The EFTA Court and International Law

2.1 Introduction

The EFTA Court has cited the European Convention on Human Rights (ECHR)⁸ and related case law from the European Court of Human Rights (ECtHR) on numerous occasions. This section covers the twelve cases where the Court itself has cited the ECHR. Cases where only parties cite the ECHR are excluded,⁹ as are those where the Court cites ECtHR case law without citing the ECHR itself.¹⁰ The EFTA Court cannot and does not apply the ECHR directly to a dispute.¹¹ It rather interprets EEA rules in light of unwritten ‘fundamental rightsʼ that are part of the EEA system, and uses the ECHR and ECtHR case law in order to find the content of those rights.

While the Courtʼs overall method of interpreting EEA rules in light of fundamental rights is common to all the twelve cases discussed below, it is possible to distinguish between them. The following sub-sections divide them into four categories.¹² The Court has used the ECHR only as an interpretative aid, as described in section 2.2. In other cases the Court has seemed to assume that EEA law is limited by fundamental rights, whose contents are informed by the ECHR (section 2.3). In two cases, covered in section 2.4, the Court left the determination of conflicts between EEA law and fundamental rights, interpreted in light of the ECHR, to national courts. In one case, discussed in section 2.5, the Court found a violation of a fundamental right, interpreted in light of the ECHR, and even imposed a remedy.

2.2 As an interpretative aid

The first category of cases is where the EFTA Court only used the ECHR as an aid in interpreting EEA law.

Arnulf Clauder is a judgment in a case resulting from a referral from a Liechtenstein court in an immigration case.¹³ The EFTA Court was asked to interpret Article 16(1) of Directive 2004/38/EC¹⁴ and found that EEA nationals who receive pension benefits in an EEA member State where they have a right to permanent residence are entitled to family reunification even with family members who also receive welfare benefits.¹⁵ It reached this conclusion through a teleological interpretation,¹⁶ which allowed it to retain homogeneity with European Union (EU) law even though there is no equivalent of EU citizenship in EEA law.¹⁷ The Court discussed various arguments based on EEA law, and finally, just before reaching its conclusion, added that ‘EEA States are parties to the ECHR, which enshrines in Article 8(1) the right to respect for private and family lifeʼ, and that ‘provisions of the EEA Agreement are to be interpreted in the light of fundamental rightsʼ.¹⁸ The Court then reached a conclusion about the content of the contested EEA rule ‘[i]n light of the foregoingʼ.¹⁹ The Court thus used the ECHR as a factor in interpreting EEA law. That the ECHR was mentioned at the very end of a long discussion, almost as an afterthought, suggests that it played a limited role in the Courtʼs reasoning.

Yankuba Jabbi is similar.²⁰ This was an immigration case involving Norway. The EFTA Court made a result-oriented interpretation of EEA law, where homogeneity with EU law was prioritised over strict fidelity to the wording of the EEA Agreement.²¹ The Court again mentioned Article 8 of the ECHR towards the end of its reasoning, repeating its formula that ‘provisions of the EEA Agreement are to be interpreted in the light of fundamental rightsʼ.²² The Court then reached a conclusion based on EEA law that it may as well have reached without having referred to the ECHR. The ECHR was held up as an interpretative factor, but it is not clear whether it actually influenced the outcome of the case.

Ski Taxi concerned a ‘controversialʼ question of competition law in Article 54 EEA Agreement.²³ The Court recalled ‘that it is incumbent on ESA or the competent national competition authority to adduce evidence capable of proving the existence of the circumstances that constitute an infringement of Article 53 EEAʼ.²⁴ The reference to the ECHR came in the next sentence, where the Court held that ‘[k]eeping in mind the guarantees provided by Article 6(2) of the European Convention on Human Rights, it follows from the principle of the presumption of innocence that the undertakings to which the decision finding an infringement was addressed must be given the benefit of the doubtʼ.²⁵ Thus the ECHR was merely ‘kept in mindʼ when interpreting Article 53 EEA, and it was the latter provision that the Court actually applied in its judgment.

Case E-12/10 ESA v Iceland concerned Icelandic legislation applicable to foreign workers in Iceland and their employers and the compatibility of this law with Article 36 EEA Agreement and Article 3 of the Posted Workers Directive.²⁶ Iceland argued that the legislation was adopted in order to protect private property, which would be legal under EEA law ‘on grounds of public policyʼ.²⁷ The Court accepted that private property is protected by the ECHR (and the Icelandic Constitution), and repeated its usual statements that ‘the EEA Agreement are to be interpreted in the light of fundamental rightsʼ and that the ECHR and ECtHR case law ‘are important sources for determining the scope of these rightsʼ.²⁸ The Court did not, however, accept Icelandʼs argument, which the Court found to ‘manifestly deprive the [Posted Workers Directive] of its effectivenessʼ.²⁹ The Court was thus willing to use the ECHR as an aid when interpreting the EEA Agreement, even though it did not accept Icelandʼs specific argument in the case.

2.3 As a limit on EEA law

In other cases the EFTA Court has seemed to accept that EEA law can only be applied within the limits of fundamental rights, and that the content of those rights correspond with the ECHR. The Court most often finds that the rights have been respected.

Ásgeirsson is an example the Court invoking Article 6 of the ECHR.³⁰ It is the first case where the Court held that the ECHR and ECtHR case law are important sources to determining the content of fundamental rights in EEA law.³¹ The case is so far the only one where the EFTA Court has interpreted Article 5 and 6 of Protocol 4 to the EEA Agreement, which contains rules of origin.³² The case was a referral from an Icelandic court in a criminal case about fish exports. The defendant in the criminal case argued against referring the case to the EFTA Court, as this would ‘[prolong] the duration of proceedingsʼ contrary to the right enshrined in Article 6 of the ECHR.³³ The Court once again noted that ‘provisions of the EEA Agreement as well as procedural provisions of the Surveillance and Court Agreement are to be interpreted in the light of fundamental rightsʼ, and that ‘[t]he provisions of the European Convention of Human Rights and the judgments of the European Court of Human Rights are important sources for determining the scope of these rightsʼ.³⁴ The EFTA Court cited case law from the ECtHR where time spent on referral to the Court of Justice of the EU (CJEU) was found not to cause a violation of Article 6, and held that ‘[t]he same must applyʼ to the EFTA Court.³⁵ The ECHR was not applied directly to the dispute, but in practice, the case was resolved as if the ECHR and jurisprudence from the ECtHR limited the application of EEA rules.

Much the same use of Article 6 ECHR was made in Konkurrenten.³⁶ The case concerned a Norwegian aid scheme for a bus company that the ESA had found to be in accordance with EEA law. The EFTA Court found several shortcomings in the ESAʼs reasoning. The Court refrained from discussing whether there is a difference between aid ‘schemes which have been previously assessed and approved by ESA, from schemes which existed prior to the entry into force of the EEA or which became aid, due to the evolution of the EEAʼ.³⁷ The Court was not persuaded ‘that the application of the requirements of Article 36 SCA is in the present case in breach of the fundamental right to effective judicial protection under EEA law, as interpreted in light of the ECHRʼ.³⁸ This conclusion nonetheless seems to presuppose that the Court could not apply Article 36 SCA, or another EEA rule, in a way that would violate fundamental rights that correspond with the ECHR.

Nye Kystlink was a referral from a Norwegian court.³⁹ The case centred on the interpretation of Articles 53 and 54 EEA Agreement and a fine imposed by ESA against a ferry company. The EFTA Court held that fines imposed by the ESA ‘fall within the criminal sphere for the purposes of Article 6 ECHRʼ, but that this applied ‘when faced with a sanction imposed by ESAʼ and not ‘to a case concerning damages based on a breach that has already been finally establishedʼ.⁴⁰ Thus, the EFTA Court seemed to assume that the powers of the ESA were in practice limited by the rights of the ECHR, which are part of the EEA law as ‘fundamental rightsʼ, but it did not find that the rights had been violated.

In Schencker I the ESA had denied three private companies access to certain documents, and the companies sought an annulment of the Authorityʼs decision from the EFTA Court.⁴¹ The ESA had seized the disputed documents from other private companies. The EFTA Court had to balance the importance of transparency and the plaintiff companiesʼ right to access information with the ESA and the other private companiesʼ need for some level of secrecy. The Court found guidance in the ECHR, when it ‘recalled […] that seizure of documents under an administrative investigative procedure may constitute an interference with a companyʼs rights pursuant to Article 8 ECHRʼ.⁴² Therefore ‘the seizure and examination of data does not go beyond what is necessary to achieve the legitimate aimʼ.⁴³ The Court referred to ECtHR case law, which has drawn up more precise guidelines. The practical consequence of this approach is that in certain respects the ECtHR will determine the limits of what the ESA can do under EEA law, since EEA law contains fundamental rights that correspond with the ECHR, which is in turn authoritatively interpreted by the ECtHR. In the specific case the ESA relied in part on Article 4(1)(b) of its Rules on Access to Documents, and the Court found that this was not a proper basis for rejecting the private companiesʼ request.⁴⁴ The Court did not use Article 8 ECHR to decide the case, but it did mention the ESA had examined all ‘documents obtained during the inspectionʼ, without providing ‘adequate reasoningʼ.⁴⁵ This could be taken to mean that the ESAʼs approach was inconsistent with fundamental rights or the ECHR.

The Court gave an advisory opinion in Fred Olsen on the relationship between Norwegian rules on the taxation of foreign-controlled companies and the EEAʼs freedom of establishment and freedom of capital.⁴⁶ The plaintiffs in the case sought to show that Norwayʼs taxation of the beneficiaries of a Liechtenstein based trust was contrary to EEA law. Among other things the EFTA Court ruled that a Norwegian tax appeals board constituted a ‘court or tribunalʼ for the purposes of Article 34 SCA.⁴⁷ The Court also discussed whether ‘the imposition of the wealth tax is contrary to the requirement to respect the fundamental rightsʼ.⁴⁸ It repeated that ‘provisions of the EEA Agreement as well as procedural provisions of the SCA are to be interpreted in the light of fundamental rightsʼ and that the ECHR and ECtHR case law ‘are important sources for determining the scope of these fundamental rightsʼ.⁴⁹ It added that justifications under EEA law based on ‘overriding requirements in the public interestʼ must be ‘compatible with fundamental rightsʼ.⁵⁰ The Court discussed proportionality as a general limitation on exceptions to fundamental rights,⁵¹ an idea that seems to have been inspired by the case law of the ECtHR.⁵² In general it seems that the EFTA Court viewed EEA rules as limited by the fundamental rights corresponding with those found in the ECHR as interpreted by the ECtHR. In the specific case the Court found that ‘an examination of the alleged restriction represented by the national wealth taxation at issue in the main proceedings from the point of view of Articles 31 or 40 EEA Agreement also covers possible limitations on the exercise of the right to property as regards fundamental rights, so that a separate examination is not necessaryʼ.⁵³ It therefore did not test whether the Norwegian legislation complied with the aforementioned rights, but its statements mean that it could well have done so.

In practice, the EFTA Court interprets fundamental rights in EEA law in light of the ECHR, and in practice this seems to mean that the Court will not apply EEA law contrary to the ECHR.⁵⁴ This is in contrast to how it has applied other international agreements, as discussed in section 3. Explanations for this different treatment are explored in section 4.

2.4 Delegating to national courts

In two cases the EFTA Court noted a possible conflict between EEA law and fundamental rights corresponding to the ECHR, but left the issue to national courts.

Holship was referred by a Norwegian court, and concerned a labour dispute.⁵⁵ Holship was a private company whose dock workers were boycotted by dock workers in a labour union in Drammen. The purpose of the boycott was to force Holship to become a party to a collective labour agreement. The EFTA Court held that such a boycott could be contrary to EEA competition rules and the freedom of establishment.⁵⁶ It nonetheless agreed with the Norwegian government that ‘[t]he protection of workers has […] been recognised as an overriding reason of general interest that may justify restrictions on the freedom of establishmentʼ.⁵⁷ However, the Court added that the ‘national measures in question may fall under the exceptions provided for only if they are compatible with fundamental rightsʼ, rights which were apparently identical to those found in the ECHR as interpreted by the ECtHR.⁵⁸ The Court left the final determination of this to ‘the referring courtʼ,⁵⁹ and did not examine the question further. The decision to leave this to the national court may have been partly inspired by the case law of the ECtHR.⁶⁰ The Norwegian Supreme Court followed the EFTA Court and sided with Holship, finding that the boycott violated the freedom of establishment and could not be justified with reference to ‘fundamental rightsʼ.⁶¹ The EFTA Courtʼs president (writing in his individual capacity) called this a ‘very welcome developmentʼ, in light of the two courtsʼ previous practice.⁶²

Irish Bank concerned the aftermath of bank failure in Iceland, where the government took control of a bank in which a nationalised Irish bank held bonds.⁶³ Icelandic courts requested an opinion from the EFTA Court. The case turned on the Winding up Directive, where the case was ‘the first stepʼ in a broader ‘developmentʼ.⁶⁴ The Court made a general statement about the relationships between the EFTA Court and EFTA State national courts, which it called ‘more partner-likeʼ than the equivalent relationships in the EU.⁶⁵ It also proposed ‘new guidelines for the treatment of language issuesʼ in the interpretation of legal texts, which according to one commentator may be ‘reverberating far beyond the boundaries of the EEAʼ.⁶⁶ One issue that the EFTA Court had to decide was whether to answer only questions posed by the Icelandic Supreme Court, or whether it should also answer questions from a lower court. When deciding this, it repeated that the EEA Agreement and SCA are to be read in light on fundamental rights, for which the ECHR and ECtHR case law are important sources.⁶⁷ The Court further held that ‘when a court or tribunal against whose decisions there is no judicial remedy under national law refuses a motion to refer a case to another court, it cannot be excluded that such a decision may fall foul of the standards of Article 6(1) ECHRʼ.⁶⁸ It thus raised the possibility of Icelandʼs Supreme Court violating the ECHR when referring a case to the EFTA Court. It did not say that the Supreme Court had done so, only that it was possible to do so. The Court eventually decided to ‘answer the question posed by the District Court in its letter of 22 December 2011, and thereby the questions as amended by the Supreme Courtʼ,⁶⁹ but only after it had reminded national courts of their obligations under the ECHR.

2.5 Imposing a remedy

In one case the EFTA Court went so far as to impose remedy as a result of a violation of fundamental rights mirroring the ECHR. The case, Posten Norge, concerned a fine imposed by ESA on a Norwegian company, where the parties before the EFTA Court ‘disagree[d] on the extent to which the guarantees provided for under Article 6 ECHR apply to the present proceedings and the effect, if any, this must haveʼ.⁷⁰ The Court held that ‘the provisions of the EEA Agreement are to be interpreted in the light of fundamental rightsʼ, and that ‘[t]he provisions of the ECHR and the judgments of the European Court of Human Rights are important sources for determining the scope of these fundamental rightsʼ.⁷¹ Further, the Court stated that ‘[t]he principle of effective judicial protection including the right to a fair trial, which is inter alia enshrined in Article 6 ECHR, is a general principle of EEA lawʼ.⁷² The practical consequence of this is that the ESAʼs powers under Article 36 SCA must be used in a way that is ‘compatible with Article 6(1) ECHR and Article 2 of Protocol 7 ECHRʼ.⁷³ Thus, according to the EFTA Court, through the existence of fundamental rights the ECHR will in practice set limits on what an EEA institution can do under EEA law, and the EFTA Court will police those limits.

Later in the judgment the Court referred to Article 13 ECHR, according to which violations of the ECHR require ‘an effective remedyʼ.⁷⁴ The EFTA Court referred to a case from the ECtHR, and found it appropriate to ‘reduce the basic amount of the fine by 20 %ʼ.⁷⁵ The reduction of the fine was not mandated or indicated by any EEA rule. However, as the Court stated, it had ‘unlimited jurisdiction in reviewing the fineʼ.⁷⁶ Formally speaking, the reduction of the fine was an exercise of the discretion granted to the Court by EEA law, rather than an application of the ECHR. Even so, the practical effect of the Courtʼs approach is much the same as if it applied the ECHR directly.

The President of the ECtHR has characterised Posten Norge as a ‘landmarkʼ case in the EFTA Court.⁷⁷ It can be said to have diverged from the practice of the CJEU, which has allowed the European Commission relatively more discretion than the EFTA Court gave the ESA in Posten Norge.⁷⁸

3.1 Introduction

This section presents how the EFTA Court has dealt with arguments based on international law other than the ECHR. Three cases are discussed: Ásgeirsson, concerning a free trade agreement (section 3.2); Holship, concerning the Dock Work Convention (section 3.3); and Fokus Bank, concerning international tax law (section 3.4). The Courtʼs approach in these cases is a clear contrast from how it deals with the ECHR. Why that may be so is explored in section 4.

3.2 A free trade agreement

In the aforementioned Ásgeirsson case, the Icelandic court asked the EFTA Court to interpret the Free Trade Agreement between the European Economic Community and the Republic of Iceland, signed on 22 July 1972.⁷⁹ The EFTA Court faced an argument that it had ‘no competence to interpret international agreements other than the EEA Agreementʼ and that ‘its interpretation or applicationʼ of the free trade agreement in question ‘must consequently be considered as falling outside the scope of EEA lawʼ.⁸⁰ The Court agreed to some extent with this, holding that ‘[a]s a point of departure, it has no jurisdiction over the application or interpretation of the Free Trade Agreementʼ.⁸¹ It made exceptions for cases where there are ‘clauses connecting both sets of lawʼ,⁸² but the Court specified that applying such clauses would in principle not be ‘an interpretation of the Free Trade Agreementʼ.⁸³

3.3 The Dock Work Convention

The Holship case involved not only an argument based on the ECHR, as discussed in section 2.4, but also a potential conflict between an obligation under the EEA Agreement and the Dock Work Convention, which is the International Labour Organization (ILO) Convention 137.⁸⁴ Norway argued that the national law measures under review by the Court were taken in order to comply with the Convention.⁸⁵ In response to this the Court referred to Protocol 35 to the EEA Agreement, according to which ‘in case of a conflict between national law implementing EEA law and other national provisions not implementing EEA law, the EFTA States shall introduce a statutory provision to the effect that national law implementing EEA law shall prevailʼ.⁸⁶ The Court dismissed Norwayʼs argument, stating that ‘a Contracting Party cannot make rights conferred by Article 31 EEA subject to the ILO Convention or other international agreementsʼ.⁸⁷ Thus, while both the ECHR and the Dock Work Convention are ‘other international agreementsʼ, the Court approaches them differently.

3.4 International tax law

In Holship the EFTA Court referred to its own Fokus Bank case. In that case Norway was accused of violating EEA law. As a defence, Norway invoked ‘a principle of international tax law according to which the avoidance of economic double taxation is a matter for the home state of each taxpayerʼ.⁸⁸ The Court rejected that argument. It recalled first ‘that the basis for its interpretation of Article 40 EEA is the effect of national measures on individuals and economic operators within the EEAʼ.⁸⁹ Further, it thought that ‘permitting derogations from the fundamental principle of free movement of capital laid down in Article 40 EEA on the grounds of safeguarding the cohesion of the international tax system would amount to giving bilateral tax agreements preference over EEA lawʼ.⁹⁰ It is understandable that the Court was sceptical about this, but as shown in section 3, its approach to the ECHR means that that convention will in some sense, at least in practice, have preference over EEA law. Finally, the Court added that ‘[a] Contracting Party cannot make the rights conferred by Article 40 EEA subject to the contents of a bilateral agreement concluded with another Contracting Partyʼ,⁹¹ which is the statement that it repeated in Holship.⁹²

4.1 Introduction

The sections above show a striking contrast between the EFTA Courtʼs treatment of the ECHR and other treaties. This section presents three possible explanations for the Courtʼs practice, summed up in terms of homogeneity, institutional framework, and compatibility.

4.2 Homogeneity

The EFTA Courtʼs openness towards the ECHR seems to be motivated by the need for homogeneity with the CJEUʼs practice and the EU system. The EU has had the Charter of Fundamental Rights of the European Union since 2000, the legal status of which was formalised and strengthened under the 2009 Lisbon Treaty. The EEA system has no similar instrument. Even before the adoption of the Charter of Fundamental Rights, the CJEU had found unwritten human rights to be part of EU law, and it used the ECHR and practice from the ECtHR when determining the scope of those rights. Writers variously suggest 1969,⁹³ ‘the 1970sʼ,⁹⁴ or 1974⁹⁵ as the starting point for that practice.

Homogeneity with the EU is a central aim of the EEA system. Homogeneity means that EEA rules and corresponding EU rules should have the same content.⁹⁶ This is emphasised in the EEA Agreementʼs Preamble, which mentions ‘the objective of establishing a dynamic and homogeneous European Economic Areaʼ. The EFTA Court has mentioned it as a ‘fundamental [principle] of EEA lawʼ.⁹⁷ In line with this, the EFTA Court generally follows the CJEUʼs case law.⁹⁸ The CJEU is also aware of the need for homogeneity, stating in Ospelt that it must ‘ensureʼ that EU and EEA rules ‘are interpreted uniformlyʼ, since the extension of the EU single market to the EFTA States is ‘one of the principal aims of the EEA Agreementʼ.⁹⁹

The EFTA Court follows the CJEUʼs lead in all areas of law. An example is treaty interpretation, where both the EFTA Court and the CJEU never mention Articles 31–33 of the Vienna Convention on the Law of Treaties (VCLT)¹⁰⁰ or its customary international law equivalent when interpreting EU and EEA law.¹⁰¹ The CJEU assumed in Opinion 1/91 that the EEA Agreement would be interpreted in accordance with the VCLT,¹⁰² but neither court has followed this in its practice. This is so even though it is difficult to see how the two courtsʼ interpretive approaches are incompatible with the VCLT.¹⁰³

Article 6 EEA Agreement states that EEA rules that are identical to EU rules ‘shall […] be interpreted in conformity with the relevant rulings of the Court of Justice of the European Communities given prior to the date of signature of this Agreementʼ. This is ‘[w]ithout prejudice to future developments of case lawʼ. Article 3(2) SCA requires the ESA and the EFTA Court to ‘pay due account to the principles laid down by the relevant rulings by the Court of Justice of the European Communities given after the date of signature of the EEA Agreementʼ, concerning rules that are identical.¹⁰⁴ These provisions ‘essentially require EEA rules to be interpreted in conformity with the ECJ case lawʼ.¹⁰⁵ Both of these provisions concern rules that are identical in the EU and the EEA. The Charter of Fundamental Rights has no equivalent in EEA law, and the CJEUʼs case law on unwritten fundamental rights is not based on any written instrument that has any equivalent in the EEA. Even so, the two institutions apply many of the same underlying rules, and it would be contrary to the aim of homogeneity if the rules were applied differently because one was subject to fundamental rights and the other was not. Therefore, some writers suggest that a teleological interpretation of Article 6 EEA Agreement is a basis for the EFTA Court to draw on the CJEUʼs case law on fundamental rights.¹⁰⁶ This is a plausible argument.¹⁰⁷ One commentator argues that the EFTA Courtʼs practice on homogeneity has gone beyond the wording of Article 6 EEA Agreement and Article 3(2) SCA and become ‘homogeneity sans frontièresʼ.¹⁰⁸ Yet its practice regarding fundamental rights seems necessary in order to preserve true homogeneity between the two systems.

In line with this, the EFTA Court specifically mentioned the Charter of Fundamental Rights in several of the cases discussed in the sections above. In Arnulf Clauder, where the Court discussed Article 8 ECHR, it mentioned that ‘in the European Union the same right is protected by Article 7 of the Charter of Fundamental Rightsʼ.¹⁰⁹ In Posten Norge, it applied Article 6 ECHR and noted that ‘the principle of effective judicial protection is now also given by Article 47 of the Charter of Fundamental Rights of the European Unionʼ.¹¹⁰ The existence of the Charter of Fundamental Rights and the CJEUʼs practice regarding the ECHR makes it safer for the EFTA Court to internalise ECHR rules than to internalise other international rules that the CJEU has not already applied. The EFTA Court could face a difficult choice if the CJEUʼs Charter-based practice diverges from that of the ECtHR, but that has not yet been an issue.¹¹¹ The Court included a more general statement in Yankuba Jabbi, where it explained that ‘[t]he consideration of homogeneity […] carries substantial weightʼ,¹¹² while expressing apparent concern with a widening ‘gapʼ between EU and EEA law.¹¹³

The contrary approach that the Court has taken to other international agreements also seems to be motivated by a desire to maintain homogeneity with the CJEU. In Fokus Bank the EFTA Court cited the judgment of the CJEU in Commission v France.¹¹⁴ The latter case concerned the French governmentʼs application of its tax legislation, which the European Commission argued was contrary to Article 169 EEC Treaty because it discriminated between domestic and foreign companies.¹¹⁵ The French government argued, among other things, that its practice was a result of ‘double-taxation agreementsʼ.¹¹⁶ The CJEU responded to this first by noting that the agreements in question were not relevant to the case. It added, as a more general point, that ‘a Member State cannot make respect forʼ Article 52 EEC Treaty ‘subject to the contents of an agreement concluded with another Member Stateʼ.¹¹⁷ The EFTA Courtʼs statements in Fokus Bank and Holship mirror this.

In ACT Group Litigation and Denkavit the CJEU diverged from the EFTA Courtʼs decision in Fokus Bank regarding the relevance of bilateral tax agreements under the free movement of capital.¹¹⁸ This may be classified as a failure on the part of the EFTA Court to predict future CJEU case law rather than a failure in maintaining homogeneity with EU law,¹¹⁹ and does not detract from the argument presented in this article.

The EU is party to various treaties, and under Article 216(2) of the Treaty on the Functioning of the European Union (TFEU) these are ‘binding upon the institutions of the Union and on its Member Statesʼ. The CJEU has stated that they ‘form an integral partʼ of EU law.¹²⁰ The CJEU has developed criteria for determining whether international agreements to which the EU is a party should have ‘direct effectʼ in EU law,¹²¹ ie whether ‘individuals may be able to rely onʼ them.¹²² Agreements to which only EU member States are parties, and not the EU as such, do not have direct effect in EU law and will not be applied by the CJEU,¹²³ as stated, for example, in the aforementioned case of Commission v France. However, Article 351(1) TFEU state that if treaties were concluded before 1 January 1958 or before the State(s) in question joined the EU, the treaties ‘shall not be affected byʼ EU treaties. More generally, Article 3(5) of the Treaty on European Union (TEU) obliges the EU to ‘contribute […] to the strict observance and the development of international lawʼ. The CJEU has stated that ‘the European Community must respect international law in the exercise of its powersʼ,¹²⁴ and has been willing to apply customary international law in various cases.¹²⁵

The EFTA Court is in a less complicated position regarding international law. The EFTA as an international organisation is not party to any international agreements. There is, moreover, no equivalent in EEA law of Article 351 TFEU. The EFTA Court is therefore simply following the CJEUʼs approach when not applying non-EEA treaties.

4.3 Institutional framework

Homogeneity thus seems to be an important factor that the EFTA Court considers when it is faced with an argument based on international law that is external to the EEA system. Another possible factor is the institutional framework surrounding different legal instruments.

The ECHR is part of the internal law of the EEA member States, and is applied by their domestic courts alongside EEA law. It would be artificial for the EFTA Court to apply EEA law in a vacuum, especially in cases of referrals from domestic courts. Instead of leaving EEA law to be harmonised with the ECHR by domestic courts, the EFTA Court has been proactive. Holship represents an exception from this trend. As noted above, the EFTA Court in that case only noted that the ECHR applied to the case, but left its concrete application to ‘the referring courtʼ. Other international law is generally less integrated in domestic law and less familiar to domestic courts than is the ECHR. It may therefore seem less necessary for the EFTA Court to engage with it.

The ECHR also has a relatively powerful institutional protector in the ECtHR. If the EFTA Court ignores the ECHR, it risks coming into conflict with another international court. Conversely, collegiate cooperation and dialogue between the judges of the ECtHR and the EFTA Court may make it seem natural to take a receptive attitude to each otherʼs legal instruments. The international law rules that the EFTA Court has chosen not to internalise, have no such institutional protectors. An ECtHR judge from Iceland (an EFTA and EEA member State) has argued that the ‘human rights protection afforded by the EFTA Court, the Court of Justice and the Strasbourg Court should not differ, but should remain uniform in scope and substanceʼ.¹²⁶ There is no one with a similarly strong institutional mandate to advocate for harmony between the EEA Agreement and, say, the Dock Work Convention or international tax law.

4.4 Compatibility

Finally, compatibility could be a factor in the EFTA Courtʼs reasoning. When the Court has internalised the ECHR, it has phrased this as being a matter of ‘fundamental rightsʼ that are already part of the EEA system. When it has rejected applying other treaties, it has phrased that as a matter of giving that law ‘preference over EEA lawʼ. The EFTA Court may see the ECHR as fundamentally compatible with EEA law, while other international law may not be. However, the EFTA Court has frequently used the ECHR in a way that, in practice, gives it preference over EEA law. On several occasions it has assumed that EEA rules may only be applied within limits set by the ECHR. It has also, indirectly, tested whether the ECHR, as reflected in fundamental rights, has been respected. In Posten Norge, the Court found that it had not, and reduced the ESAʼs fine as a result.

Compatibility with the EEA system does not provide a clear basis for distinguishing the ECHR and other international law. The EFTA Court could have rejected application of the ECHR because it would have been given ‘preference over EEA lawʼ. Conversely, it could have construed and applied unwritten EEA rules equivalent to the Dock Work Convention and international tax law, as it has done with the ECHR. Homogeneity and institutional frameworks are better explanations for the different approaches.

5.1 Introduction

This section considers how the EFTA Court may react to arguments concerning international law in future cases. It does so on the basis of the explanations presented in the previous section.

The CJEUʼs judgment in Kadi is a significant example of a case where EU law conflicted with another international legal instrument.¹²⁷ The CJEU had to consider the relationship between a UN Security Council resolution imposing sanctions against individuals and fundamental rights under EU law. The resolution was binding under the UN Charter, which was concluded before 1958, and is thus covered by Article 351 TFEU, as mentioned in section 4.2 above. The CJEU nonetheless gave priority to fundamental rights, due to their ‘constitutionalʼ status in EU law.¹²⁸ A similar conflict is highly unlikely to come before the EFTA Court since the imposition of sanctions is not part of EEA law.

Instead, this section discusses potential conflicts between EEA law and the law of the WTO (section 5.2) and the consequences of the United Kingdom leaving the EU (section 5.3).

5.2 WTO law

The WTO was established by the WTO Agreement. The Agreement has various annexes that regulate different aspects of trade, the most important of which is the General Agreement on Tariffs and Trade (GATT) 1994. Another significant annex is the General Agreement on Trade in Services (GATS). The subject matter of WTO law overlaps to a large extent with EU and EEA law, since both govern international trade. This raises the possibility of conflicts. WTO law has not been invoked before the EFTA Court, but it has been dealt with by the CJEU.

The latter court has not been receptive to claims based on WTO law. One scholar concludes that the CJEU ‘has continually denied review of the legality of EU law on the basis of WTO lawʼ, even where ‘the EUʼs behavior has been explicitly declared inconsistent with WTO obligationsʼ by the WTOʼs own Dispute Settlement Body (DSB).¹²⁹

A clear example is the CJEUʼs judgment in the FIAMM case.¹³⁰ The case concerned an EU regulation of banana imports, which the DSB had found to be contrary to WTO law in EC – Bananas.¹³¹ The DSB allowed the US to impose trade restrictions against the EU. The FIAMM case was brought by EU exporting firms that were affected by the US trade restrictions. The CJEU ruled out any possibility of awarding damages under EU law for violations of WTO law.¹³²

If WTO rules were invoked before the EFTA Court, it would presumably follow the CJEUʼs lead and refuse to engage with them. This expectation is perhaps also why no such claim has yet been brought before the EFTA Court.

5.3 Brexit

In 2016 the United Kingdom (UK) voted to leave the EU, and after much uncertainty ‘Brexitʼ eventually took place on 31 January 2020. The UK activated Article 50 TEU, which allows an EU Member State ‘to withdraw from the Unionʼ. The details of the withdrawal were fixed in a negotiated Withdrawal Agreement between the UK, the EU, and the European Atomic Energy Community.¹³³ Article 126 of the Withdrawal Agreement set out a transition period until the end of 2020 where the UK remained part of the single market. On 30 December 2020 the parties signed the EU–UK Trade and Cooperation Agreement, which will govern their future relationship.¹³⁴

The UK became a party to the EEA Agreement on 1 January 1994, 21 years after it joined the EU. Article 127 EEA Agreement has a withdrawal clause similar to Article 50 TEU, which allows a State party to ‘withdraw from this Agreement provided it gives at least twelve monthsʼ noticeʼ. The UK has not given such notice. It has concluded a Separation Agreement with Norway, Iceland and Liechtenstein which largely mirrors the Withdrawal Agreement with the EU.¹³⁵ The position of the UK, the EFTA, and the President of the European Commission is that the UK ceased to be a party to the EEA Agreement when it left the EU.¹³⁶ This conclusion is based on Article 126 EEA Agreement, which states that ‘[t]he Agreement shall apply to the territories to which the Treaty establishing the European Economic Community is applied and under the conditions laid down in that Treatyʼ.¹³⁷

An alternative view, taken by some scholars, is that an Article 127 declaration would be necessary in order for the UK to leave the EEA Agreement.¹³⁸ An application based on this argument was dismissed by the English High Court in 2017.¹³⁹ Yet another view is that general international law would be a basis for the UK leaving the EEA Agreement when leaving the EU. Article 62 VCLT allows for the termination of or withdrawal from a treaty in the event of ‘a fundamental change of circumstancesʼ. The departure of the UK from the EU could perhaps constitute a fundamental change of circumstances in respect of the EEA Agreement.¹⁴⁰ The VCLT is not directly applicable because France, Romania and Norway are parties to the EEA Agreement but not the VCLT. However, Article 62 reflects customary international law.¹⁴¹

The question of whether the United Kingdom has successfully left the EEA Agreement despite not giving an Article 127 notification could come before the EFTA Court. The CJEU has applied the customary equivalent of Article 62 VCLT,¹⁴² which means that the EFTA Court should be willing to do so as well. However, the EFTA Court would probably follow the EFTA, EU, and UKʼs official positions, and find that the UK left the EEA Agreement due to Article 126. If so there will be no need for the Court to invoke the VCLT or other general international law.