Merge branch 'feature/group-level-labels' into 'master'

Add group level labels

## What does this MR do?

Add group level labels.

## Are there points in the code the reviewer needs to double check?

* `LabelsFinder`
* `Gitlab::Gfm::ReferenceRewriter`
* `Banzai::Filter::LabelReferenceFilter`

## Why was this MR needed?

We'll be adding more feature that allow you to do cross-project management of issues.

## Screenshots (if relevant)

* Group Labels
    ![Group Labels](/uploads/2244c06ad68eae4fb246fb4c81bf8060/2.png)

* Project Labels
    ![Project Labels](/uploads/c5839516d2282b51f7418d9dadbeceb4/1.png)

* Expanded references for group labels when moving issue to another project
    ![Expanded references for group labels when moving issue to another project](/uploads/0c9ab248a8420d4978d59349ae3d42e5/3.png)

## Does this MR meet the acceptance criteria?

- [x] [CHANGELOG](https://gitlab.com/gitlab-org/gitlab-ce/blob/master/CHANGELOG) entry added
- [ ] [Documentation created/updated](https://gitlab.com/gitlab-org/gitlab-ce/blob/master/doc/development/doc_styleguide.md)
- [x] API support added
- Tests
  - [x] Added for this feature/bug
  - [ ] All builds are passing
- [ ] Conform by the [merge request performance guides](http://docs.gitlab.com/ce/development/merge_request_performance_guidelines.html)
- [x] Conform by the [style guides](https://gitlab.com/gitlab-org/gitlab-ce/blob/master/CONTRIBUTING.md#style-guides)
- [ ] Branch has no merge conflicts with `master` (if you do - rebase it please)
- [x] [Squashed related commits together](https://git-scm.com/book/en/Git-Tools-Rewriting-History#Squashing-Commits)

## What are the relevant issue numbers?

#19997

See merge request !6425

32 files changed, 874 insertions, 156 deletions

diff --git a/spec/controllers/projects/labels_controller_spec.rb b/spec/controllers/projects/labels_controller_spec.rb
index 3492b6ffbbb..622ab154493 100644
--- a/spec/controllers/projects/labels_controller_spec.rb
+++ b/spec/controllers/projects/labels_controller_spec.rb
@@ -1,52 +1,73 @@
 require 'spec_helper'
 
 describe Projects::LabelsController do
-  let(:project) { create(:project) }
+  let(:group)   { create(:group) }
+  let(:project) { create(:project, namespace: group) }
   let(:user)    { create(:user) }
 
   before do
     project.team << [user, :master]
+
     sign_in(user)
   end
 
   describe 'GET #index' do
-    def create_label(attributes)
-      create(:label, attributes.merge(project: project))
-    end
+    let!(:label_1) { create(:label, project: project, priority: 1, title: 'Label 1') }
+    let!(:label_2) { create(:label, project: project, priority: 3, title: 'Label 2') }
+    let!(:label_3) { create(:label, project: project, priority: 1, title: 'Label 3') }
+    let!(:label_4) { create(:label, project: project, title: 'Label 4') }
+    let!(:label_5) { create(:label, project: project, title: 'Label 5') }
 
-    before do
-      15.times { |i| create_label(priority: (i % 3) + 1, title: "label #{15 - i}") }
-      5.times { |i| create_label(title: "label #{100 - i}") }
+    let!(:group_label_1) { create(:group_label, group: group, title: 'Group Label 1') }
+    let!(:group_label_2) { create(:group_label, group: group, title: 'Group Label 2') }
+    let!(:group_label_3) { create(:group_label, group: group, title: 'Group Label 3') }
+    let!(:group_label_4) { create(:group_label, group: group, title: 'Group Label 4') }
 
-      get :index, namespace_id: project.namespace.to_param, project_id: project.to_param
+    before do
+      create(:label_priority, project: project, label: group_label_1, priority: 3)
+      create(:label_priority, project: project, label: group_label_2, priority: 1)
     end
 
     context '@prioritized_labels' do
-      let(:prioritized_labels) { assigns(:prioritized_labels) }
+      before do
+        list_labels
+      end
+
+      it 'does not include labels without priority' do
+        list_labels
 
-      it 'contains only prioritized labels' do
-        expect(prioritized_labels).to all(have_attributes(priority: a_value > 0))
+        expect(assigns(:prioritized_labels)).not_to include(group_label_3, group_label_4, label_4, label_5)
       end
 
       it 'is sorted by priority, then label title' do
-        priorities_and_titles = prioritized_labels.pluck(:priority, :title)
-
-        expect(priorities_and_titles.sort).to eq(priorities_and_titles)
+        expect(assigns(:prioritized_labels)).to eq [group_label_2, label_1, label_3, group_label_1, label_2]
       end
     end
 
     context '@labels' do
-      let(:labels) { assigns(:labels) }
+      it 'is sorted by label title' do
+        list_labels
 
-      it 'contains only unprioritized labels' do
-        expect(labels).to all(have_attributes(priority: nil))
+        expect(assigns(:labels)).to eq [group_label_3, group_label_4, label_4, label_5]
       end
 
-      it 'is sorted by label title' do
-        titles = labels.pluck(:title)
+      it 'does not include labels with priority' do
+        list_labels
+
+        expect(assigns(:labels)).not_to include(group_label_2, label_1, label_3, group_label_1, label_2)
+      end
+
+      it 'does not include group labels when project does not belong to a group' do
+        project.update(namespace: create(:namespace))
 
-        expect(titles.sort).to eq(titles)
+        list_labels
+
+        expect(assigns(:labels)).not_to include(group_label_3, group_label_4)
       end
     end
+
+    def list_labels
+      get :index, namespace_id: project.namespace.to_param, project_id: project.to_param
+    end
   end
 end
diff --git a/spec/factories/label_priorities.rb b/spec/factories/label_priorities.rb
new file mode 100644
index 00000000000..f25939d2d3e
--- /dev/null
+++ b/spec/factories/label_priorities.rb
@@ -0,0 +1,7 @@
+FactoryGirl.define do
+  factory :label_priority do
+    project factory: :empty_project
+    label
+    sequence(:priority)
+  end
+end
diff --git a/spec/factories/labels.rb b/spec/factories/labels.rb
index eb489099854..3e8822faf97 100644
--- a/spec/factories/labels.rb
+++ b/spec/factories/labels.rb
@@ -1,7 +1,23 @@
 FactoryGirl.define do
-  factory :label do
+  factory :label, class: ProjectLabel do
     sequence(:title) { |n| "label#{n}" }
     color "#990000"
     project
+
+    transient do
+      priority nil
+    end
+
+    after(:create) do |label, evaluator|
+      if evaluator.priority
+        label.priorities.create(project: label.project, priority: evaluator.priority)
+      end
+    end
+  end
+
+  factory :group_label, class: GroupLabel do
+    sequence(:title) { |n| "label#{n}" }
+    color "#990000"
+    group
   end
 end
diff --git a/spec/factories/merge_requests.rb b/spec/factories/merge_requests.rb
index c6a08d78b78..f780e01253c 100644
--- a/spec/factories/merge_requests.rb
+++ b/spec/factories/merge_requests.rb
@@ -68,5 +68,15 @@ FactoryGirl.define do
     factory :closed_merge_request, traits: [:closed]
     factory :reopened_merge_request, traits: [:reopened]
     factory :merge_request_with_diffs, traits: [:with_diffs]
+
+    factory :labeled_merge_request do
+      transient do
+        labels []
+      end
+
+      after(:create) do |merge_request, evaluator|
+        merge_request.update_attributes(labels: evaluator.labels)
+      end
+    end
   end
 end
diff --git a/spec/features/projects/import_export/test_project_export.tar.gz b/spec/features/projects/import_export/test_project_export.tar.gz
index d04bdea0fe4..bfe59bdb90e 100644
--- a/spec/features/projects/import_export/test_project_export.tar.gz
+++ b/spec/features/projects/import_export/test_project_export.tar.gz
diff --git a/spec/features/projects/labels/update_prioritization_spec.rb b/spec/features/projects/labels/update_prioritization_spec.rb
index cb7495da8eb..c9fa8315e79 100644
--- a/spec/features/projects/labels/update_prioritization_spec.rb
+++ b/spec/features/projects/labels/update_prioritization_spec.rb
@@ -3,18 +3,56 @@ require 'spec_helper'
 feature 'Prioritize labels', feature: true do
   include WaitForAjax
 
-  context 'when project belongs to user' do
-    let(:user)    { create(:user) }
-    let(:project) { create(:project, name: 'test', namespace: user.namespace) }
+  let(:user)     { create(:user) }
+  let(:group)    { create(:group) }
+  let(:project)  { create(:empty_project, :public, namespace: group) }
+  let!(:bug)     { create(:label, project: project, title: 'bug') }
+  let!(:wontfix) { create(:label, project: project, title: 'wontfix') }
+  let!(:feature) { create(:group_label, group: group, title: 'feature') }
 
-    scenario 'user can prioritize a label', js: true do
-      bug     = create(:label, title: 'bug')
-      wontfix = create(:label, title: 'wontfix')
-
-      project.labels << bug
-      project.labels << wontfix
+  context 'when user belongs to project team' do
+    before do
+      project.team << [user, :developer]
 
       login_as user
+    end
+
+    scenario 'user can prioritize a group label', js: true do
+      visit namespace_project_labels_path(project.namespace, project)
+
+      expect(page).to have_content('No prioritized labels yet')
+
+      page.within('.other-labels') do
+        all('.js-toggle-priority')[1].click
+        wait_for_ajax
+        expect(page).not_to have_content('feature')
+      end
+
+      page.within('.prioritized-labels') do
+        expect(page).not_to have_content('No prioritized labels yet')
+        expect(page).to have_content('feature')
+      end
+    end
+
+    scenario 'user can unprioritize a group label', js: true do
+      create(:label_priority, project: project, label: feature, priority: 1)
+
+      visit namespace_project_labels_path(project.namespace, project)
+
+      page.within('.prioritized-labels') do
+        expect(page).to have_content('feature')
+
+        first('.js-toggle-priority').click
+        wait_for_ajax
+        expect(page).not_to have_content('bug')
+      end
+
+      page.within('.other-labels') do
+        expect(page).to have_content('feature')
+      end
+    end
+
+    scenario 'user can prioritize a project label', js: true do
       visit namespace_project_labels_path(project.namespace, project)
 
       expect(page).to have_content('No prioritized labels yet')
@@ -31,19 +69,14 @@ feature 'Prioritize labels', feature: true do
       end
     end
 
-    scenario 'user can unprioritize a label', js: true do
-      bug     = create(:label, title: 'bug', priority: 1)
-      wontfix = create(:label, title: 'wontfix')
-
-      project.labels << bug
-      project.labels << wontfix
+    scenario 'user can unprioritize a project label', js: true do
+      create(:label_priority, project: project, label: bug, priority: 1)
 
-      login_as user
       visit namespace_project_labels_path(project.namespace, project)
 
-      expect(page).to have_content('bug')
-
       page.within('.prioritized-labels') do
+        expect(page).to have_content('bug')
+
         first('.js-toggle-priority').click
         wait_for_ajax
         expect(page).not_to have_content('bug')
@@ -56,23 +89,20 @@ feature 'Prioritize labels', feature: true do
     end
 
     scenario 'user can sort prioritized labels and persist across reloads', js: true do
-      bug     = create(:label, title: 'bug', priority: 1)
-      wontfix = create(:label, title: 'wontfix', priority: 2)
-
-      project.labels << bug
-      project.labels << wontfix
+      create(:label_priority, project: project, label: bug, priority: 1)
+      create(:label_priority, project: project, label: feature, priority: 2)
 
-      login_as user
       visit namespace_project_labels_path(project.namespace, project)
 
       expect(page).to have_content 'bug'
+      expect(page).to have_content 'feature'
       expect(page).to have_content 'wontfix'
 
       # Sort labels
-      find("#label_#{bug.id}").drag_to find("#label_#{wontfix.id}")
+      find("#project_label_#{bug.id}").drag_to find("#group_label_#{feature.id}")
 
       page.within('.prioritized-labels') do
-        expect(first('li')).to have_content('wontfix')
+        expect(first('li')).to have_content('feature')
         expect(page.all('li').last).to have_content('bug')
       end
 
@@ -80,7 +110,7 @@ feature 'Prioritize labels', feature: true do
       wait_for_ajax
 
       page.within('.prioritized-labels') do
-        expect(first('li')).to have_content('wontfix')
+        expect(first('li')).to have_content('feature')
         expect(page.all('li').last).to have_content('bug')
       end
     end
@@ -88,28 +118,26 @@ feature 'Prioritize labels', feature: true do
 
   context 'as a guest' do
     it 'does not prioritize labels' do
-      user = create(:user)
       guest = create(:user)
-      project = create(:project, name: 'test', namespace: user.namespace)
-
-      create(:label, title: 'bug')
 
       login_as guest
+
       visit namespace_project_labels_path(project.namespace, project)
 
+      expect(page).to have_content 'bug'
+      expect(page).to have_content 'wontfix'
+      expect(page).to have_content 'feature'
       expect(page).not_to have_css('.prioritized-labels')
     end
   end
 
   context 'as a non signed in user' do
     it 'does not prioritize labels' do
-      user = create(:user)
-      project = create(:project, name: 'test', namespace: user.namespace)
-
-      create(:label, title: 'bug')
-
       visit namespace_project_labels_path(project.namespace, project)
 
+      expect(page).to have_content 'bug'
+      expect(page).to have_content 'wontfix'
+      expect(page).to have_content 'feature'
       expect(page).not_to have_css('.prioritized-labels')
     end
   end
diff --git a/spec/finders/labels_finder_spec.rb b/spec/finders/labels_finder_spec.rb
new file mode 100644
index 00000000000..27acc464ea2
--- /dev/null
+++ b/spec/finders/labels_finder_spec.rb
@@ -0,0 +1,69 @@
+require 'spec_helper'
+
+describe LabelsFinder do
+  describe '#execute' do
+    let(:group_1) { create(:group) }
+    let(:group_2) { create(:group) }
+    let(:group_3) { create(:group) }
+
+    let(:project_1) { create(:empty_project, namespace: group_1) }
+    let(:project_2) { create(:empty_project, namespace: group_2) }
+    let(:project_3) { create(:empty_project) }
+    let(:project_4) { create(:empty_project, :public) }
+    let(:project_5) { create(:empty_project, namespace: group_1) }
+
+    let!(:project_label_1) { create(:label, project: project_1, title: 'Label 1') }
+    let!(:project_label_2) { create(:label, project: project_2, title: 'Label 2') }
+    let!(:project_label_4) { create(:label, project: project_4, title: 'Label 4') }
+    let!(:project_label_5) { create(:label, project: project_5, title: 'Label 5') }
+
+    let!(:group_label_1) { create(:group_label, group: group_1, title: 'Label 1') }
+    let!(:group_label_2) { create(:group_label, group: group_1, title: 'Group Label 2') }
+    let!(:group_label_3) { create(:group_label, group: group_2, title: 'Group Label 3') }
+
+    let(:user) { create(:user) }
+
+    before do
+      create(:label, project: project_3, title: 'Label 3')
+      create(:group_label, group: group_3, title: 'Group Label 4')
+
+      project_1.team << [user, :developer]
+    end
+
+    context 'with no filter' do
+      it 'returns labels from projects the user have access' do
+        group_2.add_developer(user)
+
+        finder = described_class.new(user)
+
+        expect(finder.execute).to eq [group_label_2, group_label_3, project_label_1, group_label_1, project_label_2, project_label_4]
+      end
+    end
+
+    context 'filtering by group_id' do
+      it 'returns labels available for any project within the group' do
+        group_1.add_developer(user)
+
+        finder = described_class.new(user, group_id: group_1.id)
+
+        expect(finder.execute).to eq [group_label_2, project_label_1, group_label_1, project_label_5]
+      end
+    end
+
+    context 'filtering by project_id' do
+      it 'returns labels available for the project' do
+        finder = described_class.new(user, project_id: project_1.id)
+
+        expect(finder.execute).to eq [group_label_2, project_label_1, group_label_1]
+      end
+    end
+
+    context 'filtering by title' do
+      it 'returns label with that title' do
+        finder = described_class.new(user, title: 'Group Label 2')
+
+        expect(finder.execute).to eq [group_label_2]
+      end
+    end
+  end
+end
diff --git a/spec/fixtures/api/schemas/list.json b/spec/fixtures/api/schemas/list.json
index f070fa3b254..8d94cf26ecb 100644
--- a/spec/fixtures/api/schemas/list.json
+++ b/spec/fixtures/api/schemas/list.json
@@ -13,7 +13,7 @@
       "enum": ["backlog", "label", "done"]
     },
     "label": {
-      "type": ["object"],
+      "type": ["object", "null"],
       "required": [
         "id",
         "color",
diff --git a/spec/helpers/labels_helper_spec.rb b/spec/helpers/labels_helper_spec.rb
index 501f150cfda..d30daf47543 100644
--- a/spec/helpers/labels_helper_spec.rb
+++ b/spec/helpers/labels_helper_spec.rb
@@ -5,27 +5,26 @@ describe LabelsHelper do
     let(:project) { create(:empty_project) }
     let(:label) { create(:label, project: project) }
 
-    context 'with @project set' do
-      before do
-        @project = project
-      end
-
-      it 'uses the instance variable' do
-        expect(link_to_label(label)).to match %r{<a href="/#{@project.to_reference}/issues\?label_name%5B%5D=#{label.name}"><span class="[\w\s\-]*has-tooltip".*</span></a>}
+    context 'without subject' do
+      it "uses the label's project" do
+        expect(link_to_label(label)).to match %r{<a href="/#{label.project.to_reference}/issues\?label_name%5B%5D=#{label.name}">.*</a>}
       end
     end
 
-    context 'without @project set' do
-      it "uses the label's project" do
-        expect(link_to_label(label)).to match %r{<a href="/#{label.project.to_reference}/issues\?label_name%5B%5D=#{label.name}">.*</a>}
+    context 'with a project as subject' do
+      let(:namespace) { build(:namespace, name: 'foo3') }
+      let(:another_project) { build(:empty_project, namespace: namespace, name: 'bar3') }
+
+      it 'links to project issues page' do
+        expect(link_to_label(label, subject: another_project)).to match %r{<a href="/foo3/bar3/issues\?label_name%5B%5D=#{label.name}">.*</a>}
       end
     end
 
-    context 'with a project argument' do
-      let(:another_project) { double('project', namespace: 'foo3', to_param: 'bar3') }
+    context 'with a group as subject' do
+      let(:group) { build(:group, name: 'bar') }
 
-      it 'links to merge requests page' do
-        expect(link_to_label(label, project: another_project)).to match %r{<a href="/foo3/bar3/issues\?label_name%5B%5D=#{label.name}">.*</a>}
+      it 'links to group issues page' do
+        expect(link_to_label(label, subject: group)).to match %r{<a href="/groups/bar/issues\?label_name%5B%5D=#{label.name}">.*</a>}
       end
     end
 
diff --git a/spec/lib/banzai/filter/label_reference_filter_spec.rb b/spec/lib/banzai/filter/label_reference_filter_spec.rb
index 908ccebbf87..9c09f00ae8a 100644
--- a/spec/lib/banzai/filter/label_reference_filter_spec.rb
+++ b/spec/lib/banzai/filter/label_reference_filter_spec.rb
@@ -305,6 +305,58 @@ describe Banzai::Filter::LabelReferenceFilter, lib: true do
     end
   end
 
+  describe 'group label references' do
+    let(:group)       { create(:group) }
+    let(:project)     { create(:empty_project, :public, namespace: group) }
+    let(:group_label) { create(:group_label, name: 'gfm references', group: group) }
+
+    context 'without project reference' do
+      let(:reference) { group_label.to_reference(format: :name) }
+
+      it 'links to a valid reference' do
+        doc = reference_filter("See #{reference}", project: project)
+
+        expect(doc.css('a').first.attr('href')).to eq urls.
+          namespace_project_issues_url(project.namespace, project, label_name: group_label.name)
+        expect(doc.text).to eq 'See gfm references'
+      end
+
+      it 'links with adjacent text' do
+        doc = reference_filter("Label (#{reference}.)")
+        expect(doc.to_html).to match(%r(\(<a.+><span.+>#{group_label.name}</span></a>\.\)))
+      end
+
+      it 'ignores invalid label names' do
+        exp = act = %(Label #{Label.reference_prefix}"#{group_label.name.reverse}")
+
+        expect(reference_filter(act).to_html).to eq exp
+      end
+    end
+
+    context 'with project reference' do
+      let(:reference) { project.to_reference + group_label.to_reference(format: :name) }
+
+      it 'links to a valid reference' do
+        doc = reference_filter("See #{reference}", project: project)
+
+        expect(doc.css('a').first.attr('href')).to eq urls.
+          namespace_project_issues_url(project.namespace, project, label_name: group_label.name)
+        expect(doc.text).to eq 'See gfm references'
+      end
+
+      it 'links with adjacent text' do
+        doc = reference_filter("Label (#{reference}.)")
+        expect(doc.to_html).to match(%r(\(<a.+><span.+>#{group_label.name}</span></a>\.\)))
+      end
+
+      it 'ignores invalid label names' do
+        exp = act = %(Label #{project.to_reference}#{Label.reference_prefix}"#{group_label.name.reverse}")
+
+        expect(reference_filter(act).to_html).to eq exp
+      end
+    end
+  end
+
   describe 'cross project label references' do
     context 'valid project referenced' do
       let(:another_project)  { create(:empty_project, :public) }
@@ -339,4 +391,34 @@ describe Banzai::Filter::LabelReferenceFilter, lib: true do
       end
     end
   end
+
+  describe 'cross group label references' do
+    context 'valid project referenced' do
+      let(:group) { create(:group) }
+      let(:project) { create(:empty_project, :public, namespace: group) }
+      let(:another_group) { create(:group) }
+      let(:another_project)  { create(:empty_project, :public, namespace: another_group) }
+      let(:project_name) { another_project.name_with_namespace }
+      let(:group_label) { create(:group_label, group: another_group, color: '#00ff00') }
+      let(:reference) { another_project.to_reference + group_label.to_reference }
+
+      let!(:result) { reference_filter("See #{reference}", project: project) }
+
+      it 'points to referenced project issues page' do
+        expect(result.css('a').first.attr('href'))
+          .to eq urls.namespace_project_issues_url(another_project.namespace,
+                                                   another_project,
+                                                   label_name: group_label.name)
+      end
+
+      it 'has valid color' do
+        expect(result.css('a span').first.attr('style'))
+          .to match /background-color: #00ff00/
+      end
+
+      it 'contains cross project content' do
+        expect(result.css('a').first.text).to eq "#{group_label.name} in #{project_name}"
+      end
+    end
+  end
 end
diff --git a/spec/lib/gitlab/gfm/reference_rewriter_spec.rb b/spec/lib/gitlab/gfm/reference_rewriter_spec.rb
index 0af249d8690..f045463c1cb 100644
--- a/spec/lib/gitlab/gfm/reference_rewriter_spec.rb
+++ b/spec/lib/gitlab/gfm/reference_rewriter_spec.rb
@@ -2,8 +2,8 @@ require 'spec_helper'
 
 describe Gitlab::Gfm::ReferenceRewriter do
   let(:text) { 'some text' }
-  let(:old_project) { create(:project) }
-  let(:new_project) { create(:project) }
+  let(:old_project) { create(:project, name: 'old') }
+  let(:new_project) { create(:project, name: 'new') }
   let(:user) { create(:user) }
 
   before { old_project.team << [user, :guest] }
@@ -62,7 +62,7 @@ describe Gitlab::Gfm::ReferenceRewriter do
           it { is_expected.to eq "#{ref}, `#1`, #{ref}, `#1`" }
         end
 
-        context 'description with labels' do
+        context 'description with project labels' do
           let!(:label) { create(:label, id: 123, name: 'test', project: old_project) }
           let(:project_ref) { old_project.to_reference }
 
@@ -76,6 +76,26 @@ describe Gitlab::Gfm::ReferenceRewriter do
             it { is_expected.to eq %Q{#{project_ref}#1 and #{project_ref}~123} }
           end
         end
+
+        context 'description with group labels' do
+          let(:old_group) { create(:group) }
+          let!(:group_label) { create(:group_label, id: 321, name: 'group label', group: old_group) }
+          let(:project_ref) { old_project.to_reference }
+
+          before do
+            old_project.update(namespace: old_group)
+          end
+
+          context 'label referenced by id' do
+            let(:text) { '#1 and ~321' }
+            it { is_expected.to eq %Q{#{project_ref}#1 and #{project_ref}~321} }
+          end
+
+          context 'label referenced by text' do
+            let(:text) { '#1 and ~"group label"' }
+            it { is_expected.to eq %Q{#{project_ref}#1 and #{project_ref}~321} }
+          end
+        end
       end
 
       context 'reference contains milestone' do
diff --git a/spec/lib/gitlab/github_import/importer_spec.rb b/spec/lib/gitlab/github_import/importer_spec.rb
index 8854c8431b5..1af553f8f03 100644
--- a/spec/lib/gitlab/github_import/importer_spec.rb
+++ b/spec/lib/gitlab/github_import/importer_spec.rb
@@ -157,7 +157,7 @@ describe Gitlab::GithubImport::Importer, lib: true do
             { type: :pull_request, url: "https://api.github.com/repos/octocat/Hello-World/pulls/1347", errors: "Validation failed: Validate branches Cannot Create: This merge request already exists: [\"New feature\"]" },
             { type: :wiki, errors: "Gitlab::Shell::Error" },
             { type: :release, url: 'https://api.github.com/repos/octocat/Hello-World/releases/2', errors: "Validation failed: Description can't be blank" }
-        ]
+          ]
         }
 
         described_class.new(project).execute
diff --git a/spec/lib/gitlab/google_code_import/importer_spec.rb b/spec/lib/gitlab/google_code_import/importer_spec.rb
index 54f85f8cffc..097861fd34d 100644
--- a/spec/lib/gitlab/google_code_import/importer_spec.rb
+++ b/spec/lib/gitlab/google_code_import/importer_spec.rb
@@ -15,6 +15,7 @@ describe Gitlab::GoogleCodeImport::Importer, lib: true do
   subject { described_class.new(project) }
 
   before do
+    project.team << [project.creator, :master]
     project.create_import_data(data: import_data)
   end
 
@@ -31,9 +32,9 @@ describe Gitlab::GoogleCodeImport::Importer, lib: true do
       subject.execute
 
       %w(
-        Type-Defect Type-Enhancement Type-Task Type-Review Type-Other Milestone-0.12 Priority-Critical 
-        Priority-High Priority-Medium Priority-Low OpSys-All OpSys-Windows OpSys-Linux OpSys-OSX Security 
-        Performance Usability Maintainability Component-Panel Component-Taskbar Component-Battery 
+        Type-Defect Type-Enhancement Type-Task Type-Review Type-Other Milestone-0.12 Priority-Critical
+        Priority-High Priority-Medium Priority-Low OpSys-All OpSys-Windows OpSys-Linux OpSys-OSX Security
+        Performance Usability Maintainability Component-Panel Component-Taskbar Component-Battery
         Component-Systray Component-Clock Component-Launcher Component-Tint2conf Component-Docs Component-New
       ).each do |label|
         label.sub!("-", ": ")
diff --git a/spec/lib/gitlab/import_export/all_models.yml b/spec/lib/gitlab/import_export/all_models.yml
index 8fcbf12eab8..02b11bd999a 100644
--- a/spec/lib/gitlab/import_export/all_models.yml
+++ b/spec/lib/gitlab/import_export/all_models.yml
@@ -38,6 +38,7 @@ label:
 - label_links
 - issues
 - merge_requests
+- priorities
 milestone:
 - project
 - issues
@@ -186,3 +187,5 @@ project:
 award_emoji:
 - awardable
 - user
+priorities:
+- label
\ No newline at end of file
diff --git a/spec/lib/gitlab/import_export/project.json b/spec/lib/gitlab/import_export/project.json
index 98323fe6be4..ed9df468ced 100644
--- a/spec/lib/gitlab/import_export/project.json
+++ b/spec/lib/gitlab/import_export/project.json
@@ -2,6 +2,21 @@
   "description": "Nisi et repellendus ut enim quo accusamus vel magnam.",
   "visibility_level": 10,
   "archived": false,
+  "labels": [
+    {
+      "id": 2,
+      "title": "test2",
+      "color": "#428bca",
+      "project_id": 8,
+      "created_at": "2016-07-22T08:55:44.161Z",
+      "updated_at": "2016-07-22T08:55:44.161Z",
+      "template": false,
+      "description": "",
+      "type": "ProjectLabel",
+      "priorities": [
+      ]
+    }
+  ],
   "issues": [
     {
       "id": 40,
@@ -64,7 +79,37 @@
             "updated_at": "2016-07-22T08:55:44.161Z",
             "template": false,
             "description": "",
-            "priority": null
+            "type": "ProjectLabel"
+          }
+        },
+        {
+          "id": 3,
+          "label_id": 3,
+          "target_id": 40,
+          "target_type": "Issue",
+          "created_at": "2016-07-22T08:57:02.841Z",
+          "updated_at": "2016-07-22T08:57:02.841Z",
+          "label": {
+            "id": 3,
+            "title": "test3",
+            "color": "#428bca",
+            "group_id": 8,
+            "created_at": "2016-07-22T08:55:44.161Z",
+            "updated_at": "2016-07-22T08:55:44.161Z",
+            "template": false,
+            "description": "",
+            "project_id": null,
+            "type": "GroupLabel",
+            "priorities": [
+              {
+                "id": 1,
+                "project_id": 5,
+                "label_id": 1,
+                "priority": 1,
+                "created_at": "2016-10-18T09:35:43.338Z",
+                "updated_at": "2016-10-18T09:35:43.338Z"
+              }
+            ]
           }
         }
       ],
@@ -536,7 +581,7 @@
             "updated_at": "2016-07-22T08:55:44.161Z",
             "template": false,
             "description": "",
-            "priority": null
+            "type": "ProjectLabel"
           }
         }
       ],
@@ -2227,9 +2272,6 @@
       ]
     }
   ],
-  "labels": [
-
-  ],
   "milestones": [
     {
       "id": 1,
diff --git a/spec/lib/gitlab/import_export/project_tree_restorer_spec.rb b/spec/lib/gitlab/import_export/project_tree_restorer_spec.rb
index 7582a732cdf..069ea960321 100644
--- a/spec/lib/gitlab/import_export/project_tree_restorer_spec.rb
+++ b/spec/lib/gitlab/import_export/project_tree_restorer_spec.rb
@@ -32,7 +32,7 @@ describe Gitlab::ImportExport::ProjectTreeRestorer, services: true do
       it 'has the same label associated to two issues' do
         restored_project_json
 
-        expect(Label.first.issues.count).to eq(2)
+        expect(ProjectLabel.find_by_title('test2').issues.count).to eq(2)
       end
 
       it 'has milestones associated to two separate issues' do
@@ -107,6 +107,41 @@ describe Gitlab::ImportExport::ProjectTreeRestorer, services: true do
         expect(Label.first.label_links.first.target).not_to be_nil
       end
 
+      it 'has project labels' do
+        restored_project_json
+
+        expect(ProjectLabel.count).to eq(2)
+      end
+
+      it 'has no group labels' do
+        restored_project_json
+
+        expect(GroupLabel.count).to eq(0)
+      end
+
+      context 'with group' do
+        let!(:project) do 
+          create(:empty_project,
+                                name: 'project',
+                                path: 'project',
+                                builds_access_level: ProjectFeature::DISABLED,
+                                issues_access_level: ProjectFeature::DISABLED,
+                                group: create(:group)) 
+        end
+
+        it 'has group labels' do
+          restored_project_json
+
+          expect(GroupLabel.count).to eq(1)
+        end
+
+        it 'has label priorities' do
+          restored_project_json
+
+          expect(GroupLabel.first.priorities).not_to be_empty
+        end
+      end
+
       it 'has a project feature' do
         restored_project_json
 
diff --git a/spec/lib/gitlab/import_export/project_tree_saver_spec.rb b/spec/lib/gitlab/import_export/project_tree_saver_spec.rb
index cf8f2200c57..c8bba553558 100644
--- a/spec/lib/gitlab/import_export/project_tree_saver_spec.rb
+++ b/spec/lib/gitlab/import_export/project_tree_saver_spec.rb
@@ -111,6 +111,18 @@ describe Gitlab::ImportExport::ProjectTreeSaver, services: true do
         expect(saved_project_json['issues'].first['label_links'].first['label']).not_to be_empty
       end
 
+      it 'has project and group labels' do
+        label_types = saved_project_json['issues'].first['label_links'].map { |link| link['label']['type']}
+
+        expect(label_types).to match_array(['ProjectLabel', 'GroupLabel'])
+      end
+
+      it 'has priorities associated to labels' do
+        priorities = saved_project_json['issues'].first['label_links'].map { |link| link['label']['priorities']}
+
+        expect(priorities.flatten).not_to be_empty
+      end
+
       it 'saves the correct service type' do
         expect(saved_project_json['services'].first['type']).to eq('CustomIssueTrackerService')
       end
@@ -135,15 +147,20 @@ describe Gitlab::ImportExport::ProjectTreeSaver, services: true do
     issue = create(:issue, assignee: user)
     snippet = create(:project_snippet)
     release = create(:release)
+    group = create(:group)
 
     project = create(:project,
                      :public,
                      issues: [issue],
                      snippets: [snippet],
-                     releases: [release]
+                     releases: [release],
+                     group: group
                     )
-    label = create(:label, project: project)
-    create(:label_link, label: label, target: issue)
+    project_label = create(:label, project: project)
+    group_label = create(:group_label, group: group)
+    create(:label_link, label: project_label, target: issue)
+    create(:label_link, label: group_label, target: issue)
+    create(:label_priority, label: group_label, priority: 1)
     milestone = create(:milestone, project: project)
     merge_request = create(:merge_request, source_project: project, milestone: milestone)
     commit_status = create(:commit_status, project: project)
diff --git a/spec/lib/gitlab/import_export/safe_model_attributes.yml b/spec/lib/gitlab/import_export/safe_model_attributes.yml
index 8c8be66df9f..feee0f025d8 100644
--- a/spec/lib/gitlab/import_export/safe_model_attributes.yml
+++ b/spec/lib/gitlab/import_export/safe_model_attributes.yml
@@ -60,11 +60,13 @@ LabelLink:
 - target_type
 - created_at
 - updated_at
-Label:
+ProjectLabel:
 - id
 - title
 - color
+- group_id
 - project_id
+- type
 - created_at
 - updated_at
 - template
@@ -329,3 +331,10 @@ AwardEmoji:
 - awardable_type
 - created_at
 - updated_at
+LabelPriority:
+- id
+- project_id
+- label_id
+- priority
+- created_at
+- updated_at
\ No newline at end of file
diff --git a/spec/models/group_label_spec.rb b/spec/models/group_label_spec.rb
new file mode 100644
index 00000000000..85eb889225b
--- /dev/null
+++ b/spec/models/group_label_spec.rb
@@ -0,0 +1,47 @@
+require 'spec_helper'
+
+describe GroupLabel, models: true do
+  describe 'relationships' do
+    it { is_expected.to belong_to(:group) }
+  end
+
+  describe 'validations' do
+    it { is_expected.to validate_presence_of(:group) }
+  end
+
+  describe '#subject' do
+    it 'aliases group to subject' do
+      subject = described_class.new(group: build(:group))
+
+      expect(subject.subject).to be(subject.group)
+    end
+  end
+
+  describe '#to_reference' do
+    let(:label) { create(:group_label) }
+
+    context 'using id' do
+      it 'returns a String reference to the object' do
+        expect(label.to_reference).to eq "~#{label.id}"
+      end
+    end
+
+    context 'using name' do
+      it 'returns a String reference to the object' do
+        expect(label.to_reference(format: :name)).to eq %(~"#{label.name}")
+      end
+
+      it 'uses id when name contains double quote' do
+        label = create(:label, name: %q{"irony"})
+        expect(label.to_reference(format: :name)).to eq "~#{label.id}"
+      end
+    end
+
+    context 'using invalid format' do
+      it 'raises error' do
+        expect { label.to_reference(format: :invalid) }
+          .to raise_error StandardError, /Unknown format/
+      end
+    end
+  end
+end
diff --git a/spec/models/group_spec.rb b/spec/models/group_spec.rb
index 0b3ef9b98fd..ac862055ebc 100644
--- a/spec/models/group_spec.rb
+++ b/spec/models/group_spec.rb
@@ -12,6 +12,7 @@ describe Group, models: true do
     it { is_expected.to have_many(:project_group_links).dependent(:destroy) }
     it { is_expected.to have_many(:shared_projects).through(:project_group_links) }
     it { is_expected.to have_many(:notification_settings).dependent(:destroy) }
+    it { is_expected.to have_many(:labels).class_name('GroupLabel') }
 
     describe '#members & #requesters' do
       let(:requester) { create(:user) }
diff --git a/spec/models/label_priority_spec.rb b/spec/models/label_priority_spec.rb
new file mode 100644
index 00000000000..d18c2f7949a
--- /dev/null
+++ b/spec/models/label_priority_spec.rb
@@ -0,0 +1,20 @@
+require 'spec_helper'
+
+describe LabelPriority, models: true do
+  describe 'relationships' do
+    it { is_expected.to belong_to(:project) }
+    it { is_expected.to belong_to(:label) }
+  end
+
+  describe 'validations' do
+    it { is_expected.to validate_presence_of(:project) }
+    it { is_expected.to validate_presence_of(:label) }
+    it { is_expected.to validate_numericality_of(:priority).only_integer.is_greater_than_or_equal_to(0) }
+
+    it 'validates uniqueness of label_id scoped to project_id' do
+      create(:label_priority)
+
+      expect(subject).to validate_uniqueness_of(:label_id).scoped_to(:project_id)
+    end
+  end
+end
diff --git a/spec/models/label_spec.rb b/spec/models/label_spec.rb
index 5a5d1a5d60c..0c163659a71 100644
--- a/spec/models/label_spec.rb
+++ b/spec/models/label_spec.rb
@@ -1,46 +1,42 @@
 require 'spec_helper'
 
 describe Label, models: true do
-  let(:label) { create(:label) }
+  describe 'modules' do
+    it { is_expected.to include_module(Referable) }
+    it { is_expected.to include_module(Subscribable) }
+  end
 
   describe 'associations' do
-    it { is_expected.to belong_to(:project) }
-
-    it { is_expected.to have_many(:label_links).dependent(:destroy) }
     it { is_expected.to have_many(:issues).through(:label_links).source(:target) }
+    it { is_expected.to have_many(:label_links).dependent(:destroy) }
     it { is_expected.to have_many(:lists).dependent(:destroy) }
-  end
-
-  describe 'modules' do
-    subject { described_class }
-
-    it { is_expected.to include_module(Referable) }
+    it { is_expected.to have_many(:priorities).class_name('LabelPriority') }
   end
 
   describe 'validation' do
-    it { is_expected.to validate_presence_of(:project) }
+    it { is_expected.to validate_uniqueness_of(:title).scoped_to([:group_id, :project_id]) }
 
     it 'validates color code' do
-      expect(label).not_to allow_value('G-ITLAB').for(:color)
-      expect(label).not_to allow_value('AABBCC').for(:color)
-      expect(label).not_to allow_value('#AABBCCEE').for(:color)
-      expect(label).not_to allow_value('GGHHII').for(:color)
-      expect(label).not_to allow_value('#').for(:color)
-      expect(label).not_to allow_value('').for(:color)
-
-      expect(label).to allow_value('#AABBCC').for(:color)
-      expect(label).to allow_value('#abcdef').for(:color)
+      is_expected.not_to allow_value('G-ITLAB').for(:color)
+      is_expected.not_to allow_value('AABBCC').for(:color)
+      is_expected.not_to allow_value('#AABBCCEE').for(:color)
+      is_expected.not_to allow_value('GGHHII').for(:color)
+      is_expected.not_to allow_value('#').for(:color)
+      is_expected.not_to allow_value('').for(:color)
+
+      is_expected.to allow_value('#AABBCC').for(:color)
+      is_expected.to allow_value('#abcdef').for(:color)
     end
 
     it 'validates title' do
-      expect(label).not_to allow_value('G,ITLAB').for(:title)
-      expect(label).not_to allow_value('').for(:title)
-
-      expect(label).to allow_value('GITLAB').for(:title)
-      expect(label).to allow_value('gitlab').for(:title)
-      expect(label).to allow_value('G?ITLAB').for(:title)
-      expect(label).to allow_value('G&ITLAB').for(:title)
-      expect(label).to allow_value("customer's request").for(:title)
+      is_expected.not_to allow_value('G,ITLAB').for(:title)
+      is_expected.not_to allow_value('').for(:title)
+
+      is_expected.to allow_value('GITLAB').for(:title)
+      is_expected.to allow_value('gitlab').for(:title)
+      is_expected.to allow_value('G?ITLAB').for(:title)
+      is_expected.to allow_value('G&ITLAB').for(:title)
+      is_expected.to allow_value("customer's request").for(:title)
     end
   end
 
@@ -51,45 +47,59 @@ describe Label, models: true do
     end
   end
 
-  describe '#to_reference' do
-    context 'using id' do
-      it 'returns a String reference to the object' do
-        expect(label.to_reference).to eq "~#{label.id}"
-      end
-    end
+  describe 'priorization' do
+    subject(:label) { create(:label) }
 
-    context 'using name' do
-      it 'returns a String reference to the object' do
-        expect(label.to_reference(format: :name)).to eq %(~"#{label.name}")
+    let(:project) { label.project }
+
+    describe '#prioritize!' do
+      context 'when label is not prioritized' do
+        it 'creates a label priority' do
+          expect { label.prioritize!(project, 1) }.to change(label.priorities, :count).by(1)
+        end
+
+        it 'sets label priority' do
+          label.prioritize!(project, 1)
+
+          expect(label.priorities.first.priority).to eq 1
+        end
       end
 
-      it 'uses id when name contains double quote' do
-        label = create(:label, name: %q{"irony"})
-        expect(label.to_reference(format: :name)).to eq "~#{label.id}"
+      context 'when label is prioritized' do
+        let!(:priority) { create(:label_priority, project: project, label: label, priority: 0) }
+
+        it 'does not create a label priority' do
+          expect { label.prioritize!(project, 1) }.not_to change(label.priorities, :count)
+        end
+
+        it 'updates label priority' do
+          label.prioritize!(project, 1)
+
+          expect(priority.reload.priority).to eq 1
+        end
       end
     end
 
-    context 'using invalid format' do
-      it 'raises error' do
-        expect { label.to_reference(format: :invalid) }
-          .to raise_error StandardError, /Unknown format/
+    describe '#unprioritize!' do
+      it 'removes label priority' do
+        create(:label_priority, project: project, label: label, priority: 0)
+
+        expect { label.unprioritize!(project) }.to change(label.priorities, :count).by(-1)
       end
     end
 
-    context 'cross project reference' do
-      let(:project) { create(:project) }
-
-      context 'using name' do
-        it 'returns cross reference with label name' do
-          expect(label.to_reference(project, format: :name))
-            .to eq %Q(#{label.project.to_reference}~"#{label.name}")
+    describe '#priority' do
+      context 'when label is not prioritized' do
+        it 'returns nil' do
+          expect(label.priority(project)).to be_nil
         end
       end
 
-      context 'using id' do
-        it 'returns cross reference with label id' do
-          expect(label.to_reference(project, format: :id))
-            .to eq %Q(#{label.project.to_reference}~#{label.id})
+      context 'when label is prioritized' do
+        it 'returns label priority' do
+          create(:label_priority, project: project, label: label, priority: 1)
+
+          expect(label.priority(project)).to eq 1
         end
       end
     end
diff --git a/spec/models/project_label_spec.rb b/spec/models/project_label_spec.rb
new file mode 100644
index 00000000000..18c9d449ee5
--- /dev/null
+++ b/spec/models/project_label_spec.rb
@@ -0,0 +1,120 @@
+require 'spec_helper'
+
+describe ProjectLabel, models: true do
+  describe 'relationships' do
+    it { is_expected.to belong_to(:project) }
+  end
+
+  describe 'validations' do
+    it { is_expected.to validate_presence_of(:project) }
+
+    context 'validates if title must not exist at group level' do
+      let(:group) { create(:group, name: 'gitlab-org') }
+      let(:project) { create(:empty_project, group: group) }
+
+      before do
+        create(:group_label, group: group, title: 'Bug')
+      end
+
+      it 'returns error if title already exists at group level' do
+        label = described_class.new(project: project, title: 'Bug')
+
+        label.valid?
+
+        expect(label.errors[:title]).to include 'already exists at group level for gitlab-org. Please choose another one.'
+      end
+
+      it 'does not returns error if title does not exist at group level' do
+        label = described_class.new(project: project, title: 'Security')
+
+        label.valid?
+
+        expect(label.errors[:title]).to be_empty
+      end
+
+      it 'does not returns error if project does not belong to group' do
+        another_project = create(:empty_project)
+        label = described_class.new(project: another_project, title: 'Bug')
+
+        label.valid?
+
+        expect(label.errors[:title]).to be_empty
+      end
+
+      it 'does not returns error when title does not change' do
+        project_label = create(:label, project: project, name: 'Security')
+        create(:group_label, group: group, name: 'Security')
+        project_label.description = 'Security related stuff.'
+
+        project_label.valid?
+
+        expect(project_label.errors[:title]).to be_empty
+      end
+    end
+
+    context 'when attempting to add more than one priority to the project label' do
+      it 'returns error' do
+        subject.priorities.build
+        subject.priorities.build
+
+        subject.valid?
+
+        expect(subject.errors[:priorities]).to include 'Number of permitted priorities exceeded'
+      end
+    end
+  end
+
+  describe '#subject' do
+    it 'aliases project to subject' do
+      subject = described_class.new(project: build(:empty_project))
+
+      expect(subject.subject).to be(subject.project)
+    end
+  end
+
+  describe '#to_reference' do
+    let(:label) { create(:label) }
+
+    context 'using id' do
+      it 'returns a String reference to the object' do
+        expect(label.to_reference).to eq "~#{label.id}"
+      end
+    end
+
+    context 'using name' do
+      it 'returns a String reference to the object' do
+        expect(label.to_reference(format: :name)).to eq %(~"#{label.name}")
+      end
+
+      it 'uses id when name contains double quote' do
+        label = create(:label, name: %q{"irony"})
+        expect(label.to_reference(format: :name)).to eq "~#{label.id}"
+      end
+    end
+
+    context 'using invalid format' do
+      it 'raises error' do
+        expect { label.to_reference(format: :invalid) }
+          .to raise_error StandardError, /Unknown format/
+      end
+    end
+
+    context 'cross project reference' do
+      let(:project) { create(:project) }
+
+      context 'using name' do
+        it 'returns cross reference with label name' do
+          expect(label.to_reference(project, format: :name))
+            .to eq %Q(#{label.project.to_reference}~"#{label.name}")
+        end
+      end
+
+      context 'using id' do
+        it 'returns cross reference with label id' do
+          expect(label.to_reference(project, format: :id))
+            .to eq %Q(#{label.project.to_reference}~#{label.id})
+        end
+      end
+    end
+  end
+end
diff --git a/spec/models/project_spec.rb b/spec/models/project_spec.rb
index 67dbcc362f6..e6d98e25d0b 100644
--- a/spec/models/project_spec.rb
+++ b/spec/models/project_spec.rb
@@ -56,7 +56,7 @@ describe Project, models: true do
     it { is_expected.to have_many(:runners) }
     it { is_expected.to have_many(:variables) }
     it { is_expected.to have_many(:triggers) }
-    it { is_expected.to have_many(:labels).dependent(:destroy) }
+    it { is_expected.to have_many(:labels).class_name('ProjectLabel').dependent(:destroy) }
     it { is_expected.to have_many(:users_star_projects).dependent(:destroy) }
     it { is_expected.to have_many(:environments).dependent(:destroy) }
     it { is_expected.to have_many(:deployments).dependent(:destroy) }
diff --git a/spec/requests/api/boards_spec.rb b/spec/requests/api/boards_spec.rb
index f4b04445c6c..4f5c09a3029 100644
--- a/spec/requests/api/boards_spec.rb
+++ b/spec/requests/api/boards_spec.rb
@@ -106,9 +106,20 @@ describe API::API, api: true  do
   describe "POST /projects/:id/board/lists" do
     let(:base_url) { "/projects/#{project.id}/boards/#{board.id}/lists" }
 
-    it 'creates a new issue board list' do
-      post api(base_url, user),
-        label_id: ux_label.id
+    it 'creates a new issue board list for group labels' do
+      group = create(:group)
+      group_label = create(:group_label, group: group)
+      project.update(group: group)
+
+      post api(base_url, user), label_id: group_label.id
+
+      expect(response).to have_http_status(201)
+      expect(json_response['label']['name']).to eq(group_label.title)
+      expect(json_response['position']).to eq(3)
+    end
+
+    it 'creates a new issue board list for project labels' do
+      post api(base_url, user), label_id: ux_label.id
 
       expect(response).to have_http_status(201)
       expect(json_response['label']['name']).to eq(ux_label.title)
@@ -116,15 +127,13 @@ describe API::API, api: true  do
     end
 
     it 'returns 400 when creating a new list if label_id is invalid' do
-      post api(base_url, user),
-        label_id: 23423
+      post api(base_url, user), label_id: 23423
 
       expect(response).to have_http_status(400)
     end
 
-    it "returns 403 for project members with guest role" do
-      put api("#{base_url}/#{test_list.id}", guest),
-        position: 1
+    it 'returns 403 for project members with guest role' do
+      put api("#{base_url}/#{test_list.id}", guest), position: 1
 
       expect(response).to have_http_status(403)
     end
diff --git a/spec/requests/api/labels_spec.rb b/spec/requests/api/labels_spec.rb
index 83789223019..1da9988978b 100644
--- a/spec/requests/api/labels_spec.rb
+++ b/spec/requests/api/labels_spec.rb
@@ -12,12 +12,18 @@ describe API::API, api: true  do
   end
 
   describe 'GET /projects/:id/labels' do
-    it 'returns project labels' do
+    it 'returns all available labels to the project' do
+      group = create(:group)
+      group_label = create(:group_label, group: group)
+      project.update(group: group)
+
       get api("/projects/#{project.id}/labels", user)
+
       expect(response).to have_http_status(200)
       expect(json_response).to be_an Array
-      expect(json_response.size).to eq(1)
-      expect(json_response.first['name']).to eq(label1.name)
+      expect(json_response.size).to eq(2)
+      expect(json_response.first['name']).to eq(group_label.name)
+      expect(json_response.second['name']).to eq(label1.name)
     end
   end
 
diff --git a/spec/services/boards/lists/create_service_spec.rb b/spec/services/boards/lists/create_service_spec.rb
index e7806add916..a7e9efcf93f 100644
--- a/spec/services/boards/lists/create_service_spec.rb
+++ b/spec/services/boards/lists/create_service_spec.rb
@@ -9,6 +9,10 @@ describe Boards::Lists::CreateService, services: true do
 
     subject(:service) { described_class.new(project, user, label_id: label.id) }
 
+    before do
+      project.team << [user, :developer]
+    end
+
     context 'when board lists is empty' do
       it 'creates a new list at beginning of the list' do
         list = service.execute(board)
diff --git a/spec/services/boards/lists/generate_service_spec.rb b/spec/services/boards/lists/generate_service_spec.rb
index 8b2f5e81338..ed0337662af 100644
--- a/spec/services/boards/lists/generate_service_spec.rb
+++ b/spec/services/boards/lists/generate_service_spec.rb
@@ -8,6 +8,10 @@ describe Boards::Lists::GenerateService, services: true do
 
     subject(:service) { described_class.new(project, user) }
 
+    before do
+      project.team << [user, :developer]
+    end
+
     context 'when board lists is empty' do
       it 'creates the default lists' do
         expect { service.execute(board) }.to change(board.lists, :count).by(2)
diff --git a/spec/services/issues/create_service_spec.rb b/spec/services/issues/create_service_spec.rb
index 1050502fa19..5c0331ebe66 100644
--- a/spec/services/issues/create_service_spec.rb
+++ b/spec/services/issues/create_service_spec.rb
@@ -67,6 +67,27 @@ describe Issues::CreateService, services: true do
         expect(Todo.where(attributes).count).to eq 1
       end
 
+      context 'when label belongs to project group' do
+        let(:group) { create(:group) }
+        let(:group_labels) { create_pair(:group_label, group: group) }
+
+        let(:opts) do
+          {
+            title: 'Title',
+            description: 'Description',
+            label_ids: group_labels.map(&:id)
+          }
+        end
+
+        before do
+          project.update(group: group)
+        end
+
+        it 'assigns group labels' do
+          expect(issue.labels).to match_array group_labels
+        end
+      end
+
       context 'when label belongs to different project' do
         let(:label) { create(:label) }
 
diff --git a/spec/services/labels/find_or_create_service_spec.rb b/spec/services/labels/find_or_create_service_spec.rb
new file mode 100644
index 00000000000..cbfc63de811
--- /dev/null
+++ b/spec/services/labels/find_or_create_service_spec.rb
@@ -0,0 +1,51 @@
+require 'spec_helper'
+
+describe Labels::FindOrCreateService, services: true do
+  describe '#execute' do
+    let(:user)    { create(:user) }
+    let(:group)   { create(:group) }
+    let(:project) { create(:project, namespace: group) }
+
+    let(:params) do
+      {
+        title: 'Security',
+        description: 'Security related stuff.',
+        color: '#FF0000'
+      }
+    end
+
+    subject(:service) { described_class.new(user, project, params) }
+
+    before do
+      project.team << [user, :developer]
+    end
+
+    context 'when label does not exist at group level' do
+      it 'creates a new label at project level' do
+        expect { service.execute }.to change(project.labels, :count).by(1)
+      end
+    end
+
+    context 'when label exists at group level' do
+      it 'returns the group label' do
+        group_label = create(:group_label, group: group, title: 'Security')
+
+        expect(service.execute).to eq group_label
+      end
+    end
+
+    context 'when label does not exist at group level' do
+      it 'creates a new label at project leve' do
+        expect { service.execute }.to change(project.labels, :count).by(1)
+      end
+    end
+
+    context 'when label exists at project level' do
+      it 'returns the project label' do
+        project_label = create(:label, project: project, title: 'Security')
+
+        expect(service.execute).to eq project_label
+      end
+    end
+  end
+end
diff --git a/spec/services/labels/transfer_service_spec.rb b/spec/services/labels/transfer_service_spec.rb
new file mode 100644
index 00000000000..ddf3527dc0f
--- /dev/null
+++ b/spec/services/labels/transfer_service_spec.rb
@@ -0,0 +1,56 @@
+require 'spec_helper'
+
+describe Labels::TransferService, services: true do
+  describe '#execute' do
+    let(:user)    { create(:user) }
+    let(:group_1) { create(:group) }
+    let(:group_2) { create(:group) }
+    let(:group_3) { create(:group) }
+    let(:project_1) { create(:project, namespace: group_2) }
+    let(:project_2) { create(:project, namespace: group_3) }
+
+    let(:group_label_1) { create(:group_label, group: group_1, name: 'Group Label 1') }
+    let(:group_label_2) { create(:group_label, group: group_1, name: 'Group Label 2') }
+    let(:group_label_3) { create(:group_label, group: group_1, name: 'Group Label 3') }
+    let(:group_label_4) { create(:group_label, group: group_2, name: 'Group Label 4') }
+    let(:group_label_5) { create(:group_label, group: group_3, name: 'Group Label 5') }
+    let(:project_label_1) { create(:label, project: project_1, name: 'Project Label 1') }
+
+    subject(:service) { described_class.new(user, group_1, project_1) }
+
+    before do
+      create(:labeled_issue, project: project_1, labels: [group_label_1])
+      create(:labeled_issue, project: project_1, labels: [group_label_4])
+      create(:labeled_issue, project: project_1, labels: [project_label_1])
+      create(:labeled_issue, project: project_2, labels: [group_label_5])
+      create(:labeled_merge_request, source_project: project_1, labels: [group_label_1, group_label_2])
+      create(:labeled_merge_request, source_project: project_2, labels: [group_label_5])
+    end
+
+    it 'recreates the missing group labels at project level' do
+      expect { service.execute }.to change(project_1.labels, :count).by(2)
+    end
+
+    it 'recreates label priorities related to the missing group labels' do
+      create(:label_priority, project: project_1, label: group_label_1, priority: 1)
+
+      service.execute
+
+      new_project_label = project_1.labels.find_by(title: group_label_1.title)
+      expect(new_project_label.id).not_to eq group_label_1.id
+      expect(new_project_label.priorities).not_to be_empty
+    end
+
+    it 'does not recreate missing group labels that are not applied to issues or merge requests' do
+      service.execute
+
+      expect(project_1.labels.where(title: group_label_3.title)).to be_empty
+    end
+
+    it 'does not recreate missing group labels that already exist in the project group' do
+      service.execute
+
+      expect(project_1.labels.where(title: group_label_4.title)).to be_empty
+    end
+  end
+end
diff --git a/spec/services/projects/transfer_service_spec.rb b/spec/services/projects/transfer_service_spec.rb
index 57c71544dff..1540b90163a 100644
--- a/spec/services/projects/transfer_service_spec.rb
+++ b/spec/services/projects/transfer_service_spec.rb
@@ -71,4 +71,14 @@ describe Projects::TransferService, services: true do
       it { expect(private_project.visibility_level).to eq(Gitlab::VisibilityLevel::PRIVATE) }
     end
   end
+
+  context 'missing group labels applied to issues or merge requests' do
+    it 'delegates tranfer to Labels::TransferService' do
+      group.add_owner(user)
+
+      expect_any_instance_of(Labels::TransferService).to receive(:execute).once.and_call_original
+
+      transfer_project(project, user, group)
+    end
+  end
 end