3.3.2.3 The substantive compatibility review of the Lex Britannia

107. The second question concerns the validity and effect of the relevant Swedish legislation and the question to what extent private parties may rely on these legislative provisions. §42(3) Co-Determination Act equates any foreign undertaking with domestic undertakings that are not bound by a collective agreement. Evidently, this approach fails to take into account the possibility that a foreign undertaking is party to a collective agreement in the Member State where it is established. Therefore, a foreign undertaking that wishes to provide services in Sweden bears the risk that collective action against it is authorised on the basis of the Lex Britannia. Without a doubt the conditions stipulated in §42(3) Co-Determination Act discriminate foreign undertakings like Laval on account of their nationality.1

108. Pursuant to Article 52 TFEU this discriminatory provision can be justified only on grounds of public policy, public security or public health. The objectives of the Lex Britannia do not constitute justification grounds within the meaning of Article 52 jo. Article 62 TFEU.2 Hence, the Court concludes that “where there is a prohibition in a Member State against trade unions undertaking collective action with the aim of having a collective agreement between other parties set aside or amended, Articles 56 and 57 TFEU preclude that prohibition from being subject to the condition that such action must relate to terms and conditions of employment to which the national law applies directly”.3 Since §42(3) Co-Determination Act is incompatible with Article 56 TFEU in conjunction with Articles 62 and 52 TFEU, it must be disapplied.