The EFTA Court and EFTA Surveillance Authority

In analogy with the EU, the enlarged internal market under the EEA needs an institutional foundation to guarantee its correct implementation and judicial arbitration in case of a violation of the agreement. Accordingly, the EEA requires the EEA EFTA states to “establish an independent surveillance authority (the EFTA Surveillance Authority or ESA, the authors) as well as procedures similar to those existing in the Community, including procedures for ensuring the fulfilment of obligations under this Agreement and for control of the legality of acts of the EFTA Surveillance Authority regarding competition (Art 108 (1) EEA),” as well as a court of justice (the EFTA Court, Art 108 (2) EEA).

Following the ‘two-pillar’ system, the CJEU and the European Commission have enforcement powers which should ensure the fulfilment of the obligation under the EEA by the EU member states, while ESA and the EFTA Court are responsible for this task with regard to the EEA EFTA states. The two pairs of institutions are expected to work together and inform each other about ongoing cases and complaints.

For this purpose the EEA EFTA states have concluded the Surveillance and Court Agreement (SCA).⁸⁵ The SCA agreement entered into force on the same date as the EEA, 1 January 1994, with respect to Austria, Finland, Iceland, Norway and Sweden. With the accession of Austria, Finland and Sweden to the EU on 1 January 1995 and the subsequent accession of Liechtenstein to the EEA, the SCA was adjusted to meet the new factual circumstances with regard to ESA and the EFTA

84 Formally, there is a committee for EFTA and one for the EEA, but in actual practice they meet jointly.

85 Agreement between the EFTA States on the Establishment of a Surveillance Authority and a Court of Justice, OJ (1994) L344, p. 3.

Court.⁸⁶ From this date onwards, Iceland, Liechtenstein and Norway are parties to the SCA, as well as to the EEA. Although similar in important aspects for the EEA, ESA and the European Commission are not fully comparable. The greatest difference is that ESA has no political role, unlike the Commission with the critical right (indeed, a near-monopoly) of initiative. On the other hand, whereas the Commission is the ‘guardian’ of the EU Treaty, ESA is the guardian of the EEA Agreement for the EEA-3.

Recently, ESA’s remit has been extended a little, for instance it is involved in the allocation of CO2 permits under the Emissions Trading Scheme (ETS) and has become responsible for veterinary and transport safety inspections.

3.2.6.1 The EFTA Court

Initially the EFTA Court⁸⁷ was located in Geneva, but its seat was moved to Luxembourg, not far from the CJEU, in 1996. The EFTA Court’s bench is filled with three judges, one from each EEA EFTA state. The Judges of the EFTA Court are appointed by common accord of the EEA EFTA states for a term of six years (SCA Art 30). The current EFTA Court President is a Swiss citizen (Prof. Carl Baudenbacher, who was nominated by Liechtenstein).

The Court has jurisdiction with regard to EFTA states that are parties to the EEA Agreement – currently Iceland, Liechtenstein and Norway. The Court has jurisdiction with respect to:

• the settlement of disputes between two or more EEA EFTA states regarding the interpretation or application of the EEA;

• actions brought by ESA against a EEA EFTA state to fulfil an obligation under the EEA

• to give advisory opinions on the interpretation of the EEA agreements, raised before a national court. In contrast to the EU legal order, these advisory opinions are not binding and no national court is legally obliged to request such an opinion.

• actions brought by a member state against decisions of ESA or its failure to act;

• actions brought by a natural person against decisions that are of direct and individual concern to this person or ESA’s failure to act.

86 Agreement adjusting certain Agreements between the EFTA States (‘Adjusting Agreement’) of 29 December 1994 (EFTA states’ official gazettes).

87 For more information on this institution, see its website (www.eftacourt.int).

In short, the jurisdiction of the EFTA Court mainly corresponds to the jurisdiction of the CJEU in the EU legal order, with the exception of the non-binding nature of advisory opinions, in contrast to the binding preliminary ruling procedure in the EU’s legal order.

The proceedings before the EFTA Court consist of a written and an oral part and all proceedings are in English except in cases where an advisory opinion is sought by a national court of an EEA EFTA state. In the latter case, the opinion of the Court is in English and in the national language of the requesting court. The average duration of proceedings before the EFTA Court between the years 2003 and 2008 was six to eight months.⁸⁸

3.2.6.2 The EFTA Surveillance Authority

The EFTA Surveillance Authority (ESA) is located in Brussels and consists of three members, appointed by a common accord by the EEA EFTA states for a renewable term of four years. The members of ESA, the so-called

‘College’, are completely independent in the performance of their duties.

The EEA EFTA states appoint a president from the three College members for a term of two years.⁸⁹

The EFTA Surveillance Authority is endowed with the function of supervising the fulfilment of obligations under the EEA by the EEA EFTA states. This means the correct and timely implementation of the main text of the EEA agreement including the competition provisions, its constantly updated annexes as well as its protocols. As regards competition law, ESA enjoys the same competencies as the Commission in the EU. ESA cooperates closely with respective Commission services to ensure the homogeneous application of Internal Market law. ESA can take decisions, formulate recommendations, deliver opinions and issue notices or guidelines with regard to the specific matters.⁹⁰

88 EFTA Court, Legal Framework and Case Law, 3^rd ed, Luxembourg, 2008 (http://www.eftacourt.int/images/uploads/Legal_Framework_Finalweb.pdf).

89 The current College members of ESA are: Oda Helen Sletnes (President, Norway), Sabine Monauni-Tömördy (Liechtenstein) and Sverrir Haukur Gunnlaugsson (Iceland).

90 The ESA College employs officials and other employees to enable it to fulfil the tasks set out in the SCA. Currently ESA employs 67 highly qualified officials, mainly lawyers but also economists, veterinary and food safety inspectors and

ESA monitors and assesses the implementation of EEA law (Directives and Regulations) into the national legal orders of the EEA EFTA states. Next to the four freedoms (goods, workers, services and capital), ESA is also competent for the areas of food safety, transport, public procurement, state aid, competition rules, environment and energy. The competences of ESA correspond to those of the Commission, the main difference being the exclusion of fisheries and agriculture.

The EEA EFTA states are obliged to submit to ESA the measures with which they intend to implement EEA law. ESA will assess the national implementation measures. In case of non- or mal-implementation, ESA will first send a ‘Letter of Formal Notice’ to the respective EEA-3 state asking it to clarify and explain its national measure. This is followed by a ‘Reasoned Opinion’, if the ‘Letter of Formal Notice’ and the state’s response to it does not prove full compliance. The ‘Reasoned Opinion’ provides the respective EEA-3 state for the opportunity to forward its arguments to prove compliance of the national measure and/or adjust its national measure so as to conform to EEA law, respectively ESA’s ‘Reasoned Opinion’. In case the EEA-3 states do not conform to the ‘Reasoned Opinion’ or are of a different legal opinion, ESA can bring the matter to the EFTA Court.⁹¹

ESA not just ensures the application of the EEA with regard to the EEA EFTA states, but also enforces the competition, state aid and procurement provisions of the EEA against individual market actors. To this end it enjoys the same powers as the Commission does vis-à-vis individuals. The Preamble of the EEA Agreement notes the “important role that individuals will play in the European Economic Area through the exercise of the rights conferred on them by this Agreement and through the judicial defence of these rights.” Therefore, ESA also protects the rights of individual market actors granted to them under the EEA against infringement of those rights by an EEA EFTA state or other market actors.

Every individual can directly file complaints with ESA, which may initiate proceedings if it deems the complaint justified.

communications and IT experts. The nationality of these officials is not limited to the EEA-3 states.

91 Art. 31 SCA.

EFTA Secretariat in Brussels

The EFTA secretariat is a low-key institution in the Brussels circuit but this does not mean it is unimportant. The EEA-3 countries rely heavily on the EFTA Secretariat, established for this purpose in Brussels (besides the EFTA Secretariat in Geneva since 1960). Unlike the European Commission, which has the sole right of legal initiative at EU level, the Secretariat serves the EEA-3 in the day-to-day management of the functioning of the EEA.

The term ‘functioning’ should be read as:

• the anticipation of and response to a steady stream of internal market legislation, followed by

• the incorporation of these EU acts into EEA-3 domestic legislation, based on Joint Committee Decisions.

Given the nature and set-up of the EEA, the EU is typically the ‘policy driving force’ of the internal market-related activities of the EEA-3. The EFTA Secretariat lubricates virtually the entire process on the part of the EEA EFTA countries. For resource-related reasons, Iceland and Liechtenstein lean more heavily than Norway on the work, expertise and informal contacts of the EFTA Secretariat.

In practice, the Secretariat

• prepares drafts of (EEA-related) documents for internal EFTA meetings (Standing Committee, subcommittees, working groups, consultative committees) and the meetings of EEA bodies (Joint Committee, advisory bodies and the EEA Council). Whenever joint texts are negotiated between member states, the Secretariat is a crucial resource whether for intra-EFTA instances or for the entire EEA (with the EEAS).

• performs Secretariat work (e.g. drafts agendas, conclusions, minutes, background notes and papers and speaking points) and

• monitors EU activities, especially with a view to anticipating future EU legislation (‘pipeline acquis’ – expected EU acts announced in Commission annual programmes, roadmaps and otherwise), on which it may provide early recommendations and analysis. The Secretariat is held to regularly update lists of what may be forthcoming as well as analysis of the impact for the EEA-3

In interviews by the authors, the Secretariat invariably gets favourable reviews.

Nevertheless, the Secretariat‘s effectiveness might be hindered by a habit of attracting officials only on fixed duration contracts (maximum 6 years). This practice leads to high staff turnover whilst institutional memory and expertise suffer. The Norwegian report by the EEA Review Committee of January 2012 calls for an audit of the Secretariat in this respect. It goes without saying that an effective Secretariat is very important for Liechtenstein, especially because of its naturally limited administrative capacity.