Laval has its day in court

RIGA - In a victory for Latvian construction company Laval un partneri, the Swedish Labor Court has ruled that Swedish trade unions will have to pay SEK 2.7 million (258,400 euros) in damages in a case of ‘wage-dumping’ arising from a construction project in Sweden, reports news agency LETA. The conflict started in June 2004 and centered around wages. Laval’s Swedish subsidiary received a contract to renovate a school in the Swedish city of Vaxholm.

Byggnads, the Swedish affiliate of Building and Wood Workers’ International (BWI), a global union federation, wanted the Latvian company to sign a collective agreement with its union instead of using Latvian agreements with the imported workforce. When Laval refused, the Swedish union interrupted the work with a blockade, in Nov. 2004.
The Swedish union agreement would have meant Laval paying the higher Swedish construction sector wages to its Latvian workers. Laval eventually withdrew from the project and the contract it had with the municipality was torn up. Its Swedish subsidiary has since gone bankrupt, reports thelocal.se.

The Latvian Foreign Ministry welcomes this decision saying that the court decision was made in accordance with European Union principles. It has consistently been the position of the Latvian government that trade unions have the right to collectively defend the rights of workers, but in this case, the union blockade was rather a move against the right of companies from other EU member states to provide their services within the common EU market, reported the Foreign Ministry.
Laval on Dec. 7, 2004, turned to the Swedish Labor Court demanding that the Swedish unions’ blockade of the company’s construction site be ruled unlawful and halted. The Swedish court decided it needed guidance from the European Court of Justice as to whether or not the Swedish union blockade was in conflict with  European laws, and whether the Swedish labor market’s principles contradicted the EU principle of free movement of labor.

In Dec. 2007, the European Court of Justice ruled that the Swedish trade unions could not force a foreign company to observe local pay deals. “Such action in the form of a blockade of sites constitutes a restriction on the freedom to provide services which, in this case, is not justified with regard to the public interest of protecting workers,” the European Court of Justice said.