The `Drama' of the EEA: Comments on Opinions 1/91 and 1/92

Barbara Brandtner ¹

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The Agreement creating a European Economic Area (EEA), negotiated between the European Community, its Member States and the countries forming the European Free Trade Association (EFTA),² and signed 2 May 1992, will parallel the Single Market as of 1 January 1993, subject to ratification. Due to be finalized in October 1991, the whole undertaking, and especially its judicial mechanism, were fundamentally called into question by the European Court of Justice (hereinafter ECJ, or the Court) on 14 December 1991.³ Its amended version, resubmitted to the ECJ in February 1992, finally found the Court's modulated approval.⁴

The principles defined in this context by the Court go far beyond the scope of the agreement actually concerned. The Court's interpretation of the objectives of the Community as opposed to those of the EEA, its analysis of scope and content of judicial mechanisms created by international agreements, the position of `mixed' association-agreements and of the legal instruments for their implementation in the Community legal order are all of significance for the further development of the `Constitutional Charter of a Community based on the rule of law'.⁵

In order to faithfully report the different stages of the `EEA-Drama', I shall start by exposing the antecedents, negotiating history and content of the Draft EEA Agreement as it stood when first submitted to the ECJ (I); after this, the three most important issues raised by the Court's ruling in Opinion 1/91 shall be presented by summarizing the Court's appreciation (II.A), then analyzing its scope and possible meaning (II.B) (II); I will then describe the main aspects of the Agreement's renegotiated version (III) and proceed, as above, to a summary and analysis of the three major topics which, in Opinion 1/92, restate, modulate or develop the Court's initial evaluation (IV).

This analysis should permit conclusions concerning the constitutional significance of these Opinions. First, the Court may have construed the Community's objectives as creating an obligation of attaining European Union, but this will not prevent the EEA's realization; second, the Court found a practicable solution combining the institution of international tribunals by Agreements concluded by the Community and its Member States with the preservation of the autonomy of the Community legal order; third, the Court practically completed its prior work of reducing the distinctions between `communautaire' and `mixed' agreements and modified the doctrine of `implied powers' in order to permit the delegation of implementing powers to Community institutions, by way of international agreements, in areas exceeding the Community's material jurisdiction. In some of these fields, there may be indications of the emergence of `higher', foundational norms of primary Community law (V).

I. Prologue - The History of the EEA⁶

The Contracting Parties' economic relations had been governed since 1972-73, the date of the Community's first enlargement, by Free Trade Agreements (FTAs) between the Community and the individual EFTA countries. In April 1984, at a ministerial meeting convened in order to celebrate the FTAs' final implementation, the Ministers and Community Representatives issued the `Luxembourg Declaration'<sup>7</sup> in which they stressed the importance of strengthening cooperation and ultimately creating a `dynamic and homogeneous European Economic Space'.⁸ Although this expression was never clearly defined, its underlying idea was to parallel the EC's completion of the Single Market, from which the EFTA countries feared imminent exclusion, by providing, in the form of a single agreement concluded between both trading blocs, a comprehensive material and institutional framework exceeding the FTAs.

The years following the Luxembourg Declaration, successful in various forms of informal cooperation, did not bring the EES into realization. The decisive signal came in January 1989, when Commission President Delors presented the idea of creating a `more structured partnership with common decision-making and administrative institutions...'⁹ The EFTA countries' response being positive, formal negotiations began in June 1990.

The undertaking proved to be complex. At stake was the creation of an area in which the four freedoms and the rules of competition of the EC Internal Market in industrial goods, restricted reciprocal market access for agricultural and fisheries products, structured cooperation in areas such as environment and consumer protection, education and research activities and economic and social policies, as well as joint action regarding economic cohesion would, in the form of a traditional intergovernmental agreement, be uniformly applicable within twenty legal orders. Eventually, a compromise balancing all interests¹⁰ was reached.

The objective of the whole undertaking was

[t]o establish a dynamic and homogeneous European Economic Area, based on common rules and equal conditions of competition ... and achieved on the basis of equality and reciprocity and of an overall balance of benefits, rights and obligations...¹¹

This was seen as necessary in order to achieve

[a] continuous and balanced strengthening of trade and economic relations ... with equal conditions of competition and the respect of the same rules, with a view to creating a homogeneous European Economic Area...¹²

Following the `two pillars approach' advocated by the Commission, the EEA `superstructure' would be composed of two joint organs: an EEA Council endowed with the definition of the general orientations and provision of the political impulse necessary for the EEA's implementation, and an EEA Joint Committee responsible for its supervision, as well as for the first stage of dispute settlement between the parties.¹³ Within the `pillars', EFTA would have to duplicate the EC institutional organization, an EFTA Surveillance Authority (ESA) paralleling, to the extent necessary, the EC Commission's tasks.¹⁴

The Draft EEA's ultima vox for the settlement of disputes between the Parties and the control of the EFTA surveillance mechanism was an EEA Court, independent though functionally integrated with the ECJ and competent to deliver binding decisions concerning the interpretation and application of the Agreement, including its Annexes and Protocols.¹⁵ This EEA Court was not the Agreement's only court: Additionally, EFTA countries' national courts could be given an opportunity to `ask' the ECJ to `express itself' on questions concerning the interpretation of EEA provisions,¹⁶ which are `[i]dentical in substance to the provisions of the [EC] Treaties...'<sup>17</sup> `Extent' and `modalities' of the procedure's application were left to the discretion of EFTA countries' .

The international duplication of EC rules envisaged by the EEA, combined with the setting-up of an independent judicial mechanism, was bound to raise fundamental questions about the Agreement's compatibility with Community law, difficulties which could only be aggravated by the EEA's `mixity', i.e. the fact that this Association Agreement was to be concluded by the Community in conjunction with its Member States. The `mixity-issue' was however not raised,¹⁸ but the

Commission requested the Court's opinion, under the second subparagraph of Article 228(1) EEC,¹⁹ on the EEA's judicial mechanism.²⁰

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1 Federal Ministry for Foreign Affairs, Vienna. The opinions expressed in this article are strictly personal.
I would like to thank Professor Joseph H.H. Weiler for his most valuable comments concerning an earlier version of this article.

2 Austria, Finland, Iceland, Norway, Sweden, Switzerland and, as of 1 September 1991, Liechtenstein.

3 Opinion of the Court of 14 December 1991 delivered pursuant to the second subparagraph of Article 228(1) of the EEC Treaty - Opinion 1/91 [Draft agreement between the European Community and the countries of the European Free Trade Association relating to the creation of the European Economic Area], not yet reported.

4 Opinion of the Court of 10 April 1992, Opinion 1/92 [Draft agreement between the Community, on the one hand, and the countries of the European Free Trade Association, on the other, relating to the creation of the European Economic Area], not yet reported.

5 Opinion 1/91, supra note 2, recital 21. (My comments are based on the original French version of the Court's ruling. For the sake of clarity, the Opinion will however be quoted according to its English translation as published in 31 ILM (1992) 442, and the French original will only be referred to in case of possibly significant divergences). The formula was first used by the Court of Justice in Case 294/83, Parti Ecologiste `Les Verts' v. European Parliament, [1986] ECR 1339, recital 23.

6 In general, see H. Wallace (ed.), The Wider Western Europe: Reshaping the EC-EFTA Relationship (1991); Weiss, `EC-EFTA relations: Towards a Treaty Creating a European Economic Space', 9 YEL (1989) 329; Wilson, `Counterpoint: Austria's Application for Membership in the European Community and Delors' Call for a New EC-EFTA Relationship', 20 GA. J. Int'l & Comp. L. (1990) 241; Hurni, `EFTA-EC Relations Aftermath of the Luxembourg Declaration', 20 JWTL (1986) 497; Nervell, `The Emerging European Economic Space: A Proposed Legal Framework for Expanding EEC-EFTA Relations Beyond the Free Trade Agreements', 21 Cal. W. Int'l L. J. (1990) 181; Lucron, `Vers l'Espace Economique Europeen, l'Europe du Deuxieme Cercle', 339 RMC (1990) 527; Coopers & Lybrand, Euroscope, `Trade Relations EC-EFTA', update of 4 June 1992; concerning the negotiations, see Spinner, `Europäischer Wirtschaftsraum (EWR): Verhandlungsfortschritte bis Februar 1991', 6 SJZ (1991) 99; `Europäischer Wirtschaftsraum (EWR): Verhandlungsentwicklung bis Mitte Juni 1991', 14 SJZ (1991) 237.

7 `Luxembourg: Ministerial Meeting Between EFTA Countries and the EC and its Member States', EFTA Bull. 2/84, 6 (1984); Nervell, supra note 5, at 182.

8 `EES', later to be renamed the EEA; Nervell, supra note 5, at 182.

9 Speech to the European Parliament of 17 January 1989, Weiss, supra note 4, at 352 passim.

10 EFTA had initially insisted on closer participation in the EC's decision-making process, as the EEA's success depended on these countries incorporating the relevant acquis communautaire into their national legal orders, but the Community soon realized that an integration of EFTA representatives into its internal procedures was inappropriate. The compromise presented to the Court in Opinion 1/91 was therefore a trade-off - an independent EEA Court as compensation for the EFTA countries' restriction of sovereignty. See Lucron, supra note 4, at 528, for the Community's view. EFTA's position is exposed in Spinner, supra note 4. The problem of balancing the Contracting Parties' benefits and obligations reappeared after Opinion 1/91; see De la Guerivière, `Espace Européen. Les Douze et les Sept.', Le Monde, 11 February 1992.

11 Preamble EEA, recital 4 [hereinafter, dispositions contained in the Agreement's original version and not modified after Opinion 1/91, as well as the final text of the EEA Agreement, will be referred to as Art... EEA, whereas original provisions modified or deleted after Opinion 1/91 will be Art... Draft EEA].

12 Art. 1(1) EEA.

13 Part VII `Institutional provisions', Articles 89-120 Draft EEA. Arts. 116-117 Draft EEA contained the surveillance and dispute-settlement procedures.

14 Art. 116(1) Draft EEA. See the contribution by Krafft in this volume.

15 Arts. 95-105 Draft EEA. Provisions on the EEA Court's composition and competences were contained in Arts. 95 and 96.

16 Art. 104(2) Draft EEA and Draft Protocol 34.

17 Protocol 34, Art. 1.

18 The issue was far from uncontroversial, the Commission having first threatened Council and Member States with bringing the issue before the ECJ; see Dispute Between EC Agencies Threatens EEA Deal, Reuter, Brussels, July 23, 1991.

19 The following problems were raised:
- the compatibility of the presence of ECJ Justices in the EEA Court with the ECJ's jurisprudence in Opinion 1/76 (infra note 70);
- the possibility of granting the EFTA countries intervention in procedures pending before the ECJ;
- the permissibility of EFTA national courts submitting questions to the ECJ;
- the sufficiency of Art. 238 EEC as legal basis for such an agreement, or alternatively, the legality of amending this Article.

20 The Commission's official motivation was `[t]he sake of legal certainty' (Opinion 1/91, 3), but before the request was filed, the ECJ's opposition of principle to an EEA Court was widely known. Johnson, `Dismay as Luxembourg Court Rejects Trade Zone', The Daily Telegraph, 15 December 1991, at 2. The EC governments, `... on the advice of the President of the European Court...', seemed ab initio reluctant to negotiate such a court's installation. McEvoy, `EC to Resist EFTA Demand for Joint Court', The Reuter Library Report, 24 April 1991.

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