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Unofficial Pre-print
The EEA EFTA States are the only non-EU states that, on a regular basis, have been allowed to participate in the work of EU agencies that govern the internal market. Participation in the work of an agency does not include the right to vote, nor are third-states automatically bound by decisions enacted by the agency. Participation “in the work” of an EU agency is a way in which to provide decision shaping rights in exchange to third-countries that are willing to enter into mechanisms that grant the binding effect of decisions enacted by EU agencies in their territories. As these mechanisms are intertwined with the attribution of decision shaping rights, the arrangements that allow for participation in the work of an EU agency become highly complex. The paper identifies and examines four different models for participation. It argues that the direct participation of third-countries in EU agencies, with voting rights, would be favorable compared to the current approach.
Third State Participation in EU Agencies – Exploring the EEA Precedent 1. Introduction
Agencies have become a cornerstone of the regulatory and institutional framework of the EU.
Among their important tasks is to build a common supervisory culture and practice, to gather and share information and knowledge, to coordinate and direct the administrative bodies within the Member States and to assist the lawmaking institutions of the EU, the Commission in particular, in the development of new regulation. Agencies belong to the administrative branch. Their role is not to shape economic or social policy, but to refine and implement the existent legal framework in their relevant fields to enhance integration. The close cooperation between the EU-agencies and the administrative bodies within the Member States make them particularly suited to deal with complex technical and bureaucratic issues which require a high degree of specialist knowledge.
Third countries wanting to take part in the internal market must find ways to connect with the relevant EU agencies. Whether, and to what extent this is possible, depends on the founding regulations of the specific agencies. While these are not streamlined, most such regulations include a third-country clause on cooperation and/or participation. Arrangements on cooperation supplement regular trade agreements and are generally limited to exchange of information and best practices. Cooperation is contingent on an assessment of equivalence between the regulation and supervision in the third-country and that which exists in the EU.
For a number of reasons, such arrangements have been described as a “legally unstable and politically unpalatable basis” for access to the EU internal market.1
Deep market access, i.e. participation in the internal market on an equal footing with the Member States of the EU, makes participation in the relevant agencies necessary.
Participation requires the full adoption of Union law in the relevant field.2 At the same time, the substantive law in areas where agencies exist tend to presuppose their existence by
1 Moloney, “Brexit and financial services: (Yet) another re-ordering of institutional governance for the EU financial system?” 55 CML Rev. (2018), 175–201, at 179.
2 See, e.g., regulations 1093/2010 (European Banking Authority) O.J. 2010 331/12; 1094/2010 (European Insurance and Occupational Pensions Authority) O.J. 2010 331/48; 1095/2010 (European Securities and Markets Authority) O.J. 2010 331/84, Article 75.1.
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conferring on them additional functions and powers. In practice, novel EU legislation cannot be fully adopted by third-countries in the absence of a prior arrangement on participation in the relevant agencies. The interdependence between substantive and institutional measures is relevant to the functioning of the Agreement on the European Economic Area (EEA),3 and indeed to the future relationship between the EU and the UK if Brexit becomes a reality.4 A careful reading of third-country clauses reveals important differences between cooperation and participation. To quote just one example, the founding regulations of the EU financial agencies express in the active form that “[t]he Authority may cooperate” with third-countries.5 In a less direct manner, the third-country clause states that “[P]articipation in the work of the Authority shall be open to third countries which have concluded agreements with the Union whereby they have adopted and are applying Union law in the areas of competence of the Authority”. The latter expression does not confer discretion to the agency itself, nor does it foresee any agreement between the third-country and the specific agency. Instead,
“arrangements shall be made” pursuant to the relevant provisions in the association agreement concluded between the EU and the relevant third-country, in particular on the nature, scope and involvement in the work of the agency.
Another important difference between cooperation and participation is that the first is a possibility or an opportunity, while the latter is formulated as a right (“shall be open”).
Notably however, participation “in the work” of an agency is not the same as full
participation.6 As has become evident in the Brexit negotiations, the EU hedges the decision- making autonomy of its institutions.7 A crucial difference between Member States and participating third-countries is that the latter will not obtain voting rights. Another difference is that participation in the work of an agency does not in itself establish how the participating third-country actually becomes bound by decisions enacted by the agency. The precise account is therefore that participation “in the work” of an EU agency provides decision shaping rights in exchange to third-countries that are willing to enter into mechanisms that grant the binding effect of decisions enacted by EU agencies in their territories.
If EU law provided third-countries the right to participate in EU agencies in the true sense, e.g. with voting rights, matters would be quite straight-forward. Third-countries would achieve more or less the same status as the Member States, within the specific field. In comparison, the right to participate “in the work” of an agency is much more reserved and Janus-faced. From the internal perspective, the right expresses that the principle of EU
3 O.J. 1994, L 1/3.
4 The outline of the political declaration setting out the framework for the future relationship between the European Union and the United Kingdom foresees comprehensive arrangements in the fields of goods and services. Participation in agencies such as ECHA (chemicals) and EASA (aviation) might be a way in which to underpin these ambitions. With regard to financial services, on the other hand, the declaration expressly refers to
“equivalence” and “cooperation”.
5 Supra note 2.
6 The same notion is found in e.g. regulation 1907/2006 on the Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH), O.J. 2006, L396/1, Article 106, but the terminology is not entirely
consistent. E.g., regulation 713/2009 establishing an Agency for the Cooperation of Energy Regulators (ACER), O.J 2009, L 211/1, Article, 31 establishes that the agency “shall be open to the participation of third countries”.
7 See e.g., European Council, December Guidelines; Council of the EU, Supplementary directives for the negotiation of an agreement with the United Kingdom of Great Britain and Northern Ireland setting out the arrangements for its withdrawal from the European Union (29 Jan 2018), para 3. See further Hillion,
“Withdrawal under article 50 TEU: An integration friendly process”, 55 CML Rev. (2018), 29–56, at 45 and 50.
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decision-making autonomy is not absolute; outsiders may be given procedural rights. As procedural rights are presumed to be of value because they may affect the outcome of a process, this concession is important. Still, to become effective the right to participate in the work of an agency must be made operational within some supplementary or overarching framework that establishes its precise reach and content.
From the perspective of a sovereign non-member state it is difficult to subordinate to the collective will of the EU Member States, as expressed through the mouth of an agency.
Procedural, decision shaping rights provide a scant of legitimacy, but in the absence of voting rights, third-countries do not participate on equal terms. Therefore, the mechanisms pursuant to which third-countries accept to be bound cannot be expected to be unconditional. As these mechanisms are intertwined with the attribution of decision shaping rights, the arrangements that allow for participation in the work of an EU agency become highly complex. The basic purpose, however, is simple: to strike a balance between the formal sovereignty of the third- countries on the one hand, and the decision making autonomy of the EU on the other, in the governance of substantive internal market rules to which all parties agree. The alternative, which arguably would provide more or less the same balance, would be to allow third countries to participate fully in the agencies, with voting rights, subject to the direct supervision of the institutions of the EU. The latter option does not yet exist.
The analysis will focus on participation in EU agencies that govern the internal market, firstly because of their importance, secondly because these agencies possess several decision making competencies. The important precedent in this regard are the arrangements entered into by the EEA EFTA States.8 Norway, Iceland and Liechtenstein, are the only non-EU states that, on a regular basis, have been allowed to participate in EU agencies that govern the internal
market.9 Their status as the most privileged outsiders flows from the EEA Agreement, which
“establishes a close association between the European Union and the EFTA States based on special, privileged links between the parties concerned”.10
The EEA Agreement is constructed to ensure homogeneity between the substantive law within the EU- and the EFTA pillar. The main incentive for the EEA EFTA States is to take part in the EU internal market, while preserving full sovereignty in the formal sense. The main incentive for the EU is to export the acquis and values of the Union while preserving the
8 Article 2 (b) EEA defines the “EFTA States” as Iceland, Liechtenstein and Norway. The fourth EFTA Member State, Switzerland, does not take part in the EEA. On the basis of its approximately 120 bilateral agreements with the EU, Switzerland participates in 6 EU agencies: the European Environment Agency, EASA and ECHA (internal market), Frontex, EASO and EU LISA (Schengen). The fragmented approach poses a challenge to the integrity of EU law and is under pressure, cf. “Council conclusions on EU relations with the Swiss
Confederation”, Brussels, 28 February 2017 (6767/17).
9 The EEA EFTA states participate in almost all of the existing EEA relevant agencies that govern the internal market: ACER (energy), EASA (aviation), EBA, ESMA and EIOPA (financial services), ECHA (chemicals), EFSA (food safety), ENISA (network and information security), ERA (railways), EMA (medicines), and EMSA (maritime safety). Further, the EEA EFTA States are expected to participate fully in the European Labour Authority and the European Data Protection Board. Fisheries and agriculture fall outside the scope of the EEA Agreement, thus the EEA EFTA States do not take part in CPVO (plants) and EFCA (fisheries). Upon a concrete assessment, EUIPO (intellectual property), EIGE (gender equality), SRB (Banking Union) and the European Translation Centre have not been regarded as EEA relevant. Regulation 1211/2009 establishing the Body of European Regulators for Electronic Communications (BEREC) and the Office, O.J. 2009, L 337/1, Article 4.3, does not allow for third-country participation.
10 Case C-431/11, UK v. Council, EU:C:2013:589, para 49.
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decision making autonomy of its institutions.11 The preservation of sovereignty and autonomy require a strict separation between the institutional machinery in the EU- and the EFTA-pillar;
generally referred to as the “two-pillar model”.12 The arrangements on the participation in EU agencies are constructed to respect and pursue the foundational values of the EEA Agreement.
One of the main findings of the paper is that the dual nature of EU agencies, performing both a substantive and an institutional role, is difficult to reconcile with the distinction between substantive and institutional issues in the EEA framework.
Section 2 presents the foundational values of the EEA Agreement in some detail. The agreement is constructed to be dynamic and includes provisions that allow for the
participation in EU agencies, but do not specify the modalities of such arrangements. Each arrangement is tailored to be the best compromise between the values underpinning the EEA Agreement, on the one hand, and the mandate of the relevant agency, on the other. The paper deduces four main models from existing practice. Section 3 examines the “national
implementation model”. The arrangement for the participation in the European Chemicals Agency (ECHA) serves as the main example. Section 4 examines the “two-pillar model”, taking the participation in the Agency for the Cooperation of Energy Regulators (ACER) as its main example. The modalities of this arrangement is the mirror image of the two-pillar model on which the EEA Agreement rests. No powers are being transferred to the
supranational level. Section 5 examines the modalities of the participation of the EEA EFTA States in the EU financial agencies, described as the “EEA model for the transfer of power”.
The arrangement vests the EFTA Surveillance Authority with competence to enact decisions that are directly binding within the national legal orders of the EEA EFTA States. Section 6 examines the recent and quite remarkable draft arrangement on the participation of the EEA EFTA States in the European Data Protection Board. The arrangement is crafted as something close to a one-pillar system, referred to in the paper as the “assimilation model”. The status of the EEA EFTA States as assimilated members of the EU pillar may challenge the autonomy of EU law while the remaining differences between the pillars are problematic from the perspective of non-discrimination. Section 7 summarizes the main observations of the paper.
Unless the principle of EU decision-making autonomy is applied in a somewhat more relaxed manner, the constitution of an administrative branch will make the European Union more state-like, and less accessible to outsiders.
2. The EEA Agreement: Substantive homogeneity – institutional sovereignty 2.1 Foundational values: Homogeneity and sovereignty
The EEA Agreement entered into force in 1994. Its main purpose is to extend the internal market of the EU to the whole of the EEA.13 The main part of the agreement is a blueprint of the most important provisions of the Treaty of Rome as they were at the time, including the provisions on free movement, competition and state aid. Further, the agreement includes 22 annexes, ordered by subject, mirroring the level of secondary legislation within EU law. The annexes are subject to continuous amendment to incorporate novel EU legislation of EEA relevance. The ability of the EEA Agreement to respond to new legal developments within the
11 See further Hillion, “Integrating an outsider: An EU perspective on relations with Norway”, Report 16 to
“Europautredingen”.
12 See e.g., “Conclusions EU and EEA-EFTA Ministers of Finance and Economy”, Brussels 14 October 2014 (14178/1/14 REV 1) para 4.
13 See e.g. case C-452/01 Ospelt, EU:C:2003:493, para 29.
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EU, and the pragmatism of the EEA EFTA States in this regard, are the two most important factors that explain the success of the agreement.14 With regard to substantive issues, it has become widely accepted that homogeneity is the prevailing principle. Its foundational character makes the EEA Agreement more ambitious and far reaching than other third- country agreements, such as the EEC–Turkey Association Agreement, and places the EEA EFTA States “on the same footing” as the EU Member States.15 The downside of the agreement is that the EEA EFTA States must accept the role as rule-takers instead of (co) rule-makers. Obviously, this is problematic from a democratic perspective and in terms of influence.
The EEA Agreement is concluded as a regular treaty pursuant to public international law.16 As observed by the ECJ in opinion 1/91, the principles of supremacy and direct effect do not exist within EEA law.17 Their absence marks national legal autonomy as the prevailing principle with regard to institutional issues. The term “two pillar model” is commonly used to refer to the fact that even though EEA law is identical to EU law in substance, the EEA Agreement, and the complementary Surveillance and Court Agreement (SEC) establish a separate institutional machinery within the EFTA pillar.18 The EEA Agreement does not vest the EFTA bodies with the power to enact decisions that produce binding effects within the legal orders of the EEA EFTA States. To mention just one important example, Article 34 SEC states that the EFTA Court shall have jurisdiction to give advisory opinions on the
interpretation of the EEA Agreement. The corollary is that, in the last instance, it is the national courts of the EEA EFTA States that establish the interpretation of the EEA Agreement with binding effect. A national court may request the advisory opinion of the Court “if it considers it necessary”, but is under no obligation to do so. Even in instances where the EFTA Court has delivered an advisory opinion, national courts have a right and a duty to “independently consider how to interpret and apply EEA law”.19 In this regard, national courts “shall attach considerable importance to the opinions of the EFTA Court concerning the interpretation of EEA law”.20 In practice, national courts tend to accept the opinion of the EFTA Court even if they disagree, but not if they consider it to be wrong.21 To combine the principle of homogeneity, on the one hand, and the principle of sovereignty, on the other, has been described as a “mission impossible”.22 The former President of the EFTA Court, Professor Carl Baudenbacher, was the proponent of a more optimistic and
14 Fredriksen and Franklin, “Of Pragmatism and Principles: The EEA Agreement 20 years on”, 52 CML Rev.
(2015), 629–684, at 633.
15 Case C-81/13, UK. v. Council, EU:C:2014:2449, para 59.
16 On the EEA Agreement, see generally, Nordberg, Hökborg, Johansson and Ehlermann, EEA Law, A
Commentary on the EEA Agreement (Fritzes,1993); Baudenbacher (Ed.),The Handbook of EEA Law (Springer, 2016); Arnesen, Graver, Fredriksen, Mestad and Vedder (Eds.), Agreement on the European Economic Area: A Commentary (Nomos/Hart Publishing, 2018).
17 Opinion 1/91 EEA, EU:C:1991:490, paras 20–22.
18 O.J. 1994, L 344/1. Only the EEA EFTA States are parties to the agreement, a fact which underlines that the design of the institutional machinery within the EFTA pillar remains the prerogative of the EEA EFTA States.
19 Norwegian Supreme Court, HR-2016-2554-P Holship, para 76 (plenary judgment, official translation of the Supreme Court).
20 Holship, para 77.
21 In Norwegian practice, the latter has happened on two occasions: in HR-2013-496-A STX the Supreme Court questioned the findings of the EFTA Court in Case E/2/11. In LF-2015-187242 Fosen the appeal court explicitly disregarded the findings of the EFTA Court in Case E-16/16.
22 Graver, “Mission Impossible: Supranationality and National Legal Autonomy in the EEA Agreement”, 7 European Foreign Affairs Review (2002), 73–90.
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pragmatic approach:23 “In the EEA/EFTA we do not have the giant gothic cathedral with three naves which is characteristic for EC law, our construction rather resembles a simple Nordic stave church. But worshipping is possible in both places with the same results.”24 As the EEA Agreement has matured, it has become increasingly clear that the foundational principles on which the agreement rests are not subject to any kind of direct balancing against each other. Instead, the principles of substantive homogeneity and institutional sovereignty are being combined and reconciled. An important example is the way in which novel EU legislation is being incorporated (“copied”) into the EEA Agreement. The EEA Joint
Committee is vested with the competence to enact decisions to update and amend the annexes of the EEA Agreement, in the pursuit of full homogeneity.25 The Committee shall take its decisions by agreement between the representatives of the EU and the three EEA EFTA States, speaking with one voice.26 The “musketeer principle” serves two purposes. First, it integrates the countries in the EFTA pillar. Second, it preserves the formal sovereignty of the individual EEA EFTA States – the possibility to say “no”. The non-incorporation of novel EU legislation of EEA relevance will result in the provisional suspension of the affected annex to the agreement.27 Politically, there is a fear that a “veto” may put the whole EEA Agreement at risk. This has never happened. Until today the EEA EFTA States have accepted their position as rule-takers.
When novel EU legislation has been successfully implemented into the EEA Agreement by decision of the EEA Joint Committee it becomes binding upon the EEA EFTA States pursuant to public international law. Protocol 35 to the EEA Agreement asserts that the Contracting Parties have not transferred any legislative competences to any institution of the European Economic area. Concequently, “the homogeneity of the EEA will have to be achieved through national procedures”.28 Article 7 EEA establishes a duty upon the EEA EFTA States to incorporate the EEA Agreement and acts referred to in the decisions of the EEA Joint Committee into their national legal orders.
To sum up, the mechanisms established to guarantee substantive homogeneity between EU law and EEA law are designed to respect the formal sovereignty of the EEA EFTA States.
Key to the EEA model is that it establishes an autonomous institutional machinery within the EFTA pillar. The principle of sovereignty requires two steps to be taken before novel EU legislation enters the internal legal order of the EEA EFTA States: first a decision of the EEA Joint Committee to incorporate the new measure into the EEA Agreement; second a decision of the national authorities of the EEA EFTA States to implement the obligations that flow from the EEA Agreement into their national legal orders.
2.2 EU agencies governing the internal market – EEA relevant?
A fundamental question is whether the founding regulations of EU agencies must be regarded as “EEA relevant”. Article 102 EEA, obliges the EEA EFTA States, acting in their capacity as members of the EEA Joint Committee, to incorporate novel EU legislation on “matters
relevant to this Agreement” into the EEA agreement. The notion of relevance is not further
23 Baudenbacher, “Ten Years of the EFTA Court: Symposium 21 October 2004”, in Baudenbacher (ed.), The EFTA Court Ten Years On, Hart, 2005, 1-9 at 4–5.
24 The point is proved by Case E-9/97, Sveinbjörnsdóttir, compare paras 44 and 59.
25 Articles 98 and 102 EEA.
26 Article 93 EEA.
27 Article 102.5 EEA.
28 Case E-1/01, Einarsson, para 52.
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defined. Generally speaking, legislation that concerns the functioning of the internal market is at the core of the concept, while its penumbra is more uncertain. If the established orthodoxy were applied directly on agencies, they would have to be regarded as EEA relevant. The EEA EFTA States would both be entitled and obliged to participate on the same terms as the Member States of the EU. That finding would however be directly at odds both with the principle of EU decision making autonomy, and the principle of sovereignty. The institutional dimension requires a more nuanced approach.
Article 102.3 EEA must be interpreted in context and with due regard to the founding values of the agreement. More or less every EU institution produces output that is important to the EEA Agreement in the practical sense. Nevertheless, the institutions themselves are not EEA relevant, legally speaking. In general, decision shaping rights require a specific legal basis.
While Articles 99–101 EEA provide for participation in working groups that sort under the Commission, the EEA Agreement does not cater for comprehensive cooperation at the institutional level. The “two-pillar model” is the negation of the principle of homogeneity with regard to institutional issues. Autonomy and sovereignty are the prevailing values in this regard.
It should be also be emphasized that while the participation in the work of an agency provide decision shaping rights, third-countries do not obtain the right to vote. Such arrangements may be agreed upon for practical and pragmatic reasons, but it can hardly be argued that the EEA Agreement legally obliges the EEA EFTA States to accept the role as the inferior part.
The way in which EU legislation is crafted increases the imbalance. If the founding regulation of an EU agency does not allow for the participation of third countries, the EEA EFTA States are simply barred. Although there exists only one relevant example in this respect, it shows that participation is regarded as an institutional issue which the parties decide upon
unilaterally.29 It is submitted, therefore, that EU agencies are not EEA relevant in the strict sense: A decision of the EEA EFTA States not to take part will not trigger the reciprocity mechanism in Article 102.5 EEA.
The notion of EEA relevance serves a double purpose: Firstly, in the strict sense, it defines the rights and duties of the EEA EFTA states. Secondly, it defines the reach of the competence of the EEA Joint Committee to amend the EEA Agreement. The strict notion is important to the extent that the Contracting Parties disagree. If however, the Contracting Parties agree to pursue a “common interest”, the competence of the EEA Joint Committee is far reaching.30 In its judgment in CIBA, the EFTA Court stated that that the term “matters relevant to this Agreement” must also
“cover matters that are not specifically dealt with in the texts of the EEA main Agreement, its Protocols and Annexes, but nevertheless are capable of affecting the good functioning of the EEA Agreement. The operative goal under Article 102(3) EEA is to ‘arrive at an agreement.’ For this to carry any practical meaning
29 Regulation 1211/2009 establishing the Body of European Regulators for Electronic Communications
(BEREC) and the Office, O.J. 2009, L 337/1, Article 4.3 does only allow observer status. The EEA EFTA States have voiced strong criticism of this provision, and have hitherto rejected incorporation of the regulation into the EEA Agreement, see “EEA EFTA Comment on the Proposal for a Regulation of the European Parliament and of the Council establishing the Body of European Regulators for Electronic Communications”, 27 March 2017, para 5 and the proposal of the Commission COM(2016) 591, Article 26.2.
30 Case E-6/01, CIBA, para 33.
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in relation to the effective implementation and operation of the EEA Agreement, such an agreement cannot be restricted to a mere adoption of secondary
Community legislation.”31
The existing practice between the Contracting Parties confirms that EEA Joint Committee is competent to enact decisions on the arrangements for participation in EU agencies, if both parties consider this to be in the common interest.
2.3 Participation arrangements – legal basis and form
Pursuant to Article 98 EEA the EEA Joint Committee is competent to enact decisions to amend the annexes to the EEA Agreement.32 Article 98 (and the provisions referred to therein) is the sole legal basis for arrangements on the participation of the EEA EFTA States in EU agencies, governing the internal market.33 The EFTA website provide a compilation of the 15 decisions that have been enacted so far.34
The arrangements have a specific form and consist of two elements: the full incorporation of the relevant founding regulation into the EEA Agreement and necessary adaptations.
Normally, the EEA-adapted founding regulation will include a general clause that states that any reference to the EU Member States shall be understood to include the EEA EFTA States.
Further, the EEA-adapted founding regulation will set out the terms of the participation in the work of the agency in some detail; rights of presence and decision-shaping rights in particular, however without voting rights. Importantly, the EEA adapted regulation will also establish the mechanisms and terms upon which agency decisions become binding upon the EEA EFTA States and within their internal legal orders. The more powerful the agency is, the more complex these mechanisms become. Examples will be provided below.
2.4 The preferred position of the EEA EFTA States
The modalities of arrangements on participation are subject to negotiations. The distinction between substantive and institutional issues is crucial to understand the position of the parties.
Normally, substantive issues are not on the table. Pursuant to the founding regulations of EU agencies, full adoption of the relevant EU legislation in the field is a basic requirement for the participation in the work of an agency. This coincides with the incentive of the EEA EFTA States, which is to pave the way for future implementation of new legislation, to maintain substantive homogeneity.
The EEA EFTA States have accepted that, allegedly, the principle of EU decision-making autonomy does not allow voting rights to be attributed to third countries. The legal and political difficulties relate to institutional issues. As will be further explained, the EEA EFTA States participate directly in the EU agencies in every aspect that does not concern the
enactment of decisions that are legally binding. If an EU agency is vested with decision making powers, the troubles start. Four possible solutions exist:
31 Case E-6/01, CIBA, para 32.
32 The antithesis is that the Committee is not competent to amend the provisions in the main agreement, and must thus act within the framework established by primary EEA Law, cf. Case E-6/01 CIBA, para 33.
33 The position of the Council is enacted on the basis of article 218.9 TFEU in conjunction with the relevant substantive provisions.
34 http://www.efta.int/eea/eu-agencies
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1. The power to enact binding decisions vested in an EU-agency can, with regard to the EFTA countries, be vested in the national bodies of the EEA EFTA States.
2. The EFTA institutions, the EFTA Surveillance Authority in particular, can be vested with powers that mirror the competences of the EU agencies to enact individual decisions addressed to the EEA EFTA States.
3. The EFTA institutions can be vested with powers to enact individual decisions addressed to the EEA EFTA States and to enact individual decisions addressed to private parties in the EEA EFTA States.
4. The powers vested in EU agencies can be extended to cover the EFTA-pillar.
The position of the EEA EFTA States is founded on the principle of sovereignty. The transfer of powers to bodies at the supranational level is politically unwanted and, at some point, constitutionally impossible. Alternative 1 above is therefore the preferred option, and will in the following be referred to as ”the national implementation model”. Alternative 2 is the mirror image of the EEA agreement, and will be referred to as “the two pillar model”.
Alternative 3 requires the transfer of internal powers to the EFTA Surveillance Authority.
This is at odds with the foundational values of the EEA Agreement and politically unwanted, but legally possible. Alternative 4 is an example of assimilation and has at least until recently been regarded as politically and constitutionally impossible.
The EU has accepted the preferences of the EEA EFTA States to the extent that they can be reconciled with the mandate of the relevant EU agency. If, however, an agency is vested with the power to enact binding decisions directed at administrative bodies at the national level, the preferred position of the EEA EFTA States is no longer feasible. To vest the national bodies within the EEA EFTA States with a similar competence would effectively amount to a competence to enact decisions addressed at themselves.
At the other end, the constitutional requirements in the EEA EFTA States must be respected.
To give one important example, any arrangement must be in conformity with the
requirements that flow from Article 115 of the Norwegian Constitution, which (somewhat ironically) establishes “the membership principle”:
“the Norwegian Parliament may, by a three-fourths majority, consent that an international organisation to which Norway is a member or will become a member shall have the right, within specified fields, to exercise powers which in
accordance with this Constitution are normally vested in the authorities of the state, although not the power to alter this Constitution.”
A core competence that belongs to the authorities of a state is to issue legislation and decisions that are directly binding upon its nationals (e.g. private parties). The constitution does not require that such powers must remain at the national level but insists that the kingdom must be a member of the organization to which the competences are being
transferred. The purpose of the membership principle is obvious; to secure participation on equal terms and thus democracy, even after the transfer of powers. Due to its fundamental character, the principle is found in many European Constitutions, the constitutional traditions of which informed the drafting of Article 115.35 The principle pinpoint the main problem from
35 The drafting of the provision was inspired by, but is not necessarily identical to, constitutional arrangements in Belgium, Denmark, France, the Netherlands, the UK, and the USA. St.meld. nr. 89 (1951), 65–81.
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the point of view of any outsider: In the absence of voting rights, participation can never take place on fully equal terms.
The principle of membership prohibits the transfer of internal powers to organizations to which Norway is not a member: e.g. the transfer of powers to enact measures and decisions that become directly binding within the internal legal order. Such powers cannot and are not transferred to the bodies of the EU. If participation in an EU agency requires the transfer of competences to enact decisions addressed to private parties the only way in which it is possible to respect the principle of membership is to vest identical powers to the bodies of EFTA; the organization to which Norway is a member.
2.5 The two-pillar model as reference
The sections above have explained the rationale on which the two-pillar model rests. In short, the model realizes substantive homogeneity, while preserving the decision-making autonomy of the EU and the formal sovereignty of the EEA EFTA States. In general, the model works quite well as the cooperation between the EU and the EFTA pillar is rather limited at the institutional level, and because the EEA EFTA States have accepted their rather passive role as rule-takers.
Agencies make matters far more complicated. The EEA agreement was never drafted to provide for close cooperation at the institutional level. The 4 models/arrangements that will be examined in the following respect the overarching framework and apply the two-pillar model and the values underpinning it as key references. While complexity is unavoidable, an
important additional aim is to keep the arrangements as simple as possible. The “national implementation model” and the “assimilation model” are heavily influenced by this aim but provide very opposite solutions (Sections 3 and 6). And if it is necessary to respect the mandate of the specific EU agency, the EEA EFTA States have been willing to resort to both pragmatism and sophistry (Section 5).
3. The national implementation model
We now turn to the analyses of the 4 different models for the participation in agencies that govern the internal market, starting with the “national implementation model”. The modalities of this “light” model is inspired by the Schengen Association Agreement, concluded between the EU, Norway and Iceland.36 The national implementation model is of interest in particular because it provides a template for the participation in EU agencies for individual states.
Section 3.1 below will explain why the preferred position of the EEA EFTA States is to copy the modalities of the Schengen association agreement, even within the ambit of the EEA Agreement. Section 3.2 will provide an analysis of the agreement on the participation of the EEA EFTA States in the European Chemicals Agency to illustrate how the national
implementation model works within the context of the EEA framework. Section 3.3 identifies some core problems that will be further discussed in the remaining parts of the paper.
3.1 The modalities of the Schengen Association Agreement
Three characteristics explain why the Schengen Association Agreement has inspired the modalities of the national implementation model. First, the rule-taking mechanism established by the Schengen Association Agreement is simpler than the mechanism that flows from the
36 O.J. 1999, L 176/36.
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EEA agreement. Key to the EEA Agreement is that it requires two steps to be taken before novel EU legislation and acts become effective within the national legal order of the EEA EFTA States. The first step is incorporation into the EEA Agreement by decision of the EEA Joint Committee.37 The second step is incorporation at the national level.38 The Schengen Association Agreement, in comparison, establishes a simple and expedient one-step
mechanism that skips the first step. The competence and duty to copy and implement novel EU acts is vested in the national bodies of the participating EEA EFTA States.39 This coincides with the preferred position of the EFTA countries; to rely to the greatest extent possible on their national institutions.
Second, the Schengen Association Agreement provides more comprehensive decision shaping rights than catered for by the EEA Agreement. The latter allows the EFTA States to take part in the structures that fall under the Commission,40 while, pursuant to the Schengen
Association Agreement, Norway and Iceland also enjoy the right to take part in the decision- shaping mechanisms and structures that fall under the Council. The Schengen Association Agreement establishes a Mixed Committee, consisting of representatives of the governments of Iceland and Norway, the members of the Council of the European Union and the European Commission.41 The Mixed Committee shall address all matters covered by the association agreement and shall ensure that any concern entertained by Iceland and Norway is “duly considered”.42 While the decision shaping rights of the EEA EFTA States in EU agencies must be constructed to fit each specific body, the Schengen Association Agreement is an important precedence in the more general sense. It confirms that extensive decision-shaping rights are necessary to compensate for the absence of the right to vote, and that such rights are possible to reconcile with the principle of EU decision-making autonomy.43
Third, the Schengen Association Agreement establishes a mechanism for the non-
implementation of Schengen relevant acts and measures by Norway or Iceland respectively that is brutally direct. If either Norway or Iceland refuse to incorporate novel legislation that is relevant to the agreement, Article 8.4 establishes that the agreement “shall be considered terminated with respect to Iceland or Norway, as the case may be”. The “guillotine clause”
offers no other possibility for Norway and Iceland than to incorporate novel EU acts and measures if they want the Schengen cooperation to continue. Notably, the Schengen Association Agreement establishes that Iceland and Norway shall decide independently whether to accept the content of novel measures and to implement them into their internal legal order.44 To some extent, the Schengen model disintegrates the EEA EFTA States and brings them closer to the EU. While this may be regarded as advantageous from the
perspective of the EU, it suits the EEA EFTA States as well, the purpose of which is not to establish an EFTA Community, but to be assimilated members of the EU. At the level of decision taking, the EEA “musketeer principle” is to some extent problematic from the
37 Article 98 EEA.
38 Article 7 EEA.
39 Article 8.2 SAA.
40 Article 99 EEA.
41 Article 3 SAA.
42 Article 4.1 SAA.
43 Article 8.1 SAA establishes that the formal adoption of new acts or measures related to the Schengen cooperation shall be reserved to the competent institutions of the European Union.
44 Article 8.2 (a) SAA.
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perspective of sovereignty, as the “veto” of one country will affect all. Within the Schengen model the non-implementation of novel EU acts and measures becomes an isolated matter between the EU and the respective EFTA State.
3.2 ECHA – the national implementation model
Its simplicity, its strong decision-shaping rights, its insistence on substantive homogeneity and its formal preservation of national legal autonomy explain why the Schengen Association Agreement is a source of inspiration, on which to model arrangements on the participation in EU agencies, even within the ambit of the EEA Agreement. The EU seems to accept the national implementation model to the extent that it is possible to reconcile with the mandate of the agency. The participation of the EEA EFTA States in the European Chemicals Agency provides a good example. The European Chemical Agency is established by the REACH regulation, to carry out its technical, scientific and administrative aspects.45 The arrangements for the participation of the EEA EFTA States in ECHA is enshrined in decision 25/2008 of the EEA Joint Committee, through which an adapted version of the REACH regulation was incorporated into the EEA agreement.46 Of particular interest in our regard is the way in which the EEA-adapted regulation deals with the incorporation of new decisions produced within the REACH framework.
The Commission, acting in close cooperation with the agency, is empowered to authorize chemical substances within the EU.47 Decisions made by the institutions of the EU are not binding on the EEA EFTA States. Instead, the EEA-adapted founding regulation establishes that “[w]hen the Commission takes authorisation decisions, the EEA EFTA States will
simultaneously and within 30 days of the Community Decision, take corresponding decisions.
The EEA Joint Committee shall be informed…”48 The national authorities of the EEA EFTA States are obliged to stamp Commission decisions and to extend their reach without any considerations or further ado. The one-step mechanism for the implementation of novel EU decisions to cover the whole EEA is the mirror image of the Schengen model. Implementation will take place at the national level only. The EEA Joint Committee will not enact a decision that incorporates the Commission decision into the EEA Agreement; it is simply “informed”.
The obligation of the EEA EFTA States to copy the decisions made by the Commission is worded as an order: “the EFTA States will…” This is compensated for by the provision of extensive decision shaping rights. The decision of the EEA Joint Committee establishes in general terms that “[t]he EFTA States shall participate in the work of the European Chemicals Agency” and further that “the term ‘Member State(s)’ contained in the Regulation shall be understood to include, in addition to its meaning in the Regulation, the EFTA States”.49 The respective provisions of the REACH regulation are adapted accordingly. To mention some
45 Regulation 1907/2006 on the Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH), O.J. 2006, L396/1, Article 75.1. The European Chemicals Agency does also assist in the enforcement of regulation 1272/2008 on Classification, Labelling and Packaging (O.J. 2008, L 353/1), regulation 528/2012 on Biocidal Products (O.J. 2012, L 167/1) and regulation 649/2012 on the export and import of hazardous chemicals (O.J. 2012 L 201/60).
46 Decision of the EEA Joint Committee No 25/2008 of 14 March 2008 amending Annex II (Technical regulations, standards, testing and certification) to the EEA Agreement, O.J. 2008 L 182/14.
47 Article 64 REACH.
48 Annex 1 to the decision of the EEA Joint Committee, paragraph 1 litra g, amending Article 64 REACH.
49 Annex 1 to the decision of the EEA Joint Committee, paragraph 1 litras a and b.
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examples, the EEA EFTA States are given the right to participate fully in the Management Board of the agency, with the same rights and obligations as EU Member States, except for the right to vote.50 Further, the EEA EFTA States participate fully, without the right to vote, in the Member State Committee, in the Committee for Risk Assessment, the Committee for Socio-economic Analysis51 and the Forum for Exchange of Information on Enforcement.52 Nationals of the EEA EFTA States are eligible as members, or as alternates, of the Board of Appeal.53 Due to the close assimilation, the EEA EFTA States shall contribute to the
financing of the agency on an equal footing as the EU Member States.54
Contrary to the Schengen Association Agreement, the EEA-adapted version of the REACH regulation does not contain a guillotine clause. The explanation is that the application of the national implementation model within the EEA framework creates a hybrid. The obligations of the EEA EFTA States flow from the EEA adapted founding regulation, as incorporated into the EEA Agreement by the decision of the EEA Joint Committee. Consequently, the
individual EEA EFTA States are not as such parties to any agreement with the EU.55 If an individual EEA EFTA State does not comply with the duty to enact “corresponding
decisions”, it will not amount to a veto pursuant to Article 102 EEA. Instead, it constitutes a violation of the EEA Agreement the consequences of which must be handled within the EFTA pillar, by the EFTA institutions.
3.3 Potential and problems
The national implementation model disintegrates the EFTA pillar and places the individual EEA EFTA States closer to the EU. It is therefore a valuable precedent for other third countries. It should be noted, however, that the model is possible to reconcile with the mandate of the institutions within the EU pillar only where their decisions are supposed to apply uniformly within the whole of the EU. Only if that is the case does it make sense to rely solely on the national authorities of the EEA EFTA States, the duty of which is to extend the reach of decisions that originate in the EU pillar, to include their national territories.
It should also be noted that when the Schengen inspired model is being applied within the EEA framework, the participation agreement benefits from the existing institutional infrastructure in the EFTA pillar. The harsh “guillotine clause” can be avoided because violations of the obligation to copy acts and measures produced within the EU pillar becomes a violation of the EEA Agreement, monitored by the EFTA Surveillance Authority and the EFTA Court.
The EEA adapted REACH regulation introduces the two most fundamental problems that occur when outsiders subordinate to EU agencies.56 First, the national legal autonomy (“sovereignty”) of the EEA EFTA States is respected only in its thinnest sense. The possibility to say “no” is formally preserved, but the way in which the legal framework is
50 Annex 1 to the decision of the EEA Joint Committee, paragraph 1 litra h, amending Article 79 REACH.
51 Annex 1 to the decision of the EEA Joint Committee, paragraph 1 litra I, amending Article 85 REACH.
52 Annex 1 to the decision of the EEA Joint Committee, paragraph 1 litra j, amending Article 86 REACH.
53 Annex 1 to the decision of the EEA Joint Committee, paragraph 1 litra k, amending Article 89 REACH.
54 Annex 1 to the decision of the EEA Joint Committee, paragraph 1 litra i, amending Article 96 REACH.
55 In comparison, The Schengen Association Agreement is concluded directly between the Council of the European Union, Norway and Iceland, thus any violation of the obligations that stem from the agreement is a direct violation of the association agreement itself.
56 These will be further discussed in the remaining sections.
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crafted underscores that it is not regarded as a practically available option. Second, the model seems to exhaust the potential for judicial review. From the perspective of the EEA EFTA States and their citizens, decisions that are enacted within the EU pillar are facts rather than law. The EEA-adapted REACH regulation establishes a legal duty upon national authorities to turn those facts into binding decisions. Arguably, if the national bodies within the EEA EFTA States have respected their legal duty to copy, there is little for the national courts or the EFTA Court to bite on. In the opposite situation, if the obligation to copy is not respected, the true nature of the model is revealed. A violation of the duty to take “corresponding decisions”
at the national level will not constitute a breach of substantive obligations that flow from the EEA agreement, as the one-step mechanism excludes the incorporation of the Commission decision into the EEA Agreement. Instead, non-incorporation at the national level will constitute a failure to act. The paradox of national implementation model is that, within the EFTA pillar, the EFTA institutions will monitor the duty of the individual EEA EFTA States to incorporate substantive measures that originates in a distinct legal order, the EU legal order.
4. The two-pillar model for the participation in EU agencies
Section 3 above described the national implementation model, characteristic of which is the simple one-step procedure for the implementation (copying) of EU decisions. If, however, an EU agency is vested with competence to make individual decisions, to direct and coordinate national authorities, the preferred model of the EEA EFTA States is no longer an option. It does not make sense to vest in the national authorities a competence to enact decisions addressed to themselves. The competence to enact individual decisions must remain outside the national domain.
The current section examines the two-pillar model for the participation in the more powerful EU agencies, such as the Agency for the Cooperation of Energy Regulators, ACER.57 The two-step procedure for the implementation of new EU measures is the key feature of the model. A two-step mechanism makes the institutional issues more demanding as it becomes necessary to set up some kind of institutional counterpart to the EU agencies within the EFTA pillar. So far, the solution has been to vest the EFTA Surveillance Authority with
competencies that parallels the powers of the EU agencies (Section 4.1). To conform with the principle of national legal autonomy, the competence of the EFTA Surveillance Authority is constructed so as not to produce internally binding effects. Its decisions must be implemented at the national level by national authorities (Section 4.2). Strict mechanisms to preserve the homogeneity between the EU and the EFTA pillars is necessary at both stages insofar as a distinct EFTA-regime is essentially at odds with the purpose of coordination. The conflict between homogeneity and effective rights protection is introduced in Section 4.3.
4.1 First step: Implementation of decisions into the EEA Agreement
At the energy sector, the need for coordination between national regulatory bodies, and in the last instance between private actors, is obvious. The preamble of the founding regulation of ACER emphasizes that it is “appropriate to provide an integrated framework within which national regulatory authorities are able to participate and cooperate…. As regards situations
57 Decision of the EEA Joint Committee No 93/2017 of 5 May 2017 amending Annex IV (Energy) to the EEA Agreement (not yet in force due to constitutional requirements).
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concerning more than one Member State, the Agency should be granted the power to adopt individual decisions.” 58
The competence enshrined in Articles 7,8 and 9 of the founding regulation interacts with more specific powers that flow from complementary legislation. Just to mention one example, regulation 714/2009 on conditions for access to the network for cross-border exchanges in electricity establishes a mechanism to solve conflicts between national authorities on issues relating to new interconnectors.59 National authorities shall try to reach an agreement, but if they fail, ACER is competent to issue a decision on the matter, with binding effect upon both national authorities and private actors. The transfer of powers is, on the one hand, necessary to allow the agency to fulfil its mandate. On the other hand, it challenges the principle of national institutional autonomy on which the EEA agreement rests. The purpose of the two- pillar model is to reconcile the competing values.
The EU energy packet has been incorporated into the EEA agreement. The EEA-adapted founding regulation establishes that the term “Member States” in the founding regulation shall be understood to include the EEA EFTA States.60 Their national regulatory authorities shall participate fully in the work of ACER and all preparatory bodies, including working groups, committees and task forces of the Agency, the Administrative Board and the Board of Regulators; however without the right to vote.61 With regard to the competence to enact binding decisions the EEA adapted regulation makes important amendments, first that:62
“In cases involving one or more EFTA States the EFTA Surveillance Authority shall adopt a decision addressed to the national regulatory authorities of the concerned EFTA State(s).”
The EEA adapted founding regulation vests the EFTA Surveillance Authority with
competencies that copy those of the EU Agency and repeal the competence of ACER in this regard. Further, it establishes that decisions enacted by the EFTA Surveillance Authority shall be “addressed to the national regulatory authorities”. The amendment reflects the non-
existence of the principle of direct effect within the EFTA pillar. To become effective, any
“binding” decision enacted by the EFTA Surveillance Authority must be implemented into the national legal order by a corresponding decision enacted at the national administrative level. The two-step procedure mirrors the modalities of the EEA Agreement.
The empowerment of the EFTA Surveillance Authority as the “ACER of EFTA” preserves the strict separation of the EU and the EFTA pillars with regard to institutional issues. It is however directly at odds with the purpose of coordination on which the establishment of ACER rests. A mechanism that preserves homogeneity is indispensable. The core procedural principle of the EEA adapted regulation is worded as follows:63
58 Regulation 713/2009the European Parliament and of the Council of 13 July 2009 establishing an Agency for the Cooperation of Energy Regulators, O.J 2009, L 211/1, para 10 of the preamble.
59 Regulation 714/2009 of the European Parliament and of the Council of 13 July 2009 on conditions for access to the network for cross-border exchanges in electricity, O.J. L 211/15, Article 17.
60 Decision 93/2017 of the EEA Joint Committee, Article 1 para 5 litra b.
61 Decision 93/2017 of the EEA Joint Committee, Article 1 para 5 litra a.
62 Decision 93/2017 of the EEA Joint Committee, Article 1 para 5 litra d.
63 Decision 93/2017 of the EEA Joint Committee, Article 1 para 5 litra d (iv).
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“The Agency and the EFTA Surveillance Authority shall cooperate closely when adopting decisions, opinions and recommendations. Decisions by the EFTA Surveillance Authority shall, without undue delay, be adopted on the basis of drafts prepared by the Agency at its own initiative or at the request of the EFTA Surveillance Authority.”
Due to the purpose of coordination and the principle of homogeneity, the provision must be interpreted literally: the task of the EFTA Surveillance Authority is to rubber stamp the draft decision of the EU agency. Thus, the competence to enact binding decisions takes on an utterly formal nature – it is the decision-shaping rights that matter.
4.2 Second step: Implementation into the national legal order
Formally, the implementation of decisions adopted by the EFTA Surveillance Authority acting as the “ACER of EFTA” is an internal matter. The preservation of the autonomy of the national administrative bodies is however at odds with the purpose of coordination. Again, a special mechanism has been created to ensure homogeneity. The EEA EFTA States have agreed to establish a designated national administrative body that is at the receiving end of decisions enacted by the EFTA Surveillance Authority.64 The EFTA Surveillance Authority will specifically address this body, which is given a special status within the national
administrative machinery: it shall act with full independence from the political and the administrative branch. The principle of independence modifies the general right of the Parliament and the Government to instruct subordinate bodies. At the same time, the independent national administrative body is bound by the obligations that the EEA EFTA States have accepted pursuant to public international law. In effect, the national body is the prolonged arm of the EFTA Surveillance Authority, which, for its part, is the prolonged arm of ACER.
4.3 Homogeneity and rights protection as conflicting values
No Board of Appeal exists within the EFTA pillar. Further, the strict separation of the two pillars bars any kind of review within the EU pillar of decisions that are formally enacted within the EFTA pillar. Instead, the EEA-amended founding regulation establishes, more modestly, that the national regulatory authorities may request the EFTA Surveillance Authority to reconsider its decision. The EFTA Surveillance Authority shall forward this request to ACER which shall “consider” preparing a new draft for the EFTA Surveillance Authority.65 The mechanism reflects the diplomacy on which the dispute resolution within public international law is based. In some sense, ACER becomes the informal complaints body of the EFTA pillar. In case of disagreement between the EFTA Surveillance Authority and ACER on the administration of the provisions of the EEA amended regulation, the two bodies shall convene a meeting to find consensus. If agreement cannot be reached, the matter must be referred to the EEA Joint Committee.66
The validity of the decisions enacted by the EFTA Surveillance Authority may be challenged before the EFTA Court by the EEA EFTA States or by any natural or legal person that is
64 In accordance with directive 2009/72/EC concerning common rules for the internal market in electricity, O.J.
2009, L211/55, Article 35.
65 Decision 93/2017 of the EEA Joint Committee, Article 1 para 5 litra d (iv).
66 Decision 93/2017 of the EEA Joint Committee, Article 1 para 5 litra d (v).
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affected by the decision.67 Decisions that are enacted at the national level may be challenged by affected individuals before national courts. Decisions that originate in the EFTA pillar cannot be made subject to review by the ECJ, and the Court is not competent to assess the validity of draft decisions adopted by ACER.68 As will be further explained below, there is a risk that the separation between the real and the formal decision-making procedure exhausts the possibilities for effective judicial review.
5. The EEA model for the transfer of power
The analysis so far has shown that the arrangements for participation vary in accordance with the mandate of the EU agency and the powers vested in it. The national implementation model is an available option in instances where EU agencies are empowered to enact decisions that shall apply uniformly within the whole of the EU. The two-pillar model is applied if the EU agency is mandated to coordinate the efforts of national administrative bodies and to issue individual decisions addressed to them. Implementation at the national level remains the prerogative of the national administrative bodies of the EEA EFTA States, in conformity with the principle of national legal autonomy.
Matters become increasingly difficult if an EU agency is mandated not only to address and instruct the bodies at the national level, but, as a last resort, to correct them and thereby to substitute them. The EU financial agencies are empowered to issue decisions that are directly binding upon private parties in the EU Member States69 and that prevail over previous
decisions adopted at the national level.70 When the arrangements on the participation of the EEA EFTA States were negotiated, the EU rejected their claim that the competence to enact decisions that are binding upon private parties should remain at the national level. The preferred position of the EEA EFTA States would be directly at odds with the mandate of the agencies. On the other hand, the EU accepted that it would be contrary to national
constitutional requirements, the principle of membership in particular, if the power to bind private parties within the EEA EFTA States was transferred to the EU.
As a compromise, the EEA-adapted founding regulations transfer the competence to enact directly binding decisions to the EFTA Surveillance Authority and introduce strict
mechanisms to ensure homogeneity between the two pillars (section 5.1). The gap between the de facto enactment of a decision within the EU pillar, and the formal enactment (copying) of the same decision within the EFTA pillar does, however, seem to undermine the possibility of administrative and judicial review of decisions that formally are adopted by the EFTA Surveillance Authority. No Board of Appeal has been established within the EFTA pillar (section 5.2). The right to judicial review before The EFTA Court exists but there is a risk that it becomes illusory (section 5.3).
5.1 The transfer of powers to the EFTA Surveillance Authority
The transfer of powers to the supranational level, is against the spirit of the EEA Agreement and the principle of national legal autonomy, but not wholly unprecedented. When the EEA Agreement was negotiated, the EEA EFTA States had to accept the empowerment of the
67 Articles 36 and 37 of the Surveillance and Court Agreement.
68 Article 267 (b) TFEU.
69 Articles 17.6, 18.4 and 19.4 of the founding regulations.
70 Articles 17.7, 18.5 and 19.5 of the founding regulations.
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EFTA Surveillance Authority to enforce the competition rules against private parties. For this specific reason, the strict procedures established by Article 115 of the Norwegian Constitution were invoked, for the first time in Norwegian history. The arrangements for the participation in the EU financial agencies made it necessary to revisit the provision, for the second time in Norwegian history.71 Its application marks the extent to which the agencification of the EU challenges the functioning of the EEA Agreement.
It is only the competence to enact binding decisions that is transferred to the EFTA
Surveillance Authority. The competence to enact decisions that are non-binding remains with the EU financial agencies. Importantly, guidelines and recommendations pursuant to Article 16 of the founding regulations of EBA, ESMA and EIOPA are regarded as non-binding measures (“soft law”). The EEA EFTA States will respect recommendations and guidelines adopted by the EU Agencies, and will report directly to them pursuant to the “follow or explain system”.72 Further, mediation pursuant to Article 19.2 and 19.3 of the founding regulations is regarded as a non-binding measure. Consequently, the EU financial agencies are competent to mediate not only between the competent authorities of the EEA EFTA States and of the EU Member States, but also between the authorities of the EEA EFTA States.
Other important examples of “non-binding measures” are investigations, recommendations and coordination as envisaged in Articles 17 1, 17.2, 17.3, 18.1 and 18.2 of the founding regulations. In all these respects, the EEA EFTA States are fully subject to the actions taken by the institutions of the EU, and participate directly in the EU pillar as if they were Member States.
The EU agencies are not copied as such within the EFTA pillar; the EEA EFTA States have not set up their own agencies. The EEA adapted founding regulations resort to the two-pillar model only with regard to the power to enact decisions that are formally binding. For the time being such competencies flow from Articles 17.4–17.6, 18.3–18.5, 19.3–19.5 of the founding regulations. Further, Article 9.5 presupposes that complementary substantive legislation on the financial sector will vest supplementary powers in the agencies, typically to enact temporary measures of a general character if a crisis occurs.73
It would be at odds with the mandate of the EU financial agencies and the purpose of
coordination if the EFTA surveillance authority could make autonomous decisions. To ensure homogeneity, the EEA-adapted regulations reinstate the general principle; that decisions enacted by the EFTA Surveillance Authority “shall, without undue delay, be adopted on the basis of drafts prepared by the Authority at its own initiative or at the request of the EFTA Surveillance Authority”. 74 The term “adopted on the basis of drafts” implies that the EFTA
71 The transfer of powers requires the consent of the Norwegian Parliament with a qualified ¾ majority. The first vote was held 16 October 1992. Of a total of 165 MPs, 130 voted for, 35 voted against. The second vote was held 13 June 2016. 135 voted for, 29 voted against.
72 Articles 16.3 and 16.4 of the founding regulations.
73 See, i.e., regulation 236/2012, O.J. 2012, L 86/1, Article 28, regulation 1286/2014, O.J. 2014, L 352/1, Article 16, directive 2011/61, O.J. 2011, L 174/1, Article 47, regulation 648/2012 Articles 40 and 41.
74 Decision of the EEA Joint Committee no 201/2016 (ESMA): Article 1, litra (g) subpara (ii) amending Article 9.5 of the EU founding regulation; Article 1, litra (i) subpara (vi) amending Article 17.4 and 17.5 of the EU founding regulation; Article 1, litra (i) subpara (viii) amending Article 17.6 of the EU founding regulation;
Article 1, litra (j) subpara (ii) amending Article 18.3 and 18.4 of the EU founding regulation; Article 1, litra (k)