The Handbook of EEA Law

The present chapter describes the background to the EEA Agreement, from the aftermath of the Second World War and the creation of EFTA to the 1973 bilateral Free Trade Agreements between the individual EFTA States and the then European Economic Community. It thereafter sets out the relationship between the EU and the EFTA States, against the background of a generally improved world economic situation and the need to improve the competitiveness of the European countries, starting with the Luxembourg Declaration and leading up to the Delors initiative in January 1989, which announced a change of the very parameters of the relationship. The chapter then explains how the subsequent negotiations of the EEA Agreement were carried out and the hurdles had to be overcome. The last part of the chapter briefly discusses aspects of the developments since the entry into force of the EEA Agreement on 1 January 1994, such as the dynamic and homogeneous development of the Agreement and the protection of the rights of individuals.

This chapter provides an overview of the decision-making procedure in the European Economic Area. It covers the period from the creation of EU law and its being seen as relevant to the EEA, to national implementation. The main focus is on the decision-making process up to the point where a legal act becomes part of the EEA Agreement. This procedure is fairly complicated. The complication stems from the aim to marry the original objectives of the contracting parties to the Agreement, which were in fact contradictory: the EEA/EFTA States wanted to participate fully in the development of EEA law without ceding any legislative powers, whereas the organs of the European Community wanted to safeguard the autonomy of EC decision making. This was achieved with the help of a structural element, the two-pillar system, and a guiding principle to bridge the legal development taking place in the two distinct pillars, that of homogeneity. The solution found may be seen as having ‘squared the circle’.

In this chapter we will address the consequences of problems that may occur during negotiations because no agreement can be reached on the incorporation of an EU legal act into the EEA legal order. We will also deal with the consequences of disagreements that the parties to the EEA Agreement become aware of after an agreement has been reached. This again can happen because a dispute arises over the interpretation or application of EEA law, or because specific distortions occur in one of the EEA States. The consequences vary depending on the nature of the dispute, and whether it occurs prior to or following the incorporation of a legal act. In the first case there is a procedure that can ultimately lead to the suspension of the affected part of the EEA Agreement. In the second case safeguard measures might be applied.

In the context of the EEA Agreement the notion of ‘opting out’ (also frequently referred to as ‘a right of reservation’ or even ‘a right to veto’) usually refers to a perceived right for the EFTA States to refuse the inclusion of new EU legislation which they, according to Article 102 EEA, have a duty to make part of the Agreement by unanimous agreement by way of a decision of the EEA Joint Committee. The refusal by only one EFTA State is sufficient to block such a decision and will have effect for them all. This chapter identifies a number of possible causes of such conflicts and explains how the Agreement provides for their resolution and the consequences of a failure thereof.

The chapter sets out the structure of the EEA Agreement. It provides an overview over the substantive rules of the main part of the agreement as well as those found in the protocols and annexes. Special attention is paid to the relationship between the main part of the Agreement and secondary EU law incorporated into the annexes and protocols. It is suggested that the relationship between the EEA Main Agreement and its Protocols and Annexes ought to be guided by the EEA’s overarching objective of homogeneity, not by attempts to establish a formal hierarchy of EEA norms. Furthermore, the need to supplement the application of specialised norms found in the protocols and annexes with the general ones of the Main Agreement is explained. Finally, it is demonstrated that the relationship between the main part of the agreement and EEA relevant secondary EU law which has not (yet) been incorporated into the Agreement may prove difficult (and politically sensitive) in cases where the novel secondary law in questions does little more than to define and give concrete expression to the four freedoms or other substantive rights already conferred on individuals by the main part of the EEA Agreement.

The EFTA Surveillance Authority serves a pivotal role in the functioning of the EEA by ensuring that the EEA/EFTA States live up to their obligations under the EEA Agreement. This chapter presents a detailed overview of how ESA ensures conformity with EEA law, reviewing the structure, competence and internal functioning of ESA. Furthermore, it provides for a comparison of the differences between ESA and the Commission with regard to their respective function and role as prescribed by the EEA Agreement, and in the case of the Commission, the TFEU. The competences of ESA extend to the surveillance and enforcement of the rules of the common internal market and concerning competition and State aid. The fields of cooperation and shared competences between ESA and the Commission are examined. The general surveillance procedure, complaint handling and the manner in which ESA deals with possible infringements of EEA law are thoroughly reviewed. In addition, ESA’s relations with other EEA and EU institutions are briefly examined. Finally, the participation of ESA in cases before the EFTA Court and the EU Courts is described and analysed, especially with regard to preliminary reference cases and interventions before EU Courts.

The EEA Agreement is the only association agreement ever concluded by the European Union which allows and obliges the associated States to have their own court. Without the EFTA Court, the EEA Agreement could not function. The present contribution focuses on the position of the EFTA Court in the governance structure of the EEA. It considers the Court’s history, and addresses the two fundamental principles of homogeneity and reciprocity, the types of procedure, the Court’s judicial style including its approach to transparency and to economics.

The relationship between the EFTA Court and the ECJ has, in the first two decades of the former’s existence, been characterised by a constructive judicial dialogue. The Court follows the relevant case-law of the ECJ when available and as far as the facts are identical. However, even if the ECJ has gone first, there may be situations where the Court comes to the conclusion that it must go its own way. The Court for its part is often called upon to go first, i.e. to decide on novel legal questions. The references to the Court’s case-law by Advocates General, the ECJ and the General Court have grown exponentially, giving the Court greater influence on the development of EU case-law than the drafters of the EEA Agreement and of the SCA may have imagined.

The EEA enforcement system includes, in particular, the mechanism pursuant to Article 111 EEA for the settlement of disputes between the Member States with respect to the interpretation and the application of EEA law. The chapter describes the different elements of this mechanism and discusses its practical relevance. It also draws a comparison with the legal regimes between the EU and two non-Member States, namely Turkey and Switzerland, respectively.

This chapter gives a brief introduction to the Office of the Norwegian Attorney General and presents some experiences made during 20 years of litigation before the EFTA Court. This includes reflections on the judicial dialogue between national courts and the EFTA Court, followed by an examination of various material issues, such as the principle of homogeneity, the internal market and the ECHR.

This chapter draws upon my personal experiences as the Attorney-General of Iceland regarding the process and effects of seeking advisory opinions from the EFTA Court. The subsequent discussion comprises of five parts; firstly, the Office of the Attorney-General is explained; the following two sections further explain the role and policy of the Office of the Attorney General vis-a-vis the EEA Agreement; the fourth section engages with relevant case-law both at EEA and national level; the final section seeks to scrutinise the Icelandic appeals system.

After 20 years of membership in the EEA, a close relationship has been established between the EFTA Court and the EEA Coordination Unit representing the Liechtenstein Government in proceedings before the EFTA Court since the very first Liechtenstein case (Case E-3/98 Herbert Rainford-Towning). This chapter therefore mainly focuses on the long-lasting relationship between the EEA Coordination Unit and the EFTA Court by highlighting the most influential judgments of the EFTA Court concerning Liechtenstein. Some general comments on the role of the EEA Coordination Unit in the ‘EEA daily life’ shall, however, be used as an introduction.

This chapter gives an overview of the Norwegian court system and addresses the advisory opinion procedure under Norwegian law. A description is given of which bodies may make references, how references are to be made, when they may and should be made, and the effect and application of the EFTA Court’s advisory opinions. The final part of the chapter sums up the experiences of the first 20 years of interaction between Norwegian courts and the EFTA Court.

Under Icelandic Law, only the District Courts, the Labour Court and the Supreme Court are permitted to request an advisory opinion under Article 34 SCA. This (with only one exception) excludes a number of quasi-judicial administrative bodies from interacting directly with the EFTA Court. Another critical feature of the Icelandic system is the fact that decisions made by the District Courts to refer may be appealed to the Supreme Court which may annul the decision or amend it to its liking. Considering the number of referrals from Icelandic Courts, the attitude of Icelandic courts can hardly be considered as hostile. However, a certain tendency to ‘safeguard the autonomy of the Icelandic legal order’ and avoid interaction with the EFTA Court can be detected in certain sensitive cases.

In this chapter the Liechtenstein court system is explained with emphasis placed on its appeal system. Subsequently the chapter addresses referral proceedings under Liechtenstein procedural law: must the parties be heard before a court decides to refer a case to the EFTA Court; can a court’s decision to refer be appealed; can legal aid be granted for the referral proceedings; which bodies may refer; whether under Liechtenstein law there is an obligation for Liechtenstein courts to refer to the EFTA Court; and are the EFTA Court’s advisory opinions binding under Liechtenstein law? Subsequently, the chapter will go on to the author’s personal experience of referral procedures and provides a table which gives a brief overview of all the references made to the EFTA Court, to-date, which have been made by Liechtenstein courts.

The inherent structural tensions and problems of the EEA arrangement have been overcome by the very pragmatic approach of the EEA community and the domestic courts. The author indicates different factors that may lead to problems from a Norwegian perspective in the future. It is the author’s opinion that problems may arise in general due to the differences in legal method, especially if the EEA legal method is not more systematically incorporated in Norwegian curricula. The introduction of supranational EU financial institutions may also cause fundamental constitutional issues in Norway. Finally the reluctance of Norwegian courts to refer cases may become more problematic, especially for private operators relying on fundamental rights under EEA law. Although pointing out potential problems for the EEA community, the author has a positive outlook for the EFTA pillar. Any problem that may arise will be solved in the EEA community’s customary fashion.

As a practicing attorney in Iceland, I have experienced the complexity of the EEA legal order. Iceland applies the dualist principle when it comes to the relationship between domestic and international law. As a result there is a tendency to regard ‘Icelandic law’ as separate from EU law or EEA law. The EEA Agreement has, however, been incorporated into the Icelandic legal order by statutory legislation giving it a stronger position in the Icelandic legal order. This has created a struggle between EEA law and ‘Icelandic law’, which in my opinion affects the effectiveness of EEA law in Iceland. An example of this is the tendency in general legal discussion in Iceland to resort very quickly to the principle of State liability for breaches of EEA law instead of trying to establish rights directly by interpreting ‘Icelandic law’ in the light of ‘EEA law’ in a teleological manner. At the same time the principle of State liability seems to be a very weak protection for those relying on EEA law. In this chapter I explore to what extent EEA law is a part of Icelandic legal teaching and the application of EEA law before Icelandic authorities and courts. Furthermore, due to the importance of the roles of ESA and the EFTA Court in the application of EEA law in Iceland, I discuss the effectiveness of these institutions from my experience.

Accession to the EEA inaugurated a change from a closure to foreign influence to an opening of the Liechtenstein economy—including the Chamber of Lawyers. Contrary to the fears many members of the Chamber had had during the referendum campaign for the EEA, in 1995 Liechtenstein was not overrun by foreign lawyers, competitors or companies. Liechtenstein is a country with numerous business contacts all over Europe, which entails the necessity of legal support for industry, financial intermediaries and other service providers. Liechtenstein lawyers profit from open markets and from the harmonisation and coordination of important fields of law. The possibility to refer questions to the EFTA Court is being used by courts quite regularly as lawyers make clear reference in their submissions if a decision is deemed to be against EEA law.

The general principles of EU law comprise a series of unwritten principles, which the EU Courts have extrapolated from the laws of the Member States and have applied in their judicial review. This chapter focuses on the relevant question as to which general principles of EU law also form part of EEA law. Some examples of how these principles have been applied in practice by the EFTA Court within the framework of the EEA Agreement will be discussed, moving from the general principle of homogeneity, which is the cornerstone of the EEA Agreement. The principle of proportionality will also be thoroughly analysed, in particular how it differs from other general principles of EEA law in that it does not protect an independently defined objective, but rather constitutes a guarantee of substantive protection of other legitimate rights requiring a balance to be struck between the means used and the intended aim (or the result attained). The conclusion that must be drawn is that the objective of securing a homogeneous EEA cannot be achieved unless certain general principles of EU law are also applied in EEA law.

The chapter is about the general prohibition of discrimination on grounds of nationality enshrined in Article 4 EEA. The fundamental character of this general principle of EEA law is highlighted and its relationship to the similar principle of EU law is explained. It is shown that even if Article 4 EEA and Article 18 TFEU are to be interpreted uniformly, the application of the two provisions may differ in specific cases due to differences in the legal context between EU and EEA law. The scope of application of Article 4 EEA is analysed, in particular related to so-called ‘wholly internal situations’, to EEA nationals who are neither economically active nor economically self-sufficient and to third country nationals. Thereafter, it is explained that the prohibition of discrimination on grounds of nationality forbids not only overt discrimination by reason of nationality but also all covert forms of discrimination which, by the application of other criteria of differentiation, lead to the same result. Furthermore, it is explained that discriminatory treatment may be justified if it is based on objective considerations independent of the nationality of the persons or economic operators concerned, and is proportionate to the objective being legitimately pursued. Finally, it is shown that EEA law does not per se preclude measures to re-establish equal treatment by reducing the advantages of the persons or economic operators previously favoured, but also that as long as such measures have not been adopted, observance of the principle of equality can be ensured only by granting disadvantaged persons or economic operators the same advantages enjoyed by those within the favoured category.

The free movement of goods plays an equivalently significant role for the basic objective of a ‘homogeneous European Economic Area’ in the EEA/EFTA States as it does in the internal market of the European Union. However, different from the EU, the EEA does not seek to establish a customs union. Therefore the free movement of goods applies in principle only to goods originating in the Contracting Parties. This chapter outlines in particular the product coverage as a specific EEA-law problem, the prohibited restrictions of the free movement of goods (customs duties, internal taxation, quantitative restrictions and measures having equivalent effects), the justification of restrictions, the treatment of state monopolies as well as the cooperation in customs related matters and trade facilitation.

This chapter addresses the right of establishment and the freedom to provide and receive services in the EEA. After an outline of the relevant law on the books and of the structure of the EEA Agreement, the living body of law concerning the two freedoms is assessed individually in the following order: right holders, rights, discrimination and restriction. Both, justification and proportionality are assessed together at the end of this chapter.

The right to free movement of persons set out in Articles 28 and 31 EEA is a fundamental freedom that has always been considered to be one of the most significant elements of European integration. The movement of persons has historically been subject to more extensive regulation than the other fundamental freedoms of the EEA Agreement. The most important conditions regarding status of mobile persons within the EEA are now set out in Directive 2004/38. Pursuant to this Directive, those who are present in the labour market or have sufficient financial means to support themselves, are accorded relatively strong rights under the EEA Agreement, whereas those do who not benefit to a lesser degree.

The chapter gives an overview of capital movements in the EEA, as experienced in the EFTA States. The Court has had to take into account changes resulting from the introduction of EMU in the EU. However, the gap between the relevant treaty and other provisions in the EU and the EEA has been dealt with on a case-by-case basis. So far, this approach is unlikely to have created any substantial difficulties.

The EEA competition rules on restrictive agreements and abuse of dominant positions have given rise to a small number of cases, of which Posten Norge is the most important. That case deals with judicial review of EFTA Surveillance Authority decisions. The Court found that Posten Norge had abused its position by negotiating with its supermarket customers in such a way as to delay market entry by competitors at a crucial time, an important conclusion on a question not decided by the EU Courts. There are a number of cases on State alcohol and gambling monopolies. These cases involve detailed analysis of facts and justifications for monopolies. In two DB Schenker cases the Court stressed the importance of private claims for compensation for loss caused by breach of EEA competition rules. One gets the clear impression that the EFTA Court deals more concisely and confidently with economic issues in competition cases than either of the EU Courts.

This chapter focuses on the application of Articles 53 and 54 EEA from a national perspective, with a particular focus on the situation in Norway. The chapter addresses the implementation of the EEA competition rules in the EEA/EFTA States, the division of jurisdiction between ESA and the national competition authorities of the EEA/EFTA States and describes the national competition rules of the EEA/EFTA States in further detail. In addition, the chapter discusses the cooperation between ESA and the EFTA NCAs, and the cooperation between the national courts of the EEA/EFTA States and the EFTA Court and ESA.

This chapter outlines the interpretation and application of EEA State aid law by ESA and the EFTA Court. With their respective case-law, both institutions have contributed significantly to the development of this important competition law discipline. Bearing in mind that EEA State aid law is closely modelled on the corresponding EU law, both ESA and the EFTA Court have applied and interpreted the EEA State aid provisions in the light of the Commission’s practice and the case-law of the ECJ. With such an alignment to the developments in the EU, ESA and the EFTA Court have ensured that the State aid provisions of the EEA are homogenously applied and interpreted, in order to create a level playing field for economic operators in the EEA.

The following chapter presents the particularities of the public procurement rules in the EFTA pillar of the EEA. Some of the provisions of the EU directives have been incorporated into the SCA. These rules are still applicable in the EFTA pillar of the EEA although they have been abrogated in the EU. The chapter also contains a list of national legislation which implements the rules on public procurement in the EEA/EFTA States (as of 2014).

This chapter addresses the principles of transparency and openness and focusses on the prime application of these principles in the EEA which is access to documents. It seeks to provide the practitioner with an initial ready-reference guide to the regimes in place, including Regulation 1049/2001, but with emphasis on ESA’s Rules on Access to Documents 2012 (RAD 2012). The chapter also considers the transparency of the Court of Justice of the European Union and the EFTA Court, focussing on their archives, and also gives ideas on potential future developments in this fast-developing area of law.

The chapter focuses on recent developments in the legislation and case-law in the field of financial services law. Section 2 provides an overview of selected acts of EEA financial services legislation and recent reform proposals thereto. Section 3 analyses three landmark decisions of the EFTA Court that addressed the legal consequences of the world financial crises. The last section then investigates the practice of ESA in the financial services sector.

Little secondary EEA law applies to games of chance, which are for most parts still regulated by national law. Accordingly, the law on fundamental freedoms and its interpretation by the courts have been crucial in this field. This chapter offers a detailed account of the EFTA Court’s contribution.

This chapter discusses the four judgments on intellectual property law delivered by the EFTA Court in its 20 years of existence from 1994 until 2014. All four judgments are advisory opinions dealing with different aspects of parallel imports. The remarkableness of these cases is that they to a large extent cover issues that the ECJ had not dealt with at the time of the EFTA Court’s decisions. The cases show the EFTA Court’s willingness to reason independently, while at the same time taking due account of the principle of homogeneity. These cases also reveal that the ECJ is ready to follow the path chosen by the EFTA Court to the extent that the ECJ finds the reasoning relevant for the solution in an EU context.

This chapter reviews the case-law of the EFTA Court relating to issues of indirect and direct taxation. While there is little express reference to taxation in the EEA Agreement, tax has a significant influence on the choices made by economic operators and therefore plays an important role in the operation of the single market. The express provisions on tax in the Agreement are only part of the relevant legal framework: the taxation of business activities and of individuals is affected also by the more general economic freedoms laid down in the Agreement, under which national provisions may not impede cross-border movement of persons, goods, services and capital. The Court’s case-law is increasingly rich and varied.

Authorities must be able to respond efficiently to criminal patterns and developments. Within the EEA, mutual legal assistance is based on multilateral and bilateral treaties such as the Convention on Laundering, Search, Seizure and Confiscation of the Proceedings from Crime and the Schengen agreements. Information on tax matters is generally based on bilateral treaties in the form of double taxation agreements and tax information exchange agreements, inter alia aiming to prevent tax evasion. To improve tax assistance, the OECD has recently elaborated a global standard on automatic exchange of information which has been signed by the member states. Furthermore, the administrative assistance relating to the financial market (Market Abuse Directive, Banking Directive), the administrative assistance relating to insurance (Solvency II) and the administrative assistance relating to funds (UCITS IV, AIFMD), has become very relevant. Having faced the financial market crisis, new developments in administrative assistance in European financial market supervision became necessary. The European Supervisory Authorities (EBA, EIOPA and ESMA) have not yet been incorporated into the EEA framework. They were established to create a level playing field and providing high protection to depositors, investors and consumers through guidelines, regulations and technical standards.

The EEA Agreement, like the Treaty of Rome, makes no exception for natural resources in the application of the principle of non-discrimination on the basis of nationality. The jurisprudence of the Courts confirms that the fundamental rules of the Agreement also apply to the natural resources of the Contracting Parties. This chapter examines problems which may arise with regard to public ownership. It furthermore discusses issues which may result from diverging application in the EEZs, and with regard to both the petroleum and fisheries sectors.

European energy law is relatively young as a subject. Looking back to just 20 years ago, the EU had adopted almost no (secondary) legislation regulating the energy sector. ECJ case-law was equally thin on the ground. Since its early days in the mid 1990s, European energy law has caught up at an impressive pace in comparison with other jurisdictions as well as with other sectors covered by the internal market. Today the gas and electricity markets are regulated in great detail by European legislation, and increasingly also by case-law. The EEA Agreement made the EEA/EFTA States partners of the European energy internal market and with its dynamic procedures of incorporating secondary legislation in this sector into the Agreement, Europe was intended to have one energy regulated market. This chapter describes the well-functioning of the EEA Agreement in the energy sector but also points to the challenges the EEA Agreement poses for the creation of a single energy market.

Social policy has always been something of the poor relation to the EEA’s internal market provisions. While the EEA has adopted all of the EU’s social acquis, most of the principles have been developed by the Court of Justice and the EFTA Court has faithfully applied them. The principle of homogeneity has been strong. That said, the national courts, most notably the Norwegian Supreme Court, have not always played ball, but with reason. This chapter outlines the key provisions of social policy in the EEA and considers how the EFTA Court has interpreted those provisions, relying on but also sometimes developing the case law of the European Court of Justice.

While it was the ECJ in Sandoz to first judicially recognise the precautionary principle in the European legal order, it was the EFTA Court in its ground-breaking Kellogg’s judgment which significantly contributed to the shaping of such a highly contested principle. The EFTA Court’s interpretation, which was in turn quickly endorsed and further developed by the EU courts, paved the way for the systematic use of the principle.By relying on a narrative path and by retrospectively looking at the genesis of one of the most celebrated, yet controversial, European judicially-made principles, this chapter tells the story of one of the most successful European horizontal judicial dialogues: that between the European Union’s courts and the EFTA Court. It also provides some guidance on how to best judicially assess a precautionary-based measure.