I.          The UK’s EEA Membership after Brexit

In a previous article titled ‘The (Uncertain) Impact of Brexit on the United Kingdom’s Membership in the European Economic Area’, that appeared in issue 7 [2016] of Kluwer’s European Business Law Review, pp. 921-958, Ulrich G. Schroeter and I have concluded that the UK’s withdrawal under Article 50 TEU does not affect its membership of the European Economic Area (‘EEA’). Contrary to this view, John Armour, Holger Fleischer, Vanessa Knapp and Martin Winner have recently argued in their article ‘Brexit and Corporate Citizenship’ that many of the EEA Agreement’s ‘provisions are drafted such that they only apply in relation to EU and European Free Trade Association (EFTA) Member States’. There are indeed certain difficulties in case the UK remains member of the EEA after Brexit. Such difficulties would arise, primarily because the institutional arrangements in the EEA Agreement do not explicitly envisage an EEA Contracting Party that is neither a member state of the EU nor of the EFTA. Most provisions of the EEA Agreement are drafted with the pre-Brexit situation in mind – a situation marked by all EEA Contracting Parties belonging either to the EU (respectively its predecessors) or the EFTA. Against this background, this blog post submits that the application and surveillance of EEA law by UK courts and authorities would be possible without the need to revise the EEA Agreement’s text.

II.        Current Competences in EEA Law

Central powers in the interpretation and surveillance of EEA law in the UK are currently conferred on the ECJ, the EGC and the European Commission. Because EEA law forms an ‘integral part’ of the EU legal system, UK courts of last instance are obliged to refer their cases to the ECJ if they concern EEA law, and they are accordingly bound by the interpretation provided by the ECJ. The European Commission is competent to investigate if the UK has failed to fulfil an obligation under the EEA laws and, if such a case arises, to bring the matter before the ECJ.

In contrast, the three EFTA States, namely Iceland, Liechtenstein and Norway, are subject to the interpretation and surveillance of EEA law by the EFTA Court and the EFTA Surveillance Authority. Both institutions have been established under the SCA, a separate treaty between (only) Iceland, Liechtenstein and Norway.

As divergences in the interpretation of EEA law may result from this ‘two pillar structure’, consisting of the ‘EU pillar’ and the ‘EFTA pillar’, the ECJ and EFTA Court are primarily entrusted with ensuring the ‘homogeneity’ of EEA law, after the initial plan that had aimed at the establishment of a single EEA Court had been declared incompatible with the TEEC by the ECJ in its Opinion 1/91 of 14 December 1991. As a consequence, a system of cooperation and information concerning judgments by the EFTA Court, the ECJ, the EGC and the courts of last instance of the EFTA States has been established. Moreover, article 6 of the EEA Agreement requires EEA rules to be interpreted in conformity with relevant rulings of the ECJ given prior to the date of the EEA Agreement’s signature (in 1992). Despite the mutual approximation within the EEA, there is no legal obligation to follow case-law of the ECJ or the EFTA Court after the date of the EEA Agreement’s signature, although the practice of the ECJ and the EFTA Court has demonstrated that both courts consider each other’s rulings. 

III.       Accession to the SCA

Once the UK’s withdrawal from the EU has terminated the ECJ’s, the EGC’s and the European Commission’s competence to survey British cases under the TFEU, the UK would not automatically become subject to the surveillance of the EFTA Court and EFTA Surveillance Authority if it remains member of the EEA. As both institutions have been established by the SCA, the UK would have to accede to it in order to achieve a representation in the EFTA Court and the EFTA Surveillance Authority. Its accession would require an amendment to the SCA by agreement among all current SCA Contracting Parties (Iceland, Liechtenstein and Norway), because Article 51 of the SCA currently only allows for an accession by EFTA States, and other SCA provisions would also have to be adjusted to the new situation.

IV.       Transforming Competences of UK Courts and Authorities

1.         Termination of EU Competences

Should the necessary agreement with Iceland, Liechtenstein and Norway not be reached or should the UK for other reasons opt against joining the SCA, the question remains as to which courts and authorities will primarily be competent for the surveillance of EEA law in the UK. The EEA Agreement itself does not establish any court nor authority that would primarily be responsible for the interpretation and surveillance of EEA law. After the withdrawal from the EU, the powers conferred on the ECJ, the EGC and the European Commission for British cases will be terminated and sovereignty rights that has partially been transferred to the EU will be regained. UK courts and authorities certainly must supervise compliance with EEA law already as a EU Member State. The withdrawal from the EU will nevertheless give them the powers of primarily responsible institutions that will thus have the final say in British cases unless the EEA Agreement provides otherwise.

2.         Powers of UK Courts

After the withdrawal from the EU, UK courts are no longer bound by the judicial framework under the EU Treaties, but solely by the framework under the EEA Agreement. Problems in this context may arise because certain provisions of the EEA Agreement expressly refer to ‘EC Member States’ and/or ‘EFTA States’ instead of referring to all ‘Contracting Parties’. Article 106(1) of the EEA Agreement which requires the EEA Joint Committee to set up a system of exchange of information expressly only includes judgements by the EFTA Court, the ECJ, the EGC and the Courts of last instance of the EFTA States. The wording appears to exclude national courts of non-EU/non-EFTA Contracting Parties. On the basis of a teleological approach, it is however submitted that the term ‘EFTA States’ is not limited to Iceland, Liechtenstein and Norway, but, more generally, refers to the ‘non-EU pillar’. This is confirmed by Article 1(1) of the EEA Agreement which sets forth that the ‘aim of this Agreement of association is to promote a continuous and balanced strengthening of trade and economic relations between the Contracting Parties with equal conditions of competition, and the respect of the same rules, with a view to creating a homogeneous European Economic Area’ (emphasis added). As an individual Contracting Party, the UK would be included in the association established by the EEA Agreement, and the substantive parts of the EEA Agreement would thereby become applicable in the UK. For example, Article 4 of the EEA Agreement, which has been recognised as a general principle of EEA Law, prohibits any discrimination on grounds of nationality ‘within the scope of application of this Agreement’ without distinguishing between different types of EEA Contracting Parties. The promotion of the EEA’s purpose would, however, substantially be frustrated if the institutional framework was not adapted in such a way as to include a non-EU/non-EFTA Contracting Party. Therefore, judgments of UK courts of last instance may also be subject to the system of exchange of information.

Beyond this (soft) practice of homogeneity, it would be a significant consequence of the UK’s EEA membership that UK courts would not be bound by rulings of the ECJ given after the date of the EEA Agreement’s signature. Nor would UK courts of last instance be obliged to refer cases to the ECJ for a preliminary ruling. Theoretically, Article 107 of the EEA Agreement and Protocol 34 could authorise the UK to allow its courts to ask the ECJ to decide on the interpretation of EEA law, but it appears unlikely that the UK would do so after the UK Government has expressed its intention to end the jurisdiction of the ECJ in the UK in its White Paper ‘The United Kingdom’s exit from and new partnership with the European Union’. Consequently, the interpretation of EEA law in British cases would be in the sole responsibility of UK courts.

3.         UK Authority

As long as the UK has not entered the SCA, surveillance of the fulfilment of obligations under the EEA Agreement by and in the UK will have to be conducted by an independent UK surveillance authority (‘UK authority’). The European Commission would by contrast not be entitled to investigate if the UK has failed to fulfil its obligations under the EEA Agreement or to bring the matter before the ECJ.

The same difficulties and possible solutions just described with a view towards the judicial framework apply mutatis mutandis to the surveillance of the UK authority. To ensure the uniform surveillance throughout the EEA, the UK authority would have to be included into the cooperation between the European Commission and the EFTA Surveillance Authority in analogy with Article 109(2) of the EEA Agreement. For the same reason, the UK authority would be responsible for ensuring the application of the competition rules in Articles 53–64 of the Agreement. Other than in the context of the judicial framework, the EEA Agreement provides for a detailed division of competences between the surveillance authorities. Accordingly, the European Commission would primarily decide on anti-competitive agreements (EEA Agreement, Article 56(1)(c)), whereas the abuse of a dominant position in the UK would be decided upon by the UK authority (EEA Agreement, Article 56(2)).

V.        Conclusion                                                                                                    

After the withdrawal from the EU, the UK may uphold its access to the European Single Market if it remains a member of the EEA. The substantive rules under the EEA Agreement could accordingly be applied by and in the UK. As the EEA Agreement does not explicitly envisage an EEA Contracting Party that is neither a member state of the EU nor of the EFTA, certain parts of the institutional framework would have to adapted with regard to the UK. As long as the UK does not accede to the SCA, UK courts and a UK surveillance authority would primarily be competent for the interpretation and surveillance of EEA law in the UK.

Heinrich Nemeczek is a Research Fellow at the University of Basel (Switzerland) and an Academic Visitor at the Law Faculty of the University of Oxford.