Agreement on the European Economic Area [1 ed.] 9783848732197, 9783845275796, 9783406709883, 9781509922420, 9788215030562

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Arnesen / Fredriksen / Graver \1:estad / Vedder Agreement on the European Economic Area

[This] Baudenbacher-free Commentary hreaks the chains of the past hy paving the way to a correct understanding of the agreement on the EEA ... Bernd Hammermann

Agreement on the European Economic Area A Commentary

edited by

Finn Arnesen Halvard Haukeland Fredriksen Hans Petter Graver Ola Mestad Christoph Vedder

2018

C.H.BECK · HART · NO MOS unlVERSITETSFORLAGET •

Published by Nomos Verlagsgesellschaft, WaldseestraBe 3-5, 76530 Baden-Baden, Germany, email: [email protected] Co-published by Verlag C.H. Beck oHG, Wilhelmstraile 9, 80801 Miinchen, Germany, email: [email protected] and Hart Publishing, Kemp House, Chawley Park, Cumnor Hill, Oxford, OXl 9PH, United Kingdom, email: [email protected] Published in North America (US and Canada) by Hart Publishing, c/o International Specialized Book, Services, 930 NE 581h Avenue, Suite 300, Portland, OR 97213-3786, USA, email: [email protected] l.,'niversitetsforlaget AS, Sehesteds gate 3, 0164 Oslo email: [email protected]

ISBN 978-3-8487-3219-7 (Nomos Print) ISBN 978-3-8452-7579-6 (Nomos ePDF) ISBN 978-3-406-70988-3 (Verlag CH.BECK) ISBJ\: 978-1-5099-2242-0 (Hart Publishing) ISBN 9-788215-030562 (Gniversitetsforlaget AS) First Edition 2018 © Nomos Verlagsgesellschaft, Baden-Baden 2018. Printed in Germany.

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Preface When the Agreement on the European Economic Area was signed 25 years ago, it was accompanied by a lively academic debate. Importantly, contributions were not only written in the national languages of the EFTA States. Rather, a cross-border debate about EEA law was emerging in the English language. The comprehensive commentary published by Sven Norberg et al. in 1993 still stands out today as a token of those promising early years of EEA law literature. However, the Swiss electorate's rejection of the Agreement and the decisions of Austria. Finland and Sweden to join the EU caused this broader academic interest in the EEA to fade rather quickly. Of course, academics from the three remaining EFTA States in the EEA - Iceland. Liechtenstein and Norway - continued to take an interest in the EEA Agreement and their home states' rather peculiar affiliation to the EU, but most of the contributions were written in the national languages and addressed to a domestic audience. Both in Iceland and Norway, matters of EU and EEA law are increasingly integrated into the general academic debate about the different fields of national law where the EEA Agreement is of relevance (i.e. almost all). In addition, 'EEA specific' questions are discussed in textbooks and articles devoted to EEA law as such. Notwithstanding the fact that the number of English language contributions from Icelandic and Norwegian commentators have increased in recent years, most contributions are still written in Icelandic and Norwegian and thus largely inaccessible to an international audience. For a long time, there were essentially only two exceptions to the 'nationalisation' of the academic debate about EEA law. Firstly, the 'Gennan-Norwegian Fellowship Program in European Law' was established already in 1994 by a group of German and Norwegian law professors, organizing biannual seminars, leading to the publication of IO volumes on a wide variety of EEA-related matters over a time span of 20 years. The program ended in 2014, with the last volume published in 2016. Secondly, the EFTA Court and its long-serving President Carl Baudenbacher has initiated and published a number of important contributions, culminating in the Court's 20 th anniversary Festschrift 'The EEA and the EFTA Court - Decentred Integration' (2014) and Baudenbacher (ed.), 'The Handbook of EEA Law' (2016). A notable achievement with the publications originating in and around the EFTA Court is the ability to engage leading commentators from the EU-pillar of the EEA, including Judges and Advocates General from the EU courts. In this way, the EFTA Court has managed to keep alive a debate about EEA law that makes sure that key actors in the EU-pillar remain aware of the existence and peculiarities of EEA law. Despite these efforts, the international debate about EEA law remains limited. both with regard to the volume of the literature and the number of participants. Nevertheless, the EEA Agreement is not only relevant for those specialists in the EU who takes an interest in free movement to and from the participating EFTA

V

Preface

States; it is relevant to a much wider audience at a time when issues of European integration (and disintegration) are hotly debated all over Europe. This book is an attempt to both deepen and broaden the literature on the EEA Agreement. The format of a German style Article-by-Article commentary makes sure that it also covers matters of EEA law which have received very little attention since the 1993 commentary by Norberg et al. This includes both important sub-fields of substantive EEA law such as environmental law, consumer protection, labour law, public procurement etc., and institutional questions revived by the 'Brexit' decision by UK voters in 2016 such as the procedures for leaving or joining the EEA. the conditions for implementing unilateral safeguard measures, cross-pillar dispute-resolution etc. In short, this Commentary aims at presenting, taking into account almost 25 years of practice, the entire body of EEA law as it stands today. Thus, it is not limited to the Main Part of the EEA Agreement as such; the Protocols and Annexes are also covered and so are the EEA-related agreements between the EFTA States on the institutional set-up of the EFTA-pillar. The list of contributors introduces several new voices to the debate, thus facilitating new perspectives on 'old' questions of EEA law and a much-needed enlargement of the small community of academics with an interest in the legal affiliation of the EFTA States to the EU's internal market. The editors thank all contributors for the work put into the contributions. Our sincere gratitude also goes to Nomos Publishing House and, in particular, to Stefan Simonis, who, ever since our first meeting, shared our enthusiasm about this project and. with the necessary patience and support, helped us realize it. Many thanks also to Matthias Knopik. Andrea Schneider and the other people of Nomos for their highly effective support in the production of this book.

Augsburg/Bergen/Oslo August 2017

VI

Finn Arnesen Halvard Haukeland Fredriksen Hans Petter Graver Ola Mestad Christoph Vedder

Foreword In the context of European cooperation, the Agreement on the European Economic Area is no small achievement. Since its adoption in 1992 this Agreement has been part of the development of a homogeneous and dynamic legal regime for an enhanced European free trade market, based on the law governing the internal market of the European Union. The various areas of EEA law have over the years been subjected to much scholarship and learned writings, but an updated comprehensive study covering the entire EEA Agreement had yet to appear. However, the 25 th anniversary of the EEA Agreement in 2017 has now encouraged five Norwegian and German professors - having solicited contributions from 30 experts of the various fields of EU/EEA law - to elaborate, edit and publish an extensive and thorough commentary on the Main Part of the EEA Agreement and on the most important EEA-related agreements between the participating EFTA States. No doubt, this volume will serve as a most valuable source of learning, guidance and inspiration for lawyers and scholars when working with various aspects of EEA and EU law. 1.

The EEA Agreement was designed as a vehicle to promote extended European cooperation in economic and related matters. At present the parties to the Agreement are the European Union and all its 28 Member States as well as the three EFTA States - Iceland. Lichtenstein and Norway. For the EFTA States the EEA Agreement establishes basic legal links to the European Union and its internal market, thereby also implying a substantial transfer of actual sovereignty. At present, the EEA Agreement essentially amounts to a lasting alternative to EU membership, however, without any formal ties to supranational powers of EU and its institutions and agencies. To achieve this, the EEA had to be designed as a two-pillar system with an EFTA-pillar distinguishing in principle between the treaty obligations of the EFTA States and their national duties to perform these obligations by incorporating the EEA-relevant EU legal acts in their national laws. Such implementation is the key to market access and integration in the internal European market. Modelled in general on the Treaty of Rome, the Main Part of the EEA Agreement contains the provisions on the four freedoms and other key elements of the EU primary internal market law. Included in the EEA Agreement arc also numerous Protocols and Annexes. At the time of the signing of the Agreement, the Annexes included nearly 2000 legal acts adopted by the EU to 'complete' the internal market by the early 1990 s. Since then, and consistent with the dynamic character of the EEA Agreement, the EEA Joint Committee has added several thousand nev..- EU legal acts to the Agreement. In addition, the EEA Agreement itself is supplemented by agreements between the EFTA states establishing an independent EFTA Surveillance Authori-

VII

Forev.,ord

ty and an independent EFTA Court. The task of these institutions is to ensure the EFTA States' compliance with their EEA law obligations. 2.

Accession to the EEA Agreement did not in itself suffice to make EEA law part of national law in the dualistic EFTA States. This was, and still is, only to be achieved through subsequent adoption of national legislative measures amending or supplementing EEA-relevant parts of the existing regulatory regimes for economic activities. Consequently, both in Iceland and Norway, legal provisions consistent with the relevant EU legal acts have continuously been adopted to incorporate EEA law with legal effect as integrated parts of Icelandic and Norwegian law. The result is that the EEA law does not constitute any separate part of Icelandic or Norwegian law. Prior to the entry into force of the EEA Agreement in 1994, the Main Part of the Agreement was enacted in Icelandic and Norwegian law by separate statutes. At least in Norway, however, the need for further legislative actions was less than could be expected, often limited to various additions or amendments to existing legislation. One reason was that in many areas Norwegian economic law, having long been influenced by the legal systems of key European countries and later also by Community law, already was largely consistent with much of the EU secondary legislation. In the 1980 s, the Norwegian government required that developments in Community law should be duly considered in the preparation of any major national law reforms. Thus, important parts of the new statutory regimes for credit and financial institutions and insurance undertakings adopted in 1988, were in fact already modelled on relevant EC directives. Another reason for the limited need for legislative action was that major parts of the various EC legal acts could be implemented into Norwegian law by the government itself exercising existing or new regulatory powers. Many of these regulations were drafted as a mere translation of the provisions in the EU legal acts. Irrespective of legal fonn of the legislative measures applied to incorporating EEA law, the accession to the EEA in the early 1990 s was a formidable and challenging operation to Norway. The legal instruments required were prepared and continuously adopted in accordance with ordinary national procedures. This meant that government bills to the parliament usually were accompanied by explanatory comments relevant to the meaning and interpretation of the statutory provisions proposed. One consequence was that the problems caused by apparent differences between the EU and Norwegian statutory drafting traditions, would thereby be addressed, explained and overcome, thus facilitating also the subsequent application of imported EEA law.

VIII

Foreword

3. During the 25 years since the EEA Agreement was signed in 1992, the European Union has constantly revised, modernised and further developed the legal regime for the internal market. Much of EU's new secondary legislation has been elaborated and adopted in the implementation of ambitious law programmes designed to broaden and strengthen the regulatory role of legal frameworks defined at the Union level. In view of the EEA Agreement's objective of dynamic homogeneity between EU and EEA law, the EEA relevant parts of novel EU legislation have subsequently been included in the Agreement by decisions of the EEA Joint Committee. In Norway and the other EFTA states, consequently, both the scope and the volume of EEA-conform law have increased quite significantly over the years. Equally important, the character of EU secondary law has gradually changed by means of more detailed drafting that offers less of the flexibility earlier available when incorporating EU legal acts in national law. In recent years, the EU legislator has also generally favoured directives aiming at full rather than only minimum harmonisation of the laws of Member States. Furthermore, the use of directly applicable regulations has increased significantly. In terms of content, the result is that much of the recent secondary legislation now offers comprehensive, almost exhaustive, elaborate and detailed legal regimes, leaving very limited room for national supplements or alternatives. Moreover, broadly articulated legal standards are frequently used to regulate complex matters, often supplemented by powers for the Commission to issue delegated acts setting out a great number of detailed rules. All this has significantly added to the volume and complexity of EU's legal market order. In several areas, EU has also established Union agencies to promote, coordinate and control uniform interpretation and application of various parts of EU law in the Member States, either through recommendations and guidelines ('soft law') or by way of binding decisions. A recent example is the regulations establishing the "European System of Financial Supervision", consisting of three separate authorities for the banking, insurance and securities sectors. In view of the two-pillar structure of the EEA Agreement, this development is problematic as it also implies exemptions from the principle of national enforcement of EEA law. The road to an agreed solution, consistent both with the two-pillar structure of the EEA Agreement and the national Constitutions of the EFTA States, has been long and difficult. The quite remarkable increase in the volume and detailed complexity of EEA law has resulted in an equally substantial increase of the administrative resources required merely to handle EEA law at the national level. The resources required for the implementation, application and supervision of EEA law exceed by far the resources regularly available in small countries such as Iceland and Norway (not to mention Liechtenstein). The sheer volume of EU/EEA law may

IX

Foreword

thus have detrimental implications for the degree of compliance throughout the EEA.

4. The main objective of the EEA Agreement is the realisation of the four freedoms within the whole of the European Economic Area, achieving thereby that the EU internal market is extended to the EFTA States. This requires homogeneous interpretation and application of the common EU/EEA rules throughout the EEA. Consequently, the principle of homogeneous interpretation of EU and EEA law has gradually been fully recognised by courts and administrative authorities of both pillars. In the EFTA States, the EU law background of the implemented EEA rules as it appears in the explanatory comments to the implementing legislative measures, is regularly regarded as clearly significant for the interpretation thereof. National courts have a particularly important role when it comes to interpretation and application of EEA law. The number of EEA-related cases brought before Norwegian courts has gradually increased over the years, and the knowledge of EEA law among judges and lawyers in general has improved accordingly. At present, we can note not only that a substantial number of EEA-decisions have been rendered by the Supreme Court, but also that an increasing number of EEA-related cases are decided by the lower courts in a way that often convinces the Supreme Court that leave to appeal is not warranted or needed. The EEA Agreement contains provisions presupposing that the EFTA States normally shall follow decisions of the EU Court of Justice when interpreting EU-conform provisions of EEA law. Consistent with the principle of homogeneity, the Supreme Court of Norway has in its judgement over the years regularly referred to and relied on the relevant decisions of the ECJ, and repeatedly stated that relevant rulings from the ECJ are to be given significant weightage by Norwegian courts when interpreting EEA law. Recently, this principle was authoritatively confirmed by the Supreme Court sitting in plenary in the case HR-20 I 6-2554-P Ho/ship. However, this principle does always not give readymade answers. Essentially it means that in the Supreme Court the relevant decisions of the ECJ will ordinarily be analysed and applied, or distinguished on the facts, in the same manner as the Supreme Court's own precedents in other fields of law. This may be illustrated by two recent Supreme Court decisions relating to the 2007 Lugano Convention, modelled on the Brussels I Regulation (44/2001 ), the Norwegian interpretation of which during more than 20 years has regularly been based on ECJ decisions. The issue in both Rt. 2011 p. 897 Marin A/pin and Rt. 2015 p. I 29 Arrow Seismic Invest was how to interpret Article 5(3) of Lugano allowing actions for damages to be brought 'where the harmful event occurred'. In A1arin A/pin, the Supreme Court, based on an extensive analysis of the EC J's decisions in the Cases C-71 !76 Bier, C-220/88 Dumez, C-364,193 Marinari and

X

Foreword

C-168/02 Kronhofer, held that an action in tort for general economic loss could only be brought in the State where the tortious act was committed, and not in the state where the person having suffered the loss had its domicile. However, four years later, in Arrow Seismic Invest, the Supreme Court, having considered the same four decisions of the ECJ, concluded that the rule therein applied by ECJ did not also cover and apply to an action in tort to recover economic damage directly resulting from the loss of a lien held in the State where the action was brought. Thus, the authority of the ECJ decisions was not in question, only their ratio decidendi in relation to the second case before the Supreme Court. Even if the Supreme Court normally will follow existing decisions of the ECJ, this does not mean that the Supreme Court always also will reach the same result as the ECJ itself would have done. Clearly, the principle of homogeneous interpretation as based on reported ECJ decisions will normally prevail. However, the situation is different if no clear ECJ precedent exists. In such a case the Supreme Court seems to be somewhat reluctant to be a "frontrunner" and preempt what would be the result of a dynamic interpretation of the EU law by ECJ, particularly if a question of principle is involved. In Rt. 2012 p. 1951 Trico Subsea the question was whether a person domiciled in a third country (Singapore) could invoke the Lugano Convention and, thus, would be entitled under its Article 2 to bring an action at the defendant's domicile in Norway. The Supreme Court noted that these questions were relevant also in relation to the same provision in the Brussels I Regulation, and the Court held. notwithstanding certain general statements by the ECJ in Cases C-412/98 Group Josi and C-281/02 Owusu, that the questions could not be considered as squarely decided by the ECJ. In view of this, the majority in the Supreme Court concluded that it was not the task of the Supreme Court to preempt or anticipate how such questions relating to third-state rights under EU law would be resolved by ECJ in the future. Consistent with principles of treaty law relating to third-state rights, the Court instead held that the action by a plaintiff from Singapore could not be brought in Norway under Lugano Convention. but only under the rules on jurisdiction in the domestic legislation. In accordance with the principle of homogeneous interpretation of EEA law, the Supreme Court in the Ho/ship also confirmed that Norwegian courts should give significant weightage to the interpretations of EEA law made by the EFTA Court of Justice. The EFTA Court itself will very often also rely on decisions by ECJ. However, since the EFTA Court usually issues only "advisory opinions", Norwegian courts would consequently in particular cases have to independently decide also the questions on how to interpret or apply the EEA law. In so doing, a Norwegian court should, as stated by the Supreme Court in Ho/ship, normally not deviate from an advisory opinion of the EFTA Court, unless warranted by special circumstances.

XI

Forev,,•ord

5. The law of major European states has over the years generally influenced many areas of Nonvegian law as well as the national legal science. For several decades, however, the development of the new EC legal regime attracted only limited interest in Norwegian legal education and science as well as in the legal professions in general. Thus, Norwegian legal communities were generally unprepared to meeting the challenges later to follow from the elaboration and adoption of the EEA Agreement in the 1990 s and the resulting national reception of EC law. The adoption by the EC of the Single European Act of 1987 caused a change in attitude. It became apparent to the EFTA States that the envisaged completion of the EC internal market by the early 1990 s would entail significant consequences also for them, thus requiring that in the future new and serious attention be given to EC market law. When Commission President Delors followed this up in 1989 with his plan for a 'structured partnership' between the EC and the EFTA States, it became obvious to several members of the law faculty in Oslo that there was an urgent need for new Norwegian knowledge and expertise in EC law. Consequently, a "Centre for European Law" was quickly established to organise research and later teaching in basic EU law. As the initiative came from professors working with shipping, offshore and finance law, the Centre was organised as part of the Scandinavian Institute of Maritime Law. The Centre soon attracted many young and enthusiastic students and scholars. Even before the EEA Agreement entered in force in 1994, many studies on topics of EC/EEA law had been published, including a textbook for a new obligatory course in EEA law at the Oslo faculty. Moreover, a comprehensive treatise on EEA law, written by five of the graduate students at the Centre, was published in 1995; a revised third edition appeared in 2011. After a few years, the Centre of European law became a key institution for teaching and research in European law, and it soon also received the privilege of being an EU documentations centre. Over the years, a great number of law students have completed their master degree thesis on topics of EU/EEA law. Also, more than 20 of the graduate students at the Centre have completed their doctor degree thesis, many of whom having thereafter become professors at the Oslo faculty. During the 2000 s, professors and scholars attached to the faculties of law in Bergen and Troms0 have also become more actively engaged in teaching and research in European law and, consequently, have broadened the Norwegian expertise in EU/EEA law. Furthermore, the Centre has always endeavoured to establish and maintain good links to other European institutions and law faculties, promoting good cooperation particularly with Scandinavian, German and Dutch law faculties and scholars. In recent years, the ties with Icelandic scholars \vorking with EEA/EU law have also been strengthened. Instrumental in these concentrated efforts to meet the need for Norwegian competence and expertise in EEA law, has been the scholarship program estabXII

Foreword

lished in 1994 by the Gennan Ruhrgas company. Over the years, this program enabled a substantial number of the most talented masters and post-graduate students at Nonvegian law faculties to carry out lengthy studies and research in European law at German law faculties. Moreover, the program has contributed significantly to renewing and strengthening the cooperation in European law and in law in general between German and Nol"\\/egian law faculties. The present book is essentially a true-born child of the German-Nol"\\/egian cooperation within the "E.ON-Ruhrgas scholarship-program". The German colleagues editing and contributing to the book have handled the German side of this program for many years. Furthermore, most of the Norwegians editors and contributors have previously carried out studies at German law faculties within the scholarship program. The Commentary to the EEA Agreement is a great achievement. containing a detailed outline of the scope, content and condition for the integration of the three EFTA states in the EU internal market.

6. The EEA Agreement will in years to come most probably still provide for and maintain the basic legal links between the three EFTA States and the European Union and its Member States. Even if the EEA Agreement itself does not govern all the areas of cooperation between the EU and the EFTA States, it has nevertheless served as a point of departure for further development of extended cooperation with the European Union. Important areas of cooperation outside the EEA Agreement have already been the subject of separate agreements between EFTA States and the EU. In this context, the outline in this Commentary of the scope of the EEA Agreement contributes to clarifying the borderlines between the EEA Agreement and other agreement on which EFTA States have made the European Union. Current trends in European and world politics seem to cast certain shadows of concern in relation to future development of the European Union and its internal market. In a troubled world and in viev,.: of the effects thereof for world trade and geopolitics, however, the access to and integration in the European internal market provided for the three EFTA states by the EEA Agreement. will probably be of even greater importance in the future than at present. Future challenges to be met by the European Union and its internal market will at least indirectly also be challenges also to be faced by the EFTA states, however not on a stand-alone basis, but as a part of the European side. Potential problems related to key issues such as a Brexit event and new economic policies developed by the present US administration, will require collective responses. Shifts in politics and public sentiment in any of the EU member states may also create Union and EEA problems. At present, however, uncertainties prevail. The character of challenges which may have to be met by EU and EEA, cannot yet be ascertained. Future events may, of course, require some adjustment also in the EEA Agreement. Neverthe-

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Foreword

less, unless the developments should constitute an actual threat to the European Union itself, it is unlikely that the continued existence of the EEA Agreement may be threatened by events outside the control of the EFTA states themselves. The great importance of the EEA Agreement has continuously been fully recognised by all Norwegian governments during the 25 years after its adoption.

Erling Selvig

XIV

Contents

Preface ............................................................................................

V

Foreword ........... ........ .......... ... ............... ..........................................

VII

List of authors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

XXV

Abbreviations . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . XXIX General bibliography ........................................................................ XXXIII Finding the sources of EEA Law ........................................................ XXXV

Introduction The EFTA States, the EEA and the different views on the legal integration of Europe ................................................................................. .

PART I: General Reports Iceland and the EEA

13

Liechtenstein and the EEA . .. .. . . .. . . .. . .. .. . . .. .. .. . . . . . .. . .. .. . .. . .. . .. .. . .. .. . .. . .. .. . . .

35

Norway and the EEA . . . . . . .. . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . .. . . . .. . . .. . .. .. . . .

59

Switzerland and the EEA ... ................................................................

80

The EEA in the Union's Legal Order ..................................................

IOI

EEA law in and beyond the text of the Main Part of the EEA Agreement

124

PART II: The Agreement on the European Economic Area The Contracting Parties ........................................................... ..........

145

Preamble

150

Part I: Objectives and principles Article I

Object and purpose ...................................................... .

171

Article 2

Definitions .................................................................. .

176

Article 3

Principle of loyalty ...................................................... .

180

Article 4

Non-discrimination on grounds of nationality ................. ..

196

Article 5

The droit d'evocation in the EEA Council and Joint Committee ..........................................................................

209

Homogeneity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

209

Article 6

xv

Contents

Article 7

Binding effect and implementation of EU legal acts

248

Part II: Free movement of goods Chapter I: Basic principles Article 8

Free movement of goods, scope of application .. .. . . .. . . .. .....

270

Article 9

Origin of goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

281

Article 10

Customs duties and charges having equivalent effect . ... . . .. .

286

Article 11

Quantitative restrictions on imports and measures having equivalent effect ... .. . . . . .. . .. .. . .. . . . . .. . . . . . .. . . . . . . . . . . .. . . . . . . .. .. . .. . .

289

Quantitative restrictions on exports and measures having equivalent effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

299

Article 13

Exemptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

30 I

Article 14

Internal taxation: No fiscal discrimination of imported goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

311

Article 15

Repayment of internal taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

322

Article 16

State monopolies of a commercial character ... . . . . . .. . . ... . . . . . .

323

Article 12

Chapter 2: Agricultural and fishery products Article 17

Veterinary and phytosanitary measures ...................... ......

335

Article 18

Technical barriers to trade in agricultural products . . . ... . . ... .

336

Article 19

Liberalization of trade in agricultural products ..................

337

Article 20

Fish and marine products . . . . .. .. ... . . .. . . . . ....... .. . .. . . ... .. ... . .. . . .

338

Chapter 3: Cooperation in customs-related matters and trade facilitation Article 21 Article 22

Border controls and cooperation in customs-related matters

341

Reduction of customs duties .......................................... .

349

Chapter 4: Other rules related to the free movement of goods Article 23

Technical regulations and barriers to trade in wine, product liability . . . . .. . . . . . . . ... . . . . . . . . . . . ... . . . . .. . . . . ...... ... . . . . . . ... . . .. . . . . .....

350

Article 24

Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . .

356

Article 25

Safeguard measures . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

361

Article 26

Anti-dumping and anti-subsidies measures . . . . . .. . . . . . . . . . . . . . . . .

362

Chapter 5: Coal and steel products Article 27

XVI

Provisions concerning coal and steel products

367

Contents

Part III: Free '1ovement of persons Chapter I: Workers and self-employed persons Article 28

Free movement of workers . .. .. ... . .. ... . . .. . . .. . . . .. . .. . . .. .. . . . .. . . ..

369

Article 29

Social security for workers and self-employed persons . . . . ..

385

Article 30

Recognition of diplomas, certificates ...............................

391

Chapter 2: Right of establishment Article 31

Freedom of establishment ... . . . . ....... .. .. .. . . . .. . .. .. . .. . . . .. . ... .. . .

400

Article 32

Exemptions for exercise of official authority . . . . . . . . . . . . . . . . . . . .

420

Article 33

Exemptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

423

Article 34

Right of establishment for companies .. . .. ... .. . .. ... .. ... . .. . .. . . .

434

Article 35

Recognition of diplomas, certificates .. .... .. . .. .. . . .. ... .. . .. . .. .. .

450

Chapter 3: Services Article 36

Freedom to provide services .. . .. .. . . .. .. . .. . . . .. . . .. .. . .. .. . .. . . .. .. . .

450

Article 37

Definition of services . .. . . . . . . . .. . . ... . . . . . . .. . . . ... . . . .. . .. . . . .. . . . .. . . .

470

Article 38

Transport services .... ................... ............................ ......

470

Article 39

Scope of application . ........................ .............................

473

Chapter 4: Capital Article 40

Free movement of capital .. .. . . . .. . . . .. . .. ... .. .. . . .. . .. . .. . .. .. . . .. . ..

473

Article 41

Free movement of payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

488

Article 42

Circumvention of capital movements liberalization . .. . .. . . . ..

489

Article 43

Protective measures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

490

Article 44

Implementation of protective measures ............................

495

Article 45

Role of the Joint Committee in case of protective measures

496

Chapter 5: Economic and monetary policy cooperation Article 46

Exchange of views and infonnation

497

Chapter 6: Transport Article 47

Scope of application . . ... . .. .. . . . . . ... . .. .. . ... . . . . . .. . .. . . . . . . . . . . . . . . .. .

500

Article 48

Non-discriminatory application of national rules . . .. .. .. .. .. .. .

517

Article 49

State aid in the transport sector .. .. . . ... .. . .. . ... . . ... .. .. . . .. .. ... . . .

518

XVII

Contents

Article 50 Article 51 Article 52

Prohibition of discriminatory rates or conditions for carriage of goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . .. . . .

521

Prohibition of State aid in the form of favorable rates or conditions . . . . ...... ... . . . . . . .. . . .. . . . . . ... . . . . . . . . . . . . . . . . . . .. .. .

522

Charges for crossing the borders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

524

Part IV: Competition and other common rules Chapter l: Rules applicable to undertakings Introduction to the competition rules applicable to undertakings . .. .. . . . .. .. .

525

Article 53

Agreements, decisions and concerted practices .. . . ... . . . . . ... . .

526

Article 54

Abuse of a dominant position . . . . . . . ... . .. . ... . . . . . .. .. . . . . . .. . . .. . . . .

546

Article 55

Supervision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

555

Article 56

Distribution of competences between the ESA and the Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

558

Article 57

Merger control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

563

Article 58

Cooperation between the ESA and the Commission . . . . . . . . . .

566

Article 59

Public undertakings, services of general economic interest .

568

Article 60

Specific provisions on undertakings

584

Chapter 2: State aid Article 61

Prohibition of state aid. exemptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

585

Article 62

Review of State aid through the ESA and the Commission .

598

Article 63

Specific provisions on State aid . . . .. .. ........ ... . . .. . . . . . . .. . . ......

605

Article 64

Dispute resolution . . . . . . . .. .. ......... .. .. ... . . ... ... . ... . . .. . .. . . . ... . . . . .

609

Chapter 3: Other common rules Article 65( I) Public procurement .......................................................

612

Article 65(2) Intellectual property rights . . .. .. .. . . ... . . .. . . . . . .. . .. .. . . . . . .. . . . . . . ...

641

Part\': Horizontal provisions relernnt to the four rreedoms Chapter I: Social policy Article 66

Improvement of \\'orking conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

659

Article 67

Health and safety of workers . . . . . . . .. . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

660

Article 68

Labour law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

664

Article 69

Equal pay for equal work .. . . . . . . .. . . .. . . . . . . . . . . . . . . . . . . . . . .. .. . .. . . . ..

677

Article 70

Equal treatment of men and women . . . .. . . . .. . . .. . . . . . . . . . . . . . . . . . .

683

XVIII

Contents

Article 71

Social dialogue . . . .. . . .. . . . ... ... . . . .. . . . .. . ... . ........... ... . . . .. . .. . . .. ..

690

Chapter 2: Consumer Protection Article 72

Provisions on consumer protection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

691

Chapter 3: Environment Introduction to EEA environmental law . . .. . .. .. . .. . .. . .. . .. .. . .. . . .. .. .. .. . . . . . . .. .. .

713

Article 73

Object and purpose of EEA environmental law .. . . . . .. . . . . . . .. .

715

Article 74

Protective measures ......................................................

721

Article 75

More stringent national measures . .. .. . . . .. . . . . . . . ... . . ... . . .. . .. . . . .

737

Chapter 4: Statistics Article 76

Cooperation in the field of statistics

740

Chapter 5: Company law Article 77

Provisions on company law . . . .. . . . ... . . . . . . .. . .. .. . . . . . . . .. . .. .. . . . . . .

742

Part VI: Cooperation outside the four freedoms Introduction to EEA cooperation outside the four freedoms . . . . . . . . . . . . . . . . . . .

751

Article 78

Areas of cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

753

Article 79

Dialogue and consultation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

754

Article 80

Forms of cooperation ... .................................................

757

Article 81

EFTA States' participation in EU programmes .................

763

Article 82

EFTA States' financial contributions ...............................

767

Article 83

Exchange of information between public authorities . . . . . . . . . .

770

Article 84

Cooperation in specific fields .........................................

771

Article 85

Inclusion of pre-existing cooperation ......... .............. ........

771

Article 86

Role of the EEA Joint Committee ...................................

772

Article 87

Expansion to new fields of cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . .

773

Article 88

Domestic measures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

776

Part VII: Institutional provisions Chapter I: The structure of the Association Section I: The EEA Council Article 89

Responsibilities of the EEA Council

777

XIX

Content.~

Article 90

Composition of the EEA Council, decision-making .. .. .. .. .. .

779

Article 91

The EEA Council: presidency and meetings .....................

780

Section 2: The EEA Joint Committee Article 92

Responsibilities of the EEA Joint Committee ...................

Article 93

Composition of the EEA Joint Committee, decision-making

782 784

Article 94

The EEA Joint Committee: presidency, meetings, sub-committees and working groups .. .. ... . .. ..... .. ... . . .. . . .. . .. .. . .. . . .. . ..

786

Section 3: Parliamentary cooperation Article 95

The EEA Joint Parliamentary Committee . .. .. . .. . . .. .... . ... . .. ..

789

Section 4: Cooperation between economic and social partners Article 96

The EEA Consultative Committee . . . .. .. . . . .. .. .. .. .. .. . .. .. .. .. . ..

791

Chapter 2: The decision making procedure Introduction to the Chapter .. . . . . . . . . . . . .. . . . . . . . . .. . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . .. . . . . .

792

Article 97

793

Right to amend internal legislation .. .. ........ .... ...... .. .. . .. .... .

Article 98

Amendments to Annexes and selected Protocols . .. . . .. . .. . . . . .

795

Article 99

Participation of EFTA States in EU decision-shaping .. . . . . ..

797

Article I 00

Participation of EFTA States' experts in the EU comitology system .........................................................................

800

Participation of EFTA States' experts in non-comitology committees . . . .. . . . .. . . .. . . ... . . .. .. . . . . ... . . .. . .. . . . .. .. ........ .. . . . ... . .. .

802

Amendments of Annexes, incooperation of EEA-relevant EU legislation ............................................................. .

803

Article I 03

Requirements for binding Joint Committee decisions ....... .

819

Article 104

Binding effect of EEA Joint Committee decisions ........... ..

824

Article IO I Article 102

Chapter 3: Homogenity, surveillance procedure and settlement of disputes Section I: Homogeneity Article 105

Homogeneous interpretation of EU and EEA law ............ ..

825

Article 106

Exchange of information concerning relevant judgements ..

835

Article 107

Preliminary rulings from the ECJ .................................. ..

837

xx

Contents

Section 2: Surveillance procedure Article 108

The ESA and the EFTA Court: Establishment and competences ..........................................................................

840

Article 109

The two-pillar surveillance system ................................. .

852

Article 110

Enforceability of decisions of the ESA and the Commission and of judgments of the EFTA Court and the EU Courts

860

Section 3: Settlement of disputes Article 111

Dispute resolution in the EEA Joint Committee

865

Chapter 4: Safeguard measures Article 112

Safeguard measures ..................................................... .

883

Article 113

Notification of safeguard measures, consultations ............ .

888

Article 114

Rebalancing measures .................................................. .

889

Part VIII: Financial '-1echanism

Introduction: Economic and social cohesion in the EU and in the EEA

890

Article 115

Object and purpose of the EEA financial mechanism .. .. .. . . .

891

Article 116

The EEA financial mechanism .. .. ... .. ... .... .. ... .. . .. .. .. . . .. . . ...

892

Article 117

Provisions governing the EEA financial mechanism .. . . . . . . . .

894

Part IX: General and final provisions

Article 118

Extension of the EEA Agreement to new fields

904

Article 119

Annexes and Protocols as integral part of the Agreement .. .

912

Article 120

The EEA Agreement and pre-existing agreements ........... .

919

Article 121

Nordic cooperation, regional union between Switzerland and Liechtenstein ......................................................... .

924

Article 122

Secrecy obligations ...................................................... .

927

Article 123

National security and trade in arms ................................ .

929

Article 124

Non-discrimination of investments ................................. .

939

Article 125

The EEA Agreement and national systems of property ownership .................................................................. ..

942

Territorial application of the EEA Agreement .................. .

945

Article 127

Withdrawal from the EEA Agreement ........................... ..

953

Article 128

Accession to the EEA Agreement .................................. .

961

Article 129

Languages, ratification, entry into force .......................... .

968

Article 126

XXI

Contents

PART Ill: The Agreement beh\-·een the EFTA States on the Establishment of a Suneillance Authority and a Court of Justice Contracting Parties . . . . . . . . . . . . . . . . . . . . ... . . . . . . . . . . . . . . .. . . . . . . . . . . . .. . . . . . . . . . ... . . .. . . . . . ..

973

Preamble .. .. . . . .. .. . . . .. .. . . . ... .. .. . . . . . . . .. .. .. . . . . . . . .. . .. .. . . .. . . . . . .. . . . . . . . . . . .. . . . . . . . . . ..

975

Part I: General rules Article I

Definitions . . .. ... . . . .. . . . . .. ... . . . . . . . . . ....... .. . . . . . . . . . . . . . . . . . .. . . . .. .. ..

977

Article 2

Principle of loyalty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . .

978

Article 3

Relevance of ECJ case law ............................................

980

Part II: The EFTA Survcillance Authority Article 4

Establishment of the EFTA Surveillance Authority

984

Article 5

Responsibilities and means . . ...... .. . . . . . . .. . . . . . . .. . ... . . . . . . . .. . .. . .

987

Article 6

Right to information from the EFTA States and from undertakings . . . . . . .. ... . . . . . . . . . . . . . . . . . .. . . . . .. . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . .. . .

990

Article 7

Composition . .. . . . . . . . . .. . . . . . . . . . . . . . . . .. . . ... . . .. . . . . . .... ... . . . . . ... . . . . .

992

Article 8

Independence of the members ........................................

993

Article 9

Appointment of the members .........................................

995

Article 10

Termination of office . ... . . . . . . .. . ... . .. . . . . . . .. . . . . . . . . .. . .. . . . . . . . .. . . ..

996

Article 11

Compulsory retirement .. . . . . .. . . ... . . . . . ... . . . .. .. . . . . . . .. . . . .. . . . . .. . ..

996

Article 12

The President of the EFTA Surveillance Authority . . . . . . . . . . . .

996

Article 13

Rules of procedure

Article 14

The staff of the EFTA Surveillance Authority...................

1002

Article 15

Decision-making ..........................................................

1003

Article 16

Obligation to state the reasons for decisions ......... ..... .......

1003

Article 17

Notification and entry into effect of decisions ...................

1004

Article 18

Publication of decisions . .. . .. ... .. . . . .... .. .. . .. . . . .. . .. .. . ... . . . . . ... ..

1004

Article 19

Enforceability of decisions .............................................

1005

Article 20

Language . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

I 005

Article 21

Annual report ...............................................................

1006

997

Part Ill: The EFTA States' fulfilment of their obligations under the EEA Agreement and the present Agreement Introduction to Part III .......................................................... ............ Article 22 Article 23

XXII

1007

Monitoring the application of the EEA Agreement and the SCA ............................................................................

1007

Monitoring within the field of public procurement law . . . . . .

1009

Contents

Article 24

Responsibilities of the ESA in the field of State aid...........

1011

Article 25

Responsibilities of the ESA in the field of the competition rules ............ ................... ..................... ..... ......... ........ ..

1012

Article 25 a

Responsibilities in the field of financial supervision ......... .

1018

Article 26

Cooperation between the ESA and the EU Commission .... .

1019

Part IV: The EFTA Court

Introduction to Part IV ......................................................................

1019

Article 27

The establishment of the EFTA Court ..............................

1019

Article 28

Composition ................................................................

1020

Article 29

Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

I 021

Article 30

Members .....................................................................

1021

Article 31

Infringement action .......................................................

1025

Article 32

Infringement action by an EFTA State .............................

1029

Article 33

Compliance with judgements of the EFTA Court ..............

1030

Article 34

Advisory opinion ..........................................................

1032

Article 35

Jurisdiction to review penalties imposed by the ESA .........

1040

Article 36

Action for annulment ....................................................

1041

Article 37

Action for failure to act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . .

I 046

Article 38

Obligation to comply with judgements of the EFTA Court .

1048

Article 39

Actions for non-contractual liability ... . .. ... .. .. . . . . . . . .. .. . . . . ... .

I048

Article 40

Suspensory effect of actions brought before the EFTA Court ..........................................................................

1050

Article 41

Interim measures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

I 051

Part V: General and final provisions

Article 42

Protocols and Annexes as integral part of the SCA . ... . . . . . . ..

I 051

Article 43

Statute and Rules of procedure of the EFTA Court ............

1056

Article 44

Legal capacity, privileges and immunities, headquarters agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

I 065

Article 45

Seats of the ESA and the EFTA Court .............................

1066

Article 46

Contractual and non-contractual liability of the ESA .........

1066

Article 47

Budget for the ESA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

I 074

Article 48

Budget for the EFTA Court ............................................

1075

Article 49

Amendments to the SCA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

I 075

Article 50

Withdrawal from the SCA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

I 075

Article 51

Accession to the SCA ....................................................

1076

Article 52

Implementation of the SCA ............................................

1077

XXIII

Contents

Article 53

Authentic languages, ratification, deposit and entry into force ...........................................................................

1077

PART IV Agreement on a standing committee of the EFTA states Preamble

1079

Article I

Role of the Standing Committee .................................... .

1081

Article 2

Consultations .............................................................. .

1082

Article 3

Responsibilities ........................................................... .

1085

Article 4

Decision-making ......................................................... .

1089

Article 5

Subcommittees and working groups ............................... .

1090

Article 6

Decision-making in the Standing Committee ................... .

1095

Article 7

Rules of procedure ....................................................... .

1096

Article 8

EFTA Secretariat ......................................................... .

1097

Article 9

EEA Joint Parliamentary Committee, EFTA Consultative Committee ...................................................................

1098

Article 10

Protocols and Annexes as integral part of the Agreement ...

1099

Article 11

Amendments of the Agreement on a Standing Committee ..

1099

Article 12

Withdrawal from the Agreement on a Standing Committee

1100

Article 13

Accession to the Agreement on a Standing Committee ......

1101

Article 14

Authentic languages, ratification, deposit and entry into force .......................... ........................... ............. ...... ...

1101

Convention establishing the European Free Trade Association . .. ..

1103

Index ..............................................................................................

1125

XXIV

List of authors Editors Finn Arnesen, Professor dr. juris (Oslo), Director of the Centre for European Law, University of Oslo ( 1997-2002 and 20 I 2-): Introduction, Preamble, Arts. 1, 2, 17-20, 119, 126 and 129 EEA. Preamble and Art. 1 SCA. Hal\'ard Haukeland Fredriksen, Professor Dr. iur. (Gottingen), Ph.D. (Bergen), University of Bergen: Introduction. Report "EEA law beyond the text of the Main Part of the Agreement", Preamble, Arts. I, 2, I 05-107 and 110-114 EEA, Preamble and Art. 1 SCA, Agreement on a Standing Committee. Hans Petter Graver, Professor dr. juris (Oslo), Dr. h.c. (University of Helsinki), Dr. h.c. (University of Heidelberg), Dean of the Faculty of Law, University of Oslo (2008-2015): Introduction. Ola \testad, Professor dr. juris (Oslo), University of Oslo, ad hoc Judge at the EFTA Court since 2006, former Director of the Centre for European Law, University of Oslo (2006-2007), Director of the Scandinavian Institute of Maritime Law (2017-): Introduction. Christoph Vedder, Professor em. Dr. iur. (Gottingen), formerly Chair for Public La\\·, Public International Law and European Law as well as Sports Law, Jean Monnet Professor ad personam, University of Augsburg: Introduction, Report ''The EEA in the Union's Legal Order". Authors Tarjei Bekkedal, Professor Ph.D. (Oslo), Centre for European law, University of Oslo: Art. 59 EEA. Per Andreas Bjorgan, Advocate, Partner Lund & Co law firm, former Director of the Competition and State Aid Directorate and Deputy Director of the Legal department of the EFTA Surveillance Authority: Arts. 4-26 SCA. Henrik Bull, dr. juris (Oslo), Justice, Supreme Court of Norway; Legal Adviser in the Norwegian Ministry of Justice, involved in the negotiations on the EEA Agreement; Director of the Centre for European Law, University of Oslo 2002-2005, Judge of the EFTA Court 2006-20 I 0: Arts. 21-26, 40-45 and 124 EEA. Per Christiansen, dr. juris (Oslo), Judge at the EFTA Court; former Chancellor, Ministry of Foreign Affairs, and Director General, Ministry of Finance; Registrar of the EFTA Court; Professor, University of Troms0: Art. 46 EEA, Arts. I 15-117 EEA, Arts. 27-41 SCA. Marthe Kristine Fjeld Dystland, cand. jur. (University of Oslo), LL.M. (Europa-Institut, University of Saarbriicken), Legal secretary at the EFTA Court, XXV

List of authors

on leave from the Legislation Department, Norwegian Ministry of Justice and Public Security: Art. 7, Arts. 97-104 EEA, Arts. 27-41 SCA. Margret Einarsdottir, Associate Professor, Reykjavik University, Advisor for the Steering Group set up under the Prime Minister's Office in Iceland to address the execution of the EEA Agreement from 2014; Director of the European Law Institute, Reykjavik University 2010-2013: General Report on Iceland. Olafur Johannes Einarsson, M.Jur. (Oxon), M.Phil. (Oxon), advocate at BBA law firn1, Reykjavik; Ad-hoc College Member, EFTA Surveillance Authority; former Director of the Internal Market Affairs Directorate, EFTA Surveillance Authority: Arts. 30-33, 35-39 and 110 EEA. lngvald Falch, Justice, Supreme Court of Norway since September 2015, formerly at the Office of the Norwegian Attorney General (Civil Affairs); former partner in the law finn Schj0dt: Art. 4 EEA. Fredrik Bockman Finstad, Deputy Director General, Legislation Department, Norwegian Ministry of Justice and Public Security; formerly justice and home affairs counsellor at the Mission of Nonvay to the EU and member of the government-appointed committee analysing the agreements between the EU and Norway (NOU 2012: 2): General Report on Norway, Arts. 7, 99-104 EEA. Karin Floistad, Ph.D. (European University Institute, Florence), Partner Simonsen Vogt Wiig law finn; chair of the Norwegian Competition Appeals Tribunal: Arts. 28, 29 EEA. Christian Franklin, Professor Ph.D. (Bergen), University of Bergen. Head of the Research Group for Competition and Market law; Barrister (Gray's Inn), board member of the Norwegian Association for European Law; joint manager of the Bergen Centre for Competition Law and Economics (Beccle): Art. 3 EEA, Art. 2 SCA. Christian Frommelt, Ph.D. (ETH Zurich), research fellow at the Liechtenstein Institute (Bendem), Director for Brexit Studies at the Ministry of Foreign Affairs of Liechtenstein: General Report on Liechtenstein. Ronny Gjendemsjo, Associate Professor Ph.D. (Bergen), University of Bergen, Co-director of the Bergen Centre for Competition Law and Economics (Beccle ), member of the Norwegian Competition Appeals Tribunal: Arts. 53-58 and 60 EEA. Simen HammersYik. Advocate, Senior Associate, Schj0dt law firm, Oslo, Norway: Art. 65( I) EEA. Ragnhildur Helgadottir, Professor, S.J.D. (Virginia), Dean of the School of Law, Reykjavik University. chairperson of the Negotiation Team on Justice and Home Affairs and member of negotiation committee for Iceland's application for membership of the EU, 2009-2013: General Report on Iceland.

XXVI

list of authors

Martin Hennig. Postdoc; Ph.D. (Troms0), The Arctic University of Norway:

Arts. 14 and 15, 47-52, 76 EEA. Christophe Hillion, Professor Dr., Universities of Leiden and Goteborg;

Swedish Institute for European Policy Studies (Stockholm) and Norwegian Institute of International Affairs (Oslo): Arts. 118, 127, 128 EEA. Johanna Jonsdottir, Dr., Advisor at the Icelandic Ministry for Foreign Affairs,

affiliated Senior Researcher at the Icelandic Institute of International Affairs: Arts. 78-88 EEA, Agreement on a Standing Committee of the EFTA States. Christian Jordal. Deputy Director, Competition and State Aid Directorate,

EFTA Surveillance Authority: Arts. 61-64 EEA. Berte-Elen R. Konow, Professor dr. juris (Bergen), University of Bergen. mem-

ber of the Working Group preparing DCFR IV B Lease of Goods, member of editorial board of Restatement of Nordic Contract Law, Vice Dean for Research at the Faculty of Law (2013-2017): Art. 72 EEA. Gjermund l\lathisen, Dr., LL.M. (Heidelberg), Ph.D. (Bergen), Director, Com-

petition and State Aid Directorate, EFTA Surveillance Authority, former Legal Secretary at the EFTA Court, former Legal Officer at the EFTA Surveillance Authority: Arts. 61-64 EEA. Peter-Christian \1iiller-Graff, Professor Dr. habil., Dr. h.c. mult., Chair for Private Law, Commercial Law, Company Law, Economic Law, European

Law and Comparative Law, Director of the Institute for German and European Corporate Law and Economic Law, Honorary Jean Monnet Professor, University of Heidelberg, Co-Editor of the Skriftserie for Tysk-Norsk Rett: Arts. 34, 77 EEA. Jonas W. \1yhre, Scandinavian Institute of Maritime Law, Supreme Court Ad-

vocate ( until 2012 ); guest researcher at the Centre for European Law, U iO, Partner in the law firm Hjort ( 1971-200 I), cand. iur. ( 1963, University of Oslo), MCL 1966 (University of Illinois, USA): Art. 16 EEA. Ernst !'ilordtveit, Professor dr. juris (Bergen), University of Bergen, former

Dean of the Law School, former Head of the Research Group of Natural Resources, member of the National Ethical Committee for Natural Science and Technology, Ministry of Education and Research; Member of the Norwegian Academy of Science, Committee on Climate, Environment and Natural Resources Use (2015-): Arts. 73-75 EEA. Havard Ormberg, Research fellow, University of Bergen, Bergen Centre for

Competition Law and Economics (Beccle), fonner Officer of EFTA Surveillance Authority, Competition and State Aid Directorate: Arts. 120-123 EEA. Gunnar Thor Petursson, Professor, Ph.D. (Lund), Reykjavik University, Direc-

tor of the Internal Market Affairs Directorate, EFTA Surveillance Authority: Arts. 8-13, 27 EEA.

XXVII

List oJ authors

Benedikt Pirker, LL.M. (Bruges), Ph.D. (IHEID Geneva), Privatdozent, Senior Lecturer, Institute for European Law, Universite de Fribourg: Report on Switzerland. Thomas Chr. Poulsen, Judge, Borgarting Court of Appeal, former Legal Secretary at the EFTA Court: Art. 125 EEA, Arts. 42-53 SCA. Ole-Andreas Rognstad, Professor dr. juris., University of Oslo, former Director of Department of Private Law (2008-2011 ), since 2016 associated with the Centre for European Law: Art. 65(2) EEA. Sigrid Eskeland Schutz. Professor dr. juris (Bergen), University of Bergen, Head of the Research Group for Natural Resource Law, Environmental Law and Development Law: Arts. 73-75 EEA. Erling Selvig, Professor em. dr. juris (Oslo), University of Oslo, Chairman of the Board for the Centre for European Law, University of Oslo ( 1997-2012); ad hoc Judge of the EFTA Court ( 1997-2002); chairman of the Norwegian Banking Law Commission ( 1991-2017): Foreword. Ida Sorebo, Legal Advisor, Legislation Department. Norwegian Ministry of Justice and Public Security, with responsibility for EEA implementation and constitutional issues, former Officer at the EFTA Surveillance Authority, Legal Department: Art. 7, Arts. 99-104 EEA. Karl Harald Sovig, Professor dr. juris (Bergen), University of Bergen. Dean of the Faculty of Law (2017-), Vice President of the European Association of Health Law (2015-); temporary Judge at the District Court (2002) and Gulating Court of Appeals (2005): Arts. 69, 70 EEA. Tron Lokken Sundet, Vice-President. Labour Court of Norway: Arts. 66-68 and 71 EEA. Dora Sif Tynes, LL.M. (EUI, Florence), Attorney-at-law in Iceland. former Head of EEA Legal Services at the EFTA Secretariat, previously legal officer at the EFTA Surveillance Authority: Arts. 5, 89-96, 108, 109 EEA. Pal Wenneras, Ph.D. (Amsterdam), Advocate, Office of the Attorney General (Civil affairs): Arts. 6 EEA, Art. 3 SCA.

XXVIII

Abbreviations AAA AA\1S ACER ADR ADM AF\1P AFSJ AG Art. BEREC BGH

ccs

CEDAW CEDEFOP CEEP CESL CETA CFI CFP CFSP CISG CMLR COM Commission COREPER COSME CJEU

cs

CSA Dir. DSB EAFRD EASA EBA EC ECB ECC-Net ECDC ECHA ECHR ECtHR ECJ ECJ RoP ECN ECOFIN ECR ECSC ECSR ECU EDA EDPB

Ankara Association Agreement Administration of State Monopolies Agency for the Cooperation of Energy Regulators Alternative Dispute Resolution Administration Agreement on the Free Movement of Persons Area of freedom, security and justice Advocate General Article Body of European Regulators for Electronic Communications Bundesgerichtshof Carbon capture and storage UN Convention on the Elimination of All Forms of Discrimination against Women European Centre for the Development of Vocational Training European Centre of Enterprises with Public Participation and of Enterprises of General Economic Interest Common European Sales Law EU-Canada Comprehensive Economic and Trade Agreement Court of First Instance of the European Communities Common Fisheries Policy Common Foreign and Security Policy United Nations Convention on Contracts for the International Sale of Goods Common Market Law Review (Journal) Communication from the European Commission European Commission Committee of the Permanent Representatives of the Governments of the Member States to the European Union Competitiveness of Enterprises and Small and Medium-sized Court of Justice of the European Union (the institution, not the court) Continental Shelf Competition and State Aid Directorate Directive Danske Statsbaner (Danish State Railways) European Agricultural Fund for Rural Development European Aviation Safety Agency European Banking Authority European Communities European Central Bank European Consumer Centres Network European Centre for Disease Prevention and Control European Chemicals Agency European Convention of Human Rights European Court of Human Rights Court of Justice of the European Union (the court, not the institution) Rules of Procedure of the Court of Justice of the European Union European Competition Network Economic and Financial Affairs Council European Court Report European Coal and Steel Community European Committee of Social Rights European Currency Unit European Defence Agency European Data Protection Board

XXIX

Ahhreviatiom EEA EEAS EEC EECvtA EEIG EES EESC EEZ EFSA EFTA EFTA States EIA Directive

EIB e.i.f EIOPA EJIL ELRev EMA EMFF EMU ENP EPC EPC

ERA ERDF ERIC ESA ESF ESIF ESMA ESO ESS ETUC EU EUCJ EU ESAs EUETS EU-OSHA EUR EuR Euratom EURES EUROFOUJ',;D Europol Eurostat FMC FMG FMO FTA GAIT GBER GC GDP GMO

XXX

European Economic Area/EEA Agreement European External Action Service European Economic Community European Electronic Communications ~arket Authority European Economic Interest Grouping European Economic Space European Economic and Social Committee European Economic Zone European Food Safety Authority European Free Trade Association Iceland, Liechtenstein and Norway (in the context of EEA Law); Iceland, Liechtenstein, Norway and Switzerland (outside the scope of EEA Law) Environmental Impact Assessment Directive European Investment Bank entry into force European Insurance and Occupational Pensions Authority European Journal of International Law European Law Review (Journal) European Medicines Agency European Maritime and Fisheries Fund Economic and Monetary Union European Neighbourhood Policy European Professional Card European Patent Convention European Railway Agency European Regional Development Fund European Research Infrastructure Consortium EFTA Surveillance Authority European Social Fund European Structural and Investment Funds European Securities and \.iarkets Authority EFTA Statistical Office European Statistical System European Trade Union Confederation European Union European Union Court of Justice (the institution) European Financial Supervisory Authorities EU Emission Trading Scheme European Agency for Safety and Health at Work Euro Europarecht (Journal) European Atomic Energy Community European Employment Services European Foundation for the Improvement of Living and Working Conditions European Union Agency for Law Enforcement Cooperation Statistical Office of the European Union Financial Mechanism Committee Free Movement of Goods Financial Mechanism Office Free Trade Agreement General Agreement on Tariffs and Trade General Block Exemption Regulation General Court Gross domestic product Genetically modified organism

A hbreviations

GNI GPA GPG HS HSE IEA ILO IMA IMF IMI IMO IOSCO IP IPCEI IPR IPrax ISA JC JCD LEA MA MEIP MEO principle

MFF MFN MFSD mn. MoU \1RA MSP '.'JAP NATO NCA NGO NIMIC NOK NCPI NZZ ODR OECD OJ OLG Para. PEM Convention PIL Prot. PSO PWD RoP SAM SCA SCE

Gross national income Agreement on Government Procurement Gender Pay Gap International Convention on the Harmonized Commodity and Coding System Health. safety and environment International Energy Agency International Labour Organisation Internal Market Affairs Directorate International Monetary Fund Internal Market lnfonnation System International Maritime Organisation International Organisation of Securities Commissions Intellectual Property Important Projects of Common European Interest Intellectual Property Right Praxis des lntemationalen Privat- und Verfahrensrechts (Journal) Interoperability for Public Administrations Joint Committee Joint Committee Decision Legal and Executive Affairs Department United Nations Millennium Ecosystem Assessment Market Economy Investor Principle Market Economy Operator principle Multiannual Financial Framework Most Favoured Nation Marine Strategy Framework Directive margin number (Randnummer) Memorandum of Understanding Mutual Recognition Agreement Marine Spatial Planning National Allocation Plan North Atlantic Treaty Organisation National competition authority Non-governmental Organisation National IM! (Internal Market lnfonnation) Coordinator Norwegian Krone Norsk Utenriskspolitisk lnstitutt (~orwegian Institute of International Affairs) Neue Ziiricher Zeitung (Newspaper) Online Dispute Resolution Organisation for Economic Co-operation and Development Official Journal of the European Union Oberlandesgericht (Higher Regional Court, Gennany) Paragraph Regional Convention on pan-Euro-Mediterranean preferential rules of origin Private International Lav., Protocol Public Service Obligation Posting of Workers Directive Rules of Procedure of the EFTA Court State Aid Modernisation Agreement between the EFTA States on the Establishment of a Surveillance Authority and a Court of Justice European Cooperative Society

XXXI

Abbreviations SE SEA Directive SERA SGEI SI EC-test SME SNE SPC St.prp. State Aid Guidelines TAA

TBT TCN TEC TEDIS TEEC TEN-T TEU TFEU TfR TMD TRIPS TTIP UEAPME UNCITS UK UNCLOS UN/ED IFACT UNICE VAT VIS

WFD WG WIPO WTO ZJS

XXXII

European Company Strategic Environmental Assessment Directive Single European Railway Area Services of General Economic Interest Significant Impediment of Effective Competition test Small and medium sized enterprise Seconded National Expert Supplementary Protection Certificate Proposisjon til Stortinget Procedural and Substantive Rules in the Field of State Aid Transitional Arrangements for a period after the Accession of certain EFTA States to the European Union Technical Barriers to Trade Third Country National Treaty Establishing the European Community Trade Electronic Data Interchange Systems Treaty Establishing the European Economic Community Trans-European Transport Network Treaty on the European Union Treaty on the Functioning of the European Union Tidsskrift for Rettsvitenskap (Journal) Trade Mark Directive The Agreement on Trade-Related Aspects of the Intellectual Property Rights EU-US Transatlantic Trade and Investment Partnership European Association of Craft, Small and Medium-Sized Enterprises Undertakings for collective investment in transferable securities United Kingdom United Nations Convention on the Law of the Sea The United Nations rules for Electronic Data Interchange for Administration. Commerce and Transport Union of Industrial and Employers' Confederations of Europe Value Added Tax Visa Information System Water Framework Directive Working Groups World Intellectual Property Organisation World Trade Organisation Zeitschrift fur das Juristische Studium (Journal)

General bibliography The following books arc referred to in abbreviated form throughout the commentary

Catherine Barnard, The Substantive Law of the EU - The Four Freedoms (5 th ed., Oxford University Press, Oxford 2016) Carl Baudenbacher (ed.), The Handbook of EEA Lmv (Springer, 2015) Therese Blanchet, Risto Piipponen and Maria Westman-Clement, The Agreement on the European Economic Area (Clarendon Press, Oxford 1994) Henrik Bull, Norsk lovkommentar (Reusdata.no), Comments on the Norwegian

£EA Act and the Main Part of the £EA Agreement. Christian Calliess and Matthias Ruffert (eds.), EUVIAEUV - Das Ver.fas-

sungsrecht der Europiiischen Union mil Europiiischer Grundrechtecharta Kommentar (5 th ed., CH.Beck, Munich 2016) Paul Craig and Grainne de Burca, EU Law- Texts, Cases and Materials (6 th ed., Oxford University Press, Oxford 2015) EFTA Court (ed.), The EEA and the EFTA Court - Decentred Integration (Hart Publishing, Oxford and Portland, Oregon 2014) EFTA Court (ed.), Judicial Protection in the European Economic Area (German Law Publishers, Stuttgart 2012) Niels Fenger, Michael Sanchez Rydelski and Titus van Stiphout, European Free Trade Association (EFTA) and European Economic Area (EEA) (Wolters Kluwer, Alphen an den Rijn 2012) Halvard Haukeland Fredriksen and Gjermund Mathisen, E@S-rett (2 nd ed., Fagbokforlaget. Bergen 2014) Peter-Christian Millier-Graff and Erling Selvig (eds.), The European Economic Area - Nonvay 's Basic Status in the Legal Construction of Europe (Berlin Verlag Amo Spitz, Berlin 1997) Peter-Christian Millier-Graff and Erling Selvig (eds.), EEA-EU Relations (Berlin Verlag Amo Spitz, Berlin 1999) Olivier Jacot-Guillarmod (ed), Accord £EE - Commentaires et reflexions (Schultess, Zurich 1992) Sven Norberg, Karin Hokborg, Martin Johansson, Dan Eliasson and Lucien Dedichen, EEA Law-A Commentary on the EEA Agreement (Fritzes, Stockholm 1993) Fredrik Sejersted, Finn Arnesen, Ole-Andreas Rognstad and Olav Kolstad, E0Srett (3 rd ed., Universitetsforlaget, Oslo 2011) Christoph Vedder and Wolff Heintschel von Heinegg (eds.), Europiiisches Unionsrecht - EUVIAEUV/Grundrechte-Charta - Handkommentar (Nomos, Baden-Baden 2012)

XXXIII

Finding the sources of EEA Law EEA legal texts

EEA legal texts can be accessed through the EEA's official website, www.efta.int. In the section called "The EEA Agreement" one can find: • • • • • • •

•

•

• •

the text of the Main Part of the EEA Agreement updated versions of Annexes I to 22 to the EEA Agreement updated versions of Protocols I to 49 to the EEA Agreement the full text of the Final Act to the EEA Agreement a chronological archive of the Decisions of the EEA Joint Committee the Decisions adopted by the EEA Council a list of adopted EU acquis marked as EEA relevant by the EU or considered as such by the EEA EFTA States currently under discussion for incorporation into the EEA Agreement a list of adopted EU acquis considered as EEA relevant and for which draft Joint Committee Decisions have been formally submitted and are under consideration by the two sides an updated list of adopted Decisions of the EEA Joint Committee where constitutional requirements have been indicated by one or more EFTA States in accordance with Art. I 03( I) EEA an updated list of adopted Decisions of the EEA Joint Committee where indicated constitutional requirements have not yet been fulfilled a list of veterinary acts subject to simplified procedures

Particularly helpful is the interactive EEA-lex database (www.efta.int/eea-lcx), which can be used to check the current EEA law status of any EU legal act. The EFTA homepage further provides access to: • •

the updated version of the Agreement between the EFTA States on a Standing Committee, www.efta.int/eeaieea-institutions/standing-committee the updated version of the Agreement between the EFTA States on the Establishment of a Surveillance Authority and a Court of Justice, including its Protocols and Annexes: www.efta.int/I egal-tex ts/thc-survei llance-and-courtagreemen t. Decisions from the EFTA Court

Cases from the EFTA Court can be accessed free of charge through the Court's official website, www.eftacourt.int.

XXXV

Finding the sources of £EA Law

Decisions and guidelines from the EFTA Surveillance Authority

Decisions and guidelines from the EFTA Surveillance Authority can be accessed free of charge from ESA's official website, www.eftasurv.int. El:-sources of [EA-relevance

EU-sources of EEA-relevance can be obtained from the usual EU law databases (EUR-lex, InfoCuria etc.)

XXXVI

Introduction The EFTA States, the EEA and the different views on the legal integration of Europe I. The background of the EEA Agreement

Today, the basic function of the EEA Agreement is to integrate Norway, Iceland and Lichtenstein into the internal market of the European Union. It is a special type of an association agreement with its homogeneity mechanism, its related dynamism and its institutional set-up, both in the Agreement itself and the Agreement's requirement that independent institutions are to be established by the participating EFTA States. 1 In a wider perspective, the EEA Agreement demonstrates that European integration can be shaped in different ways, not only inside an EU with different speeds, but also outside and closely associated with developments within the EU itself. The background to the EEA Agreement lies in the relationship between the 2 development of what was to become the EU on the one hand and the needs and possibilities of the EFTA States on the other. When the European Free Trade Association (EFTA) was established on the initiative of the UK in 1960, it was meant as an alternative for Western European States unwilling (or unable) to join the European Economic Community (EEC). The aim was to promote closer economic cooperation and free trade in Europe, but within the framework of a multilateral association and without any transfer of sovereignty to supranational institutions. 2 The founding members of EFTA were Austria, Denmark. Norway, Portugal, Sweden, Switzerland and the UK, tellingly known at the time as 'the outer seven' (as opposed to the six founding members of the EEC - 'the inner six'). Finland joined EFTA in 1961, 3 Iceland in 1970 and Liechtenstein in 1991. 4 However, most of the EFTA States soon came to see the more ambitious plan 3 for deep economic and even political integration pursued by the EEC/EC/EU as more attractive than the traditional multilateral free trade agenda of the EFTA. The UK applied for membership in the EEC already in 1961 and pioneered negotiations for entry for its EFTA partners Denmark and Norway (as well as Ireland). However, the UK application was vetoed by France. Due to their strong links both economically and politically to the UK, neither Denmark nor Norway wanted to join the EEC on their own. 5 A second UK application in 1967 was

Art. I EEA states explicitly that it is an · Agreement of association'. On the EU side, the relevant provision is Art. 21 7 TFEU (ex Art. 3 IO TEC) which establishes the competence to enter into association agreements. 2 Compare the preamble and Art. 2 of the EFTA Convention of 1960 ('the Stockholm Convention') with the preamble and Arts. 2 and 3 of the Treaty establishing a European Economic Community of 1957 ( 'the Treaty of Rome'). 3 As an associate member, Finland became full member of EFTA in 1986. 4 Up until 1991, the EFTA Convention applied to Liechtenstein by way of a particular Protocol under which the interests of Liechtenstein were represented by Switzerland.

The Editors

Introduction

equally unsuccessful. When the UK finally joined the EC in I 972, so did Denmark. Nonvay had applied for membership too, but remained in the EFTA after 53,5 % of the voters rejected the accession agreement in a referendum. 6 4 As a result of the EC enlargements, presumably in particular the accession of the former EFTA States Denmark and the UK and the gradual understanding within the EC that the EFTA was not really a competitor to fear, the relationship between the EC and the EFTA States became closer. The 1972/1973 bilateral Free Trade Agreements between each of the remaining EFTA States, on the one hand, and the EC (as well as the ECSC), on the other, were concluded, and full free trade under these agreements was achieved by the end of 1983. 7 This lead to the next step in the development of the EFTA-EC relationship: The I 984 EFTAEC Ministerial meeting and the resulting declaration to create a dynamic European Economic Space ('EES') (the Luxembourg Declaration). 8 In parallel, the EC States and the EFTA States negotiated what became the 1988 Lugano Convention on jurisdiction and the enforcement of judgments in civil and commercial matters - essentially a 'parallel convention' to the 1968 Brussels Convention between the EC Member States. 5 As the limits of the bilateral relationship between each EFTA State and the EC became evident, however, accession to the EC remained the more attractive alternative for several of the EFTA States. In 1986, Portugal followed the CK and Denmark, increasing the 'inner circle' of EC member states to 12 whilst reducing the 'outer circle' of EFTA States to six. 9 6 The attractiveness of the EC grew further as a result of the Single European Act of 1986 and the ambitious plan to 'complete' the internal marked by the end of 1992. Notv,:ithstanding differing views on the prospect of future accession to the EC, the remaining EFTA States all agreed that access to the EC internal marked was vital to their economic interests. To the EC Member States, access to the markets of the EFTA States was also attractive. Furthermore, a comprehensive agreement of association was preferable to further membership applications from EFTA States at a time when priority was given to deepening the integration through the foreseen establishment of the European Union. The solution found was the Agreement on the European Economic Area (EEA), which was initiated by the President of the European Commission, Jacques Delors, in 1989 ('the Delors Initiative'), discussed at the political level in 1989-90, formally negotiated in 1990-1992 and then signed on 2 May 1992. The entry into force was

------------

5 For the same reasons, it is assumed that both Denmark and Norway would have become members of 1he EEC in the 1960 s if France had not vetoed UK membership. 6 See further B0ckman Finstad's report on Norway in Part I of this book. 7 See !:llorberg and Johansson. 'The history of the EEA Agreements and the first twenty years of its existence'. in: Baudenbacher (ed.). 1/andhook of EEA law, pp. 3-42, at p. 15. 8 For the details, sec Norberg and Johansson. pp. 15-21. 9 Ireland ( 1973 ), Greece ( 1981) and Spain ( 1986) had joined the EC without first having been members of the EFTA. 2

The Editors

The EFTA States, the EEA and the different views on the legal integration of Europe

delayed when the Agreement was rejected by Swiss voters (by 50.3% to 49. 7%). but the EEA eventually came into existence on I January 1994.

11. The function of the EEA Agreement In short. the EEA Agreement integrated the, at that time, five participating 7 EFTA States, Austria, Iceland, Finland. Norway and Sv.·eden, into the internal marked. but with important exceptions for the fields of agriculture and fisheries. For some of the EFTA States, notably Iceland, Norway and Switzerland, keeping agriculture and/or the fisheries out of the deal was considered of fundamental importance. Part of the price to pay for these 'opt outs', however, was the lack of genuine joint decision-making procedure where the EFTA States would be able to influence the future regulation of the internal market. Commission President Delors had initially given the EFTA States expectations about some kind of a joint EC-EFTA decision-making mechanism, but this met strong opposition from the European Parliament and was ultimately rejected by the Council. From the perspective of the EFTA States, the resulting 'democratic deficit' of the EEA is the Agreement's main shortcoming. 10 It was an important factor behind the Swiss 'No' to the Agreement in 1992 and it remains one of the main reasons why accession to the EEA appears not to have been seriously considered by the Swiss ever after. Instead. Switzerland has negotiated numerous bilateral agreements with the EU. 11 The EFTA States' inability to get the EC-side to agree to a genuine joint deci- 8 sion-making procedure was part of the reason why five ofEFTA States (Austria. Finland. Norway, Sweden and Switzerland) applied for membership of the EC/EU even before the EEA negotiations were concluded. The Swiss application w·as put on hold by the Swiss government as a result of the outcome of the referendum on the EEA Agreement, but the four other EFTA States negotiated and signed accession agreements in 1994. Three of them, Austria. Finland and Sweden, acceded to the EC/EU in 1995, whereas Norway remained in the EFTA-pillar of the EEA after 52,2 % of the voters rejected the accession agreement in a referendum. With only Iceland and Norway left in the EFTA pillar of the EEA, it was im- 9 portant that the Swiss 'No' did not prevent Liechtenstein from acceding to the EEA on I May 1995. 12 Even though the institutional architecture of the EEA

IO As noted in the final report of the Norwegian EEA Review Committee: 'The most problematic aspect of Norway's form of association with the EU is the fact that Norway is in practice bound to adopt EU policies and rules on a broad range of issues without being a member and without voting rights. This raises democratic problems. Non.my is not represented in decisionmaking processes that have direct consequences for Norway, and neither do we have any significant influence on them.• (~OU 2012:2 Urenfor og innenfor - Norges ai-raler med EU. Ch. I, Point 1.1 ). See also Erik Odd var Eriksen and John Erik Fossum (eds), Der norske paradoks. Om ,Vorgesf,Jrhold ti/ Den europeiske union, Oslo 2014. 11 For details, see Pirker's report on Switzerland in Part I of this book.

The Editors

3

lntrod11ction

was designed for seven EFTA States, it has proven to function well with only the three smallest of them left in the EFTA pillar. JO Since 1995, all changes in the list of EEA Contracting Parties have happened on the EU-side. 13 The Faroe Islands has enquired about the possibility of their territory joining EFTA and the EEA, but the fact that the Faroe Islands is not a sovereign State effectively hinders this. Enquiries have also been made concerning the EEA as a suitable affiliation to the EU internal market for microstates such as Andorra. Monaco and San Marino. 14 From the EU's perspective, this would be an ideal way to integrate these states into the internal market through a tried and tested institutional set-up funded by the participating EFTA States. For the EFTA States, however, accepting Andorra. Monaco and San Marino into EFTA and the EEA would complicate life in the EFTA pillar without adding much bargaining power. The Norwegian government therefore made it known that it did not consider EFTA/EEA membership for the microstates to be an appropriate mechanism for their integration into the internal market. The EU accepted this, opting instead for the negotiation of a single multilateral Association Agreement with all three states. 15 11 The prospects of Switzerland eventually joining the EEA appear rather remote. Still, given the EU's growing dissatisfaction with the cumbersome 'Swiss Model' of numerous bilateral agreements without an institutional framework. as well as the general uncertainty brought about by Brexit, it should perhaps not be ruled out completcly. 16 12 Out ofa total number often EFTA States, six arc now members of the EU. It is tempting to claim that at least three of the remaining four come across as thoroughly sceptical towards the 'ever closer union of the peoples of Europe' envisaged by the EU Treaty. The prospects of either of the remaining EFTA States joining the EU in the foreseeable future appear slim. 17 At least for Iceland. Norway and Switzerland, this is mainly because of an electorate less than enthusiastic about the idea. 18 However, as dramatically demonstrated by the 2016 'Brexit' vote, EU membership has not automatically transformed former members of

12 Liechtenstein's accession to the EEA was ddayc:d by the: nc:ed to sort out the: relationship between the EEA Agreement and the Swiss-Liechtenstein customs union. For details, see Frommelt's report on Liechtenstein in Part I of this book. 13 For an overview, see the comments by Arnesen and Fredriksen to the list of EEA Contracting Parties in Part II of this book. 14 European Commission. 'EU Relations with the Principality of Andorra. the Principality of \1onaco and 1he Republic of San Marino - Options for Closc:r Integration with the EU'. COM (20 I 2) 680 final. 15 European Commission. 'EU Relalions with the Principality of Andorra. lhe Principality of Monaco and the Republic of San Marino: Options for their participation in the Internal Market', COM (2013) 793 final. 16 See also Pirker's report on Switzerland and the EEA in Part I of this book. 17 Iceland applied for EU membership in the wake of the financial crisis, but the government suspended the application in 20 I 3 and then, in 2015, sent a letter withdrawing it. 18 For Liechtenslein. the small size of the country alone makes EU membership hard to envisage and the maner does not seem to be on the political agenda.

4

The Editors

The EFTA States, the EEA and the different views on the legal integration of Europe

'the outer circle' into enthusiastic supporters of European integration either. Out of the founding members of EFTA. only Austria and Portugal participate fully in all EU policies, including the Euro. It is hardly a mere coincidence that Austria and Portugal were among those of the founding states that were unable rather than unwilling to join the European Economic Community at the time when the EFTA was established. 19 The EFTA States' scepticism towards deep integration with supranational in- 13 stitutions and transfer of legislative and judicial competences is clearly visible in the EFTA Convention, both the original Stockholm Convention from 1960 and the new Vaduz Convention of 2001. The EFTA has always been primarily about free trade, within the framework of a multilateral association and without any transfer of sovereignty, whereas the raison d'etre of the EEC/EC/EU is the process of integration towards an ever closer union of the peoples of Europe. 20 Thus, from the very beginning, there were fundamental differences between the EEC and the EFTA with regard to objectives, means and institutional arrangements. These differences are, with the transition from the EEC to the current EU. all the more apparent today. In this context, it is certainly notable that two of the founding EFTA States, Denmark and Sweden, have opted out from important EU policies, and that another, the UK, now is leaving the Union altogether. Despite their persistent position as 'reluctant Europeans', however, the re- 14 maining EFTA States' relationships to the EU has developed considerably since the signing of the EEA Agreement. As a side-effect. the integration between the four EFTA States has also become deeper.

III. The development of the EEA Agreement The EEA Agreement itself has evolved in ways hardly foreseen by the EFTA 15 States when it was signed in 1992. Over the years, the EEA Joint Committee has widened the substantive scope of the Agreement on a number of occasions. Important examples include the incorporation of veterinary issues into the EEA Agreement; 21 the incorporation of the EU Emissions Trading Scheme; 22 the granting of rights to economically inactive persons (other than pensioners and students) through the incorporation of the Citizenship Directive; 23 and the acceptance of EEA lav.1 incursions into criminal law through the incorporation of the Environmental Crime Directive. 24

19 The same applies to Finland, who opted for EU membership as soon as the geopolitical situation allowed for it and who has come across as a much more enthusiastic supporter of European integration than the other Nordic countries. 20 As stated by the ECJ (Full Court) in Opinion 2/13, 18.12.2014, ECHR, para. 172. 21 Decision of the EEA Joint Committee No. 69/ 1998. 22 Decision of the EEA Joint Committee No 146/2007. 23 Decision of the EEA Joint Committee r-.o 158/2007. 24 Decision of the EEA Joint Committee No 191/2015. See also Decision No 188/2007, incorporating into the EEA Agreement the Ship-Source Pollution Directive (Directive 2009/123/EC).

The Editors

5

Introduction

In parallel, the EFTA Court has not only vigorously pursued an interpretation of EEA law in line with the ECJ's dynamic development of EU law; it has also embraced, and won acceptance for, an effect-related conception of the homogeneity objective: Homogeneity is a legal principle (not only a political goal) which applies also to the question of the legal effect of EEA law in the legal orders of the Contracting Parties. The crossing of the Rubicon took place in 1999, when the EFTA Court in Case E-9/97 Sveinbjornsdottir deduced an unwritten principle of State liability from the object and purpose of the Agreement. 25 For the dualist EFTA States, liability for loss and damage caused by incorrect implementation of EEA law obligations was a bitter pill, but the EFTA Court received invaluable support by the ECJ in Case C-140/97 Rechberger2- 6 and Sveinbjornsdottir was thereafter accepted by all of the supreme courts of the EFTA States. 27 Even though the EU law principles of direct effect and primacy are not part of EEA law, 28 the recognition of the principle of State liability provides a judicial protection in the EFTA-pillar of rights based on EEA law which comes quite close to that provided for within the EU. 17 In other cases, the EFTA Court has relied on the homogeneity principle in attempts to bridge, by way of interpretation, the 'widening gap' that has formed between the (unchanged) Main Part of the EEA Agreement and the EU Treaties as a result of the Treaties of Maastricht. Amsterdam. Nice and Lisbon. Particularly sensitive are cases where the lack of EEA parallels to the EU law concept of Union citizenship and the EU Charter of Fundamental Rights come into play. 29 In Case E-26/13 Gunnarsson and Case E-28/15 Jabbi, the EFTA Court opted for an interpretation of provisions of the Citizenship Directive (Dir. 2004/38) at odds with ECJ case-law in order to 'remedy' the lack of provisions in the Main Part of the EEA Agreement mirroring Arts. 20 f. TFEU. 30 Whereas some applaud this as bold moves to attain homogeneity between EU and EEA law; 31 others see it as illegitimate overruling of the fact that the EFTA States refused to take on board the concept of Union citizenship when accepting the Citizenship Directive. 32 18 In Sveinbjornsdottir, the EFTA Court held that the 'depth of integration of the EEA Agreement is less far-reaching than under the EC Treaty, but the scope and

16

25 Case E-9i97, I 0.12.1998, Sveinbjornsdottir. 26 Case C-140!97, 15.6.1999, Rechberger, para. 39. 27 Judgment of the Supreme Court of Iceland. 16.12.1999, in Case 236!1999 Sveinbjornsdottir; judgment of the Supreme Court of ~onvay, 28.10.2005, in Case 2005!4 l 2 Finanger II and. linally, judgment of the Supreme Court of Liechtenstein, 7.5.2010. in Case CO.2004.2 Dr. Tschannet II. 28 Despite the ECJ's suggestions to the contrary in Case C-431/1 I, 26.9.2013, UK v. Council, para. 54, and Case C-83/13, 8.7.2014, Fonnship, para. 24. See further the comments by Dystland. Finstad and S0reb0 on An. 7 EEA in Pan II of this book. 29 Sec Fredrikscn and Franklin. 'On Pragmatism and Principles - The EEA Agreement 20 Years On', 52 Common Market law Rei·iew (2015) pp. 629-684, at pp. 635 ff 30 Case E-26/13, 27.6.2014, Gunnarsson and Case E-28i 15. 26.7.2016, Jabbi. 31 Sec. e.g. the comments by Einarsson on Art. 32 EEA in Part II of this book. 32 Sec, e.g., the comments by Wenner/ls on An. 6 EEA in Part II of this book.

6

The Editors

The EFTA States, the £EA and the d/fferenf views on the legal imegrution of E11rope

the objective of the EEA Agreement goes beyond what is usual for an agreement under public international la\.\·'. 33 This is an accurate observation. as the EEA Agreement indeed does bridge some of the differences between the EFTA and the EU, making all the EEA States subject to a new kind of international cooperation, different from the ones they were in prior to the EEA Agreement. There are also developments in the fields of agriculture and fisheries that are related to the EEA Agreement in one way or another. Even though concluded by way of bilateral agreements between the EU and each of the EFTA States, Arts. 19 and 20 EEA provide a basis for EU-EFTA relations also in these fields. 34

19

I\". The dewlopment of further relationships between the EFTA States and the El1 The relationship between the EU and the EFTA States have developed also 20 outside the scope of the EEA Agreement. While the conclusion of the EEA Agreement has to be seen in the context of the 'completion' of the internal market after the European Single Act of 1986, the many other agreements between the EFTA States and the EU reflect the widening and deepening of EU policies brought about by the Treaties of \.1aastricht, Amsterdam, Nice and Lisbon. As early as in 1957, Denmark, Norway, Sweden, and Finland agreed to re- 21 move passport control at their internal borders. 35 The Convention was extended to Iceland in 1965, thus completing the Nordic Passport Union. In 1996, however, the agreements on the accession of Denmark. Sweden and Finland to the Schengen Agreement were signed. In order to maintain the freedoms established by the Nordic Passport Union. Iceland and Norway signed an association agreement with the Contracting Parties to the Schengen Agreement to become part of the Schengen Area. However, this agreement never came into force, as the 1995 Convention implementing the Schengen Agreement did not open for signature by non-EU States. Fortunately, the extension of EU competences through the Treaty of Amsterdam allowed Iceland and Norway to conclude a similar agreement with the EU, which they then did in I 999. 36 Switzerland followed suit in 2008 and in 2011 Liechtenstein too joined the Schengen Area. As six of the currently 28 EU Member States remain outside the Schengen Area. 37 the EFTA States' Schengen association agreements show that there are fields where the

33 Case E-9/97, 10.12. I 998, Sveinhjornsdlfir. para 59. 34 See further the comments by Arnesen on Art. 19 (agriculture) and 20 (fisheries) EEA in Part II of this book. 35 Convention between Denmark. Finland. Nonvay and Sweden concerning the waiver of passport control at the Intra-Nordic frontiers. Signed at Copenhagen. on 12 July 1957. 36 The agreement on Iceland's and Norway's association with the implementation, application and development of the Schengen acq11is, as based on the Council Decision 1999/439/EC of 17 May 1999. was signed between Iceland. Norway and the EU on 18 ~lay 1999. 37 Bulgaria. Croatia. Cyprus and Romania have still not been admiued into the Schcngen Areas, whereas Ireland and the CK have permanent opt-outs.

The Editors

7

Introduction

EFTA States actually are deeper integrated into EU policies than some of the EU's own Member States. 22 The Schengen association agreements connect all four EFTA States to the EU Area of freedom, security and justice (Arts. 67-89 TFEU). 38 Other important agreements within this field include association agreements to the so-called Dublin Asylum System. Iceland and Nor.vay concluded a joint agreement with the EU in 2001, 39 whereas Switzerland concluded a separate one in 2004 (which entered into force in 2008). 40 Liechtenstein acceded to the latter agreement in 2008 (with effect as of 2011 ). 41 To this comes a long list of agreements related to criminal matters and police cooperation, such as, e.g., Operational Agreements with Europol;-1 2 agreements on cooperation with Eurojust4 3 and the European Union Agency for Law Enforcement Training (Cepol); agreements with the EU on the application of certain parts of the Prilm regime on cross-border cooperation to combat terrorism and cross-border crime-14 and with respect to mutual assistance in criminal matters 45 as well as the (still not effective) Agreement on Icelandic and Norwegian affiliation to the European Arrest Warrant. 46 23 Also part of the EU Area of freedom. security and justice are the EU rules on jurisdiction and the recognition and enforcement of judgments in civil and com38 This is briefly described in NOU 2012:2 Utenfor og innenfor. l\'orges avtaler med EU. pp. 72-74. 39 Agreement between the Kingdom of Norway and the Republic of Iceland and the European Community concerning the criteria and mechanisms for establishing the State responsible for examining a request for asylum lodged in a member State or in Iceland or Norv.'ay, 19 January 2001. 40 Agreement between the European Community and the Swiss Confederation concerning the criteria and mechanisms for establishing the State responsible for examining a request for asylum lodged in a Member State or in Switzerland. 26 October 2004. 41 Protocol between the European Community, the Swiss Confederation and the Principality of Liechtenstein on the accession of the Principality of Liechtenstein to the Agreement between the European Community and the Swiss Confederation concerning the criteria and mechanisms for establishing the State responsible for examining a request for asylum lodged in a Member State or in Switzerland, 28 February 2008. 42 Agreement between The Republic of Iceland and Europol. 28 June 2001; Agreement on Operational and Strategic Co-operation between the Principality of Liechtenstein and the European Police Office, 7 June 2013; Agreement between The Kingdom of Norway and Europol, 28 June 2001; Agreement between The Swiss Confederation and Europol, 24 September 2004. 43 Agreement between the Republic of Iceland and Eurojust, 2 December 2005Agreement on Cooperation between Eurojust and the Principality of Liechtenstein, 7 June 2013; Agreement between the Kingdom of Norway and Eurojust, 28 April 2005; Agreement between the Swiss Confederation and Eurojust. 27 November 2008. 44 Agreement between the European Union and Iceland and Norway on the application of certain provisions of Council Decision 2008/61 SiJHA on the stepping up of cross-border cooperation. particularly in combating terrorism and cross-border crime, 26 1'ovember 2009. At the time of writing. the agreement has still not entered into force. Liechtenstein and Switzerland are negotiating a similar agreement. 45 Agreement between the European Union and the Republic of Iceland and the Kingdom of Norv.·ay on the application of certain provisions of the Convention of 29 May 2000 on Mutual Assistance in Criminal Matters between the Member States of the European Union and the 2001 Protocol thereto, Agreement between EU, !>lorv.'ay and Iceland signed in Brussels 19 December 2003. Neither Liechtenstein nor Switzerland have so far concluded a similar agreement.

8

The Editors

The EFTA States, the £EA and the differe/11 views on the legal integration of Europe

mercial matters. Developments in this field necessitated an update of the abovementioned 1998 Lugano Convention. Thus, in 2007 a new Lugano Convention was signed. this time •.vith the EU as the sole Contracting Party on the EU-side and with the three EFTA States Iceland. Switzerland and Norway on the otherY In addition. Denmark is a Contracting Party due to the Danish opt out from this part of EU law. Notably, Liechtenstein is not a party to the Lugano Convention. The recast Brussels I Regulation of 2012 ( Reg. No. 1215/2012) has introduced some changes to the EU rules that mean that there is no longer full homogeneity between the Lugano and the Brussels Regimes, but so far without any call from the Lugano Convention's Standing Committee for an update of the Convention. Unlike the EEA Agreement and the Schengen and Dublin association agreements, the Lugano Convention lacks a simplified procedure that allows for updating of the agreement to keep up with changes within EU law. Also within the field of EU's Common Foreign and Securi~v Policy have the 24 EFTA States entered into several separate agreements with the EU. 48 As a particularly striking example, Norway has negotiated an opt-in to participate with military personnel in one the EU's battlegroups - the so-called Nordic battlegroup.~9 Typically, Norway also aligns itself with EU Council decisions on the field of foreign policy. All of the agreements betv.reen the EU and the EFTA States outside the scope 2S of the EEA Agreement demonstrate that the EEA Agreement alone today no longer meets the EFTA States' desires to be part of the cooperation that takes place within the framework of the EU. At the same time, however, the absence of any interest in the EFTA States for similar affiliation to EU policies in the fields of agriculture, fisheries, the customs union, the banking union, the economic and monetary union etc. demonstrates that their status as non-members of the EU allows them to 'cherry pick'. The price to pay is, as already mentioned, the absence of genuine influence in the fields in which they choose to enter into agreements of association with the EU. In parallel to, and at least partially as a side-effect of, the development of EU- 26 EFTA relations, the EFTA as such has also been revitalized. The EFTA secre46 Agreement between the European Union and the Republic of Iceland and the Kingdom of Norway on the surrender procedure between the Member States of the European Union and Iceland and Norway, 28.6.2006. At the time of writing. this agreement has still not entered into force. 47 Convention on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters. 30 October 2007 (entry in force I January 2010). It expands the applicability of the Brussels I regulation (Council Regulation 44/2001) to the mentioned non-EU members. 48 The EU"s Agreements with Norway in this field are briefly described in NOU 2012:2 Utenfor og innen(or. Norges ai-taler med EU, pp. 74-75. 49 \1emorandum of understanding between the Ministry of Defence of the Republic of Estonia and the Ministry of Defence of the Republic of Finland and the :'vlinistry of Defence of the Kingdom of Norway and the Government of the Kingdom of Sweden concerning the principles for the establishment and operation of a multinational battle group to be made avai !able to the European Union. 17 May 2005.

The Editors

9

Introduction

tariat plays a crucial role in the daily management of the EEA Agreement and has been strengthened accordingly. Furthennore, in an attempt to keep up with the EU's common commercial policy, the EFTA States have jointly negotiated and concluded numerous free trade agreements with third countries. Currently, the number of such agreements is 27, covering 38 countries. 5 Finally, the EFTA Convention was completely overhauled in 2001 and now includes provisions on the free movement of persons and progressive liberalization of trade in services and of investment, essentially reflecting developments in the bilateral agreements between the EU and Switzerland.

°

V. The role of the EEA Agreement today. Future denlopments 27

As can be seen from this overview, there is today a whole web of agreements

between the EU and the different EFTA States. From an EU perspective, the EEA Agreement and the other agreements between the EU and one or more of the EFTA States can be seen as projections of EU nonns and values onto neighbouring States. 51 Seen from the EFTA States, the perspective is rather one of shared values, mutual interests and practical considerations as to hmv to structure cross border relations with close neighbours. 28 Notwithstanding the importance of the other agreements, the EEA Agreement still stands out as by far the most important one for the three participating EFTA States Iceland. Liechtenstein and Norway. 25 years on, the EEA has proven surprisingly resilient. Defying the discouraging predictions made by leading commentators at the time of its creation, 52 the EEA Agreement has accomplished its aim of extending (much of) the EU internal market to the participating EFTA States. However, the Agreement's resilience is hardly due to it being so much better than perceived by those predicting its demise 25 years ago, but rather to the fact that the remaining EFTA States have proven to be far more pragmatic than any commentator back in the early I990's could ever have imagined them to bc. 53 29 Notwithstanding, the inherent tensions brought about by the attempt to integrate the EFTA States into the EU internal market without any transfer of sovereignty are still there. Furthcnnore, the independent 2012 EEA review com-

50 For updated information, see http:!/www.efta.int/free-tradeifree-trade-agreements. Norway has only negotiated two FTAs on its own. They are the free trade agreements with Greenland and the Faroe Islands. both having a special Nordic perspective. 51 See Hillion, Integrating an outsider: An EU perspective on relations with Norway, Europautrcdningen Rapport# 16, August 2011, see pp 6, R, ..,he EEA is, from an EU point of view, a nearly perfect tool of norm projection" (p 13), 14. 52 Sec, eg, Schermcrs' prognosis in his annotation of the ECJ's Opinions 1'91 and J/92 in 29 Common Market Law Review ( 1992), pp. 991-1009, I 005: "It is unlikely that the compromises found will lead to a system which remains workable in the long term". Similarly Cremona 'The "dynamic and homogeneous" EEA: Byzantine structures and various geometry' 19 European Law Review ( 1994) pp. 508-526, 524. 53 See further Fredriksen and Franklin. 'On Pragmatism and Principles - The EEA Agreement 20 Years On', 52 Common Market Law Review (2015) pp. 629-{,84.

10

The Editors

The EFTA States, the £EA and the different views on the legal integration o/Europe

missioned by the Norwegian government and the Commission's follow-up review from an EU perspective both revealed that the functioning of the EEA is not quite as unproblematic as suggested in previous conclusions of both the EEA Council and the EU Council.5 4 There are tensions both within the EFTA pillar55 and between the EFTA States and the EU. Subsequently, in 2014, the EU Council noted with concern 'the recurrent backlog and delays incurred during the entire process of incorporation of EU legislation into the EEA Agreement, as well as in the implementation and enforcement of relevant legislation in the EEA EFTA states' and strongly emphasizes 'the need for renewed efforts in order to ensure homogeneity and legal certainty in the European Economic Area'. 56 The 2016 assessment was a bit more positive, but the Council still noted that 'there is still an important number of legal acts for which the compliance date in the EU has passed but which have not entered into force in the EEA EFTA States as their incorporation into the EEA Agreement has been delayed' .57 The Council thus stressed the need for the EFTA States to 'continue their efforts towards a streamlined incorporation and application of EEA relevant legislation, in order to reduce the number of pending acts for incorporation and to ensure legal certainty and homogeneity in the EEA.' Also, developments within the EU in more recent years have given rise to 30 new challenges in the EEA. The development of Union citizenship, the entry into force of the EU Charter of Fundamental Rights, the blurring of the lines between the law of the internal market and other parts of EU law, the 'agencyfication' of the EU and the development towards closer cooperation between national authorities of the Member States, to name only some of the most important, all present challenges to the functioning of the EEA. At the time of writing, the EU has still not recovered from the 2008 financial 31 crisis and not even begun to absorb the shock of the 2016 Brexit vote. Predictions about the future of EU-EFTA relations, or indeed that of the EU itself, are almost impossible to make. Still, it is to be noted how the term 'multispeed Europe' has gained renewed attention. Based on the history of EFTA-EU relations, it may be objected that it would be more precise to talk about different levels of integration. as views differ not only with regard to the speed of the integration

54 1'OU 2012:2 Utenfor og innenfor. Norges avtaler med EU; European Commission Staff Working Document 'A review of the functioning of the European Economic Area', Brussels, 7 December 2012 (SWD (2012) 425 final). 55 In Iceland. some diplomats have opined that 'their Norwegian counterparts on occasion seem lo forget that they are in a binding agreement with two smaller partners and that Norway, as the big power within the EFTA/EEA, is prone to operate alone on issues that are a concern to all of them', see Bergmann, Jee/and and the £EA /994-20/1, Europautredningcn Rapport# 7, '.\larch 2011, p 17. 56 Council conclusions on a homogeneous extended single market and Eli relations with NonEU Western European countries. I 6 December 2014, para 32. See also Helgadottir and Einarsdottir 's report on Iceland in Part I of this book. 57 Council conclusions on a homogeneous extended single market and EU relations with NonEU Western European countries, 13 December 2016, para. 42.

The Editors

II

Introduction

32

.B

.14

35

process but also the ultimate goal of the whole enterprise. Tenninology aside, the future of European integration may come in different versions. both within and outside the EU. As to the EFTA, the prospect of UK re-entry is not necessarily far-fetched, even though UK membership of the EFTA pillar of the EEA seems to be off the agenda - at least as anything more than a temporary crisis-solution if the negotiations for a future UK-EU agreement drag out. The question of Scotland's possibility of becoming a member of the EFTA pillar of the EEA cannot be ruled out. 58 even though the necessary backing by the UK government may be difficult to get. The EU's push for a framework agreement with Switzerland may well in the end lead to something which resembles the institutional structure of the EEA - perhaps even with a kind of Swiss 'docking' to the EFTA Surveillance Authority andior the EFTA Court (although the sv.,iss at the moment appear to favour the ECJ above the EFTA Court). 59 A bold. but perhaps not completely far-fetched proposition would be for an updated and broadened 'EEA 2.0' which includes several of the other EU-EFTA agreements mentioned above (Lugano, Schengen, Dublin etc.)60 and introduces a genuine joint decision-making procedure. It would solve the problem with the 'static' character of some of the current agreements (such as the Lugano Convention) and remedy the democratic deficit of the EEA, thus potentially turning the EEA into a permanent solution for those European states less enthusiastic about deepened integration within the EU . So far, Iceland, Liechtenstein and Norway have been very reluctant to open up for renegotiation of the EEA Agreement - acknowledging that the bargaining-power on the EFTA-side is smaller now than it was in 1990-91 and fearing a range of tough demands from the EU-side. However, as demonstrated by several of the contributions to this commentary, 25 years after it was signed. the need for an 'overhaul' of the EEA Agreement is growing. Rather than just leave the matter to the courts, the Contracting Parties will sooner or later have to acknowledge their responsibility as masters of the Agreement and deal with the challenges to the continued success of the EEA. If a genuine joint decision-making procedure is off the table, the EFTA States' could prevent the opening Pandora's Box by limiting the discussions from the outset to a mere update of the Main Part of the EEA Agreement as it stands today - thus leaving the grand debate concerning the EFTA States' future relationship to the EU for another day. Grand or not. any debate about the future of EFTA-EU relations has to be based on a thorough understanding of EEA Agreement as it stands and functions today. This commentary on the Agreement is intended to provide just that.

58 See the Scottish government's discussion paper Scotland's Place in Europe, Edinburgh. 2016. 59 See the report by Pirker in Part I of this book on Swiss-EU relations. 60 As suggested by the Committee reviewing Norway·s relationship to the EU, see the concluding chapter of !'JOU 2012:2 l./lenfor og innenfor - 1\/orges avtaler med EU.

12

The Editors

PART I: General Reports Iceland and the EEA I. Introduction ............................. . II. Constitutional issues concerning the EEA Agreement . . . . . . . . . . . . . . . . . . . . . . . . . I. Acceding to the EEA: constitutional matters in 1992.............. 2. Developments since 1992.......... 3. Proposed constitutional amendments................................ Ill. General Impact ofEEA on Icelandic law: Impact on legal theory............ IV. Incorporating and Implementing Eli Acts - How is Iceland Doing?......... I. Incorporating EU Acts into the EEA Agreement - Why the Increased Backlog?.................

3 3 8 13 18

2. Increased Implementation Deficit V. Legal Effects ofEEA Law on Icelandic La\\'............................... I. No Direct Legal Effect. but Obligation to Comply with Principles of Uniform Interpretation.......... 2. Precedence of EEA Law over Icelandic Law.......................... VI. Conclusions.............................. VII. Literature.................................

42 48

48 56 76 76

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25

I. Introduction "The EEA Agreemor Bjorgvinsson. Stefan Mar Stefansson and Vioar Mar Matthiasson on the constitutionality of joining the Schcngen Agreement. Their conclusions arc summarized in pskj. 1176, 122. loggj.p. I 997-1998. Available at http:i/www.Alpingi.is/altext/l 221sil 176.html and the opinion of Ragnhildur Helgadottir as to whether certain provisions in proposed Eli legislation concerning electronic communications arc consistent with the Icelandic Constitution and the role of the EFTA Surveillance Authority, 20.5.08, (on tile with authors and PFS - the Post and Telecom Administration in Iceland).

Helgad6ttir/Einarsd6ttir

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PART/: General Reports

the delegation must not lead to a derogation from the constitutional rights of the citizens; and the delegation must be retractablc. 8 One can argue that the importance of these conditions - and their practicality - varies widely and it is possible that this list has changed in the intervening years. But this has been used and amongst the different issues evaluated under this standard,9 one can name a new Competition Act (in 2004-2005), 10 the Schengen agreement (1997-1998), Arts. 5-7 and 11-13 of the proposed Regulation establishing the European Electronic Communications Market Authority (2008) and the European System of Financial Supervision (2012). 11 In at least two of those cases 12 - the European System of Financial Supervision and the EECMA - the intended changes were held to go beyond what the constitution permits. In the first case, due to the delegation's scope not being sufficiently limited or the delimitations clear and in the second one due to the same reason and because there was no precedent for delegation of the kind suggested there. 13 The opinion on the constitutionality of the European System of Financial Supervision mentioned especially the need to amend the constitution so as to permit delegation, as \Veil as the risk of cumulative delegation going beyond what is constitutionally acceptable, even if any single instance of delegation does not. 14 11 Indeed, it has been discussed in public and legal debate since at least the early 2000, that the EEA Agreement gives lead to constitutional questions. In a 200 I interview in the main Icelandic newspaper, Norn·egian law professor Eivind Smith noted that the EEA Agreement had been a ,,constitutional catastrophe." 15

IO

8 Bjorgvinsson 1992, pp. 478-479. 9 For years, most recently in 2014. the main constitutional questions arising out of the EEA Agreement each year were mentioned in the annual report of the Foreign Minister to Parliament. Sec c .g. https:iiwww. utanri kisraduneyti. isimedia·'utn-pdf-skj ol/Sk yrsla-radherra-2014. p df#page=34, p. 35. IO See e.g. the opinions of Bjorn I>. Guomundsson and Guomundur Alfrcosson. They are Annexes II and 111 to pskj. 30. 116. loggj.p. I 992. 11 The Opinion of Bjorg Thorarcnsen and Stefan Mar Stefansson on the constitutionality of the European System of Financial Supervision. Available at https:/Niww.utanrikisraduncyti.is/mc dia'FrettatilkynningiAlitsgcrd_ BTh _ SMS.pdf. 12 See http://blog.pressan.is/morduri2014/01/ I 2/stjornarskra-i-evropustefnu-00,, where more examples of delegation going beyond what is viewed as permissible are listed. See also Margret Einarsdottir, ·Nyjar askoranir fyrir framkva:md EES-Samningsins' [New Challenges in the Execution of the EEA Agreement), Timarit logfrreoinga.forthcoming 2017. 13 In light of the discussion. political and legal. when Iceland acceded to the EEA treaty and the worries evidenced over foreign access to resources in the parliamentary records. it seems clear that this delegation goes much further than anyone envisioned at the time. There are thus no precedents for concluding that this delegation would fall within the customary rule allowing derogation from Arts. 2 and 14 of the constitution. There is therefore serious doubt as to whether Alpingi would accept such delegation and whether it can constitutionally do so. The opinion of Ragnhildur Helgadottir. I 998, p.23. 14 See The Opinion of Bjorg Thorarensen and Stefan Mar Stefansson 1992, p. 39. 15 'Norra:n pingra:oishefo er stcrk' [The Nordic Tradition of Parliamentarism is strong) \1orgunblaoio 6.2.2001. Available at http:iiwww.mbl.is/greinasafnigrcini587554i.

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Helgad6ttir!Einarsd6ttir

Iceland and the £EA

In 2002-2003, J:>or Vilhjalmsson and Kristrun Heimisdottir published articles discussing these matters and the latter in particular argued that "The accession to the £EA was based on the condition that it did not delegate so,•ereignty and that there wa., no need to amend the con,tilution because of ii. The main reason for holding !hat 1hi., condition was fulfilled was that the theory of dualism [. ..} would ensure that EU legislation wo11ld enter into force in Iceland according to /raditional formal mean., hut not otherwise. Dualism did not pro,·e a strong fort against the tide of £EA-legislation since other means of implementing £EA legislation had in fact been enacted with the treaty. In practice, dualism lost out to them. The Constitwion, no. 33//944, does not pro,·idefor delegating sovereignty. The £EA Agreement entailed that kompetenz-kompetenz was limited in the field, covered by the Agreement, a., an international organization that Iceland is not party to holds legislative power. This puts great stress on the ela.,ticity of the cornritution and weakens the principle of legality which is the basis of rhe role of law and democraq in the country. " 16

She concluded, and rightly so in the view of these authors, that even acceding to the EU after a referendum would not solve the constitutional problems: 'The legal system has changed irrespective of [referenda] and the problem concerning legality must be solved through multiple means.' 17

12

3. Proposed constitutional amendments

In the context of EEA cooperation, a committee on constitutional rev1s1on, 13 which was active from 2005- 7 noted, in its report, that "When foreseeing increased international cooperation in the future, it is natural to prepare and implement constitutional amendments to prevent specific doubts being raised every time the decision is made to cooperate in a certain area." 18 Successive constitutional committees have agreed. The specialist committee of 7, which was asked to make recommendations early in the constitutional amendment process of 20I0-2013 noted that it had repeatedly been discussed whether and how the Icelandic constitution should account for more international cooperation. 19 It went further than previous committees and wrote: The commilleefind, ii urgent. that Icelandic conslilutional law allow the delegation of state powers within certain limits. hut also that the direct participation of the nation in mch decisions he ensured ... In this context, the development of constitutions of all other Nordic countries. and indeed most European countries after 1950 mu.51 he noteJ_W

The Constitutional Council which drafted a whole new constitution in 2011, included in its draft a provision on "Devolution of state power" permitting "the devolution of state power to international institutions where Iceland is a member for the purpose of peace and economic cooperation ... " The article stipulated that 16 Kristnin Heimisd6ttir, 'Stj6marskrarbundio fullveldi islands' (2003) Timarit /6gfraoinga I, p. 54. 17 Ibid., p. 56. I 8 See Endurskooun stj6marskrarinnar: Afangaskyrsla nefndar um cndurskooun stj6marskrar lyoveldisins islands, febniar 2007. [The Revision of the Constitution: Report of the Committee on the Revision of the Constitution of the Republic of Iceland] Available at http://www.alt hingi.is/altext'l 33/sipdf/ 1293.pdf. I9 Slcy;rsla stjornlaganefndar 20 I I [Report of the Constitutional Commiuion 20 I/]. I. I 04. 20 Ibid., 106.

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PART 1: General Reports

the devolution of state power should always be withdrawable and that a referendum was needed when Alpingi made decisions under this article. 21 None of these amendments was successful. 15 In 20 I 3, the Minister of Foreign Affairs stated in Parliament that Iceland might need to retreat from the EEA Agreement if the amendment on devolution did not pass. 22 A 2014 report from a new constitutional committee emphasized ... that there exists hroad political consens11s concerning the need.for the comti/11/ion to disc11s., the po-Hihility. limits and practice of delegating state powers in the inlerests of peace and international cooperation. One can consider that such provisions are to he_fo11nd in most European consti/11/ions. inc/11ding the consti/11l ions c,( all other Nordic co11ntries. Then, Icelandic legal scholars and civil ser1•ants have repeated~v pointed 0111 the disach·antages of not having such a provision. inter alia regarding Iceland's participation in the EEA Agreement. "! 3

In spite of this view, the committee did not propose an amendment concerning this matter. The Icelandic constitution thus remains unchanged. and the customary rule pennitting delegation. described above, remains the only constitutional rule to follow. 17 The fact that Iceland has, in spite of broad political consensus on the necessity of the matter not managed to amend its constitution so as to define and clarify permissible delegation of state powers is very hannful. Vis-a-vis the EEA, it creates legal uncertainty which can only be resolved on a case by case basis and generally not before courts, so foreseeability is low. Domestically, it undennines the constitution and respect for it; principles of interpretation (as the state bases decisions on constitutional interpretations which are questionable) and the rule of law (due to foreseeability and hierarchy ofnonns issues). None of this is really disputed in Icelandic legal circles. In addition. it does. in the opinion of the authors, render parts of legal theory (particularly concerning sources of law and the primacy of the constitution) illusory. The main political reasons for the failure of any such amendments are worries from certain political parties that such a provision would enable Iceland to join the EU without a referendum. Of course, a provision on delegation need not do that; its effect depends on the drafting. But this fear, coupled with popular lack of support for EU accession, has so far meant that none of the drafted provisions has been adopted. In a very real sense, Iceland's constitutional status within the EEA Agreement and the integrity of the Icelandic constitutional system are thus collateral damage in a political disagreement on EU membership. 16

2 I Art. 111 of the Constitutional Council's Proposal. 22 ,Deilt um framsal rikisvalds i stj6mskipunarlogum: Getum purft ao hverfa fra EES-aoild' [Arguments about delegation of stale powers in constitutional law: May need to leave the EEA] Vi sir 1.2.2013. Available at hnp:/iwww.visir.is/dcilt-um-framsal-rikisvalds-i-stjomskipunarlog um--gctum-thurft-ad-hvcrfa-fra-ces-adild/article/2013702019935. 23 Sec Star( stjornarskrcirne(ndar - I. cifaniaskfrsla (06/2014) (The Work of the Constitution Committee - I. Report) 14.

18

Helgad6ttir!Einarsd6ttir

Iceland and the £EA

III. General Impact of EEA on Icelandic law: Impact on legal theor~' It is of course undisputed that the EEA has immensely influenced the law in EEA areas. The question of the impact of the EEA cooperation on the legal system in general - the way laws are v.Titten, methods of interpretation and the relative weight of sources of !av,, - has received much less attention in Icelandic legal theory. Obviously, the EEA Agreement has meant that legislation is now enacted in Iceland, which has different roots than being written in the Icelandic ministries. This is not totally new - Nordic legal cooperation preceded the EEA Agreement by close to a century - but the fact remains that a sizeable chunk of Icelandic legislation stems from the EEA Agreement. This matters when looking at and analysing legal sources. However, because EEA law is implemented through traditional channels, this difference is sometimes omitted entirely in discussions of legal sources. It remains the opinion of these authors that the influx of rules stemming from an international agreement is an important change in the legal system, irrespective of the modes of implementation. On a related note, the EEA is, along with the European Convention on Human Rights, generally viewed as having weakened dualism as the default mode of thinking about the relation bel\veen domestic and international law. From the "hard" theory of dualism practiced by the Icelandic Supreme Court in the 1980 s, 24 where the Court refused any application of the ECHR, Icelandic law has moved to a stage where the relationship between domestic and international law is much murkier, and where plenty of court decisions do "not sit easily with the principle of dualism". 25 No dominant mode of thought has emerged on those issues, however. Another issue, which is very undertheorised, is the impact of the EEA co-operation on legal interpretation. Until further studies, including statistical ones, have been undertaken, one can only offer a few tentative suggestions. First of all, it seems likely that the EEA has played a role (along with the ECHR, constitutional changes and changes in legislative methodology) in opening up Icelandic law to influences from elsewhere. International law and foreign domestic law are cited more, and used more frequently in interpretation than before 1990. 26 In the absence of further studies, it is however impossible to distinguish the influence of the EEA in particular. As regards the areas covered by the EEA, the Agreement has obviously led to substantive changes in legislation. In those areas, the Advisory Opinions of the EFTA Court have proven very intluentia1 27 and the Supreme Court, as well as lower courts and parties to cases, have cited the ECJ directly. But the volume of

24 Sec e.g. Hrd. 1985.1290. 25 Davio Thor Hjorgvinsson, The Intersection of National law and Domestic law (Edward Elgar 2015)p.83. 26 See. as regards constitutional judgments. Ragnhildur Helgadottir, ,Afstaoa domstola til hlutvcrks sins vio mat a stjomskipulegu gildi laga - proun sioustu ara· [Judicial Review, Recent Developments], (2002) 55 Ulfljotur I.

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PART I: General Reports

legislation in these areas has also increased dramatically compared to pre-1994. This suggests (and once again this is only a suggestion) that there is less need for courts to resort to analogy, unwritten principles of law, etc. This also suggests that the rules in these areas are more detailed than they were before, which can be a systemic change. The "legal standard" approach - with broadly worded provisions which take their substance from other norms - which characterized Icelandic law for a while, may then be retreating. 22 It seems, although this too, needs more substantiation, that Icelandic law is now written in a manner more similar to EEA law. Definitions of terms and objectives of legislation are now sometimes found in the legislation itself, which is a novelty. Although some changes in the writing of Supreme court opinions seem evident in the last 25 years, mostly in favour of longer and more reasoned opinions compared to the very short, almost summary, court opinions that characterized Danish and Icelandic law through the 20th century, this is undertheorized and no links have been made to the EEA. 23 In a 2007 report. Althingi estimated that roughly 20% of Icelandic legislation stemmed directly or indirectly from the EEA cooperation. 28 This estimate is likely too low. Firstly, the volume of EEA legislation implemented in Iceland pr. year, has doubled now compared to 2007. 29 Secondly, this is lower than the approximately 30% of legislation that Europautredningen in Norway suggested in 20 I 2 was influenced in whole or in part by the EEA. 30 24 To sum up, it was stated already in 2003 that the EEA cooperation had fundamentally changed the Icelandic legal system. 31 These authors agree that the constitutional issues arising from the EEA cooperation are important and impact the constitutional system far beyond the scope of EEA legislation. Also, that the influx of rules stemming from international cooperation and the \veakcning of dualism have opened up Icelandic law to foreign domestic and international law with inherent complications. HO\vever, we find that there is not enough infonna27 Sec l>orgeir Orlygsson, ,Hvemig hefur island brugoist vio akvorounum EFTAdomstolsins' [How Has Iceland Reacted to EFTA Court Decisions"] (2004) 54 Timar-it logfrceoinga 412; Davie\ !>or Bjorgvinsson, ,Application of Art. 34 of the ESATourt Agreement by the Icelandic Courts' in Mario Monti, ed. Economic Law and Justice in Times of Globalisation: Festschrift for Carl Ba11denbacher Baden-Baden 2007; l>orgeir Orlygsson: ,.Iceland and the EFTA Court'" in Economic Lav.- and Justice in Times of Globalisation: Festschri(/ for Carl Baudenbacher (Baden-Baden 2007); Margret Einarsdonir, ,Rac'lgefandi a.lit EFTA-domstolsins - Raunveruleg ahrif i islenskum retti' (Advisory Opinions of the EFTA Court - Real Effects in the Icelandic Legal System)" (2012) 62 Timarit logfr1Eoinga 135. 28 Samantekt - Log sampykkt a Alpingi sem eiga ra:tur ao rekja til samningsins um Evropska Efnahagssva:oio [Report - Legislation enacted in Alpingi which stems from the EEA Agreement]. Skrifstofa Al~ingis. mars 2007. See https://wwv.'.forsaetisraduneyti.isimedia,Ymislegt.' Altingi _ -_ EES _ tengd _loggjof.pdf. 29 See the Annual report of the Minister of Foreign Affairs to Parliament 2016 https:/iw\\--V.'.utanr ikisraduneyti.isimedia/gunnar-bragifSky%CC%8 l rsla-utanri%CC%8 l kisra%CC%8 l dherra-til -Althingis-2016.pdflipage= 36 38. 30 Utenfor og innenfor - Norges avtaler med EU, NOU 2012: 2. Available at https:/'www.regjeri ngen.noino/dokumentcrinou-20 l 2-2iid669368/. See ch. 7. I. 31 Heimisdottir 2015.

20

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Iceland und the £EA

tion to state unequivocally that legal methodology or the legal system as such have changed. As suggested above, it is possible, but unsubstantiated.

I\". Incorporating and Implementing EU Acts - How is Iceland Doing? I. Incorporating EU Acts into the EEA Agreement - Why the Increased Backlog?

a) General The principal aim of the EEA Agreement is to expand the so-called internal 25 market of the European Union in such a manner that the four freedoms, i.e., the free movement of goods, the free movement of services, the free movement of persons, and the free movement of capital, do not solely apply to EU Member States, but also to the EEA EFTA States. 32 The basic objective is to establish a homogeneous European Economic Area which is founded on common rules and equal conditions of competition. 33 In order to attain this objective, it is necessary that the same rules regarding 26 the internal market apply to the EEA EFTA States as those that apply to the EU \iember States. The EEA Agreement contains clauses that have the same content as the basic clauses of the Treaty of the functioning of the European Union on the four fundamental freedoms. In terms of the EEA Agreement. secondary law of the EU, which EU institutions enact in areas that fall within the scope of the Agreement. ha,·e to be incorporated into the EEA Agreement as soon as possible. It is the principal role of the EEA Joint Committee to pass decisions regarding the incorporation of EU secondary law into the EEA Agreement. In accordance with Art. I 02 of the EEA Agreement, the EEA Joint Commit- 27 tee shall take all decisions regarding amendments to an Annex of the Agreement "as closely as possible" to the adoption by the Community of the corresponding new Community legislation, "with a view to permitting a simultaneous application of the latter as \veil as of the amendments of the Annexes to the Agreement". 34 In other words, the aim is that the secondary law which is found by the EEA Joint Committee to be EEA relevant, become valid simultaneously within the three EEA EFTA States and the EU Member States. 35

32 The EEA Agreement was signed on the 2nd of May 1993 by the European Economic Community and the European Coal and Steel Community and the \1ember States of these alliances on the one hand. and the EFTA Member States at that time, on the other hand. The accession of Switzerland to the EFTA State was rejected by a national referendum and Switzerland is therefore not a pany to the Agreement. The Agreement came into force on I January 1994. 33 See Section 4 of the Preamble of the EEA Agreement. A closer discussion of the objectives of the EEA Agreement can be found in the following book by Bjorgvinsson. 1992, pp. 40-42 and the book by Sigurc'Jur Linda! and Skuli Magnusson: Rettarkerfi Evr6p11samhand~ins og Evropska efnahagssva?Oisins [The legal system of the £11ropean Union and the £11ropean Economic Area]. Reykjavik2011,pp. 123-124. 34 See An. 102 of the EEA Agreement. 35 J\'orberg et al., £EA Lm,; 1993, p. 142.

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PART I: General Reports

Since the adoption of the EEA Agreement, the EEA EFTA States have been facing challenges regarding the incorporation of EU acts into the EEA Agreement in a timely manner. During the first years of the EEA Agreement, this task did not go very well. During 2000-20 I0, this task went acceptably well according to Contracting Parties. This is true despite the fact that a high proportion of the acts has consistently not been incorporated in a timely manner in accordance with Art. I 02 of the EEA Agreement. that is, prior to the adoption of the new legislation by the EU. Alternatively, the more realistic aim has been to attempt to keep the magnitude of the backlog of unincorporated acts to a minimum. 36 29 However, from 2011, the backlog has increased significantly. For example, during 2011-2014, about 418-544 legal acts had not been incorporated into the EEA Agreement, despite the fact that the compliance date had passed for these acts in the EU. Moreover, the compliance date in the EU takes place, on average, around 18 months prior to the equivalent incorporation date into the EEA Agreement. 37 If the incorporation of secondary [av..- takes too long, it is evident that the same rules do not apply in the EU and the EEA EFTA States. Thus, the primary objective of the EEA Agreement to create a homogeneous European Economic Area is jeopardised. 30 According to the authors. there are a few contributing factors that have exacerbated the problems regarding the incorporation of EU acts into the EEA Agreement. Regarding Iceland, it is clear that to a nation consisting of just over 300.000 people with an understaffed public administration. the task of executing the EEA Agreement is challenging. Furthermore, the economic crash in Iceland in 2008 has placed even more pressure on public administration and this has been accompanied by heavy cutbacks and an increase in pressing projects. As will be discussed in the next section. the extensive consultation process in the incorporation process in the Icelandic Parliament has also had the tendency to take a long time. 38 28

b) Increased Parliamentary Consultations during the Incorporation Process 31

Parliamentary consultation by the Parliament of Iceland increased significantly with the changes to the Rules Regarding the Parliamentary Process of EEA Mauers on 16 August 20 I 0. Acts that require legislative changes when implemented, have now to be discussed in the Parliament of Iceland, as part of the incorporation process, on three occasions prior to implementation into Icelandic law·.

36 Einarsdottir. Tpptaka atleiddrar loggjafar i EES-samninginn og innleieling i islenskan rett' [The incorporation of EU secondary law into the EEA Agreement and the implementation into Icelandic national law]. Timarit logfraeelinga 20 I 5, p. 558. 37 Halvard Haukeland Frederiksen and Christian N.K. Franklin. 'Of pragmatism and principles: The EEA Agreement 20 years on', CMLR 52 (2015). p. 658. 38 For funher discussion, sec the anicle by Einarsd6ttir. 2015, pp. 562-566.

22

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Iceland and the £EA

Firstly, parliamentary consultation takes place via the so-called standard sheet. that is, early in the incorporation process in cases where specialists employed by the ministries claim that the implementation of the specific legal act requires a legislative change to national law. This involves a comprehensive parliamentary consultation process that can take a long time. 39 However, it must be pointed out that there is no corresponding consultation process during this stage of the incorporation process in Norway. Similarly, as in Nonvay, approval by the Standing Committee on Foreign Affairs of the Icelandic Parliament takes place a few days prior to the meeting of the EEA Joint Committee that passes a decision regarding the incorporation of the legal act into the EEA Agreement. This approval process generally runs smoothly and without delay. However, occasionally the Standing Committee on Foreign Affairs requests the Minister of Foreign Affairs to postpone the incorporation of the act for further consideration. Experience has shown that this process takes many months whilst the acts await incorporation into the EEA Agreement. 40 As a final step, the legal act comes under consideration by the Parliament for the third time during the incorporation, if the legal act has to be incorporated into the EEA Agreement via constitutional requirements in accordance with Art. I 03 of the EEA Agreement. In the case of Iceland. legal acts have to be incorporated with constitutional requirements, if the implementation requires a change to legislation. Iceland has six months to lift the constitutional requirements. This part of the process also tends to take much longer than six months:H

32

33

34

35

c) New Challenges Facing the Execution of the EEA Agreement. There are more factors than those presented above that account for the incor- 36 poration delay. From the time of the signature of the EEA Agreement on 2 May 1992, the EU has undergone a lot of changes. However, the main part of the EEA Agreement has remained unchanged. Various changes within the EU has resulted in new challenges regarding the execution of the EEA Agreement and has caused delays in the incorporation process. For a long time, EU institutions more commonly adopted secondary law in 37 the fonn of directives. Hov.--ever, during the past years, regulations have become 39 According to the rules of the parliamentary proceedures of EEA maners. the process should take two weeks. but it seems. in practise, to take a much longer time, even monhts. Sec the Report of the Steering Commillee on the Execution of the £EA Agreement. Prime Minister's Office, December 2015, 37. 40 Report of the Steering Commillee on the Execution of the £EA Agreement, p. 38. It should be noted that the Foreign Affairs Committee of the Parliament has no legal authority to delay or stop the incorporation of acts into the EEA Agreement. The authority lies with the minister of foreign affairs to make a decision on whether a draft decision of the EEA Joint Committee should go before the Committee. cf. Art. 21 of the Constitution of Iceland. 41 Einarsdottir, 'Upptaka atleiddrar loggjafar i EES-samninginn - Hva0 er unnt a0 gera betur?' [The incorporation of secondary law into the EEA Agreement - What improvements can be made?] Timarit logfr.e0inga. pp. 24-25.

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PART I: General Reports

the most common fonn of secondary law. 42 Regulations are directly applicable in the Member States of the EU 43 and generally take effect 20 days after publication of the specific regulation in the Official Journal of the EU.4-1 In comparison, the Member States invariably receive a certain time limit to implement directives into national law after adoption by EU institutions in accordance with Art. 288 of the Treaty on the Functioning of the European Union. 38 Prior to a decision by the EEA Joint Committee on the incorporation of a legal act into the EEA Agreement, preparation within the EEA EFTA States takes place, i.e. consultation with the parliament of a state. It is inevitable that this process takes a long time. In cases where regulations apply, it is clear from the discussion above that the time that the EEA EFTA States have to prepare for the incorporation of a specific regulation into the EEA Agreement before the compliance date in the EU, is much shorter than in the case of directives. The increased shift from directives to regulations by the EU thus plays, without a doubt. a role in the increased backlog. 39 Secondly, it is undisputed that, over the past years, decisions regarding the rele\·ance of EU acts to the EEA Agreement have become increasingly difficult.45 One reason for this is that with the entry into force of the Lisbon Treaty, the so-called three pillar system of the EU was abolished. 46 With the abolishment of the three pillar system, the separation between the internal market legislation that is EEA relevant and other legislation became unclear inasmuch as such distinction is of no importance to the EU Member States any longer. 47 Consequently, it has become increasingly difficult to decide whether an act is EEA relevant and whether it should therefore be incorporated into the EEA Agreement. 40 As a final point, the number of EU agencies has increased significantly over the past few years and this development has resulted in increased constitutional complications in relation to the incorporation of EU acts into to EEA Agreement. The reason for this is that some of these agencies have the power to settle disputes among various EU Member States and pass decisions that are binding on individuals and legal entities of the Member States. 48 It is undisputed that

42 Sven Norberg am! Manin Johansson, 'The history of the EEA Agreement and the first twenty years of its existence'. in: Baudenbacher (ed.), The handbook of £EA law, 2016, p. 36. 43 M. Elvira \-icndez-Pinedo, EC and £EA lm,: A Comparative Srudy of the Effectiveness of European law (Groningen 2009), p. 62. 44 Fenger, Rydelski and van Stiphout, EFTA and EEA.2012, p. 132. 45 Report of the Institute of International Affaris, University of Iceland: Iceland's Accession ;Vegotiations. A report commissioned by the Icelandic Confederation of labor, the Confederation of Icelandic Employers. the Icelandic Federation of Trade, and the Icelandic Chamber of Commerce. Reykjavik 2014, pp. 115-116. Also see The £EA Agreement and Norway's other agreement with the EU, Meld.St. 5 (2012-20/ 3). 12. 46 Jean-Claude Piris, The Lisbon Trear-.·. A legal and political analysis (Cambridge 2010). p. 177. 47 Report of the lnstitllle of International Affaris. University of Iceland: Iceland's Accession .-Vegotiations, p. 115 and European Economic Area, Joint Parliamentary Commillee, Report. The review of the £EA. Brussels 3.5.2012, p. 3.

24

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Iceland and the £EA

these types of decisions entail a transfer of power to international or~anisations. As mentioned in part 2, however, the Constitution of Iceland contains no pro- 41 vision that allows for the transfer of powers to international organisations. 49 The development described above has resulted in constitutional problems for Iceland regarding the incorporation process. 50

2. Increased Implementation Deficit Once a decision has been adopted by the EEA Joint Committee to incorporate 42 an EU act into the EEA Agreement, Iceland is required to implement the specific act into national laws in accordance with Art. 7 of the EEA Agreement. If the specific act has already entered into force in the EU Member States, the abovementioned requirement comes into existence the day after the decision by the EEA Joint Committee, alternatively on compliance date in the EU. 51 The implementation of directives into the national laws of Iceland has, since .0 the existence of the EEA Agreement, been a challenging task for the administration and the legislature. At times, this task has been completed successfully and Iceland has placed well in comparison with other EU Member States and other EEA EFTA States. However, there have also been times during which this task has not gone so well and over the past few years, Iceland has performed poorly in the implementation of directives into national law. Iceland places at the bottom in terms of the implementation deficit in comparison with all 28 EU Member States and the other EEA EFTA States. 52 Furthermore, the implementation of regulations into Icelandic national law has not been up to par since 2007. 53 However, relatively few infringement procedures against Iceland have been 44 initiated based on a "lack of conformity or incorrect application of EEA law" in 48 H. Frederiksen and C. Franklin, 2015, p. 676. Also sec Moncn Egcbcrg and Jarle Trondal, 'National Administrative Sovereignty. Linder pressure', in The European Union:~ Non-Members. Independence under hegemony (New York 2015), pp. 173-174 and p. 178. 49 Bjorgvinsson, 'Stj6marskrarakvre0i um framsal valdheimilda rikisins til alpj60astofnana' [The Icelandic Constitution and the Transfer of Powers to International Organisations], Ranns6knir i felagsvisindum JV. p. 2 I 9. 50 The incorporation of the EEA regulations on the supervision of financial markets took for example many years due to constitutional problems, see the proposal to the Parliament to make a declaration regarding its confirmation of the decision of the EEA Joint Committee to change Annex IX (Financial services) of the EEA Agreement (European rules on financial supervision). Parliamentary Document 1109 - Case No. 681, submitted to the 145 1h Legislative Session 2015-2016. 51 For funher discussion. see the anicle by Einarsd6ttir 2015, pp. 566-568. 52 Einarsd6ttir 2015, pp. 569-570. 53 The regulations as decided by the EU institutions have direct effect in the EC Member States. This means that the EU Member Stales do not have to implement regulations into their national law, as they arc binding in their entirety and they are directly applicable in all EU Member States without the need for further implementation according to Art. 288 of TFEU, sec \-fendcz-Pinedo 2009, pp. 57-58 and 62. This also applies to Liechtenstein which has a monist legal system, cf. "Internal Market Scoreboard", the EFTA-states. February 2007, p. 10. Therefore, it is only Iceland and Norn·ay that need to implement regulations into national law via specific measures.

Helgad6ttir/Einarsd6ttir

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PART/: General Reports

comparison to other EU Member States and other EEA EFTA States. since the entry into force of the of the EEA Agreement. That is, the main problem is not related to the qualil)· of the legislation implementing the Acts, it is rather due to delays with the implementation itself. 54 45 The EFTA Surveillance Authority (ESA) has voiced serious concerns with the performance of Iceland in the implementation of EU acts into Icelandic law. 55 The former President of ESA, Oda Helen Sletnes, stated in an announcement dated 28 February 20 I 4 that delays or failure to implement EEA law have serious consequences for the internal market. There are also various indicators that signal increasing EU impatience with Iceland's implementation deficit. 56 46 One of the factors that underlie the implementation deficit of Iceland is the small size of the administration. Another contributing factor is the incorporation problem as discussed above. Delays in incorporation result in a situation that once the secondary law has been incorporated into the EEA Agreement, the time limits for implementing the directives and regulations into the national laws of the EU Members States have passed. This means that on the same day as the EEA Joint Committee passes a decision, the deadline passes for the EEA EFTA States to implement the directive or regulation into their national law as was found in Case E-15112, 22. 7. I 3, Jan Anjinn Wahl v The Icelandic State. 47 It is not common practice, and very few cases can be found, where Iceland prepares for the implementation of secondary law into its national law prior to a formal decision being passed for the incorporation of that specific law into the EEA Agreement. It is therefore clear that the delay in the incorporation process leads to a delay in the implementation process. \'. Legal Effects of EEA Law on Icelandic Law

l. l\'o Direct Legal Effect, but Obligation to Comply with Principles of Uniform Interpretation

EEA law does not have direct effect in Icelandic law. In order for an individual or any legal entity to rely on rights protected by the provisions of the EEA Agreement, these rights have to be implemented into the domestic laws of Iceland. 57 49 With Act No. 2/ 1993, the main part of the EEA Agreement gained legal force in Iceland. According to Art. 7 of the EEA Agreement, Iceland has to implement regulations and directives that have been incorporated into the EEA Agreement into its national law. 50 As discussed in Chapter 2, the implementation of regulations and directives into Icelandic law has been a challenging task for the Icelandic administration

4!1

54 Einarsd6ttir 2015, p. 574 and p. 580. 55 See "Internal Market Scoreboard" from February and July 2014. 56 For funher discussion. see the Report of the Institute of lntemationul Affairs, University of Iceland: lceland'.f Accession Negotiations, pp. I09-110. 57 Mendez-Pinedo, 2009, pp. 163-164.

26

Helgad6ttir!Einarsd6ttir

Iceland and the EEA

and in the past few years this task has not been executed properly, as described above. Individuals and legal entities can sustain losses in cases where they cannot base their rights on regulations or directives that have not yet been implemented into national laws, or as a result of the wrong implementation into national laws. EEA law aims at safeguarding the rights of individuals and legal entities 51 against this situation. Thus, an obligation rests on the Icelandic courts to interpret applicable national law in light of the wording and purpose of the EEA rule as far as possible in order to attain the intended result of the EEA rule. This obligation rests on the Icelandic courts from the date on which the legal act has been incorporated in the EEA Agreement and the period for implementation has expircd.58 If however an act has been incorporated into the EEA Agreement, but the pc- 52 riod for implementation has not expired, national courts are still obliged to interpret national law in conformity \vith EEA law. This has been established by the EFTA court with reference to Arts. 3 and 7 of the EEA Agreement and Prot. 35. 59 The time factor (whether the implementation period has expired or not) thus seems to make little difference. The Icelandic courts have followed the above principle and interpreted the 53 provisions of national law in light of EEA law whenever possible. 60 If, on the other hand. the Icelandic law has such "clear and fixed subject matter that the textual interpretation is the only way then the principle of uniform interpretation of EEA law does not apply because it should not lead to an interpretation that one cannot use(/. contra legem)." 61 If, on the other hand. an individual or legal entity cannot rely on rights based 54 on an EEA rule - either because the rule was not implemented into Icelandic law or its implementation was wrong - and the national provision cannot be inter-

58 Pall Hreinsson. ·samr.emd EES-11ilkun' [Conform EEA-lnterpretation]. Timarit logfr.eoinga 2014, p. 276 and pp. 279-280. Also see C-212104, -U.06, Konstantinos. " ... where a directive is transposed belatedly into a ~ember State's domestic la"· and the relevant provisions of the directive do not have direct effect. the national courts are bound to interpret domestic law so far as possible, once the period for transposition has expired, in the light of the wording and the purpose of the directive concerned with a view to achieving the result sought by the directive, favouring the interpretation of the national rules which is the most consistent with that purpose in order thereby to achieve an outcome compatible with the provisions of the directive."

59 E-15/15 and E-15.'16, 10.5.16. Fran=-Josef Hagedorn and Vienna-life Lebenswrsicherung AG Vienna Life Insurance Gmup and Rainer Armbruster and Swiss Life (Liech1enstein), para. 9.

60 Sec, for example, the Supreme Court of Iceland Case ~o. 20li2011. 10.6.11, Kaupthing Singer & Friedlander (Isle of Man) Limited 1: Kaupjiing Bank hf However, there are judgments that cast doubt on whether the Icelandic courts have gone far enough in their obligation to interpret national law in conformity with EEA rules. for example, Supreme Court of Iceland Case No. 160.12015, 15.5.15, Gunnar V Engilherr.uon 1: islandfhanki hf 61 The Supreme Court of Iceland, Case No. 265!2013, 21.11.13, Prosecutor 1: Benedikt Eyjolfsson and Bilahuo Benna ehf For further discussion. see the article by Hreinsson, 2014. pp. 289-290.

He/gad6ttir!Einarsd6ttir

27

PART 1: General Reports

preted in conformity with the EEA rule, the individual or legal entity can use other remedies. 55 The judgment of Supreme Court of Iceland in the Case No. 236/1999, 16.12. 99, Er/a Maria Sveinhjornsdottir v Iceland, confirmed that individuals and legal entities have a right to claim damages, subject to the fulfilment of certain conditions, against the government of Iceland based on its negligence in the implementation of an EEA rule into national law. 62 This provides legal protection for individuals and legal entities, but only if the period for implementation has expired. 2. Precedence of EL\ La~ oYer Icelandic Law a)

Protocol 35

Even though an EEA rule, whether relating to a provision of the main part of the EEA Agreement or a regulation or directive, has been correctly implemented into Icelandic law, problems can arise. There can be a conflict between statutory law that provide legal validity to rules of the EEA Agreement and other statutory lav.·s - even younger laws. 57 During the negotiations of the EEA Agreement, the EEC emphasised63 that the supremacy rule of EEC law also applies to EEA la\\i. 64 However, the EEA EFTA States could not accept this rule because, among other reasons, it included a transfer of legislative power, which was considered incompatible with the sovereignty of the states. A compromise between these two opposing views can be found in the wording of Prot. 3 5 of the EEA Agreement: 56

"Prot. 35: iiWhereas thi.v Agreement aims al achie,·ing a homogeneou., E11mpeun Ec,momiorgeir Orlygsson. ,Iceland and the EFTA Court' in Mario Monti, ed., Economic LaH· and Justice in limes of Globalisation: Festschrififor Carl Ba11denhacher (Baden-Baden 2007) 225; Opinions on constitutionality of various acts: The opinions of Bjorn i>. Guomundsson and Guomundur Alfreosson on the EEA Agreement. Annexes II and Ill to pskj. 30, I I 6. loggj.p. I 992. Available at www.Alpingi.is/altext'l 16/sOO 30.html; The opinion of Davia i>or Bjorgvinsson regarding the constitutionality of a new Competition Act. incorporating new EEA rules. available in pskj. 883, 131. loggj.p. 2004-2005. Available at www.Alpingi.is/altext/l 3 l /s/0883.html; The opinion of Davio l>or Bjorgvinsson. Stefan Mar Stefansson and Vioar Mar Matthiasson on the constitutionality of joining the Schcngcn agreement. Their conclusions arc summarized in pskj. I 176, 122. loggj.p. 1997-1998. Available at http:!/www.Alpingi.is/altext/122/s/l l 76.html; The Opinion of Bjorg Thorarensen and Stefan Mar Stcfansson on the constitutionality of the European System of Financial Supervision. Available at https:/iwww.utanrikisraduneyti.is/frettir/nri7048 and https://www.utanrikisraduneyti.is/media/Frettatilkynning!Alitsgerd_BTh_SMS.pdf; The opinion of Ragnhildur Helgadottir as to whether certain provisions in proposed EU legislation concerning electronic communications arc consistent with the Icelandic Constitution and the role of the EFTA Surveillance Authority, dated May 20, 2008 (on file with authors and PFS the Post and Telecom Administration in Iceland).

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Liechtenstein and the £EA

Liechtenstein and the EEA I. Introduction ............................. . 11. Liechtenstein ·s path to joining the EEA ..................................... . III. Administration of the EEA Agreement ..................................... . IV Other agreements v.·ith the EU ........ . V. EEA law in the Liechtenstein legal order .................................... .. YI. Implementation of EEA law by Liechtenstein ........................... . I. Parliamentary involvement in EEA matters ....................... .

5 15 23

28

35

2. Implementation of EEA law ....... 3. Application of EEA law ........... VII. Liechtenstein's tailor-made arrangements ..................................... I. The special solution in the free movement of persons ............... 2. Other tailor-made arrangements ... 3. Explanations for and effects of tai!or-made arrangements ............. VIII. Conclusions .............................. IX. Literature .................................

43 48

55

56 60 66 70 73

36

I. Introduction With approximately 38'000 inhabitants the Principality of Liechtenstein 1s Europe's fourth smallest country. Liechtenstein has a sovereign history which goes back to 1806 when Napoleon established the Confederation of the Rhine. Due to its smallness, however, Liechtenstein has always been closely integrated with its surrounding countries. From 1852 to 1919 Liechtenstein was in a customs and currency union with the Austrian monarchy. After this customs and currency union ended with World War I, Liechtenstein built up an even closer regional union with Switzerland. It is based on the Customs Treat~· of 1923 1 but includes also many other agreements (concerning inter alia the treatment of foreigners, the enforcement of civil judgments, the control of medicines, air traffic, patent protection and the currency). From Liechtenstein's perspective, this regional union is a 'genuine success story as the economic actors of Liechtenstein gained access to the Swiss market and to the export markets that Switzerland had opened up through trade agreements'. 2 In addition to the close regional cooperation, Liechtenstein is also deeply cm- 2 bedded in European integration. On 2 May 1992, after long negotiations, representatives of the EU and its member states as well as of the countries of the European Free Trade Association (EFTA) signed the Agreement on the European Economic Area (EEA). Today, Liechtenstein finds itself as a member of the EEA half-way between Austria, a member of the EU, and Switzerland, which has stayed out of both the EEA and the EU. This country report analyses the specific feature of Liechtenstein's EEA 3 membership by combining the perspectives of political science and jurisprudence. In line with various other reports it concludes that Liechtenstein, due to an efficient bureaucracy, a favourable legal culture and some nexibility of the Et:, its EEA EFTA partners and Switzerland, is able to comply with the I LGBI. 1923 No. 24. 2 Christian Fromme It and Sieglindc Gstohl, Liechtenstein and the EEA: the Europeanization of a (very) small stale (Europautrcdningen. Oslo 2011) 8. Frommelt

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obligations set out in the EEA Agreement. In this regard. the EEA membership marks an important step for Liechtenstein in its 'quest for independence and recognition as a sovereign state'. 3 At the same time, by focusing on economic integration EEA membership provided for a pragmatic approach to European integration. Indeed, Liechtenstein has been able to tum its EEA membership into a boost to the economy. 4 The report will first give an overview of Liechtenstein's path to joining the EEA. Second, it will describe how Liechtenstein administrates its EEA membership. Third, it shows what other agreements Liechtenstein shares with the EU. In the remaining sections we will show hov.: the EEA is embedded in the legal order of Liechtenstein and address some specific features of the implementation of EEA law in Liechtenstein. Finally, we provide a brief overview of the tailormade arrangements of Liechtenstein. Chapter 8 concludes. II. Liechtenstein's path to joining the EEA 4

Historically speaking, Liechtenstein's desire to participate in international organisations was often met with scepticism. The most prominent example is the rejection of Liechtenstein's application to join the League of '.\'ations in 1920 due to country's small size, the delegation of some aspects of its sovereignty and the lack of an arrny. 5 Similar obstacles had to be overcome later on when joining the International Court of Justice (1950), 6 the Council of Europe ( 1978)7 and the United Nations ( 1990)8 as the first very small European state. 9 From the perspective of Liechtenstein's foreign policy, membership in international organizations has therefore always been seen as a strategy to safeguard Liechtenstein's independence and international recognition as the two main elements of the country's sovereignty. 6 Based on the Customs Treaty Liechtenstein delegated its treaty-making power in trade matters to Switzerland. As a result, Liechtenstein was initially not an independent contracting party of the EFTA. Instead, a special protocol of the EFTA Convention stated that the EFTA provisions also apply to Liechtenstein as long as the customs union with Switzerland persists. Liechtenstein was formally represented by the Swiss delegation to EFTA. The same applied to the negotiations leading up the 1972 Free Trade Agreement between the European Community (EC) and Switzerland, 10 though Liechtenstein was allowed to have a

5

3 Jacques Pelkrnans and Philip Bohler, The £EA Re1•iew and Liechtenstein s Integration StrateK\' (Centre for European Policy Studies, Brussels 2013) 12. 4 This section is partly based on Frornrnclt and Gstohl (n 2) 12-15. 5 Sieglinde Gstohl, F/exihle Integration fiir Kleinstaaten? Liechtenstein rmd die £11ropiiische Union (Verlag der Liechtenstcinischen Akadernischen Gesellschaft. Vaduz 200 I). 6 LGBI. 1950 No. 6. 7 LGRI. 1979 No. 26. 8 LGBI. 1990 No. 65. 9 Frornrnelt and Gstohl (n 2) 12. 10 LGBI. 1973 ~- 10.

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representative in the Mixed Committee. By contrast, from the very start in the 1980 s, Liechtenstein was invited to the "Luxembourg Process" which aimed at deepening the European integration. Moreover, the principality also took part in the informal exploratory talks about closer cooperation following Commission President Delors' 1989 initiative for an European economic area. Liechtenstein thus participated independently in this decisive stage of European integration. From the perspective of Liechtenstein the envisaged economic area with its 7 four freedoms as well as horizontal and flanking policies went well beyond the Swiss competences in the framework of the Customs Treaty. The completion of the EU's internal market and the establishment of the World Trade Organization (WTO) made it increasingly difficult to separate trade in goods from other matters of international negotiations which the treaty-making power delegated to Switzerland did not cover. In 1991 the Customs Treaty was thus modified to allow Liechtenstein its own membership in international organizations and agreements, provided that Switzerland ,vas also a contracting party. Liechtenstein joined the EFTA as well as the WTO and participated in the EEA negotiations in its own right. Hence, in the context of the new dynamics in European integration and the end of the Cold War, Liechtenstein emancipated itself from Switzerland within a few years and developed an own integration policy vis-avis the EU. Liechtenstein's accession to the EEA was the result of a lengthy and intense 8 domestic debate, facing serious opposition by the local manufacturing sector as well as numerous trustees and other actors within the finance sector. The opponents of an EEA membership used several arguments that were related to Liechtenstein's smallness, in particular, the lack of bargaining power and the lack of administrative resources. Put simply, for the opponents Liechtenstein was too small to join the EEA. Nonetheless, in September 1992, the Liechtenstein Parliament (Landtag) approved the EEA Agreement but decided to hold a national referendum. The Liechtenstein government set the date for the vote on the EEA Agree- 9 ment one week after the Swiss referendum on the same matter. The Swiss electorate and cantons rejected an EEA membership by a very narrow margin. Against all odds, 55.8 percent of the Liechtensteiners approved the EEA Agreement in the referendum. Of the possible "yes/no" combinations bet\\·een the two countries, this scenario was the most unexpected as the two economies seemed too tightly interwoven to permit a different choice of pol icy. As a result of the outcomes of the two referendums, the Liechtenstein govern- JO ment first had to renegotiate relations with Switzerland, then have the solution approved by the EEA partners and finally overcome the domestic ratification hurdle again. In March 1995, the Landtag approved several changes to the Customs Treaty and other agreements between Liechtenstein and Switzerland. The Customs Treaty now allowed Liechtenstein to join international organisations and agreements without Switzerland as intermediary. However, the parallel

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membership of Liechtenstein in two important economic and legal areas also required adaptations to the EEA Agreement. The solution of this "Gordian knot" was found in the innovative principle of parallel marketability, which allows products meeting either EEA or Swiss requirements to circulate in Liechtenstein.11 11 Due to the changes to the Customs Treaty and the EEA Agreement the members of the Landtag agreed to hold a second referendum. It took place in April 1995 after the approval by the Landtag and vivid campaigns in favour and against EEA membership. In a remarkable show of independence, Liechtensteiners voted again in favour of European integration. With 55.9 percent "yes" votes the support was about the same as in I 992. On I \,fay 1995 the principality became a full EEA member and thus achieved its first own treaty-based relationship with the EU. 12 Several factors allowed to "square the circle" of participating in the EEA's enhanced free trade area while maintaining the bilateral customs union with a non-member. 12 The small size of Liechtenstein made it quite easy to observe the trade flows. The need to adapt the bilateral relations was mainly restricted to the free movement of goods and the differences between EU and Swiss rules that could potentially lead to conflict were relatively small. The political will on all sides to honour the Liechtensteiners' wish to join the EEA despite Switzerland's rejection was strong - the Swiss had no interest in complicating their future bilateral negotiations with the EU while the EU was keen to demonstrate its understanding for the concerns of small states after the Danish "no" to the Maastricht Treaty. Finally, Art. 12l(b) of the EEA Agreement already recognized the regional union between Liechtenstein and Switzerland as being in conformity with the EEA Agreement to the extent that it did not impair its functioning. It would indeed have been paradoxical to force these two countries to reintroduce border controls after seventy years. Moreover, an additional EEA EFTA country was most welcome in view of the EU accession negotiations with Austria, Finland. Norway, and Sweden. D The immediate effect of the accession to the EEA was a fast increase in the number of Law Gazettes published per year from 86 in 1994 to 233 in 1995. To cope with the new obligations, Liechtenstein's public administration had to increase its resources. However, there was also an economic boost. Between 1995 and 1999 the GDP gre\\· by 7.3 percent on average while the average in-

11 Georges Baur. 'Die 'parallele Verkehrslahigkeit' und analoge Verfahren als Prinzipien des Europarechts' in Francis Baur and Georges Baur (eds), Akwelle Rechtsfragen 1996. Liber amicorum zum sech=igsten Geh11rmag von Theodor Buhler (Schulthess Juristische Medien, Ziirich 1996). 12 Sieglinde Gstohl 'Successfully Squaring the Circle: Liechtenstein's Membership of the Swiss and European Economic Area', in \1adeleine 0. lfosli and Arild Saether (eds), Free Trade Agreements and Customs Unions: Experiences. Challenges and Constraints, (Tacis European Commission and European Institute of Public Administration. Brussels/Maastricht 1997) 164-166.

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crease of the GDP of Switzerland was only 1.6 percent. 13 Indeed. there has never been a period when the economic growth diverged that strongly between Liechtenstein and Switzerland. This economic boost is likely to explain why the polarization bet\veen supporters and opponents of an EEA membership in Liechtenstein ended. With that said. it can be seen as the foundation of the strong public support of the EEA in Liechtenstein. To sum up, two lessons can be drawn from Liechtenstein's path to joining the EEA: First. due to its smallness Liechtenstein has al\vays aimed for international integration in order to safeguard the country's sovereignty. This wish for independence may explain why the EEA is widely seen by the Liechtenstein people and policy-makers as a gain of sovereignty. Second, Liechtenstein's negotiating parties repeatedly demonstrated their willingness and capabilities to facilitate European integration of Liechtenstein. Indeed. Liechtenstein has received various opt-outs and tailor-made arrangements in order to ensure that EEA membership remains feasible.

U

III. Administration of the EEA Agreement

State capacity is one of the main factors in order to explain why some states comply better with international obligations than others. Taking into account Liechtenstein's smallness and the debate on the feasibility of its EEA membership, it is important to analyse how Liechtenstein administrates its EEA membership. In 2015 there were I '674 people working in the public administration of Liechtenstein which corresponds to I '400 full-time equivalent employees (including local councils). Without doubt. in absolute terms, Liechtenstein has by far the lowest number of administration employees of all 31 EEA members. However, Frommelt 14 has shown that in relation to its population. Liechtenstein is likely to invest more human resources in its public administration than the other EEA members. Moreover, since Liechtenstein has joined the EEA employment in public administration has increased by over 60 per cent. The increase was particularly high in the first five years of Liechtenstein's EEA membership because Liechtenstein had to establish several new government offices, and within the already existing offices the workload has also significantly increased due to EEA membership. 15 The rise in the employment in public administration in the late 1990s proves that Liechtenstein was willing to and capable of increasing the resources of its public administration in order to fulfil the obligations of the EEA Agreement. 13 Calculations made by Andreas Arunhan. Liechtenstein Institute. 14 Christian Frommelt, 'Liechtenstein's tailor-made arrangements in the EEA: A small state's creative solutions in European integration' in Sebastian \\'olf (ed). State size matters. Polirik 1md Recht im Kontext mn Kleinstaatlichkeit und Monarchie (Springer VS. Wiesbaden 2016) 140. 15 Regierung des fiirstentums Liechtenstein. Bericht und Antrag der Regienmg an den Landtag

des Fur.1·renr11ms Liechtenstein hetrejfend 20 Jahre Mitgliedfcha/i des F11rstent11m.< Liechtenstein im Europiiischen IVirtschaftsraum (£WR; Liechtenstein 2015: 183. fromme/t

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However, interview evidence suggests that over the last 20 years not all government offices have always had enough EEA specific resources at their disposal. This is likely to affect the implementation of policies that are not high priority for the Liechtenstein government, such as those regarding the environment or consumer protection. 17 State capacity cannot be reduced to the number of employees in public administration. Indeed. an efficient bureaucracy is likely to compensate for a lack of resources. Subsequently, it is also important to look at the procedures and the general organisation of an administration. In the case of Liechtenstein. all departments of its public administration and all ministries are involved in the administration of the EEA. each having at least one EEA expert. Based on their personal expertise, these experts accompany the EEA policy-making process, represent Liechtenstein's interests in the respective EFTA or EU committees and are responsible for the transposition of EEA law into domestic law. The EEA Coordination Unit and Liechtenstein's diplomatic representation in Brussels support and coordinate the activities of the specialists. In practice, the EEA Coordination Unit is the key player which advises the government and public administration on EEA matters, coordinates the incorporation and implementation of EEA law, and represents the government in proceedings before the ESA and EFTA Court. In addition. the EEA Coordination Unit is responsible for the documentation of EEA topics. It is subordinated to the Prime Minister's Office. Hence, in Liechtenstein - as in most EU states but in contrast to Norway 16 and Iceland - the administration of EEA matters is separate from foreign policy which. from an analytical perspective, is likely to have triggered a po\ver shift from the political to the administrative level and thus increased the technical expertise of Liechtenstein in EEA matters. In a nutshell, Liechtenstein's administration of EEA matters is an elaborate trade-off between the thematic specialisation of the individual departments and the EEA Coordination Unit's specialisation in the EEA policy-making process. IH Based on semi-structured interviews Frommelt 17 selected various factors that are supposed to have increased the efficiency of Liechtenstein's public administration in EEA matters, such as expertise or discretion. The compilation also addresses organisational features. In this regard. Liechtenstein's size is considered to be an advantage as it ensures quick communication across the various administrative units as well as bet\veen the administration and the government. Moreover, in contrast to its EEA EFTA partners, Liechtenstein does not have to translate EU acts because Gennan is an official EU language. 19 Liechtenstein has delegated and outsourced various administrative and political tasks such as representation in EU programme committees, the authorisation of medicinal products and the implementation of EU veterinary law. -·-

-----· - - - -

16 In 2013 Norway appointed a Minister of EEA and EU Affairs who together with the Minister of Foreign Affairs represent the Ministry of Foreign Affairs. 17 Frommelt (n 14).

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Liechtenstein's participation in EU and EFTA committees follows its political and economic interests. Interviews show that Liechtenstein uses its access to those committees not only to influence an EEA policy but also to disclose the structural limits of its public administration and potential short-comings of its implementation capacity in order to receive tailor-made arrangements. As a monist state Liechtenstein recognises the provisions of international law 20 as part of its national legal order. Subsequently, EU acts do not necessarily have to be implemented through a national law before they can apply within the Liechtenstein legal system. Taking into account the high number of regulations incorporated into the EEA Agreement monism is likely to increase the efficiency of the day-to-day management of the EEA membership by Liechtenstein. With regard to the legal order it is also important to note that. thus far, Liechtenstein has not faced constitutional problems related to its participation in EU agencies. Finally, different political aspects such as high public and party-based support 21 for the EEA and a low degree of politicisation are likely to increase Liechtenstein's capacity to implement EEA law. Overall, Frommelt 18 concludes that the consulted experts show a high level of 22 sensitivity towards the challenges that result from the lack of human resources in Liechtenstein and confirmed various efforts in place to increase the efficiency of the day-to-day management of the EEA Agreement. In practice, however, there are still various shortcomings. For instance, thus far, Liechtenstein has never seconded a national expert to the European Commission. and participation in EU and EFTA committees is indeed less consistent and comprehensive than actually aimed for. Moreover, EEA experts who have been involved in the administration of EEA matters for a long time may have a lot of knowledge and broad networks but the fact that this knowledge is held by individual experts makes the public administration more vulnerable to staff turnover. Finally, the interest of the Liechtenstein government in a broad debate of EEA matters is very limited. Indeed. the government provides only very little information on the EU and the EEA policy-making process and reporting is confined to assessments of the EEA every five years. Efficiency may thus sometimes come at the expense of deliberation and participation. IV. Other agreements with the EU

Liechtenstein, like the other EFTA states, has concluded bilateral agree- 23 ments with the European Union beyond the EEA Agreement. In 2004 the principality has negotiated an agreement with the EU on the taxation of sa\'ings income. 19 In 20 I 5 the EU and Liechtenstein agreed on an amending protocol which entered into force on I January 2016. 20 The revised agreement shall implement the OECD Standard for Automatic Exchange of Financial Account 18 Frommelt (n 14). 19 LGBI. 2005 So. 111. 20 LGBI. 2015 !'-lo. 354.

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24

25

26

27

Information. It was widely seen as an important step for Liechtenstein to reaffirm its commitment to international cooperation on tax matters. Liechtenstein has also concluded an agreement with the EU on security procedures for exchanging classified information 21 as well as cooperation agreements with Europo1 22 and Eurojust. 23 Another important integration step for Liechtenstein - like for Norway, Iceland and Switzerland - is the association with the Schengen area and Dublin convention. 24 It requires the principality to adopt the relevant acquis and includes it in the European information and consultation mechanisms in the fields of border controls, international justice and police cooperation. visa and asylum policy. Similar to the EEA, the EFTA countries have the right to participate in decision-shaping but not a formal right to participate in decision-making in the further development of SchengeniDublin law. Although Liechtenstein's association to the Schengen area is not based on a separate agreement with the EU but linked to the Swiss bilateral agreements via protocols, the principality is a formal Schengen member since December 20 I I. It enjoys the same rights and obligations as the Swiss Confederation. Specific provisions are laid down for Liechtenstein concerning the time period required to implement new acquis, in case constitutional requirements need to be fulfilled ( 18 months). Liechtenstein is a member of the Mixed Committee. in which it has the right to express its opinion and which it may preside over. In 2007 Liechtenstein concluded with the EU and Switzerland an additional agreement extending the sectoral agreement between Switzerland and the EU on trade in agricultural products to Liechtenstein (see Chapter Vll). 25 Finally, Liechtenstein is included in the EU-Swiss agreements on processed agricultural products 26 and on the carriage of goods. 27 Those agreements apply to Liechtenstein although it is not an otlicial contracting party because they are linked to the customs union between Switzerland and Liechtenstein. To sum up, similar to Iceland and Norway, the EEA Agreement was not sutlicient to ensure Liechtenstein's place in the process of European integration. Overall, the principality of Liechtenstein has reached an unprecedented level of participation. However, it has also shown that Liechtenstein sometimes lacks the state capacity as well as the treaty-making power to make its own agreements with the EU. Hence, outside the scope of the EEA Agreement. Liechtenstein often lags behind Switzerland. Finally, the legal and political cooperation with the EU in the area of taxation has improved the reputation of Liechtenstein's financial centre. 21 22 23 24 25 26 27

42

LGBI. 2010 ~o. 187. LGBI. 2013 No. 405. LGBI. 2013 No. 376. LGBI. 2011 No. 131. LGBI. 2007 No. 257. AS 2005 No. 1533 (Swiss law). AS 2011 No. 983 (Swiss law)

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V. EEA law in the Liechtenstein legal order

The Principality of Liechtenstein is a constitutional hereditary monarchy 28 on a democratic and parliamentary basis. 28 Liechtenstein's Constitution was adopted in 1921. Since then there were numerous amendments but they have not changed the Constitution's specific features. In a nutshell, the power of state is shared between the Prince and the people establishing a dualism of the monarchic and the democratic principle. Indeed, unlike in the other European monarchies (except for Monaco), the Prince has real powers and is not confined to a mere representational role. The far-reaching competences of the Prince such as the power to veto every lav.• or to dismiss the government have often been criticized by international organisations, in particular the Council of Europe. On the other hand, the Liechtenstein Constitution also includes a wide range of direct democratic rights. Similar to Switzerland, Liechtenstein has thus a very active tradition of direct democratic votes. The Liechtenstein Constitution is generally seen as 'friendly' towards interna- 29 tional lav,· allowing for direct effect of international law. 29 Moreover, Art. 8 para 2 of the Liechtenstein Constitutions enables the Landtag to transfer sovereign rights to other states or international organisations as long as it does not restrict the fundamental rights laid down in the Liechtenstein Constitution. The most far-reaching example of such a transfer of power is Liechtenstein's Customs Union with Switzerland. According to Art. 4 of the Customs Treaty 30 the Swiss customs law automatically applies to Liechtenstein. In practice, this means that twice a year the Landtag takes note of the newly adopted Swiss laws that are applicable in Liechtenstein. 31 For some specific parts of the Customs Treaty the recourse to legal process takes place at the respective Swiss Courts. Shortly after Liechtenstein joined the EEA, the State Court ruled that EEA 30 law has direct effect in Liechtcnstein. 32 This means that 'it is effective as international law on a national level from the time of taking effect without any special national act of transformation' .33 The precedence of EEA law, however, only applies if EEA law has been incorporated into the Liechtenstein legal order

28 Constitution of the Principality of Liechtenstein, LGBI. 1921 l\o. 15 Art. 2. 29 Daniel Thlircr, 'Licchtem;tcin und die Volkcrrcchtsordnung. Ein Klcinstaat im volkerrcchtlichen Spannungsfeld zwischen Singularital und Model I rcchtlichcr Integration' in: Archiv des Vo/kerrechts (Tlibingen 1998) 112. 30 LGBI. 1923 ~o. 24. 31 It is important to mention that in contrast to the EEA and EEA secondary law the landtag does not approve the incorporation of Swiss law into the Liechtenstein legal order. Instead. it only takes note of the incorporation. All Swiss law provisions that arc applicable to Liechtenstein based on the Customs Treaty are published in the same Liechtenstein Law Gazene (sec for the most recent version: LGBI. 2017 No. 114). 32 StGH 1995/14. 33 Peter Bussjager, N"ational Report hy the State Court of the Principality of Liechtenstein, XVI. Congress of the Conference of European Constitutional Courts; see also StGH 1995'14.

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by the respective process foreseen in the EEA Agreement 34 because EEA and EU institutions do not have independent legislative competences. 35 31 The State Court has further argued that the EEA Agreement amends and supplements the substance of the Constitution and that violations of rights established by EEA law can be qualified as violations of constitutionally guaranteed rights. In this vein the State Court has extended its judicial re,·iew of legislation ("Normenkontrollfunktion") 36 to the control of compliance of domestic law with EEA law. There was thus no need to introduce a legal provision stating that EEA law prevails in cases where there is a conflict between EEA rules and other legal rules (see Protocol 35 of the EEA Agreement). 37 Instead. it is the practice of the State Court that EEA law prevails over any Liechtenstein law contradicting it, unless 'fundamental principles and core elements of the fundamental rights laid down in the Liechtenstein Constitution' are violated. 38 However, according to Bussjager39 'such a constellation is conceivable only in stark exceptional cases, so that the constitutionality of a decision of the EFTA Court or of an EEA rule need not be examined in practice'. 32 This Court practice has remained unchanged, although by the re,·ision of the Liechtenstein Constitution in 2003 the State Court was attributed jurisdiction to review the constitutionality of international treaties (Art. 104 para. 2). Due to this revision one might argue that international treaties shall rank below the Constitution. However, in 2004, the State Court decided that the revision of the Constitution from 2003 shall not affect the established qualification of the EEA Agreement as an international treaty amending and supplementing the Constitution.40 33 In the legal debate on the EEA, the relationship between EEA law and constitutional law is the main subject of interest. The large majority of experts does not doubt the direct applicability and precedence of EEA law in Liechtenstein's judicial system, but, for instance, opinions are divided with regard to the relationship between the EFTA Court of Justice and the State Court. It is for the State Court to annul Liechtenstein laws that are not compatible with the EEA Agreement. The competence of judicial review may also affect the domestic impact of an advisory opinion by the EFTA Court. The main point at issue is whether domestic courts are allowed to disregard a national law which is not compatible with EEA law, or whether they have to wait until the State Court annuls the respective law. 41 The proponents of the State Court hold the view that in

34 See explanations to An. 8 para 2 of the Liechtenstein Constitution in Chapter VI of this repon. 35 Andrea Entner-Koch. 'Liechtenstein im EWR-Rechtsetzungsprozess', in Bruha. Pallinger and Quadcrer (eds), Liechtenstein - JO Jahre im £WR. Bilanz. Herausfordernngen. Perspektiven (Verlag der Liechtensteinischen Akademischen Gesellschaft, Schaan 2005). 36 LGBI. 2004 No. 32 An. 18 para. I. 37 Bussjager(n 33). 38 StGH 1998161. 39 Bussjager (n 33), refering to StHG l 998i61. 40 StGH 2004/45.

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case the EFTA Court has declared national lav.· contrary to EEA law, the presenting court cannot disregard the respective law but must refer it to the State Court to conduct a judicial review. Hence, not the EFTA Court but the State Court would decide in last instance whether a national law is compatible with EEA law or not. 42 On the other hand. some experts argue that the precedence of EEA law has to be interpreted as a precedence of application which replaces national law but does not dissolve it. 43 This debate has never been particularly salient. but is one example in order to indicate that the recognition of the jurisdiction of the EFTA Court varies across different national Courts and judges. To sum up, the judicial system of Liechtenstein is very open to EEA law. 34 This friendly approach is mainly the result of Liechtenstein's monistic approach to international law. However, it has also to be seen in context of Liechtenstein's specific legal tradition according to which Liechtenstein law has been developed based on Swiss and Austrian law. Moreover. all Liechtenstein Courts have judges of Swiss or Austrian nationality and based on the Customs Treaty with Switzerland Liechtenstein gives direct effect to numerous Swiss laws. \'I. Implementation of EEA law b~· Liechtenstein

This section addresses three specific aspects of the implementation of EEA 35

law by Liechtenstein. First. ii analyses how the Liechtenstein parliament is involved in the EEA policy-making. Second, it shows some specific techniques to implement EU law that Liechtenstein has introduced. Finally, it addresses the application of EEA law in Liechtenstein as well as the Liechtenstein Court system. I. Parliamentary in\'olwmcnt in EEA matters

Before the fonnal adoption of a Joint Committee Decision (JCD). each EEA 36 EFTA state has to inform the other contracting parties if the fulfilment of constitutional requirements is called for. According to Art. 103 of the EEA Agreement. a JCD cannot enter into force until the members of the national parliament of the EEA EFTA state that had previously acknowledged constitutional requirements have ratified the respective JCD. The members of the parliament of an EEA EFTA state can only approve a JCD but cannot make any changes or adaptations, neither to the JCD nor the EU act itself. Each EEA EFTA state has its own rules and requirements to fulfil before 37 launching a procedure in accordance with Art. I 03. In Liechtenstein, the EEA --··----

..

---·--·----·-----------------------

41 See for different perspectives: llerben Wille, 'Das Abkommen tiber den Europaischen Winschaftsraum und seine Auswirkungen auf das liechtensteinische Verfassungs- und Verwaltungsrecht' in Bruha, Pallinger and Quaderer (eds). Liechtenstein - JO Jahre im £WR. Bilanz, Herausforderungen, Perspektiven (Verlag der Liechtensteinischen Akademischen Gesellschaft. Schaan 2005) and Peter Bussjager, 'Rechtsfragen des Vorrangs und der Anwendbarkeit von EWR-Recht in Liechtenstein' (Licchtcnsteinische Juristen-Zeitung, Vaduz 2006). 42 Wille (n 42) 136; see also StGH 2006/94. 43 Bussjager (n 42) 145.

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Committee of the Liechtenstein parliament ('EWR-Kommission') 44 meets a few days prior to the meeting of the EEA Joint Committee in order to decide whether a procedure in accordance with Art. 103 is necessary for a specific EU act. The parliamentary EEA Committee makes its decision based on a recommendation from the EEA Coordination Unit of the Liechtenstein government whose experts also participate in the meetings of the parliamentary EEA Committee so questions raised by the Members of Parliament (MP) can be answered directly. In nearly all cases the parliamentary EEA Committee decides according to the recommendation of the government without much discussion. 45 38 To make its recommendation, the EEA Coordination Unit receives reports from the responsible department of the Liechtenstein public administration concerning: the content of an EU act; specific information on the expected impact of an EU act on Liechtenstein's bilateral relations with Switzerland; the financial costs; and legal amendments triggered by the respective EU act. The recommendation itself is based on an expert opinion of Liechtenstein's State Court,46 which specified the provisions of the EEA Agreement (Art. I03) and of Liechtenstein's Constitution (Art. 8 para 2). 47 According to the State Court, a JCD has to be treated as an international treat)' affecting the sovereignty of the state, the rights of its citizens, or resulting in new burdens. As a result. a JCD requires the consent of the Liechtenstein parliament and may also be subject to a referendum. In its judgment. however, the State Court also states that parliament's approval of a JCD is only necessary if the corresponding JCD changes domestic lav.· or has financial consequences. By contrast, delegated and implementing EU acts, EU acts with a specific addressee, non-binding EU acts and EU acts that simply amend or consolidate other EU acts do not require the approval of the Liechtenstein parliament. This also applies to EU acts that are invalid or irrelevant for Liechtenstein due to its specific geographic and economic properties. Furthermore, the State Court stated that the decision of the parliamentar~· EEA Committee has to reflect the efficiency and proper working of the EEA Agreement. Finally, it highlights the necessity of close cooperation between government and parliament to ensure the democratic legitimacy of the EEA policy-making process. These specifications give all players certain room for interpretation as to whether the stipulation of constitutional requirements is necessary or not. 39 If Liechtenstein states the need to fulfil its own constitutional requirements to a JCD, the Landtag has to approve the respective JCD in a plenary meeting for which the government provides a short report addressing its relevance and consequences. The debates in the Landtag on a JCD are usually very short. In most 44 LGBI. 2013 No. 9, An. 69. 45 Christian Frommelt £11ropiiisierung der Landtagsurbeit (Arbt:itspapiere Liechtenstein, Bendem 2011, No 29).

46 StGll 1995/14. 47 Peter Bussjiiger, Kommentur wr liechtensteini.l'chen Ver/ass11ng. Online-Kommentar. Bt:ndem 2016. www.vcrfassung.li.

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cases there are only very few requests to speak made by the MPs. An exception was the incorporation of the Directive 94/34/EC on Parental Leave which caused an extensive and emotional discussion about sovereignty, economic freedom and social policy. 48 In other more controversial cases, like the incorporation of the Directive 2001 /97 /EC on Money Laundering4 9 or the Directive 98/5/EC on practice of the profession of lawyer, 50 opposition was mainly motivated by the specific interests of individual MPs. Thus far, there has never been a referendum on the ratification of a JCD. Despite quite similar procedures and criteria, the number of constitutional 40 requirements and the required time for parliamentary approval varies greatly across the EEA EFTA states. 51 From I January 1994 to 3 I December 2015 Liechtenstein has stipulated constitutional requirements to 196 JCDs compared to 275 by Iceland and 270 by '.\orway. In total, the EEA EFTA states specified that constitutional requirements must be fulfilled in 468 JCDs. However, there were only 87 JCDs where all EEA EFTA states established that constitutional requirements had to be fulfilled. Surprisingly, although Iceland and Norv.ray have similar economic interests and a comparable legal tradition, they have only slightly more often pointed out the need to fulfil their own constitutional requirements to the same JCDs ( 126 cases) than Norway and Liechtenstein ( 119 cases) or Iceland and Liechtenstein (115 cases). On average (median), it takes 266 days until the EEA EFTA states fulfil 41 their constitutional requirements. With 176 days the average time to ratification of a JCD is in Liechtenstein slightly lower than in Norway ( 185 days) and much lower than in Iceland (283 days). There were only two JCDs where the ratification took more than one year. By contrast, Norway and Iceland had various JCDs, where it took several years until their constitutional requirements were fulfilled. Beyond Art. I 03 of the EEA Agreement the involvement of the Liechtenstein 42 parliament is very limited. In contrast to Norway and Iceland there are no special parliamentary procedure rules on EEA matters according to which the government has to inform or consult the Landtag during the EEA decision-making process. Hence, it is completely up to the government to decide when to inform the Landtag about EEA matter. Thereby strategic questions on Liechtenstein's European politics are addressed by the parliamentary Foreign Affairs Commission52 or, at the EEA EFTA level, by the Delegation to the EFTA and EEA Parliamentary Committee. 53 Taking into account the limited resources of the Liechtenstein Parliament it is hard lo understand why there are three different in48 Landtagsprotokoll 17 June 1999. 49 Landtagsprotokoll 18 December 2003. 50 Landtagsprotokoll 22 November 2002. 51 Christian F rommelt In search .for effective differentiated integration ( PhD thesis, Zurich 2017) (not yet published). 52 LGBI. 2013 No. 9, Art. 64. 53 LGBI. 2013 No. 9, Art. 61.

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stitutions with often different MPs, between whom there is no formal exchange or cooperation. 2. Implementation of EL\ law

There is no specific legislative procedure for the transposition of an EU directi,·e into Liechtenstein law. In general, EU directives are transposed by amending the respective Liechtenstein law hill. This process requires the approval by the Liechtenstein parliament and the assent of the Reigning Prince (sanction). Statistical analyses of the Liechtenstein law making between 2001 and 2009 54 show that over 49 percent of the law and 34 of the ordinances have had their impetus in Liechtenstein's legal relationship with the EU compared to 39 percent of the laws and 3 7 percent of ordinances with a domestic impetus. Put differently, EEA membership was the most important impetus for legislative activities in Liechtenstein between 200 I and 2009. As at 31 May 2017 a total of 303 laws and ordinances in force included references to the EEA. This is approximately one third of the domestic lav.· in force. 44 On the other hand, empirical analyses of the number of votes and voting results from the Landtag show that there is a high level of consent and little debate about EEA matters in Liechtenstein. 55 Hence it is no surprise that the enactment of laws with an EEA impetus takes less time and requires fewer amendments by the parliament than laws with a domestic impetus. 56 However, in December 2013 the Landtag rejected a financial resolution which would have ensured Liechtenstein's participation in the EL' Framework Programme Horizon 2020.57 Liechtenstein then has been exempted from the participation in the EU programme (Protocol 31 EEAA). 45 From a legal perspective, there arc two interesting features in the context of implementing EEA law in Liechtenstein. First, Liechtenstein transposes certain directives of Annex II of the EEA Agreement by so-called 'modular ordinances' ('Modularverordnung'). 58 Based on the law about the circulation of goods, 59 the government enacts a decree that implements a directive on a certain type of goods, for instance Directive 69!493/EEC on crystal glass. 60 However, the ordinance includes only the basic principles about the circulation of the corresponding product as well as references to the respective directive and its pos-

43

54 Christian l'rommch. Europiiisierung der /iechtensteinischen Rechtsordnung (Arbcitspapicre Liechtenstein, Bcndcm 2011, No 28). 55 Frommelt (n 45). 56 Christian Frommclt. 20 Jahre EWR-Abkommen: Einschi.it=ungen wm EWR-Experten 11nd Fiihmngskrii/ien. Ergebnisse einer Onlinebefragung (Unterlagen zuhanden der Regierung des Fiirstentums Liechtenstein, Vaduz 2015.). 57 Landtagsprotokoll 5 December 2013. 58 Christoph Biichcl, "Wic vcrwaltet dcr Klcinstaat Liechtenstein das E\\'R-Abkommen? ' in Prange (ed) Zwischen Bern 11nd Bn'issel, Erfahrungen liechtensteins im Europiiischen ·1-Virtschafisraum ( Ruegger, Chur-'Ziirich I 999) 35. 59 LGBI. 1995 1'io. 94. 60 LGBI. 1998 No. 126.

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ition in the annex of the EEA Agreement. Subsequently, Liechtenstein does not adopt specific implementation measures but gives the respective directive direct effect. Moreover, the government docs not update a modular ordinance in case the corresponding directive is amended because the modular ordinance stipulates that the currently valid edition of the directive results from the publication of the respective JCD. Put simply, Liechtenstein treats directives mentioned in modular ordinances as well as their amendments in the same way as it treats EU regulations. Legally speaking, in the EU and the EEA, directives have to be implemented 46 into domestic law by each member state (see Art. 288 TFEU and Art. 7 as well as the respective case law). Hence, Liechtenstein's waiver to implement certain directives can be seen as an offence of EEA law. It also threatens the legal certainty of the EEA law as well as the transparency of Liechtenstein's legal order. Thus far, hmvever, the renouncement to implement certain directives of Annex II is tacitly accepted by the ESA. In this vein, Liechtenstein can substantively reduce administrative expenses of its EEA membership. By the end of 2014, Liechtenstein had 35 such modular ordinances in force which referred to approximately 500 directives, which, in practice, had direct effect on the legal order of Liechtenstein after they were incorporated into the EEA Agreement. The second feature reflects a rather recent development. The delayed incorpo- 47 ration of several EU acts into the EEA Agreement has restricted the EEA EFTA states' access to the EU's internal market for financial services. To protect the interest of its economic operators Liechtenstein decided to introduce legislative changes autonomously in their national legal order. Put simply, Liechtenstein applies exactly the same implementation technique as it usually uses to implement EEA secondary law but with the exception that it directly referred to the EU's Official Journal since the EU act is not yet incorporated into the EEA Agreement. 61 The State Court of Liechtenstein has recently confirmed that this implementation technique is under specific circumstances compatible with the Liechtenstein Constitution. 62 By contrast. according to the European Commission6~ under the current legal system such an implementation approach 'does not represent an acceptable option for the EU' in order to compensate for the uneven willingness among the EEA EFTA states to incorporate new EU law into the EEA Agreement. Against this background. the actual extent of the rights ensured by this autonomous implementation remains unclear. However, the incorporation of the regulations establishing the European Financial SupervisoQ· Authorities (ESAs) into the EEA Agreement in September 20 I 6 allowed for the incorporation of numerous EU acts related to financial services. As a result, an autonomous implementation of those EU acts is no longer necessary.

61 See for instance LGBI. 2014 No. 341!. 62 StGH 2015i8I. 63 European Commission. A rel'iew ofthefunctioninf! of the European Economic Area (Commission Staff Working Document. Brussels 2012) 6.

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3. Application of EEA law

According to the EEA Coordination Unit Liechtenstein 'makes every effort to fulfil its obligations arising out of the EEA Agreement, in particular regarding the correct and timely transposition of internal market directives' .64 Indeed. in the recent years Liechtenstein's implementation deficit was mostly below the average implementation deficit of the three EEA EFTA states. The most recent Internal :\1arket Scoreboard from January 2017 shows for Liechtenstein an implementation deficit of 0.9 percent compared to 2.2 percent for Iceland and 0.4 percent for Nonvay. However, Liechtenstein's implementation deficit was mostly above the EU average. 49 Although there is an intense exchange between the EEA Coordination Unit, the various Liechtenstein government offices and ESA, the work of ESA does not attain much political or academic interest. Hence, there are no studies on the exchange between Liechtenstein and the ESA and on how this exchange shapes Liechtenstein's implementation record and its implementation quality. 50 Jurisdiction in civil and criminal matters is exercised in the first instance by the Court of Justice ("Landgericht"), in the second instance by the Court of Appeal ("Obergericht"), and in the third and last instance by the Supreme Court ("Oberster Gerichtshof'). The decisions and decrees of the administrative bodies can be challenged in the Administrath,e Court ("Venvaltungsgerichtshof'), and any final decision of a Liechtenstein court or administrative body can be appealed to the State Court ("Staatsgerichtshof' StGH) on the grounds of an infringement of constitutional rights or of rights guaranteed under the European Convention on Human Rights. Due to the lack of human resources and the strong impact of Switzerland and Austria on Liechtenstein's legal system, all Courts have judges of Swiss or Austrian nationality, but the majority of judges and the presidents of the respective Courts have to be Liechtenstein citizens. All Courts have been facing a strong increase in the number of cases in the recent years. In addition to the above-mentioned Courts, special independent commissions 65 may be appointed to decide on appeals against decisions by the government. As Ungerank 66 points out all Courts as well as those special commissions have the authority to submit requests for ad\'isory opinions to the EFTA Court in terms of Art. 34 of the Surveillance and Court Agreement (SCA). 51 Liechtenstein procedural law does not include special rules concerning the form of referrals. However, the parties of the main proceeding can only "suggest" that an opinion has to be obtained as there is no right that their request for an advisory opinion from the EFTA Court is accepted by the Liechtenstein Court 48

64 Andrea Entner-Koch and Thomas Bischof 'Liechtenstein EEA Coordination Gnit' in C.Baudenbacher (ed) The Handbook of £EA law (Springer International Publishing, Cham 2016) 242. 65 LGBL 1921 No. 15, An. 78. 66 Wilhelm Ungerank 'Liechtenstein Courts' in C. Baudenbacher (ed), The Handbook of £EA law (Springer International Publishing, Cham 2016) 296.

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in charge of the proceeding. 67 Against this background the State Court has recently defined the conditions when a request for an advisory opinion is appropriate. According to the State Court a referral to the EFTA Court is required if the legal situation concerning EEA law is unclear and the interpretation of EEA law is necessary to the proceeding in question. 68 According to Ungerank 69 the decision of the State Court can be seen to have set an 'obligation to refer to the EFTA Court if the above mentioned conditions arc fulfilled' under Liechtenstein law. Again, the impact of EEA membership on the jurisdiction of Liechtenstein 52 has never been empirically analysed. However, the case law of the EFTA Court is occasionally discussed in the main law journals of Liechtenstein. There are also some overviews of the EFTA Court cases related to Liechtenstein. 70 Most of those cases were related to the free movement of persons or the right of establishment. Indeed. several laws of Liechtenstein initially included residence requirements which were in breach of Art. 31 of the EEA Agreement and therefore had to be adapted after Liechtenstein joined the EEA. 71 However, there are also other topics addressed by the EFTA Court such as preferential taxation regimes. 72 In the recent years, the number of EFTA Court cases relating to Liechten- 53 stein has increased. As a result, the requests by Liechtenstein Courts for advisory opinions cover a ·wider range of policies. 73 Particularly salient were the first two referrals by the State Court regarding the procedure for awarding casino concession 74 and environmental impact assessments. 75 Except for the Supreme Court, all Courts have submitted a request for an advisory opinion to the EFTA Court. 76 Nonetheless, it is important to mention that most requests were made by the same judges. Hence, the big majority of judges at the Liechtenstein Courts has never requested an advisory opinion from the EFTA Court. To sum up, the implementation process can be divided into three stages. First. 54 the EEA EFTA states have to incorporate EU secondary law into the EEA Agreement. This is only possible if all EEA EFTA states and their parliaments agree. In practice, however, Art. I 03 is mainly seen as a right to information rather than a decision-making pov.·er of the national parliaments of the EEA EFTA states. Second, EU law has to be transposed into national law. In the case of

67 68 69 70 71

72 73 74 75 76

Ungerank (n 66) 300. SIGH 2014/172. Ungerank (n 66) 301. E.g. Entner-Koch and Bischof (n 64) or Cngerank (n 66). E.g. Case E-3/98 Herbert Rainford Towning. E.g. Joined Cases E-4/10, E-6/10 and E-7/10 Liechtenstein, REASSCR Aktiengcscllschaft and Swisscom RE Akticngesellschaft v. ESA. Ungerank (n 66) 306. Case E-24/13 Casino Admiral AG v. Wolfgang Egger. Case E-3/15 liechtensteinische Gesellscha(t_fiir Uml1·eltsch111: v. Gemeinde Vad11:. However, Ungerank (n 66) points out that the Supreme Court hast dealt with and based its decisions on opinions of the EFTA Court.

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PART I: General Repo,-t.1·

Liechtenstein there is no EEA specific legislative procedure. However, empirical analyses show again that law bills linked to the EEA receive less attention and are less controversial than purely domestic law bills. Finally, EEA law is applied by the people and institutions and in this vein has to be interpreted by the Liechtenstein Courts. The increasing number of requests for advisory opinions from the EFTA Court by the Liechtenstein Courts may indicate that EEA law has become more important for the Liechtenstein jurisdiction in the recent years. To confinn this observation, hO\vever, further analysis would be necessary. VII. Liechtenstein's tailor-made arrangements 55

Liechtenstein is likely to have widely benefited from various tailor-made arrangements and several opt-out clauses. In this section, we will therefore analyse Liechtenstein's tailor-made arrangements in the EEA. 1. The special solution in the free movement of pcrsons 77

The most prominent and politically most sensitive opt-out of Liechtenstein is the 'special solution' which allows a quantitative restriction on the number of new residents. It is based on a sectoral adaptation included in Annex V (free movement of workers) and VIII (right of establishment) of the EEA Agreement. The arrangement, however, was the outcome of a longer process. The EEA Agreement contained in Protocol 15 a standard transitional period (until the end of 1997) and a review clause which foresaw to jointly review the transitional measures 'duly taking into account the specific geographic situation of Liechtenstein'. In the context of the negotiations adapting the EEA Agreement to the revised Liechtenstein-Swiss regional union. the Liechtenstein government obtained in 1995 an additional joint declaration with the EEA Council. 78 This declaration recognized Liechtenstein as a very small area of rural character with an unusually high percentage of non-national residents and employees. It also acknowledged the principality's vital interest in maintaining its ov,m national identity. 57 In view of the expir~· of the transitional period as of 1998 and the failure to negotiate a solution in time, the Liechtenstein government invoked the safeguard clause of the EEA Agreement ( Art. 112) which allows a contracting party to take unilateral measures 'if serious economic, societal or environmental difficulties of a sectorial or regional nature liable to persist are arising'. In 1999 the EEA Joint Committee, under Liechtenstein's chair, agreed to extend the transitional period until the end of 2006 because the principality's situation still justified the maintenance of special conditions. 79 The special solution was incorp-

56

77 This section is based on Sicglindc Gstohl and Christian Frommelt. Back 10 the Fut11,-e? lessons from the EFT.4 Countries fi,r the UK s Withdrawal from the EU (Conference Paper EUSA. ~iami 2017). 78 EEA Council Decision 1/95. 79 JCD 191'1999.

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orated as a 'sectoral adaptation' and therefore did not require specific ratification by the contracting parties. Before the expiry of that second transitional period. the EU had to enter negotiations Viith the EEA EFTA countries on the enlargement of the EEA to the ten new EU member states in 2004. On this occasion, the special solution for Liechtenstein was slightly amended. Thus, the "special solution" no longer expires automatically but has become a "quasi-permanent'' exception, subject to a review every five years. The later EEA enlargement agreements (Bulgaria, Romania, and Croatia) followed this example. As a result. the free movement of persons applies to Liechtenstein citizens, 58 but EEA citizens wishing to live in the country have to obtain a residence permit. The number of permits is limited. with a yearly net increase. There are no restrictions preventing family members of holders of a residence permit from joining and they also have the right to take up an economic activity. The authorities shall grant the new permits in a way that is not discriminatory and does not distort competition. In order to guarantee equal chances, half of them are granted by a ballot procedure. The number of applications for residence permits exceeds the allocable quota by multiple times. Yet, obtaining a residence permit is not a requirement for working in Liechtenstein, and many people commute from neighbouring countries on a daily basis. The special solution applying to Liechtenstein is closely linked to its tiny ter- 59 ritory ( 160 km2) and high number of foreigners among its resident population (about one third) and workforce (about two thirds). It has emerged over time as a complex, tailor-made solution institutionally embedded in the EEA. No EU or EEA EFTA state has so far contested Liechtenstein's limited absorption capacity.so 2. Other tailor-made arrangements

After the Swiss people rejected an EEA membership while the citizens of 60 Liechtenstein approved it one week later, the maintenance of the much appreciated customs union between the neighbouring countries posed a challenge. Part of the solution \Vas the 'parallel marketability' of goods that enables Liechtenstein to apply Swiss technical regulations and standards deriving from its regional union with Switzerland on the Liechtenstein market in parallel with the legislation implementing the EU acts incorporated into the EEA Agreement. To implement the parallel marketability, Liechtenstein had to create a national market surveillance and control system in order to prevent that Swiss products differing from EEA standards arc exported into EEA countries and products following different EEA standards are marketed in Switzerland. The parallel marketability was included as a sectoral adaptation to Annex II 61 (Technical regulations, standards, testing and certification) of the EEA Agree-

80 European Commission. Liechtenstein Sectoral Adaptations Rn·iew (COM(2015) 411 final. Brussels. 2015).

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ment. Today, it mainly covers goods with different tariffs (such as fish or agricultural products) as well as products with different technical standards (like chemicals or medicinal products). Due to the various sectoral agreements between Switzerland and the EU, the number of products subject to parallel marketability decreased significantly over time. Overall, the system has worked well, but it also has its limits. For example, a judgment of the CJEt.: 81 related to the calculation of the tenn of protection of specific certificates for medicinal products approved by Switzerland - and thus also by Liechtenstein - has forced both countries to confine the parallel marketability in order to protect the economic interests of Swiss businesses. 62 Another sectoral adaptation exempts Liechtenstein from the application of the EU acts contained in Protocol 47 (Trade in wine) and Annex I (Veterinary and phytosanitary matters) of the EEA Agreement as well as the EU acts contained in Chapter XII (Foodstuffs) and XXVII (Spirit drinks) of Annex II of the EEA Agreement. Indeed, the adaptation was only possible after Switzerland and the EU concluded the Agreement on trade in agricultural products (Agriculture Agreement). Based on an Additional Agreement between the EU, Switzerland and Liechtenstein, 82 the EU secondary law covered by the Agriculture Agreement is extended to Liechtenstein. Put differently, while the EU acquis on veterinary issues and foodstuffs incorporated into the EEA Agreement was suspended, the EU acquis on veterinary issues and foodstuffs contained by the Agriculture Agreement is extended to Liechtenstein. In this regard. the tenn ·extended' means that the implementation of the EU secondary law into Swiss law automatically applies to Liechtenstein. Hence, by the suspension of the respective parts of the EEA Agreement Liechtenstein could ensure confonnity with Swiss legislation that is traditionally applied in Liechtenstein based on the Customs Treaty between Switzerland and Liechtenstein but could also avoid substantial investments in its administrative capacity that would have been required to ensure correct implementation of the respective EEA acquis. 63 Aside from these sectoral adaptations the contracting parties have also agreed on numerous specific adaptations for Liechtenstein (e. g. Directive 2003/55/ EC). 83 Those adaptations are usually included in a JCD and refer to a specific EU act by stating that an EU act or a specific provision of an EU act shall not apply lo a specific EEA EFTA state. Most of these specific adaptations can be found in the field of statistics. However, specific opt-outs for Liechtenstein can be found in nearly all annexes. 64 The number of EU acts that Liechtenstein has to implement is further reduced as the EEA EFTA states usually do not have to implement EU acts for \\1-hich there is no field of application. For instance, none of the EEA EFTA

81 European Court of Justice, Millennium Pharmaceuticals - Novartis and Others, Joined Cases C-207/03 and C-252/03, ECR 2005 1-03209, 21 April 2005. 82 JCD 97/2007, LGBI. 2007 No. 257. 83 JCD 146/2005.

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states have inland watenvays, which is why ESA does not require the notification of implementing measures from the EEA EFTA states. In the case of Liechtenstein, there are various other policies where no implementing measures are necessary such as maritime transport or some parts of the aviation acquis. An overview of those EU acts can be found in the implementation status database of ESA. As at I March 2017 this database showed that Liechtenstein was released from the implementation of 40.4 percent of the EU directives and regulations in force in the EEA. By contrast, Norway was released from the implementation of 4. 9 percent and Iceland from the implementation of 15.8 percent of the EU acts in force in the EEA. These statistics do not include the above mentioned EU acts implemented by modular decrees. Finally, in very specific cases ESA might accept derogations from the EEA 65 acquis that are anchored in the national law of the EEA EFTA states. For instance, due to the small inhabitable area. the access of EEA nationals to the property market is confined to EEA nationals with a residence permit in Liechtenstein. This restriction on the free movement of capital is accepted by the ESA since nationals of Liechtenstein also face certain restrictions on Liechtenstein's property market (Liechtenstein 2007). 3. Explanations for and effects of tailor-made arrangements

To systematise the numerous explanations for Liechtenstein's exemptions 66 from EEA secondary law, Frommelt and Gstohl 84 distinguish between opt-outs related to Liechtenstein's smallness and opt-outs related to its close relations with Switzerland. Frommelt 85 examines more closely how Liechtenstein's optouts and tailor-made arrangement can be linked to different aspects that are directly or indirectly related to its smallness including small market size ( e. g. electronic communication networks), 86 limited administrative resources (e. g. EEA acquis on agriculture), 87 lack of a regulatory need ( e. g. EEA acquis on inland watenvays), small inhabitable area (e.g. property market/free movement of capital), limited natural resources (e. g. renewable energy sources), 88 lack of specific infrastructure (e.g. combustion plants)89 or Liechtenstein's vital interest to maintain its national identity (e. g. free movement of persons). 9 Finally, in the field of statistics, a small population might raise privacy concerns which is why Liechtenstein is exempted from collecting such data ( e. g. business statistics ).91

°

---------------------------- - 84 Frommell and Gstohl (n 2) 43ff.

85 86 87 88 89 90 91

Frommelt (n 14) 153. JCD 11/2004. JCD 9712007. JCD I02!2005. JCD 147/2002. EEA Council Decision l.'1995. EEA JCD 123..-2008

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PART I: General Reports

In the face of it the high number of tailor-made arrangements for Liechtenstein seems to challenge the confidence in Liechtenstein's implementation capacity and willingness but also in the uniformit)· of EEA law. However, Liechtenstein's market is simply too small for specific arrangements for Liechtenstein to have an impact on the functioning of the EEA. Likewise, Liechtenstein is too small to attain much attention or to set a precedent. Moreover, most of Liechtenstein's tailor-made arrangements concern mainly technical issues and are tied to certain conditions. Accordingly, they will be abolished as soon as those conditions have changed. In this vein, they are embedded in a narrow institutional corset according to which Liechtenstein cannot take advantage of its opt-outs for its own economic benefits. As a result Liechtenstein's tailor-made arrangements are unlikely to impair the functioning of the EEA. 6H From a domestic point of view, most of Liechtenstein's tailor-made arrangements are not base on material or idealional preferences that often are seen as the main causes for differentiated integration. Instead. most arrangements arc supposed to reduce the expenses of Liechtenstein's public administration while Liechtenstein does not gain legislative sovereignty. Indeed, most of those arrangements even impose certain restrictions on Liechtenstein's sovereignty because they give EU law or its implementation by Switzerland or Austria direct effect in Liechtenstein. 69 To sum up, Liechtenstein has various tailor-made arrangements that adapt the application of EEA law to the special characteristics of Liechtenstein. Those exemptions were either introduced as a sectoral adaptation that automatically applies to all related EU acts or as a specific adaptation which is tight to an individual EU act. Due to its smallness, however, Liechtenstein cannot be seen as a precedent for other EEA slates. Moreover, from an analytical perspective, Liechtenstein's tailor-made arrangements represent mostly a trade-off between legislative sovereignty and administrative efficiency. That said, Liechtenstein's tailor-made arrangements may be crucial in order to make EEA membership feasible and to ensure a high public support for EEA membership.

67

\'Ill. Conclusions

70

As an EEA member Liechtenstein could assert its international legal personality and has finally achieved its own treaty-based relationship with the EU. Despite its smallness it has proven to be capable to fully comply with its obligations set out by the EEA Agreement. This achievement has also been acknowledged by Liechtenstein's EEA partners. In December 2016 the Council 92 commends Liechtenstein 'for its continued excellent rate of implementation of EEA relevant EU acquis, ( ... ) its efforts to bring about solutions to pending issues regarding the incorporation of relevant EU acquis into the EEA Agreement'. In its

92 Council of the European Union. Council Conclusions on a homogenous extended single marker relations with Non-EU Western European countries (Brussels, 2014).

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preceding conclusions from December 2014 the Council also pointed to Liechtenstein's willingness to share its 'extensive experience in implementing EU acquis as a small-sized country with other western European small-sized countries'. This shov.·s that by its EEA membership Liechtenstein is likely to provide a vanguard role to the other small-sized countries of Europe Andorra, Monaco and San Marino - a role that it has already provided for by the accession to the Council of Europe and the United Nations. Even more remarkable is the high political support for the EEA among the 71 Liechtenstein people. Survey results show that in no other EEA state the official European policy received that much public support. 93 In addition, Liechtenstein's political elites are strongly committed to the EEA membership which is seen as a gain of sovereignty and prosperity. From an analytical perspective, however, a precondition of this high support is the compatibility of Liechtenstein's EEA membership •Nith the Customs Union between Switzerland and Liechtenstein. Moreover, this report has shown that Liechtenstein benefits from various tailor-made arrangements and applies specific implementation techniques in order to save administrative resources. Despite such tailor-made arrangements Liechtenstein's EEA membership can- 72 not be belittled as a 'Sonderfall'. Instead. the success of its EEA membership is the result of an ambitious but pragmatic European politics. To sum up, over the last 25 years, Liechtenstein has not only shown a remarkable willingness to participate in European integration but also the expertise and adaptability to do so. IX. Literature Baur, GS (1996), 'Die 'parallele Verkehrsfahigkeit' und analoge Verfahren als Prinzipien des Europarechts', in: F Baur and G Baur (eds), Akwel/e Rechtsfragen /996. Liber umicorum wm sechzigsten Geburtstag von Theodor Buhler (Schulthess, Ziirich 1996 ). pp. 83-10 I; Blichel, Christoph ( 1999). 'Wie verwaltet der Kleinstaat Liechtenstein das EWR-Abkommen?', in: 11 Prange (ed), Zwischen Bern und Briissel. Erfuhrungen Liechtensteins im Europiiischen Wirtschaftsraum (Rliegge. Chur/Zurich 1996), pp. 23-60; Bussjagcr, Peter (2006), 'Rechtsfragen des Vorrangs und der Anwendbarkcit von EWR-Recht in Liechtenstein', in: Liechtensteinische Juristen-Zeil!mg (Vaduz 2006), pp. 140-146; Bussjagcr, Peter (2016), Art. 8 LV, Kapitel VIII, Licchtenstein-lnstitut (cd), Kommcntar zur liechtensteinischen Verfassung. Online Kommentar Bendern, 2016, www.verfassungs.li; Council of the European Union (2014), Council Conclusions on a homogenous extended single market and EU relations with NonEU Western European countries. Brussels, 16 December; Council of the European Cnion (2016), Council Conclusions on a homogenous extended single market and EU relations with Non-EL' Western European countries. Brussels, 14 December; Entner-Koch. Andrea and Thomas Bischof (2016), 'Liechtenstein EEA Coordination Cnit', in: C Baudenbacher (ed), The Handbook of EEA law (Springer International Publishing, Cham 2005). pp. 69-85; Entner-Koch. Andrea (2005), 'Liechtenstein im EWR-Rechtsetzungsprozess', in: Bruha. Pallinger and Quaderer (eds), Liechtenstein - /0 Jahre im EWR. Bi/an=. Heruusforderungen, Perspektiven (Verlag der Liechtensteinischen Akademischen Gesellschafl. Schaan 2005); European Commission (2012). A revie'"· of the functioning of the European Economic Arca.

93 Fromme It (n 51 ).

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PART I: General Reports Commission Sta IT Working Document. S\VD{2012) 425 final, Brussels; retrieved from http:/.-' v.-ww .europarl .europa.eu/RegData/docs_ autres _ ins ti tutionsicommission_ europeenne/swcl/20 I 2/0425iCOM_SWD(2012)0425_EN.pdf; European Commission (2015), Liechtenstein Sectoral Adaptations Review, COM(2015) 411 final, Brussels, 28 August 2015; Frommelt, Christian and Sieglinde Gstohl {201 I). 'Liechtenstein and the EEA: the Europeanization of a {very) small state', Rapport no. 18 (Europautredningen. Oslo 2011 ), Frommelt, Christian (2011 a), · Die Europaisierung der liechtensteinischen Rechtsordnung', in: Arbeitspapiere Liechtensteinlnstillll 28. doi: 10.13091/li-ap-28; Frommelt, Christian (201 I b), 'Die Europaisierung der Landtagsarbeit", in: Arheitspapiere Liechtenstein-institut 29. doi: I 0.1309 lili-ap-29; Fromme It. Christian (2015), '20 Jahre E\\-"R-Abkommen: Einschatzungen von EWR-Experten und Fiihrungskraften. Ergebnisse einer Onlinebefragung. Unterlagen zuhanden der Regierung des Fiirstentums Liechtenstein', Retrieved from http://www. liechtenstein-institut.liiPortalsiO/cont ortionistUniversesi408irsc!Publikation _ downloadLink/Entwurf_ Experten_zhd _ Regierung.pdf (februar 2015); Frommelt, Christian (2016), 'Liechtenstein's tailor-made arrangements in the EEA: A small state's creative solutions in European integration•, in: S \Volf (ed), State si;:e mallers. Politik 11nd Recht im Kon/ext 1·on Kleinstaatlichkeit und A1onarchie (Springer VS, Wiesbaden 2016 ). pp. 131-161; Fromme It. Christian (2017), in Search of Effective Differentiated integration: Lessons from the European Economic Area {EEA), ETH Zurich (PhD dissertation): Gstohl, Sieglinde and Christian Frommelt (2017), 'Back to the Future'' Lessons from the EFTA Countries for the UK's Withdrawal from the EU' (Conference Paper EUSA, \1iami 2017); Gstohl. Sieglinde (2001 ), Flexible integration far Kleinstaaten? Liechtenstein wrd die Europiiische Union (Verlag der Liechtensteinischen Akademischcn Gcsellschaft, Vaduz 2017); Gstohl, Sieglinde ( 1997), 'Successfully Squaring the Circle: Liechtenstein"s Membership of the Swiss and European Economic Arca', in: \1adeleine O Hosli and Arild Saether (eds), Free Trade Agreements and Customs Unions: Experiences, Challenges and Constraints, Brussels/Maastricht: Taeis European Commission and European Institute of Public Administration, 163-176; Pelkmans, Jacques and Philip Bohler (2013 ), The £EA Review and Liechtenstein Integration Strategy. Brussels: Centre for European Policy Studies. Retrieved from https:/,www .ceps.eu/systemifi lcs/EEA %20Revicw_ Liechlenstein°li,20Final. pdf; Regierung des Fiirstentums Liechtenstein (2015), Bericht 11nd Antrag der Regierung an den Landtag des Fiirstent11m.1· Liechtenstein betre[fend 20 Jahre Mitglied~chaft des Fiirstent11m.~ Liechtenstein im £11ropiiischen Wirtschaftsra11m (EWR). retrieved from http://bua.gmg.biz1bu a/default.aspx?nr= I 8&year=20 I 5&content= 1425573281; Thiirer, Daniel ( 1998), Liechtenstein und die Volkerrechtsordnung. £in Klein.Haaf im w"j/kerrechtlichen Spannungljeld zwischen Singulariliit und Model/ rechtlicher Integration (Tiibingen 1998), pp. 98-127; Ungcrank, Wilhelm (2016), 'Liechtenstein Courts', in: C Baudenbacher (cd), The Handhook of £EA law (Springer International Publishing, Cham 2016), pp. 69-85; Wille, Herbert {2005), 'Das Abkommcn Uber den Europaischen Wirtschaftsraum und seine Auswirkungen auf das liechtensteinische Verfassungs- und Verwaltungsrecht', in: 13ruha/Pallinger/Quaderer (ed), Liechtenstein - JO Jahre im £WR. Bi/an;:, Herausfordenmgen, Perspektiven (Verlag der Liechtensteinischen Akademischen Gesellschaft, Vaduz 2005 ), pp. I 08-148.

s

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Norway and the EEA I. Introduction ........................ .

2. Norway and the EEA- a brief historical sketch . . . . . . . . . . . . . . . . . . . . . . . . 3. Other agreements with the EU and their relation to the EEA Agreement................................. 4. The legal position of EEA law under Norv.·egian law .. ,,.,., ..... , 5. Implementing EU/EEA acts - the constitutional framework..........

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9 15

6. The modes of implementation of EEA law and consequences for the ~orv,•egian style of legislation 7. The question of EEA relevance and the need for a complete makeover............................ 8. The UK's exit from the EU and the EEA, ...................... ,.....

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I. Introduction Norway is not a member state of the European Union. Still, in many respects Norv.·ay is more deeply involved and integrated legally, practically and economically in the EU's cooperation than some of the EU Member Stales. Norway takes part in broad areas of the EU's total cooperation through the EEA Agreement and a host of other agreements \\.·ith the EU; in 2015 the country had received 200.000 posted workers from the EU; and between 75 and 80 % of Norway's exports go to the EU. 1 Norway is the EU's fifth largest trading partner (larger than e.g. India and Canada),2 and Norway is the major exporter of natural gas to the EU. The oil and gas export counts for 70 % of Norway's exports to the EU. 3 The world's largest sovereign \vealth fund. the Norn·egian Government Pension Fund Global (in January 2017 valued to approximately NOK 7 530 billion), is an important operator in the economies within the European Union; it holds 2,3 % overall of the listed companies in Europe and it invests heavily in real estate especially in the UK. France and Germany. The EEA and ;'v'orv.-ay Grants distribute 2,8 billion euros from 2014 to 202 I directly to projects in the EU Member States. 4 It is important to note, however, that Norway is not a part of the euro-area and the cooperation and obligations in that field. which in itself is a strongly integrating force in Europe, As a matter of course, the legal frameworks governing the numerous relation- 2 ships bet\veen the EU and economic and other operators in the EU, on the one side, and Norv.·ay and Norwegian businesses and individuals, on the other, is crucial for the nature, vitality and viability of all these relations. The EEA Agreement is the main mechanism of translating EEA relevant EU law into binding Norwegian law prevailing over non-constitutional law. It is the legal guarantor of a significant share of "Norwegian" activities within the EU, be it

See e.g. NOC 2012: 2 ch. 14, 16 an