England and Wales High Court (Commercial Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT

		Royal Courts of Justice Rolls Building Fetter Lane London EC4A 1NL
		20/06/2013

Mr Justice Field:

Introduction

1. The question to be decided on this application is whether the court has jurisdiction under EC Regulation 44/2001 ("the Regulation") to determine the claim brought by the Claimants against the 1^st Defendant ("SEPLA"), a Spanish trade union, for damages and declaratory and injunctive relief alleging that strikes of Spanish airline pilots organised by the 1^st Defendant were unlawful under Spanish law in that they were in breach of the Claimants' right to freedom of establishment and to provide cross border services under Articles 49 and 56 of the Treaty on the Functioning of the European Union ("TFEU").
2. The 2^nd Claimant ("IAG") is the parent company of the 1^st Claimant ("BA") and Iberia Airlines ("Iberia"). It was formed in January 2011 upon the merger of BA and Iberia. IAG is a Spanish registered company, but its shares are traded on the London Stock Exchange as well as on the Spanish Stock Exchange. Its corporate head office and principal place of business are in London. It is responsible for the management of the combined group including the delivery of a joint business and merger synergy plan. The rest of the operational activities of the group are carried out by the operating companies, Iberia in Spain and BA in London.
3. SEPLA is an independent Spanish trade union of Spanish airline pilots which was founded in 1978. It is registered as such with the Spanish Ministry of Employment and has its seat at Madrid, Spain. It has no establishment, office or other presence in the UK. Under Article 28.2 of the Spanish Constitution, the right to strike is an employee's fundamental right. As such it prevails over the right to work provided for in Article 35.1 of the Constitution.
4. As its name suggests, the 2^nd Defendant ("IFALPA") is a federation of airline pilots associations of which SEPLA is a member. It appears that IFALPA has been domiciled in Montreal, PQ, Canada since January 2013 but there is a good arguable case that it was domiciled within the jurisdiction at the time when the Claim Form was issued on 16 November 2012.
5. In October 2011, IAG announced the intention of launching a new low-cost airline, Iberia Express. Whilst Iberia's long haul business had been profitable, its domestic (short haul) and European (medium haul) businesses had been historically unprofitable. The Claimants contend that this had been due to two main factors: (i) competition from low-cost airlines such as Ryanair and Easyjet and from high-speed rail services; and (ii) the high cost of pilots and cabin crew. The plan was that Iberia Express would hire new pilots and crew at competitive market rates significantly lower than those paid to pilots and crew under current Iberia collective agreements. In IAG's estimation, without new competitive rates of pay for short and medium haul flights, Iberia would continue to make substantial losses on these sectors of its business.
6. IAG offered guarantees to SEPLA and its pilot members that there would be no job losses at Iberia but this did not neutralise SEPLA's hostility to Iberia Express employing pilots and cabin crew on less favourable terms than those enjoyed by its members employed by Iberia. In December 2011 and January and February 2012, pilots employed by Iberia went on strike at the urging of SEPLA and SEPLA called for further strikes in March, April and May 2012. In the event, the strikes planned for March and early April 2012 did not go ahead and the remaining strikes were called off on 27 April 2012. Overall, the pilots were on strike for 18 days in the period December 2011 to 27 April 2012. The principal objective of the strikes as stated in SEPLA's strike notices was to halt the transfer by Iberia of short and medium business to Iberia Express or any other company other than as regulated under the pre-existing collective agreement.
7. On 7 December 2011, IFALPA sent a letter to all of its member associations bearing the heading "Request for Mutual Assistance by Spanish Air Line Pilots Association (SEPLA)". The letter stated, inter alia, that Iberia Express

" … endangers pilots' jobs, infringes the scope clause in the collective agreement established between the company and the trade union, and aims at watering down the pilot market by having reduced terms and conditions below those in any other comparable airline. … The company's strategic plan is clearly to expand the Iberia Express's fleet at the expense of the main carrier, which would eventually disappear, with all its flying being outsourced to Iberian Express… Therefore the Iberia pilots will be commencing strike action on the 18^th and 29^th December 2011 and is requesting the implementation of the following Mutual Assistance polices; Request for Extra Flights and/or Increased Capacity … Request for Ban on Wet Leasing … Request for Recruitment Ban, Request for Denial of Training Facilities … Request for Denial of Cockpit Crew Contracting…

8. On 2 April 2012, Iberia filed a claim against SEPLA and SEPLA's Trade Union Section in Iberia at the National Court, Labour Division. The gist of the claim was that the strikes were in opposition to the lawful decision to create Iberia Express and amounted to a violation of fundamental rights under Spanish law.
9. On 27 April 2012, the Spanish Cabinet ordered the parties to the dispute to submit their differences regarding the strike to a compulsory arbitration leading to an award based not on the legal rights and wrongs of the dispute but on general grounds of fairness. This order was made under Article 10 of Royal-Decree Law 17/1977. On 24 May 2012, the arbitrator issued his award ("the first Laudo") which Iberia appealed to the National Court. Iberia Express also appealed on the ground that it had not been called on to participate in the arbitration notwithstanding that it was affected by the award and was an essential party to the dispute. Iberia Express's appeal succeeded. On 2 November 2012, the National Court ordered the arbitrator to retract the proceedings to the point where Iberia Express should have been heard and annulled the proceedings thereafter and the first Laudo. Iberia, Iberia Express and SEPLA have all appealed the National Court's decision to the Supreme Court and those appeals are still pending, as is Iberia's appeal against the first Laudo to the National Court.
10. On 21 December 2012, the arbitrator issued a second award ("the second Laudo") which was not materially different from the first Laudo, save that Iberia Express was now a party. This second Laudo too has been appealed to the National Court by Iberia and Iberia Express. At present, those appeals are stayed by order of the National Court pending judgement by the Spanish Supreme Court in the three appeals against the first Laudo.
11. Following the order directing compulsory arbitration of the dispute between Iberia, Iberia Express and SEPLA, Iberia withdrew its claim against SEPLA in the Labour Division of the National Court.

The cause of action relied on by the Claimants

12. The Claimants contend that: (i) Spanish law applies to their claims against both defendants, which includes the right under EU law to the freedom of establishment and freedom to provide cross-border services provided for in Articles 49 and 56 of TFEU; (ii) the strikes and/or the effects of the strikes called for by SEPLA with the participation IFALPA were unlawful in that they constituted discriminatory measures and/or restrictions contrary to Articles 49 and 56 TFEU; and (iii) SEPLA and IFALPA are accordingly liable in damages for loss caused by their unlawful conduct and the Claimants are entitled to declaratory and injunctive relief.
13. Articles 49 and 56 of TFEU (ex Articles 43 and 49 TEC) provide:

Article 49 TFEU

Within the framework of the provisions set out below, restrictions on the freedom of establishment of nationals of a Member State in the territory of another Member State shall be prohibited. Such prohibition shall also apply to restrictions on the setting-up of agencies, branches or subsidiaries by nationals of any Member State established in the territory of any Member State.

Freedom of establishment shall include the right to take up and pursue activities as self-employed persons and to set up and manage undertakings, in particular companies or firms within the meaning of the second paragraph of Article 54, under the conditions laid down for its own nationals by the law of the country where such establishment is effected, subject to the provisions of the Chapter relating to capital.

Article 56 TFEU

Within the framework of the provisions set out below, restrictions on freedom to provide services within the Union shall be prohibited in respect of nationals of Member States who are established in a Member State other than that of the person for whom the services are intended.

The European Parliament and the Council, acting in accordance with the ordinary legislative procedure, may extend the provisions of the Chapter to nationals of a third country who provide services and who are established within the Union.

14. The Claimants place great reliance on the decision of the ECJ in ITF and Finnish Seamen's Union v Viking Line ABP and OÜ Viking Line Eesti [2007] ECR 1-10779 which is the leading authority on the right to freedom of establishment in the context of trade union action. Here, Viking Line ABP ("Viking"), a Finnish company, used its vessel, the Rosella, to operate a ferry service between Finland and Estonia. The ferry service was loss-making and in an attempt to turn the business round, Viking sought to reflag the Rosella in Estonia with a view to agreeing lower rates of pay for the crew with an Estonian trade union. The existing crew were members of the Finnish Seamen's Union ("FSU") with whom Viking had a collective agreement governing the crew's terms and conditions. FSU called a strike. It demanded that Viking should abandon its plan to reflag or, in the event of reflagging, insisted that the size of the crew be increased by eight and the entire crew employed under Finnish labour conditions. FSU was an affiliate of ITF, a federation of transport workers unions based in London, which at the request of FSU sent a circular to all its affiliated trade unions requesting them not to negotiate with Viking. Viking settled the strike with FSU and in time wanted to make another attempt to reflag the Rosella but ITF had never withdrawn their circular. Anticipating that a new attempt to reflag would result in collective action by ITF and FSU, Viking brought an action in the Commercial Court in London seeking, inter alia, an injunction restraining interference with its rights to freedom of movement. The action was tried by Gloster J who granted the injunctive relief sought, holding that the defendants could not lawfully prevent Viking from reflagging the vessel in Estonia since this involved the exercise of an establishment right. ITF and FSU appealed to the Court of Appeal who referred what in essence were three questions to the ECJ for a preliminary ruling: (i) Did collective action initiated by a trade union or group of trades union to induce an undertaking to enter into a collective agreement whose terms were liable to deter it from exercising freedom of establishment fall outside Article 43 EC? (ii) Did Article 43 confer rights on a private undertaking which could be relied on against a trade union or association of trade unions? (iii) Did the collective action taken by ITF and FSU against Viking constitute a restriction within the meaning of Article 43 EC and, if so, to what extent could such a restriction be justified?
15. The ECJ addressed these questions in so far as they related to the interpretation of Article 43 EC. It answered "no" to the first question. The court observed that according to settled case-law, Articles 39, 43 and 49 EC did not apply only to actions of public authorities but extended to rules of any other nature aimed at regulating in a collective manner gainful employment, self-employment and the provisions of services (para 33). Since working conditions in the different Member States are governed sometimes by provisions laid down by law or regulation and sometimes by collective agreements and other acts concluded or adopted by private persons, limiting application of the prohibitions laid down by these articles to acts of a public authority would risk creating inequality in its application (para 34). Collective action such as that taken against Viking was inextricably linked to the collective agreement FSU was seeking. It followed that collective action to induce an undertaking to enter into a collective agreement whose terms were liable to deter it from exercising freedom of establishment did not fall outside Article 43 EC (paras 36-37).
16. The ECJ stated that the right to take collective action, including the right to strike, is recognised both by various international instruments which the Member States have signed or cooperated in and by instruments developed by Member States at Community level or in the context of the EU. However, although the right to strike was a fundamental right which forms part of the general principles of Community Law, the fundamental nature of that right is not such as to render Article 43 EC inapplicable to the collective action in the instant proceedings (paras 43-47).
17. As to the second question, the court held that Article 43 is capable of conferring rights on a private undertaking which may be relied on against a trade union or an association of trade unions. The principal strands of the court's reasoning are found in the following paragraphs of the judgement.

57. … [I]t was clear from the case law that the abolition, as between Member States, of obstacles to freedom of movement for persons and freedom to provide services would be compromised if the abolition of State barriers could be neutralised by obstacles resulting from the exercise, by associations or organisations not governed by public law of their legal autonomy (Walrave and Koch, paragraph 18; Bosman, paragraph 83; Deliège, paragraph 47; Angonese, paragraph 32; and Wouters and Others,paragraph 120).

58. Moreover, the Court has ruled, first, that the fact that certain provisions of the Treaty are formally addressed to the Member States does not prevent rights from being conferred at the same time on any individual who has an interest in compliance with the obligations thus laid down, and, second, that the prohibition on prejudicing a fundamental freedom laid down in a provision of the Treaty that is mandatory in nature, applies in particular to all agreements intended to regulate paid labour collectively …

59. Such considerations must also apply to Article 43 EC which lays down a fundamental freedom.

61. It follows that Article 43 EC must be interpreted as meaning that, in circumstances such as those in the main proceedings, it may be relied on by a private undertaking against a trade union or an association of trade unions.

62. This interpretation is also supported by the case-law on the Treaty provisions on the free movement of goods, from which it is apparent that restrictions may be the result of actions by individuals or groups of such individuals rather than caused by the State (see Case C-265/95 Commission v France [1997] ECR 1-6959, paragraph 30, and Schmidberger, paragraphs 57 and 62).

65. There is no indication in [the case law referred to paragraph 57] that could validly support the view that it applies only to associations or to organisations exercising a regulatory task or having quasi-legislative powers. Furthermore, it must be pointed out that, in exercising their autonomous power, pursuant to their trade union rights, to negotiate with employers or professional organisations the conditions of employment and pay of workers, trade unions participate in the drawing up of agreements seeking to regulate paid work collectively.

18. In answer to the third question, the court held that: (1) collective action such as that envisaged by FSU had the effect of making less attractive, or even pointless, Viking's exercise of its right to freedom of establishment in that it prevented Viking and its subsidiary from enjoying the same treatment in the host Member State as other economic operators established in that State (para 72). (2) Collective action to implement ITF's policy of combating the use of flags of convenience by seeking to prevent shipowners from registering their vessels in a State other than that of which the beneficial owners of those vessels are nationals was liable to restrict Viking's exercise of its right of freedom of establishment (para 73). (3) A restriction on the freedom of establishment can be accepted only if it pursues a legitimate aim compatible with the Treaty and is justified by overriding reasons of public interest; it must also not go beyond what is necessary in order to attain its objective (para 75). (4) The protection of workers is a legitimate interest which, in principle, justifies a restriction of one of the fundamental freedoms guaranteed by the Treaty (para 77). (5) The rights under the Treaty on the free movement of goods, persons and capital must be balanced against the objectives pursued by social policy including improved living and working conditions (para 79). (6) If jobs or conditions of employment at issue were not jeopardised or under serious threat, the objective of protecting workers would not justify a restriction on the exercise of one of the fundamental freedoms (para 81). (7) Collective action seeking to implement ITF's policy that results in shipowners being prevented from registering their vessels in another Member State cannot be objectively justified, even if the objective of that policy is also to protect and improve workers' terms and conditions of employment.
19. Paragraph 90 of the judgement reads:

"… Article 43 EC is to be interpreted to the effect that collective action such as that at issue in the main proceedings, which seeks to induce an undertaking whose registered office is in a given Member State to enter into a collective work agreement with a trade union established in that State and to apply the terms set out in that agreement to the employees of a subsidiary of that undertaking established in another Member State, constitutes a restriction within the meaning of that Article. That restriction may, in principle, be justified by an overriding reason of public interest, such as the protection of workers, provided that it is established that the restriction is suitable for ensuring the attainment of the legitimate objective pursued and does not go beyond what is necessary to achieve that objective.

The Regulation

20. In relevant part, the Regulation provides:
SCOPE

Article 1

1. This Regulation shall apply in civil and commercial matters whatever the nature of the court or tribunal. It shall not extend, in particular, to revenue, customs or administrative matters.

JURISDICTION

Section 1

General Provisions

Article 2

1. Subject to this Regulation, persons domiciled in a Member State shall, whatever their nationality, be sued in the courts of that Member State.

Article 3

1. Persons domiciled in a Member State may be sued in the courts of another Member State only by virtue of the rules set out in Sections 2 to 7 of this Chapter.

2. In particular the rules of national jurisdiction set out in Annex I shall not be applicable as against them.

Article 4

1. If the defendant is not domiciled in a Member State, the jurisdiction of the courts of each Member State shall, subject to Articles 22 and 23, be determined by the law of that Member State.

Section 2

Special jurisdiction

Article 5

A person domiciled in a Member State may, in another Member State, be sued:

...

3. in matters relating to tort, delict or quasi-delict, in the courts for the place where the harmful event occurred or may occur;

Article 6

A person domiciled in a Member State may also be sued:

1. where he is one of a number of defendants, in the courts for the place where any one of them is domiciled, provided the claims are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings;

...

The Claimants' case on jurisdiction

21. The Claimants contend that the court has jurisdiction over its claims against SEPLA under Article 6 of the Regulation on the basis that IFALPA was domiciled in England at the time the Claim Form was issued and the claims against SEPLA and IFALPA are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings.
22. The Claimants also contend that the court has jurisdiction under Article 5.3 on the ground that harm caused by the strikes was suffered by both Claimants within the jurisdiction.
23. It is common ground that where the Regulation applies, the court has no discretion to stay proceedings on forum non-conveniens grounds (see Owusu v Jackson [2005] ECR-1 3565). Accordingly, if the Claimants' contentions are made out, this court will have no choice but to exercise jurisdiction over the Claimants' claim for damages and declaratory and injunctive relief against a Spanish trade union whose members have by their national law a constitutional right to strike and where the Spanish Government have lawfully exercised a constitutional power to compel the parties to the underlying industrial dispute to submit to compulsory binding arbitration.

Do the Claimants' claims come within the Regulation at all?

24. Mr Flynn QC for SEPLA submitted that he had a knock-out point : the claims against SEPLA were solely based on the fundamental freedoms guaranteed by Articles 49 and 56 and as such they were not covered by the Regulation because they were not 'civil and commercial matters' within Article 1 but instead were public law claims.
25. The phrase 'civil and commercial matters' bears an autonomous meaning. In Sonntag v Waidmann [1993] ECR 1-1963, the question was whether a claim against a German schoolteacher for the accidental death of a pupil in his care on a school trip was a civil or commercial matter, notwithstanding that he was a public employee and that the duties which he owed to the pupil were, as a matter of German law, governed by public or administrative law. The ECJ held that the conduct of a teacher in a state school in his function as a person in charge of pupils during a school trip did not constitute an exercise of public powers since such conduct does not entail the exercise of any powers going beyond those existing under the rules applicable to relations between private individuals. In the opinion of the Court, an action fell outside the scope of the Brussels Convention only where the author of the damage against whom it is brought must be regarded as a public authority which acted in the exercise of public powers.
26. In Gemeente Steenbergen v Baten [2002] ECR 1-10489, the ECJ held that a claim brought by a Dutch municipality to recover maintenance payments from a former husband which the municipality had paid to his wife when the husband defaulted on those payments was a civil matter. It was necessary to examine the basis and the detailed rules governing the bringing of the action. Although only a public body could make such a claim, Dutch law characterised the claim against the husband as a civil matter, analogous to the State being subrogated to the wife's right to maintenance.
27. In Préservatrice Fonciere TIARD SA v Staat der Nederlanden [2003] ECR 1-4867, the Netherlands state sued in a national court an insurance company, PFA, on a guarantee PFA had given to the claimant in respect of the payment of import and export duties and taxes owed by associations authorised to issue TIR carnet. The provision of the guarantee was pursuant to an obligation owed by authorised associations under Article 5 of the TIR Convention. PFA disputed the jurisdiction of the court on the ground that the claim was a commercial or civil matter and therefore governed by the Brussels Convention. On a reference from the Dutch court, the ECJ held it was necessary to identify the legal relationship between the parties to the dispute and to examine the basis and the detailed rules governing the bringing of the action (para 23). It was therefore necessary to consider whether the relationship between the Netherlands state and PFA under the guarantee contract is characterised by an exercise of public powers on the part of the state going beyond those existing under the rules applicable to relations between private individuals and in the view of the ECJ, the guarantee was subject to the rules applicable to private individuals and did not involve the exercise of public powers.
28. In Frahuil SA v Assitalia SpA [2004] ECR1-1543, an insurance company (Assitalia) made a subrogation claim in Italian proceedings against a French importer of goods (Frahuil) into Italy in respect of customs duties it had paid to the Italian customs authorities under a guarantee in favour of the forwarding agent, Vegetoil. On the question whether the claim was a civil and commercial matter the ECJ adopted the approach it took in Préservatrice Fonciere TIARD, and identified the legal relationship between the parties to the dispute and examined the basis of the detailed rules governing the action. Frahuil and Assitalia were each governed by private law and were in a relationship governed by private law; further, the claimant was relying on a legal remedy provided for under a civil law provision. The action accordingly did not amount to the exercise of powers falling outside the rules applicable to relationships between private individuals and therefore it was governed by the Brussels Convention.
29. In Apostolides, the issue arose (inter alia) whether a claim brought by a dispossessed owner of land in Northern Cyprus against subsequent purchasers of the land was a civil and commercial matter within Article 1 of the Regulation. The ECJ held:

42. The autonomous interpretation of the concept of "civil and commercial matters" results in the exclusion of certain judicial decisions from the scope of Regulation No 44/2001, by reason either of the legal relationships between the parties to the action or the subject-matter of the action (see LTU, paragraph 4; Rüffer, paragraph 14; Préservatrice Fonciere TIARD, paragraph22 and Lechouritou and Others, paragraph 31).

43. Thus, the Court has held that, although certain actions between a public authority and a person governed by private law may come within the context, it is otherwise where the public authority is acting in the exercise of public powers (see LTU, paragraph 4; Rüffer, paragraph 8; Sonntag, paragraph 20; Préservatrice Fonciere TIARD, paragraph22 and Lechouritou and Others, paragraph 31).

44. The exercise of public powers by one of the parties to the case, because it exercises powers falling outside the scope of the ordinary legal rules applicable to relationships between private individuals, excludes such a case from civil and commercial matters with the meaning of Article 1 (1) of Regulation No 44/2001) (see to that effect, LTU, paragraph 4; Rüffer, paragraphs 9 and 16; Sonntag, paragraph 22; Préservatrice Fonciere TIARD, paragraph 30 and Lechouritou and Others, paragraph 34).

30. Mr Flynn cited the following observations of Professor Briggs in his well-known work Civil Jurisdiction and Judgments, 5th ed. 

(1) In deciding whether a claim is within or without the Regulation, the court 'must isolate and focus upon the legal obligation which the claimant seeks to enforce, and to characterise it as civil or commercial, or not, within the context of the law of the national court seised'^[1].

(2) On the basis of the decisions of the ECJ in Gemeente Steenbergen v Baten [2002] ECR 1-10489, Freistaat Bayern v Blijdenstein [2004] ECR 1-981 and Frahuil SA v Assitalia SpA, "... if the claim is based upon the defendant's liability to perform obligations and duties cast upon him by private law, then even if the claimant is a public authority, relying upon a cause of action which happens to be vested in it, as a public authority alone, it will still be enforcing duties and rights which bind the defendant according to the private law of the state in question, and the proceedings are to be regarded as arising in a civil or commercial matter. The fact that the claimant is acting in its capacity as a public authority is quite irrelevant to the jurisdictional issue."^[2]

(3) "… if the claim is brought against a defendant which owes the duty in respect of which it is sued and which performs those duties, as a matter of public law, the proceedings will not be in a civil or commercial matter, even if the allegation made against the defendant is that it was negligent, or acted without legal excuse for what it did, in a way which is, in terms of its content, practically identical with duties owed by other persons in other contexts."^[3]

(4) " … if a public authority can act by the exercise of private powers, a private body may sometimes act in the exercise of public powers, whether these are undertaken within a scheme of public regulation, or take the form [of] public powers delegated to a private provider."^[4]

31. Citing Préservatrice Fonciere TIARD SA v Staat der Nederlanden [2003] ECR 1-4867, para 30 ; Apostolides v Orams [2009] ECR-1 3571, paras 43-45  and Professor Briggs' observation (4) above, Mr Flynn submitted that the key determinative factor in deciding if the claim was a civil or commercial matter was whether the claim is brought against a defendant who, because of his exercise of his rights and powers is subject to obligations and duties which are not simply matters of the ordinary private law to which all are subject, but are exorbitant in the sense that they entail the exercise of powers going beyond those existing under the rules applicable to relations between ordinary private individuals or entities.
32. In Mr Flynn's submission, the rights sought to be enforced by the Claimants are fundamental rights that are not located in the sphere of ordinary private law but are in the nature of public law rights that in principle are exercisable only against Member States and emanations of Member States. Although it is a private entity, SEPLA is exceptionally obliged to respect the freedoms enshrined in Articles 49 and 56 TFEU because it occupies a special position whereby it is capable of exercising powers to regulate the conditions of the labour market and to this extent it is to be assimilated to a Member State body. For these reasons, SEPLA's obligations to respect the Article 49 and Article 56 freedoms are exorbitant to those obligations to which it is subject as a matter of ordinary private law and it follows that the Claimants' claims are not civil or commercial matters.
33. Mr Mercer QC for the Claimants argued that the only matters that were outside the Regulation were matters concerned with the exercise of public law powers by a public authority. SEPLA was not a public authority and the Claimants' claims did not involve the exercise of public law powers. Rather, the claims were civil claims for illegal conduct that had caused loss. They were analogous to claims for damages for breach of the treaty prohibition against anti-competitive agreements and it was the view of the editors of Dicey, Morris and Collins on The Conflict of Laws "that it was likely that claims for damages caused by restrictive practices or unfair competition, which often have public law elements, come within the scope of the Regulation and the Convention."^[5] Professor Briggs' observation that if a public authority can act by the exercise of private powers, a private body may sometimes act in the exercise of public powers, was unsupported by authority and in any event was directed to whether private utility companies might be seen to be exercising public powers delegated by the state, or contained in a scheme of public regulation.
34. Mr Mercer submitted that it was implicit in the ECJ's reasoning in Viking^[6] that all individuals were subject to the obligations underpinning the EU fundamental freedoms of movement of goods and establishment. He also observed that if it had been seriously arguable that the Regulation did not apply to claims that industrial action breached the treaty provisions providing for the fundamental freedom of establishment, the point would have been taken either by defendant trade unions or by the national courts both in Viking [2005] EWHC 1222 (Comm); [2005] CMLR 29 and The Tor Caledonia [2004] All ER (EC) 845.
35. In my judgement, Mr Flynn's contention that the Claimants' claims are not "civil and commercial" matters is well founded. The prohibitions on restrictions on the freedoms of establishment and the provision of services within the EU expressed in Articles 49 and 56 TFEU import treaty obligations laid upon the Member States, with the result in my view that the enforcement of those obligations is not a civil or commercial matter but one involving the application of public law. True it is that trade unions have been held to be subject to the obligation to maintain the fundamental freedoms enshrined in the EC predecessors to Articles 49 and 56, but this in my opinion is because for this purpose they are to be deemed to be emanations of the state. As submitted by Mr Flynn, this analysis is supported by paragraph 29 of the Opinion of Advocate General Trstenjak in Fra.bo SpA v DVGW Case C-171/11:

As the fundamental freedoms are addressed principally to the Member States, only action taken by the Member States can in principle be measured against fundamental freedoms. (11)^[7] In settled case-law, however, the Court tends to take a broad view of the concept of measures taken by Member States, in that it considers that a person or institution need not be formally classified as exercising official authority or be a public body for the measures taken by that person or institution to be classified as action taken by a Member State, to which the fundamental freedoms apply. The Court thus examines measures taken by professional organisations for their compatibility with the fundamental freedoms where, under national law, those organisations have been granted powers similar to sovereign powers. (12)^[8] Measures taken by legal persons established under private law and controlled, directly or indirectly, by the Member State concerned are also deemed to be public measures attributable to that Member State. (13)^[9]

36. In paragraph 33 of her Opinion, Advocate General Trstenjak notes the Viking decision and observes that such direct application of the fundamental freedoms involves a kind of collective rules of a non-public law nature. As to this, I would observe that it remains the case that the source of the fundamental freedoms are treaty provisions imposing obligations on states. Moreover, it is extremely difficult to conceive of circumstances where a private individual's acts could constitute a breach of the rights of establishment and free movement of goods and I accept Mr Flynn's submission that SEPLA's obligations to respect the Article 49 and Article 56 freedoms are exorbitant to those obligations to which it is subject as a matter of ordinary private law.
37. Further, a court having to decide whether SEPLA was in breach of Articles 49 and/or 56 TFEU will have to conduct a sensitive balancing exercise in which it weighs SEPLA's constitutional right to strike and the fundamental right to strike which forms part of the general principles of Community Law against the fundamental freedoms enshrined in Articles 49 and 56. In my judgment, such an exercise will involve a resort to notions of public law rather than to private law.
38. In Viking in the Commercial Court, FSU originally stated that it intended to challenge the jurisdiction of the English court under the Regulation, but it later withdrew its jurisdictional challenge. Understandably, therefore, the court proceeded on the basis that it had jurisdiction to try the action, and indeed relied on the fact that it had jurisdiction as a reason for rejecting the defendants' contentions that the court could not or ought not to decide the case on grounds of non-justiciability. I accordingly do not accept the proposition that Viking points strongly to the conclusion that the Claimants' claims herein are civil or commercial matters. Nor do I think that much reliance can be placed on The Tor Caledonia. There an action was brought in the Labour Court in Denmark challenging the legality of industrial action called by a Swedish maritime trade union against the claimant owner of the vessel Tor Caledonia for the purpose of securing a collective agreement for that vessel's Polish crew on a ferry route between Sweden and the UK. The vessel was then withdrawn from the ferry route and the owners brought an action for damages against the Swedish trade union in the Danish Maritime and Commercial Court. The claimants contended that the court had jurisdiction under Article 5 (3) of the Brussels Convention on the ground that the damage resulting from the collective action was suffered in Denmark. The ECJ held that the court did indeed have jurisdiction under Article 5 (3). However: (i) the point whether the claim was a civil or commercial matter was not raised; (ii) there is nothing to suggest that the claim was based on an infringement of the fundamental right of establishment or free movement of goods -- Viking was not decided in the Commercial Court until June 2005 and in the ECJ until December 2007; (iii) nor is there any reference to any constitutional right to strike under the law of Sweden.
39. I accordingly find that this court does not have jurisdiction under the Regulation to determine the Claimants' claims.
40. No jurisdictional basis other than the Regulation was relied on. If some other basis had been advanced, and a jurisdiction gateway established, I would have had no hesitation in deciding that jurisdiction should be declined, for it is obvious to me that if the court had a discretion to decline jurisdiction on forum non conveniens grounds, as it would have on this hypothesis, it would decide that it was wholly inappropriate for an English court to pronounce on the lawfulness under Spanish law of calls for strike action in Spain by a Spanish trade union and where compulsory arbitration had been lawfully ordered by the Spanish Government.
41. It follows that SEPLA's application succeeds and the court will grant a declaration that it has no jurisdiction to try the Claimants' claims brought against it.

Note 1   Para 2.31, p.65    [Back]

Note 2   Para 2.31, p.66    [Back]

Note 3   Para 2.33, p.70.    [Back]

Note 4   Para 2.33, p. 69    [Back]

Note 5   15th ed, para 11-034    [Back]

Note 6   At para 62    [Back]

Note 7   With respect to the free movement of goods, see only the judgments in Case 311/85 Vereniging van Flaamse Reisbureaus [1987] ECR 3801, paragraph 30 and Case C-159/00 Sapod Audic [2002] ECR 1-5031, paragraph 74.    [Back]

Note 8   See only the judgment in Joined Cases 266/87 and 267/87 Association of Pharmaceutical Importers and Others [1989] ECR 1295, paragraph 13 et seq., in which the Court concluded the measures taken by the British Society representing pharmacists may, with particular account taken of the powers conferred on it, constitute measures within the meaning of Article 34 TFEU. The Court came to the same conclusion in its judgment in Case C-292/92 Hünermund and Others [1991] ECR 1-6787, paragraph 12 et seq., regarding measures taken by the Landesapothenkammer Baden-Wüttemburg.    [Back]

Note 9   See only the judgments in Case C-325/00 Commission v Germany [2002] ECR 1-9977, paragraph 14 et seq., and Case 302/88 Hennen Olie [1990] ECR 1-4625, paragraph 13 et seq.    [Back]