appellant's request for
cancellation of his assessment of the Industry Charge payable in the
years 2001 to 2004 should be granted, and the respondent should be
ordered to pay the appellant the costs of the case in the District
Court as well as before the Supreme Court.”
II. RELEVANT DOMESTIC LAW
Article
74 §§ 1 and 2 of the Icelandic Constitution provides:
“Associations may be formed without prior
permission for any lawful purpose, including political associations
and trade unions. An association may not be dissolved by
administrative decision. The activities of an association found to be
in furtherance of unlawful objectives may, however, be enjoined, in
which case legal action shall be brought without undue delay for a
judgment dissolving the association.
No one may be obliged to be a member of any association.
Membership of an association may, however, be made obligatory by law
if this is necessary in order to enable an association to discharge
its functions in the public interest or on account of the rights of
others.”
The
relevant provisions of the Industry Charge Act No. 134/1993 read:
Section 1
“A charge of 0.08%, the Industry Charge, shall be
levied on all Icelandic industries as defined in section 2. The base
of the charge shall be turnover as provided for in section 11 of the
Value-Added Tax Act, plus any turnover exempted from value-added tax
in accordance with section 12 of that Act.
The assessment and collection of the Industry Charge
shall be governed by the provisions of Chapters VII-XIV of the Income
and Net Worth Tax Act, as applicable.
The State Treasury shall receive 0.5% of the Industry
Charge collected in accordance with the first paragraph to cover the
cost of its collection.
The Industry Charge may be deducted from the income of
the operating year in which its base was formed.”
Section 2
“Any activity coming under the activity code
numbers enumerated in the Appendix to this Act shall be included in
the term 'industry'.
Enterprises entirely in public ownership, and
enterprises formed under particular acts of law to be in public
ownership to a significant extent, shall be exempt from the charge,
unless a provision to the contrary is made in the act in question.”
Section 3
“Revenues derived from the Industry Charge shall
be transferred to the Federation of Icelandic Industries. The
revenues shall be used to promote industry and industrial development
in Iceland. The Federation shall annually provide a report to the
Ministry of Industry on the use of the revenues.”
Section 7
“The Office of the Auditor-General may demand
accounts from institutions, associations, funds and other parties
that receive funding or guarantees from the State, and they shall be
obliged to provide the Office of the Auditor-General with the
materials requested. Furthermore, the Office of the Auditor-General
shall be permitted access to, and shall have the right to examine,
the original materials or reports that are created at the same time
as invoices are issued to the State or State bodies for work or
services that are to be paid for, entirely or to a substantial
extent, from the State Treasury according to law or work contracts or
agreements based on tariffs that have been agreed with individuals,
companies or institutions, in order to verify the contents of
invoices and the payment obligation borne by the State Treasury. ...
In the event of a dispute regarding the right of the
Office of the Auditor-General to carry out examinations under this
section the Office of the Auditor-General may seek a ruling by the
district court.”
III. RELEVANT INTERNATIONAL LAW AND PRACTICE
A. Position of the European Committee of Social Rights
The
Committee has addressed the issue of union fees and contributions
from the angle of Article 5 of the European Social Charter on several
occasions, notably those referred to below:
Confederation of Swedish Enterprise v. Sweden,
Collective Complaint No. 12/2002, Decision on the merits of 15 May
2003
“39. The Committee observes firstly that the fees
deducted from the wages of workers pursuant to a collective agreement
concluded between SBWU and the Swedish Construction Federation are,
according to the collective agreement, for the service of wage
monitoring. The Committee considers that the system of wage
monitoring may, depending upon national traditions, be assumed either
by public authorities, or, on the explicit or implicit authorisation
of the legislator, by professional associations or trade unions. In
the latter case this could legitimately require the payment of a fee.
40. Consequently, the Committee considers that the
payment of a fee to the trade union for financing its activity of
wage monitoring cannot be regarded in itself as unjustified. It also
considers that it cannot be regarded as an interference with the
freedom of a worker to join a trade union as the payment of the fee
does not automatically lead to membership of the SBWU and in addition
is not required from workers members of trade unions other than SBWU.
41. However, the Committee considers that doubts exist
as to the real use of the fees and that, in the present case, if they
were to finance activities other than wage monitoring, these fees
would, on the grounds indicated in paragraph 29 be deducted, at least
for a part, in violation of Article 5.
42. In the present case, the Committee is not in a
position to verify the use of the fees and in particular to verify to
what extent the fees are proportional to the cost of the service
carried out and to the benefits wage monitoring confers on the
workers. These are decisive factors in determining a violation of
Article 5 with reference to paragraphs 39 and 40 or 41. The Committee
considers therefore that it is for the national courts to decide the
matter in the light of the principles the Committee has laid down on
this subject or, as the case may be, for the legislator to enable the
courts to draw the consequences as regards the conformity with the
Charter and the legality of the provisions at issue.
43. The Committee reserves the right to supervise the
situation in practice through the reporting procedure and, as the
case may be, the collective complaints procedure.
...”
Conclusions 2002, Romania, p. 126
“... According to the report, it is common for
trade unions to impose the payment of a fee and 'the filling of an
application form or of an engagement' on non-members within the
enterprise in consideration for negotiating a collective agreement.
Supplementary information received from the Government at the
Committee's request indicates that the basis for this practice is the
single national collective agreement 2001-2002, according to which
the amount of the deduction should be no less than 0.3 % of
salary and no more than the amount of union dues. The Committee
observes that by virtue of Section 9 of Act No. 130/1996 on
collective labour agreements, collective agreements apply to all
workers in the enterprise, irrespective of their length of service or
trade union membership. In these circumstances, the imposition of a
fee on workers who are not members of a trade union constitutes a
union security practice that is contrary to the right to organize.
The Committee asks that the next report indicate clearly
whether, in addition to paying a fee to the union, non-members are
also required, as the report would seem to suggest, to apply for
membership. ...”
Conclusions 2004, Romania, pp. 454-55
“...The Committee previously concluded that the
situation in Romania was not in conformity with Article 5 because of
the obligation on non-unionised workers to pay a fee to the trade
union that had negotiated the applicable collective agreement, even
though such agreements applied by law to all workers independently of
whether or not they were members of a trade union (the situation is
described in Conclusions 2002, p. 126).
The Committee has re-examined the situation in the light
of the explanations in the report and of the principles it has laid
down in Complaint No. 12/2002 (Confederation of Swedish Enterprise
v. Sweden, decision on the merits of 15 May 2003, §§26-31).
It notes firstly that the contribution helps to finance an activity
that benefits all employees: negotiating collective agreements.
Secondly, under the single national collective agreement for
2001-2002, on which the practice is based, the contribution is not
obligatory and is not earmarked for a trade union. Finally there is
no statutory provision for automatic affiliation to a trade union.
The Committee therefore considers that the payment of this sum cannot
in itself be regarded as an infringement of employees' right to join
or not to join a trade union.”
Conclusions XVIII-1, Hungary, p. 390
“... In its previous conclusion, the Committee
asked if automatic deductions from all workers' wages, including
those who were not unionised, were forbidden under the present
legislation. The report states that according to rules on deducting
trade union dues, union dues are paid only by persons who are
mandated to pay such dues, which means that they must be trade union
members.
Union dues can be paid in two ways. Union members may
either pay their dues directly into the union account or ask their
employers to deduct the dues from their wages, in which case the
employer is required to comply. In 2002, parliament adopted
legislation, with the support of the unions, requiring employers to
deduct and transfer dues. Prior to that, deductions were only
possible with the agreement of both employer and employee. The
Committee considers that the procedure for deducting trade union
contributions from wages at source may not be prohibited or made
obligatory by national legislation. It must be made a criminal
offence to use such a procedure for illegitimate purposes, for
example to secure information on trade union membership. ...”
B. ILO standards
Information
on the right of workers and employers to establish and join
organisations of their own choosing may be found in Chapter 5 of the
Digest of decisions and principles of the Freedom of
Association Committee of the Governing Body of the International
Labour Office (ILO).
Under
the sub-heading “Trade union unity and pluralism”, it is
pointed out, inter alia, that the fact that workers and
employers generally find it in their interest to avoid a
multiplication of the number of competing organisations would not be
sufficient to justify direct or indirect intervention by the State
(see Digest of decisions and principles, 2006, paragraph 319).
A monopoly situation imposed by law would be at variance with the
principle of free choice of workers' and employers' organisations
(paragraph 320). A government should neither support nor obstruct a
legal attempt by a trade union to displace an existing organisation.
Workers should be free to choose the union which, in their opinion,
will best promote their occupational interests without interference
by the authorities (paragraph 322). The imposition of an obligation
on all the workers in the category concerned to pay contributions to
a single national trade union, the establishment of which is
permitted by branch of industry and by region, would not be
compatible with the principle that workers should have the right to
join organizations “of their own choosing”(paragraph
325).
Under
the sub-heading “Favouritism or discrimination in respect of
particular organizations”, it is stated, inter alia
(references in the Digest added after each paragraph have
been omitted here):
“339. Considering the limited functions which, in
one case, were by law open to certain categories of trade unions, the
Committee felt that the distinction made between trade unions under
the national legislation could have the indirect consequence of
restricting the freedom of workers to belong to the organizations of
their choosing. The reasons which led the Committee to adopt this
position are as follows. As a general rule, when a government can
grant an advantage to one particular organization or withdraw that
advantage from one organization in favour of another, there is a
risk, even if such is not the government's intention, that one trade
union will be placed at an unfair advantage or disadvantage in
relation to the others, which would thereby constitute an act of
discrimination. More precisely, by placing one organization at an
advantage or at a disadvantage in relation to the others, a
government may either directly or indirectly influence the choice of
workers regarding the organization to which they intend to belong,
since they will undeniably want to belong to the union best able to
serve them, even if their natural preference would have led them to
join another organization for occupational, religious, political or
other reasons. The freedom of the parties to choose is a right
expressly laid down in Convention No. 87.
...
340. By according favourable or unfavourable treatment
to a given organization as compared with others, a government may be
able to influence the choice of workers as to the organization which
they intend to join. In addition, a government which deliberately
acts in this manner violates the principle laid down in Convention
No. 87 that the public authorities shall refrain from any
interference which would restrict the rights provided for in the
Convention or impede their lawful exercise; more indirectly, it would
also violate the principle that the law of the land shall not be such
as to impair, nor shall it be so applied as to impair, the guarantees
provided for in the Convention. It would seem desirable that, if a
government wishes to make certain facilities available to trade union
organizations, these organizations should enjoy equal treatment in
this respect.
...
341. In a case in which there was at the very least a
close working relationship between a trade union and the labour and
other authorities, the Committee emphasized the importance it
attaches to the resolution of 1952 concerning the independence of the
trade union movement and urged the government to refrain from showing
favouritism towards, or discriminating against, any given trade
union, and requested it to adopt a neutral attitude in its dealings
with all workers' and employers' organizations, so that they are all
placed on an equal footing.
...
342. On more than one occasion, the Committee has
examined cases in which allegations were made that the public
authorities had, by their attitude, favoured or discriminated against
one or more trade union organizations:
(1) ...
(2) unequal distribution of subsidies among unions ...
(3) ...
Discrimination by such methods, or by others, may be an
informal way of influencing the trade union membership of workers. It
is therefore sometimes difficult to prove. The fact, nevertheless,
remains that any discrimination of this kind jeopardizes the right of
workers set out in Convention No. 87, Article 2, to establish and
join organizations of their own choosing.”
Chapter
8 of the Digest contained the following principles regarding
public financing and control of trade unions (references in the
Digest added after each paragraph have been omitted here):
“466. The right of workers to establish
organizations of their own choosing and the right of such
organizations to draw up their own constitutions and internal rules
and to organize their administration and activities presuppose
financial independence. Such independence implies that workers'
organizations should not be financed in such a way as to allow the
public authorities to enjoy discretionary powers over them.
...
467. With regard to systems of financing the trade union
movement which made trade unions financially dependent on a public
body, the Committee considered that any form of state control is
incompatible with the principles of freedom of association and should
be abolished since it permitted interference by the authorities in
the financial management of trade unions.
...
470. A system in which workers are bound to pay
contributions to a public organization which, in turn, finances trade
union organizations, constitutes a serious threat to the independence
of these organizations.
...
473. Questions concerning the financing of trade union
and employers' organizations, as regards both their own budgets and
those of federations and confederations, should be governed by the
by-laws of the organizations, federations and confederations
themselves, and therefore, constitutional or legal provisions which
require contributions are incompatible with the principles of freedom
of association.”
THE LAW
I. ALLEGED VIOLATION OF ARTICLE 11 OF THE CONVENTION
The
applicant complained that the imposition of an obligation by law to
pay the Industry Charge to the FII violated his right to freedom of
association under Article 11 of the Convention, which in so far as
relevant reads:
“1. Everyone has the right to freedom
of peaceful assembly and to freedom of association with others,
including the right to form and to join trade unions for the
protection of his interests.
2. No restrictions shall be placed on the
exercise of these rights other than such as are prescribed by law and
are necessary in a democratic society ... for the protection of
health or morals or for the protection of the rights and freedoms of
others. ...”
In
addition, the applicant relied on Articles 9 (right to freedom of
thought, conscience and religion) and 10 (right to freedom of
expression) of the Convention.
The
Government disputed this contention.
The
Court considers that this part of the application falls most suitably
to be examined under Article 11 of the Convention, as interpreted in
the light of Articles 9 and 10.
A. The existence of an interference with a right
guaranteed by Article 11
1. The submissions of the parties
(a) The applicant
In
the applicant's view, the negative aspect of the right to freedom of
association should be considered on an equal footing with the
positive aspect of that right. Any other conclusion would be
illogical and would undermine the principle of freedom of
association. Thus the Court had correctly held that compulsion to
join a particular trade union and to fund its activities contrary to
the negative aspect of the right to freedom of association, “str[uck]
at the very substance of the freedom of association guaranteed by
Article 11” (he cited Young, James and Webster
v. the United Kingdom, 13 August 1981, § 55, Series A no.
44, and Sørensen and Rasmussen v. Denmark [GC], nos.
52562/99 and 52620/99, § 54, ECHR 2006 I).
The
applicant disputed the Government's contention that the present case
involved a tax and not a membership fee and that therefore the
negative aspect of the right to freedom of association had not been
violated. Whilst the Government recognised that a tax was a
compulsory payment to the State to be used by the State in accordance
with decisions taken in the public interest by the State, they failed
to appreciate that the Industry Charge did not have these
characteristics but was a payment to the FII collected on its behalf
by the State. It was the FII which decided how to spend the funds
accrued to it in this way, guided by its policies and views and
without regard to the views of the applicant and others who were
compelled by law to contribute to its financing. For the reasons set
out in particular in the opinion of the dissenting member of the
Supreme Court, the applicant had been compelled through the
compulsory payment of charges to be a member of the FII and/or to
associate himself with others within the FII. Notwithstanding the
compulsory character of the Industry Charge and the fact that FII
members could have their charges deducted from their membership fees,
the FII had reserved the right to deny the applicant and others like
him membership.
The
applicant further submitted that the disputed obligation to pay the
Industry Charge adversely affected his enjoyment of his positive
right to freedom of association. Article 11 § 1 protected the
right to freedom of association with others, including the right to
form and join a collective entity or association for the furtherance
of the common interests of the members of the group. The imposition
of the Industry Charge reduced the resources available to the
applicant and others to form and to fund associations which promoted
their views and interests. At the very least, there had been an
interference with the positive right of the applicant, and others,
voluntarily to associate with others in the promotion of their common
interests and views. In this regard the applicant relied on
paragraphs 339 to 342 of the Digest of decisions and principles
of the Freedom of Association Committee of the Governing Body of the
ILO (see paragraphs 23 and 24 above). Any discrimination of the kind
mentioned in those paragraphs, including favourable or unfavourable
treatment of a given organisation as compared with others,
jeopardised the rights of individuals to establish and join
organisations of their own choosing.
In
the applicant's view, it was clear that the FII, a private
association, was placed at an advantage vis-à-vis other
private associations. The Industry Charge was a tax levied to fund
the activities of the FII. Neither the MBA nor any other private
organisation was the beneficiary of such a tax.
The
applicant argued that protection of the freedom of thought in Article
9 and of the freedom of expression in Article 10 involved a freedom
of choice. This implied that a person ought to enjoy a choice as to
whether he or she would contribute towards the expenditure incurred
by others in promoting and promulgating political views and whether
to be grouped with others whose views he or she disagreed with or for
purposes of which he or she disapproved. Thus, to compel a person to
pay dues to an association, notwithstanding his or her objections to
its policies, activities and views, and to contribute towards
expenditure incurred by that association in promoting and
promulgating those views would in itself interfere with that
individual's Article 11 rights.
(b) The Government
The
Government disputed that there had been any restriction on the
applicant's right of association, as provided for in Article 11 of
the Convention, with respect to either his right to form and join
trade unions or his right not to belong to an association. The
applicant was not a member of the FII and had not been coerced in any
way into becoming a member. The applicant was only one of 10,000, in
a country with a population of 300,000, who were subject to the
Industry Charge. The amount of the Industry Charge was very low,
constituting 0.08% of business turnover. It was not a membership fee
but a tax imposed for a specific purpose laid down in statute, in the
1993 Act, namely to promote industry and industrial development in
Iceland. Like other taxes, the charge was collected by the State. In
accordance with the Act, the funds were disbursed to the FII, which
was obliged to use them for the stated purpose. It should be stressed
that, even though the FII was a non-governmental organisation, it had
been given a clear and legally prescribed role in one aspect, which
was to use the Industry Charge for the benefit of industry as a
whole. This included the applicant as a self-employed individual.
While
the FII worked specifically in the interests of its members, care was
taken in its operations to maintain separate records of how revenues
from the Industry Charge were used for the service of their
particular interests, on the one hand, and for the common and overall
interests of the entire industrial sector, on the other hand. The
FII's use of funds derived from the Industry Charge had been subject
to statutory conditions and effective public scrutiny. In this area,
supervision was exercised in a manner fully complying with the
requirements of transparency vis-à-vis persons who,
like the applicant, paid the charge to the FII without being a member
of it or otherwise affiliated. In this regard, the present case
differed from that of Evaldsson and Others v. Sweden
(no. 75252/01, 13 February 2007). The fact that the FII
granted those of its members who also paid the Industry Charge a
discount on membership fees had no effect on the applicant's
position. As a non-governmental organisation, the FII had been
completely within its rights in deciding what arrangement should
apply regarding its membership fees and in doing so in fact enjoyed
protection under Article 11 against State interference.
The
Government emphasised that the imposition of the Industry Charge was
essentially different from the situation described by the ILO in its
Digest of decisions and principles under the heading
“Favouritism or discrimination in respect of particular
organizations” (see paragraph 24 above). The tax revenues that
were transferred to the FII could not be viewed as a form of State
subsidy unevenly distributed to one employer association and not to
others. On the contrary, they were meant to cover the costs of the
official duties imposed on the FII to promote Icelandic industry and
industrial development. The reason why no other employer association
received revenues from the Industry Charge was that no other
association had been assigned such duties. There could accordingly be
no question of discrimination between the FII and the traditional
employer associations in the sense envisaged by the ILO Committee.
In
the Government's opinion, there was a fundamental difference between
the situation at issue in the present case and that in previous
judgments by the Court concerning the negative aspects of the
freedom of association, notably Young, James and
Webster, cited above; Sigurður A. Sigurjónsson v.
Iceland (30 June 1993, Series A no. 264); and
Sørensen and Rasmussen, cited above. Unlike in those
cases, in the case at hand a refusal by the applicant to pay the
Industry Charge would not have led to his losing his employment or
his means of livelihood and would have had no bearing whatsoever on
these aspects. What was involved was only a tax, not a membership
fee.
Had
the applicant not paid the Industry Charge, he would have suffered no
personal consequences from the point of view of either labour law or
criminal law or been forced to close down his business under the
special rules that applied to the collection of value-added taxes.
Any arrears would have been the subject of ordinary collection
measures employed by the tax authorities, namely recovery and
attachment of the applicant's assets (Enforcement Measures Act, No.
90/1989) and the compulsory sale of those assets at an auction (Act
No. 90/1991). Thus, the only consequences, if the applicant were to
refuse to pay the Industry Charge, would have been financial pressure
of the same type as that applied to taxes ordinarily. In any event,
the charge levied on the applicant's operations was very tiny
(0.08%), amounting to the equivalent of only EUR 66 for the entire
year 2004. Such a small sum could not constitute a financial burden
for him and distinguished the present case from that of Evaldsson
and Others (cited above).
The
Government further disputed the applicant's submissions with
reference to Articles 9 and 10 of the Convention. The FII had no
political objectives relating to the functioning or the policies of
any political parties. It had never declared support for any specific
political party or established political affiliations, for example
through funding, directly or indirectly. The Government therefore
firmly rejected the applicant's unsubstantiated claims that the FII
took part in political activities. The FII inevitably took part, at
times, in public discussions in which the focus was on the interests
of industry and how best to ensure a suitable operating environment
for the sector. But this was irrespective of the political party or
parties that happened to be in power at any given time. In this
respect too, the applicant's situation differed from that of the
applicants in the cases of Young, James and Webster and
Sørensen and Rasmussen, where there had been clear and
openly declared affiliations between the trade unions to which they
were obliged to belong and specific political parties.
Nor
were the circumstances in the applicant's case comparable to those in
Chassagnou and Others v. France ([GC], nos. 25088/94,
28331/95 and 28443/95, ECHR 1999 III). As the largest forum for
the entire industrial sector in Iceland, the FII had evaluated and
expressed an opinion on how the European Union served the broad
interests of industry and how industry in European Union Member
States was ensured certain operating conditions in comparison with
the situation in Iceland. However, this did not involve the adoption
of a particular political view or convictions with which the
applicant considered he had been associated contrary to his wishes.
The FII was the representative of an extremely broad and disparate
group of enterprises and employers across a wide range of categories
of industry, in which the only policy was to work in the interests of
industry as such, not to support the policy of any particular
political party or parties or to take part in political activity.
In
the light of the above, the Government submitted that the applicant's
case did not involve a form of compulsion which struck at the very
substance of the rights guaranteed by Article 11. Nor did it follow
from the Court's case-law that the negative aspect of the right to
freedom of association should be considered on an equal footing with
the positive aspect.
As
to whether the obligation to pay the charge had any effect on the
applicant's positive freedom of association, it was to be
noted that it had no effect on his right to join a union or
association of his choice. The MBA, of which he was a member, had not
been bound by the collective agreements negotiated by the
Confederation of Icelandic Employers, to which the FII was
affiliated. Thus, the applicant's freedom to negotiate had not been
threatened. Without any interference, the MBA was able to act in
furthering the special interests of its members and to direct
membership fees paid by them towards these purposes. The applicant's
allegation that the FII's activities were contrary to his own
interests or convictions was unsubstantiated. Both the MBA and the
FII were employers' associations and the applicant had not pointed to
any interests of his that clashed with those of the FII in this
respect. On the contrary, the interests of construction companies,
like those of other industrial companies, coincided fully with those
promoted by the FII. The applicant himself benefited from the FII's
activities promoting Icelandic industry.
While
the FII participated in public discussions on the operating
conditions of Icelandic industry, including whether Icelandic
membership of the European Union would be advantageous, the applicant
remained free not to identify himself with FII opinions and to adopt
his own position, as did the MBA.
Relying
on the above considerations, the Government requested the Court to
hold that there had been no interference with the applicant's rights
under Article 11 of the Convention.
2. Assessment by the Court
The
Court reiterates that the right to form and to join trade unions
is a special aspect of freedom of association and that the
notion of a freedom implies some measure of freedom of choice as to
its exercise (see Young, James and Webster,
cited above, § 52). Accordingly, Article 11 of the
Convention must also be viewed as encompassing a negative right of
association or, put in other words, a right not to be forced to join
an association (see Sigurður A. Sigurjónsson, cited
above, § 35). Although compulsion to join a particular trade
union may not always be contrary to the Convention, a form of such
compulsion which, in the circumstances of the case, strikes at the
very substance of the freedom of association guaranteed by Article 11
will constitute an interference with that freedom (see Gustafsson
v. Sweden, 25 April 1996, § 45, Reports of Judgments
and Decisions 1996-II; and Young, James and
Webster, § 55; Sigurður A. Sigurjónsson, §
36; and Sørensen and Rasmussen, § 54; all cited
above).
Furthermore,
regard must also be had in this context to the fact that the
protection of personal opinions guaranteed by Articles 9 and 10 of
the Convention is one of the purposes of the guarantee of freedom of
association, and that such protection can only be effectively secured
through the guarantee of both a positive and a negative right to
freedom of association (see Chassagnou and Others, § 103;
Young, James and Webster, § 57; Sigurður
A. Sigurjónsson, § 37; and Sørensen and
Rasmussen, § 54, all cited above).
In
this connection, the notion of personal autonomy is an important
principle underlying the interpretation of the Convention guarantees.
This notion must therefore be seen as an essential corollary of the
individual's freedom of choice implicit in Article 11 and
confirmation of the importance of the negative aspect of that
provision (see Sørensen and Rasmussen, ibid.).
In
the present instance, the applicant, an employer in the building
sector who was a member of the MBA, was under a statutory obligation
under the 1993 Act to pay an Industry Charge to the FII, of which he
was not a member and to which the MBA was not affiliated. A first
issue to be determined is whether, as argued by the applicant but
contested by the Government, this obligation was tantamount to
compulsory membership adversely affecting the negative aspect of his
freedom of association, namely his freedom not “to join”
a professional organisation against his will, as interpreted in the
Court's case-law.
The
Court observes that the circumstances of the present case differ from
those in the cases previously examined by it in that neither the
applicant nor the MBA to which he belonged were compelled “to
join” the FII in the sense of becoming members of the
Federation. However, although the obligation to which the applicant
was subject did not involve formal membership, it had an important
feature in common with that of joining an association, namely that of
contributing financially to the funds of the FII (cf. Sørensen
and Rasmussen, cited above, § 63) This common feature could
be seen as being reinforced by the fact that FII members who
paid the Industry Charge were entitled to a reduction of their
membership fees by an amount equivalent to the charge.
It
is true that, in contrast to an association membership fee, the
Industry Charge was not paid directly to the FII but indirectly
through the State Treasury which, after the deduction of collection
costs, transferred the sums received to the FII, where the sums were
recorded separately from membership fees. Although the Industry
Charge may in this respect be seen as having the characteristics of a
dedicated tax, it was one of a special kind, being levied on a
restricted group of persons and disbursed to a private law
association for use by the association without any significant
involvement or control by public authorities.
It
is further true, as pointed out by the Government, that the annual
amounts which the applicant had to pay, calculated on his turnover at
the statutory rate of 0.08%, were relatively modest and that any
failure on his part to comply with the statutory obligation to
pay the Charge would have been met by civil or administrative
sanctions only, including the recovery of any sums due by way of the
attachment and sale of the applicant's assets. In this respect, the
degree of compulsion to which the applicant was subjected may be
regarded as significantly less serious than that in certain other
cases examined by the Court, where an applicant's refusal to join a
union resulted in the loss of his employment or professional licence
and, in consequence, his means of livelihood (see, for example,
Young, James and Webster, cited above, § 55;
Sigurður A. Sigurjónsson, cited above, §§
36-37). At the same time, the Court observes that much less serious
consequences of a refusal to comply with the requirement to join a
union have similarly been found to be capable of striking at the very
substance of the freedom of choice and personal autonomy inherent in
the right of freedom of association protected by Article 11 of the
Convention (see, for example, Sørensen and Rasmussen,
cited above, § 61).
The
fact remains that in the present case the applicant was obliged by
statute financially to support a private law organisation that was
not one of his own choosing. It was also an organisation which
advocated policies - notably accession to the European Union –
which the applicant deemed to be fundamentally contrary to his own
political views and interests. His complaint under Article 11 ought
therefore to be considered in the light of Articles 9 and 10, the
protection of personal opinion being also one of the purposes of the
freedom of association guaranteed by Article 11 (see Sørensen
and Rasmussen, cited above; Sigurður A. Sigurjónsson,
cited above, § 37; and Young, James and
Webster, cited above, § 57).
The
Court further notes that, although the annual contributions involved
may have been modest from an individual point of view, the
systematic, extensive and continuous character of the Industry Charge
scheme gave it a considerable impact. Involving no fewer than 10,000
entities paying charges to an organisation with little more than
1,100 members and generating the greater part of its funds (see
paragraph 12 above), the scheme consisted of a large-scale system of
finance accruing to one recipient organisation, the FII. No other
organisations, including the MBA, of which the applicant was a
member, received funds derived from the Industry Charge. Unlike
members of the FII, members of other organisations, such as the
applicant, were not in a position to have the membership fees which
they paid to their respective organisations reduced by the amounts
that they had paid by way of the Industry Charge. Notwithstanding the
Government's argument that the funds were used for the promotion and
development of Icelandic industry as a whole, there can hardly be any
doubt that the FII and its members were treated more favourably than,
for example, the MBA and its members, including the applicant.
In
this connection the Court has also had regard to the respective
conclusions of the European Committee of Social Rights (in relation
to Article 5 of the European Social Charter) and the Freedom of
Association Committee of the Governing Body of the ILO (in relation
to Convention No. 87 concerning freedom of association and the
right to organise), from which it transpires that the imposition on
non-union members of an obligation to pay fees to a trade union and
Government measures entailing favouritism towards or discrimination
against a trade union may in certain circumstances be considered
incompatible with the right to organise and the right to join an
organisation of one's own choosing (see paragraphs 22 to 24 above).
In
sum, the Court finds that the statutory obligation on the applicant
to pay the Industry Charge impinged on the applicant's freedom of
choice in his pursuit of his occupational interests as a trade union
member and amounted to an interference with the applicant's right to
freedom of association as protected by paragraph 1 of Article 11.
B. Whether the interference was justified under
paragraph 2 of Article 11
1. The submissions of the parties
(a) The applicant
The
applicant accepted that the requirement that he pay the Industry
Charge was “prescribed by law” but disputed the
Government's submission that the interference with his right to
freedom of association pursued a legitimate aim.
Nor
could the imposition of the Industry Charge on non-members like the
applicant be considered necessary for the purposes of the second
paragraph of Article 11 of the Convention, which Article ought to be
interpreted in the light of Articles 9 and 10. There was no pressing
and proportionate need to interfere with his (negative) right to
freedom of association, his freedom of thought and freedom of
expression, by requiring him to be a member of the FII and/or to
associate with others within the FII through the payment of dues to
the FII. These dues were used in part by the FII to incur expenditure
in promoting and promulgating political views which were contrary to
the views of the applicant and others like him, who were compelled to
play a significant part in the FII activities through the payment of
those compulsory dues to the FII, which he (and others) considered to
be contrary to their interests and the national interests. The
Icelandic authorities could not show that there was no way to promote
the interests of Icelandic industry, as represented by the FII, other
than requiring him (and others) to pay the charge and thereby
contribute to the expenditure incurred by the FII in promoting and
promulgating views to which the applicant (and others) were opposed.
In this connection the applicant relied on the Court's judgment in
Evaldsson and Others (cited above).
The
applicant further stressed that the FII's decisions on how to spend
the funds generated by the Industry Charge were taken without the
involvement of any public authority. As the Government had affirmed
in their letter of 15 February 2000 (quoted under “II” of
the opinion of the dissenting member of the Supreme Court – see
paragraph 19 above), the FII enjoyed unrestricted power in deciding
how the Industry Charge was to be allocated and the Ministry of
Industry could not intervene.
Moreover,
it was indisputable that the FII took part in political activities,
such as campaigning in favour of Icelandic membership of the European
Union.
Nor
could it assist the Government's position that enforcement action to
compel payment of the Industry Charge was taken by the State, not by
the FII. Quite the contrary, it supported the applicant's case that
whilst the Industry Charge was enforced and collected by the State,
the compulsory dues were then transferred to the FII, which spent the
funds as it saw fit without public supervision.
Contrary
to what the Government suggested, the Industry Charge was not levied
in the public or general interest but in the interests of a private
association, the FII.
Whilst
the Government prayed in aid the Court's judgment in Evaldsson and
Others (cited above), that ruling rather supported the
applicant's position. Whereas the impugned duty of payment in the
Evaldsson and Others case had been imposed under a collective
labour agreement, the disputed obligation in the present case was
imposed by statute, which meant that the position adopted in the
former case applied with even greater force in the present case.
Furthermore, in a similar way to the situation in Evaldsson and
Others, there was a lack of information and transparency as to
the monitoring activities and the way in which the funds had been
spent by the FII.
Also,
as in the former case, the applicant had to pay fees against his
wishes to an organisation with a political agenda which he did not
support. However, unlike the applicants in the former case, the
applicant had not received any return on the fees paid in his case.
In
the light of the above, it could not be said that the Icelandic
authorities had struck a “fair balance” between the
competing interests.
(b) The Government
In
the event that the Court, notwithstanding the arguments above, should
find that there had been an interference with the applicant's right
to freedom of association as protected by paragraph 1 of Article 11,
the Government argued that the interference fulfilled the conditions
set out in the second paragraph. The Industry Charge was clearly
prescribed by law and pursued the legitimate aim of “protection
of the rights and freedoms of others”. At the same time, it
should be noted, by serving the purpose of promoting one of the most
vital sectors of the Icelandic economy, the Industry Charge also
served important public interests.
As
to the necessity of the interference, the Government stressed that
the legislature had considered that the objective of promoting
Icelandic industry could best be achieved by entrusting this role to
the FII, subject to public supervision in accordance with the law,
and by allocating the funds derived from the Industry Charge to this
single organisation rather than dispersing them between many smaller
ones. The FII was an umbrella federation embracing a wide variety of
enterprises, individuals and associations in all branches of
industry, for the purpose of working together with the Government
towards this objective. The FII defended the interests of all types
of industry, both in Iceland and abroad, exerting influence on
policies of the Government and financial institutions, State bodies
and other parties involved in industrial operations. This was with
the aim of ensuring that Icelandic companies had a working
environment that enabled them to be competitive on domestic and
foreign markets, without hindrance and in a profitable manner.
Having
regard to the various arguments set out above to the effect that no
interference with the applicant's right to freedom of association had
occurred (see paragraphs 34 to 44 above), the Government submitted in
any event that the Industry Charge had not entailed a
disproportionate interference with his right. The Industry Charge by
no means constituted a heavy burden on the applicant but only a tiny
proportion (0.08%) of his turnover. On this score, the case differed
from Evaldsson and Others (cited above).
Pursuant
to section 3 of the Industry Charge Act, the legislature had
entrusted the executive with monitoring in order to ensure that the
funds were used in the public interest as provided for by the Act and
for the benefit of the industrial sector as a whole. This was done in
an entirely transparent manner and also in this respect the case was
to be distinguished from Evaldsson and Others (cited above).
Moreover, since the revenues in question were public funds, the
office of the Auditor-General had full authority to investigate the
FII's operations and accounts.
The
Government moreover submitted that, in its decision of 15 May 2003 in
the case of Confederation of Swedish Enterprise v. Sweden
concerning a wage-monitoring fee deducted from the wages of workers
who were not members of the trade union in question, the European
Committee of Social Rights had interpreted Article 5 of the European
Social Charter in a manner that only served to support the
Government's position in the present case. Four main points of
special significance for the present case could be inferred from that
case. Firstly, a fee could be imposed by law or even by a collective
agreement when it was intended to serve substantial interests of all
the workers in the occupation involved. Secondly, and very
importantly, the payment of a fee which was made over to a specific
association did not automatically entail obligatory membership.
Thirdly, the sums raised by the collection of fees must be used for
the purposes for which they were intended. Fourthly, the size of the
fee should not be disproportionate in terms of the services provided
by the association. All the conditions set forth in the Confederation
of Swedish Enterprise case were met in the present case.
Furthermore,
the imposition of the Industry Charge was fundamentally different
from the situation described in the ILO Digest regarding
“favouritism or discrimination in respect of particular
organizations”. The tax revenues transferred to the FII could
not be viewed as any form of State subsidies, leading to unequal
distribution of subsidies among employers' associations. The
Government stressed that these revenues were meant to cover the cost
of the official duties imposed upon the FII to promote Icelandic
industry and industrial development. No other employers' association
in the field of industry in Iceland received such revenues, owing to
the undisputed fact that no other association had comparable legally
prescribed duties. Accordingly, the Government firmly denied that any
discrimination was taking place between the FII and traditional
employers' associations within the meaning of ILO standards.
Should
the Court find that the impugned Industry Charge arrangement was
incompatible with Article 11, this would constitute a major departure
in the interpretation of the effect and scope of that provision. It
would also have far-reaching consequences undermining the freedom of
action necessary for the Contracting States to enjoy in matters of
tax collection and also their freedom to choose methods for achieving
political goals in such important areas as supporting and encouraging
development in their occupational sectors.
2. Assessment by the Court
The
Court will next examine whether the obligation to pay the Industry
Charge fulfilled the conditions set out in the first sentence of
Article 11 § 2.
It
was undisputed that the first condition, namely that the measure
should be “prescribed by law”, was fulfilled. The
obligation to pay the Industry Charge clearly had a basis in sections
1 to 3 of the 1993 Act. Whilst noting the finding by the minority of
the Supreme Court that the obligation was incompatible with Article
74 § 2 of the Constitution, the Court finds no reason to
question the majority's finding to the effect that the Industry
Charge was in conformity with national law. It is in the first place
for the domestic authorities, notably the courts, to interpret and
apply the domestic law (see Jahn and Others v. Germany [GC],
nos. 46720/99, 72203/01 and 72552/01, § 86, ECHR 2005 VI;
Wittek v. Germany, no. 37290/97, § 49, ECHR
2002-X; Forrer-Niedenthal v. Germany, no. 47316/99, §
39, 20 February 2003; and Former King of Greece and Others
v. Greece [GC], no. 25701/94, § 82, ECHR 2000 XII).
Thus the Court is satisfied that the interference was “prescribed
by law”.
As
regards the second condition, the Court disagrees with the applicant
that the Industry Charge failed to pursue a legitimate aim. Pursuant
to section 3 of the 1993 Act, the revenues from the charge were to
“be used to promote industry and industrial development in
Iceland”. In the Court's view the measure pursued the
legitimate aim of protection of the “rights and freedoms of
others”.
As
to the third condition, the Court reiterates that the test of
necessity in a democratic society requires it to determine whether
the interference complained of corresponded to a “pressing
social need”, whether it was proportionate to the legitimate
aim pursued and whether the reasons given by the national authorities
to justify it are relevant and sufficient (see, for instance, United
Communist Party of Turkey and Others v. Turkey, 30 January 1998,
§ 47, Reports 1998-I).
In
the area of trade union freedom, in view of the sensitive character
of the social and political issues involved in achieving a proper
balance between the respective interests of labour and management,
and given the wide degree of divergence between the domestic systems
in this field, the Contracting States enjoy a wide margin of
appreciation as to how the freedom of trade unions to protect the
occupational interests of their members may be secured (see Swedish
Engine Drivers' Union, cited above, § 39; Gustafsson,
cited above, § 45; Schettini and Others v. Italy
(dec.), no. 29529/95, 9 November 2000; Wilson, National
Union of Journalists and Others v. the United Kingdom, nos.
30668/96, 30671/96 and 30678/96, § 44, ECHR 2002 V;
and Sørensen and Rasmussen, cited above, § 58).
This
power of appreciation is not, however, unlimited but goes hand in
hand with European supervision by the Court, whose task it is to give
a final ruling on whether a restriction is reconcilable with freedom
of association as protected by Article 11. The Court's task in
exercising its supervisory function is not to take the place of the
national authorities, but rather to review under Article 11, in the
light of the case as a whole, the decisions taken pursuant to their
power of appreciation (see United Communist Party of Turkey and
Others, cited above, § 47).
Turning
to the particular circumstances of the present case, the Court has
taken note of the Government's argument that the Icelandic
legislature had considered that the objective of promoting Icelandic
industry could best be achieved by entrusting this role to the FII,
subject to public supervision in accordance with the law, and by
allocating the funds derived from the Industry Charge to this single
organisation rather than dispersing them between many smaller ones.
In the Government's submission, the FII was a broad federation
embracing a wide variety of enterprises, individuals and associations
in all branches of industry, working together with the Government
towards this objective. The FII defended the interests of all types
of industry, both in Iceland and abroad, exerting influence on
policies of the Government and financial institutions, State bodies
and other parties involved in industrial operations. This was to
ensure that Icelandic companies had a working environment enabling
them to be competitive on domestic and foreign markets. The Court
accepts that these were relevant considerations for the purposes of
the necessity test under Article 11 § 2.
As
to the further issue of whether the reasons were also sufficient, the
Court observes that the FII's role and duties in respect of the use
of the revenues from the Industry Charge were defined in very broad
and unspecific terms in section 2 of the 1993 Act: “to promote
industry and industrial development in Iceland”. That was also
the case as regards its section 3 duty to “annually provide a
report to the Ministry of Industry on the use of the revenues”.
Neither the 1993 Act nor any other instrument drawn to the Court's
attention set out any specific obligations vis-à-vis
non-members who financially contributed to the FII by their payment
of the Industry Charge (compare, mutatis mutandis, Evaldsson
and Others, cited above, § 57).
While
the FII's annual reports to the Ministry of Justice contained
information on the proportion of the Industry Charge in the FII's
revenues and its expenditures in respect of the different items and
sub-items, the Court observes that, as noted by the dissenting member
of the Supreme Court, the FII did “not keep separate accounts
of whether individual elements of the Federation's operations [were]
financed by monies derived from membership fees, capital income, or
the Industry Charge” (see under “II” at paragraph
19 above).
Nor
is the Court convinced that the FII's reporting to the Ministry of
Industry involved substantial and systematic supervision by the
latter. According to the Minister's comments to the MBA of 15
February 2002 (quoted by the dissenting member of the Supreme Court
under “II” at paragraph 19 above), “[a]s can be
clearly seen from the Industry Charge Act, the FII has the
unrestricted power to decide how the charge is allocated, and the
Ministry of Industry cannot interfere with this as long as it remains
within the framework of the law”.
What
matters in the present instance is the lack of transparency and
accountability towards non-members, such as the applicant, who are
obliged financially to support the FII through their payment of the
Industry Charge (see, mutatis mutandis, Evaldsson and
Others, cited above, §§ 63 and 64).
Accordingly,
the Court observes that not only did the relevant national law define
the FII's role and duties in an open-ended manner and fail to set out
specific obligations for the FII, there was also a lack of
transparency and accountability, vis-à-vis non-members
such as the applicant, as to the use of the revenues from the
Industry Charge. In these circumstances the Court is not
satisfied that there were adequate safeguards against the disputed
arrangement giving the FII a more favourable standing in its pursuit
of the specific interests of its members and placing the applicant
and other non-members like him at a disadvantage compared to them.
Having
regard to the above considerations, the Court does not find that that
the restriction on the applicant's freedom of association entailed by
the obligation to financially support the FII contrary to his own
opinions was supported by sufficient reasons and was “necessary”.
Notwithstanding Iceland's margin of appreciation, the authorities of
the respondent State failed to strike a proper balance between the
applicant's freedom of association on the one hand and the general
interest in promoting and developing Icelandic industry on the other
hand.
Accordingly,
there has been a violation of Article 11 of the Convention.
II. ALLEGED VIOLATIONS OF ARTICLE 1 OF PROTOCOL No. 1 AND
ARTICLE 14 OF THE CONVENTION
With
reference mainly to those arguments summarised above in relation to
his complaint under Article 11 of the Convention (viewed in the light
of Articles 9 and 10) the applicant also alleged a violation of
Article 1 of Protocol No. 1. In his view the imposition of the
Industry Charge amounted to a deprivation of his possessions in
breach of Article 1 of Protocol No. 1. It was inconceivable that the
Industry Charge paid to the FII under the guise of taxation could be
viewed as justified in the general interest. Those who, like him,
paid the charge were taxed separately, in excess of such other taxes
as were imposed on taxpayers generally, without any relevant reasons
being given, for instance a requirement that the tax be used for
their benefit. This taxation of a restricted group for the benefit of
another restricted group or in the interests of others could not be
justified. For the reasons stated in paragraphs 56, 61 and 62 above
in the context of Article 11, the Court's judgment in Evaldsson
and Others (cited above) supported his position.
The
applicant further alleged violations of Article 14 taken in
conjunction with the former provisions. The differential treatment
between him and those public-sector enterprises, partly or fully
owned by the State, and also certain private-sector businesses, that
were exempted from the duty to pay the Industry Charge could not be
deemed justified by any objective and reasonable considerations. The
favourable treatment of the FII compared with other organisations was
yet further evidence of the discriminatory nature of the Industry
Charge.
The
Government disputed that the imposition of the Industry Charge
constituted deprivation of property, though they accepted that it
involved a control of the use of his property and maintained that
this was permitted under the second paragraph of Article 1 of
Protocol No. 1. They stressed that the imposition of the Industry
Charge bore all the features of taxation as interpreted in Icelandic
law and should be regarded as falling within the term “taxes”
as used in the second paragraph of Article 1 of Protocol No. 1 to the
Convention. The impugned interference fell within the wide margin of
appreciation accorded to States in this area. The Industry Charge was
clearly lawful and served the interests not only of those who worked
in the industrial sector but also the general interest of the
community as a whole. For the reasons summarised in paragraphs 66 and
67 above in relation to the Article 11 complaint, the Government
invited the Court to distinguish the present case from that of
Evaldsson and Others (cited above).
The
Government further denied the existence of discrimination between
industries that were obliged to pay the Industry Charge and those
that were not. The rules on the levying of the Industry Charge
applied equally to all entities that were in the same position as the
applicant.
The
Court, in the light of its findings above with regard to the
complaint under Article 11 of the Convention, does not find it
necessary to review the complaints under Article 1 of Protocol No. 1
on its own or under Article 14 taken in conjunction with the former
and with Article 11.
III. APPLICATION OF ARTICLE 41 OF THE CONVENTION
Article 41 of the Convention provides:
“If the Court finds that there has been a
violation of the Convention or the Protocols thereto, and if the
internal law of the High Contracting Party concerned allows only
partial reparation to be made, the Court shall, if necessary, afford
just satisfaction to the injured party.”
A. Costs and expenses
The
applicant stated that he would not seek an award for pecuniary and
non-pecuniary damage but he requested the reimbursement of legal
costs and expenses, in sums totalling ISK 3,920,773 and 36,392.07
British pounds (GBP) (approximately EUR 22,000 and EUR 42,000) for
services provided by Mr Einar Hálfdánarson and Mr
Child, respectively, covering the following claims submitted on 28
February 2008 and 20 March 2009:
(a)
ISK 1,494,000 for Mr Einar Hálfdánarson's work in
representing the applicant before the domestic courts (inclusive of
value-added tax);
(b)
GBP 25,860 for Mr Child's legal advice in the domestic proceedings
and his representation of the applicant before the Strasbourg Court
until 28 February 2008;
(c)
ISK 314,985 for translation costs;
(d)
ISK 281,925 for travel expenses;
(e)
ISK 35,863 for photocopying and transcripts (ISK 34,363 and ISK 1,500
respectively);
(f)
ISK 1,494,000 for Mr Einar Hálfdánarson's work in the
Strasbourg proceedings after 28 February 2008;
(g)
ISK 300,000 for various expenses incurred by him after 28 February
2008;
(h)
GBP 9,500 for further work by Mr Child in the Strasbourg proceedings
after 28 February 2008;
(i)
GBP 1,032.07 for the latter's expenses (accommodation, travel and
translation) incurred after 28 February 2008.
As
to the claims for items (a) and (b), which had been submitted on 28
February 2008, the Government objected to them, arguing that the
legal fees for two lawyers in the Strasbourg proceedings were
excessively high, both in terms of the number of hours indicated and
the hourly rate charged. Item (d) had not in the Government's opinion
been necessarily incurred. The claims for items (f), (g), (h) and
(i), submitted on 20 March 2009, had not been accompanied by any
detailed breakdown or other particulars and also seemed excessive.
The
Court will consider the above claims in the light of the criteria
laid down in its case-law, namely whether the costs and expenses were
actually and necessarily incurred in order to prevent, or obtain
redress for, the matter found to constitute a violation of the
Convention and were reasonable as to quantum. In the present case,
the Court considers that the claims for items (a) and (b) should be
awarded in their entirety, as should those for items (c) and (e). The
expenses in respect of item (d) do not appear to have been
necessarily incurred and that claim must therefore be rejected. No
vouchers or particulars have been submitted in support of items (f)
to (i), incurred after 28 February 2008 up to and including the oral
hearing on 24 March 2009, and the additional fees do not in any
event appear reasonable as to quantum. The Court is nevertheless
prepared to accept that some of the additional expenses and fees
claimed were actually and necessarily incurred for the applicant's
legal representation at the oral hearing before the Court. Regard
being had to the information in its possession and the above
criteria, the Court considers it reasonable to award the applicant
EUR 15,000 for Mr Child's work and EUR 10,000 for Mr Einar
Hálfdánarson's work and EUR 1,000 and EUR 3,000 for
their respective expenses.
B. Default interest
The
Court considers it appropriate that the default interest should be
based on the marginal lending rate of the European Central Bank, to
which should be added three percentage points.
FOR THESE REASONS, THE COURT UNANIMOUSLY
Holds that there has been a violation of
Article 11 of the Convention;
Holds that it is unnecessary to examine the
applicant's complaints under Article 1 of Protocol No. 1 on its own
or in conjunction with Article 14 or under Article 14 taken in
conjunction with Article 11;
Holds
(a) that
the respondent State is to pay the applicant, within three months
from the date on which the judgment becomes final in accordance with
Article 44 § 2 of the Convention, EUR 16,000
(sixteen thousand euros) in respect of the costs and expenses claimed
by Mr Child and EUR 13,000 (thirteen thousand euros) in respect
of those claimed by Mr Einar Hálfdánarson, to be
converted respectively into British pounds and the national currency
of the respondent State at the rates applicable at the date of
settlement, plus any tax that may be chargeable;
(b) that
from the expiry of the above-mentioned three months until settlement
simple interest shall be payable on the above amounts at a rate equal
to the marginal lending rate of the European Central Bank during the
default period plus three percentage points;
Dismisses the remainder of the applicant's claim
for just satisfaction.
Done in English, and notified in writing on 27 April 2010,
pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.
Fatoş Aracı Nicolas Bratza
Deputy
Registrar President
