7.4.2 Laval: only punitive damages and no mitigation

329. The Arbetsdomstolen argues that the damages regulations of the Co-Determination Act apply.1 According to §54 Co-Determination Act both pecuniary and non-pecuniary damage is recoverable in relation to liability based on §42(1) Co-Determination Act2. The Arbetsdomstolen holds that although it seems obvious that Laval has suffered pecuniary damages, Laval has failed to prove that it has suffered the petitioned amount of pecuniary damages claimed as well as to deliver evidence that it was difficult to demonstrate the pecuniary damages suffered.3 As a result, the pecuniary damages (ekonomisk skadestånd) cannot be awarded. The Arbetsdomstolen awards punitive damages (allmänt skadestånd) to an amount of approximately €60.000 plus interest4.5 In Sweden, punitive damages are a common remedy in relation to unlawful collective actions.6 The amount determined by the Arbetsdomstolen is considerably lower than the amount claimed by Laval. The court does not give insight into how it arrived at this amount, whilst pursuant to §55 Co-Determination Act the amount of damages must be determined in consideration of the specific circumstances of the case.

330. According to §60 Co-Determination Act courts can mitigate or entirely annul the amount of damages on the basis of specific circumstances of a case and the interests involved.7 The trade unions claimed mitigation of the amount of damages payable in view of the legal uncertainty they experienced in relation to, first, the Swedish legislative provisions allowing them to take action and, second, the direct horizontal effect of Article 56 TFEU.8 However, the Arbetsdomstolen dismissed the claim with only a few words. This is one of the parts of the judgment that did not receive a warm welcome and where, again, the court was not unanimous.9 According to the trade unions as well as several scholars, the unlawfulness of the collective actions, which were in conformity with the Swedish legislation, could not reasonably be foreseen and therefore liability to pay damages for the collective actions jeopardises the principle of legal certainty, which could be a reason to mitigate the damages payable. Nyström notes:

The Arbetsdomstolen however holds:

Subsequently the Arbetsdomstolen recalls its own interlocutory judgment in which it held that the actions were not in conflict with Union law, and continues by immediately stating that “they constituted, however, clear violations” of Union law and that “it is obvious that the state of the law with respect to the issues raised in the case was not clarified until and with the European Court of Justice’s judgment”. However, it refuses to reduce the amount of punitive damages, particularly because:

331. Besides the fact that the Court of Justice gave the whole issue the cold shoulder, the conditions for limiting the temporal effect of the Court of Justice’s judgment were not likely to be met in the present case anyway.13 Hence, the effectiveness of Article 56 TFEU prevails over legal certainty.14 In addition, on the basis of earlier case law the trade unions could have anticipated the direct horizontal effect of Article 56 TFEU. From the perspectives of effectiveness of Union law and effective judicial protection the Arbetsdomstolen’s judgment makes sense. However, considering the dissenting opinions of especially Judge Öman and Judge Olovsson,15 and the avalanche of criticism pertaining to the Arbetsdomstolen’s judgment, its approach has not convinced those who advocated (more) protection of the trade unions.

332. In conclusion, the infringement of Article 56 TFEU was remedied by the payment of punitive damages.16 The Arbetsdomstolen’s calculation of the punitive damages and its decision not to mitigate the amount of damages for reasons of legal certainty are rather abrupt and intransparent. The three dissenting opinions as well as the widespread criticism expressed in relation to the Arbetsdomstolen’sjudgment reveal that the concrete outcome of this case could have been (considerably) different too – e.g. no liability of the trade unions at all, or a lower amount of damages.17 This makes it harder to concretise what a proportionate remedy is or would be in this specific case than in more clear-cut cases. It is noted that in Member States that have a more accommodating regime for the compensation for economic damages than Sweden, the question on punitive damages will usually not be relevant. In that sense, this case may be somewhat atypical.

Regardless of the specific facts of this case, liability of a party to pay compensation for damages suffered by another private party as a result of an infringement of Article 56 TFEU is generally an effective and proportionate remedy. Further, punitive damages awarded for infringements of Article 56 TFEU are neither required nor prohibited by Union law. Yet, punitive damages must be proportionate both in relation to the seriousness or gravity of the infringement in question, and in relation to other sanctions for the same infringement, for example administrative or criminal sanctions.