Can a trade union be held liable for damages for breach of the European Convention on Human Rights? The Supreme Court is about to answer this question after a lawsuit was filed against trade union Byggnads by a construction company claiming that the union had violated the convention's rules on freedom of association and protection of property.
In 2006 a construction company in Sweden refused to enter into a collective agreement with Byggnads, as the agreement required the employer to pay an inspection fee to the trade union corresponding to 1.5% of the employees' wages.
According to labour law, a trade union can blockade a company if it refuses to sign a collective agreement. A blockade is a permitted industrial action where the union attempts to influence customers and suppliers not to cooperate with the company, which in turn leads to company deliveries and orders being stopped.
During the ongoing blockade, the European Court of Human Rights overturned the inspection fee system in another ruling. For this reason, the inspection fee requirement was removed. When the new agreement was in place, the company signed a collective agreement with Byggnads and the trade union lifted the blockade. Shortly thereafter, the company declared itself bankrupt. The bankruptcy receiver stated that the blockade appeared to have been the primary reason for the bankruptcy.
The company sued Byggnads for pecuniary damages for the loss it suffered due to the blockade and general damages. As grounds for the suit, the company stated that the trade union had violated the convention's rules on freedom of association (Article 11) and protection of property (Article 1), and held that damages should be paid according to convention (Article 13) and tort principles. The company held that damages should be paid since Byggnads did not respect the right to negative freedom of association according to the convention, which caused the company to be declared bankrupt.
The first-instance district court found in favour of Byggnads and stated, among other things, that the regulation of the conditions on the labour market set out by trade unions and employers cannot be compared to the exercise of official authority. The court also stated that damages for private legal subjects on the Swedish labour market cannot arise due to violation of the convention.
Thus, the court chose not to take into account the company's arguments that:
- the government has traditionally given actors on the labour market significant responsibility;
- collective agreements largely replace employment legislation;
- collective agreements have a normative effect for employees who are not part of the contracting organisation; and
- labour associations, not public authorities, ensure the observance of collective agreements – meaning that if a member state allows the labour market's actors to regulate conditions, it must also be possible for the parties themselves to be held accountable for damages.
The construction company also stated that, in accordance with European case law, it was foreseeable that Byggnads's liability for damages could arise based on the industrial action taken.
The ruling was an intermediate judgment and dealt only with whether legal subjects other than the state (in this case a trade union) can be held liable for damages for alleged breach of the convention. The second-instance appeal court joined the city court's assessment and the matter was appealed to the Supreme Court (third and final instance). If the Supreme Court departs from previous verdicts, the case – with its specific claims for damages – will be tried anew in the city court. The Supreme Court case number is T3269-13 and it is expected to issue its decision by the end of November 2015.
For further information on this topic please contact Jörgen Larsson or Frida Toveby at Wistrand Advokatbyrå by telephone (+46 31 771 21 00) or email ([email protected] or [email protected]). TheWistrand website can be accessed at www.wistrand.se.
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