APPENDIX I THE EUROPEAN ECONOMIC AREA 1. Introduction. In January 1994 the Treaty between the Community and its member states on the one part and the European Free Trade Association (EFTA) states of Iceland, Liechtensteinl, Norway, Austria, Finland and Sweden on the other establishing the European Economic Area (EEA) entered into force2• With the accession of Austria, Finland and Sweden to the European Union in January 1995 changes to the EEA Treaty will be neces• sary but are, at the time of writing, still awaiting agreement. Since Switzerland, the seventh EFTAstate, opted to stay out of the EEA,in what follows 'EFTAstates' refers to those EFTAstates party to the EEATreaty. 2. The purpose and nature of the EEA.The purpose of the EEAis '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 homogenous European EconomicArea ... '4. The EEA is not otherwise defined in the Treaty, and its nature is difficult to define. It is a sophisticated free trade area, but includes also provisions on free movement of persons, services and capital, with a view to economic integration less profound than that of the Community but deeper than that of the EFTA.Its institutions are not competent to legislate in the same way as the Community institutions under the ECTreaty. The EEATreaty implies no cession of sovereignty. 3. The institutions of the EEA.The EEATreaty creates an EEACouncil, an EEA Joint Committee, an EEA Parliamentary Committee and an EEA Consultative Committee. The EEA Council comprises the members of the European Council plus one member £Tomthe government of each of the EFTA states5• Its function is, for the EEA, broadly similar to that of the European Council for the Community. The EEAJoint Committee consists of a representative from each of the contracting states, and acts by agreement between the Community representatives on the one hand and those of the 1 Owing to the closeness of its economic ties with Switzerland, the Protocol of March 1993 which amended the EEA Treaty to recognise the refusal of Switzerland to take part (OJ LI, 3.1.94, p 572) also recognised a temporary, special status for Liechtenstein. 2 For the text see OJ L1, 3.1.94, P 3. 3 See para 300 above. 4 EEA Treaty, art 1. S Ibid, art 90; for the Rules of Procedure see 0J L138, 2.6.94, P 39. Para 3 Appendix I: The European Economic Area 148 EFTA states, speaking with one voice, on the other1. Its purpose is to ensure the effective implementation and operation of the EEA TreatyZ, to which end it is granted the power to adopt binding acts3 and significant powers of dis• pute settlementi. The EEA Joint Parliamentary Committee consists of mem• bers drawn equally from the European Parliament and members of the parliaments of the EFTA states5, with the task of contributing, through dia• logue and debate, to a better understanding between the Community and EFTA of the issues covered by the Treaty;. The EEA Consultative Committee has functions broadly similar to those of the Community's Economic and Social Committee7• The EEA Treaty also required the establishment of the EFTA Surveillance Authority and the EFTA Court. All decisions of these authorities are published in the Official Journal of the Community. 4. The EFfA Surveillance Authority. The EEA Treaty required the EFTA states to create an independent surveillance authority, the EFTA Surveillance AuthorityB, which came into being on 1 January 19949• It con- . sists of five members, chosen upon grounds of general competence and whose independence is beyond doubtlO. They are appointed by the common accord of the EFTA governments for a four-year renewable term11, and are wholly independent in the performance of their duties12. It is assisted by an executive secretariat, five directorates, a legal service and administration13. Its task is to ensure on the part of the EFTA states the fulfilment of the oblig• ations arising under the EEA Treaty14. It therefore co-operates closely with the Commission, which performs a similar task on the Community side15. Like the Commission, the EFTA Surveillance Authority is competent to adopt binding measures which impose pecuniary sanctions and are enforce• able by civil process16. 1 EEA Treaty, art 93. Procedures for adopting a common Community position within the EEA Council and Joint Committee are laid down in an EC regulation; see Regulation 2894/94, DJ 1305,30.11.94, p 6. 2 EEA Treaty, art 92. 3 Ibid, art 7. .4 Ibid, art 111. 5 Ibid, art 95(1) and Protocol 36. 6 Ibid, art 95(3). 7 Ibid, art 96. 8 Ibid, art 108(1). 9 EFTA Surveillance Agreement of 2 May 1992 establishing a Surveillance Authority and an EFTA Court of Justice, [1992] 1 Commercial Laws of Europe 277 (hereinafter 'EFTA Surveillance Agreement'). For the Rules of Procedure of the Surveillance Authority see DJ L113, 4.5.94, p 19. 10 EFTA Surveillance Agreement, art 7. 11 Ibid, art 9. 12 Ibid, art 8. 13 Rules of Procedure of the EFTA Surveillance Authority, art 2. 14 EEA Treaty, art 109. 15 Ibid, art 109 and Protocol 23. 16 Ibid, art 110. 149 Appendix I: The European Economic Area Para 6 5. The EFTA Court. The EEA Agreement also required the EFI'A states to create an EFI'A Court!, which was created with effect from 1 January 19942• It consists of five judges appointed for a six-year renewable term. It sits only in plenary session, although it could request the EFI'A states to permit it to establish chambers. There are no Advocates-General. The sole working lan• guage is English except where the Court directs otherwise and where national courts refer questions for interpretative opinions3. Its seat is in Geneva. 6. The jurisdiction of the EFTA Court. The forms of process before the EFl'A Court fall into five categories: (a) Infringement proceedings raised by the EFl' A Surveillance Authority against an EFI'A state4, analogous to article 169 of the EC Treaty. (b) Settlement of disputes between EFI'A states relating to the EEN, analo• gous to article 170 of the EC Treaty. (c) Actions to annul a decision of the EFI'A Surveillance Authority6, analo• gous to articles 173 and 174(1) of the EC Treaty. The first such action was raised in April 19947• (d) Actions against the EFI'A Surveillance Authority for failure to acts, anal• ogous to article 175 of the EC Treaty. (e) Advisory opinions to national courts of EFI'A states9• But it is important to note that there are significant differences between this procedure and article 177 of theEC Treaty. First, because the EEA Treaty does not require the transfer of legislative authority to any EEA institution10, advi• sory opinions of the EFI'A Court are, unlike preliminary rulings from the Court of Justice, non-binding. Second, an advisory opinion may be sought only upon the interpretation of the EEA Treaty, and not upon the interpretation or validity of acts of the institutions. Further, there is no obligation to seek an advisory opinion, even for courts of last instance, and national rules may restrict access to the procedure to courts of last instancell• The first request for an advisory opinion, from a Finnish cus• toms appeal committee, was lodged in April 1994 and decided in December 199412• 1 Ibid, art 108(2). 2 EFTA Surveillance Agreement; the Statute of the Court is contained in Protocol 5. For the Rules of Procedure see OJ L278, 27.10.94, P 1; [1994] 1 CMLR 832. 3 See para 6 of this Appendix. 4 EFTA Surveillance Agreement, art 31. 5 Ibid, art 32. 6 Ibid, art 36. 7 Case E-2/94 Scottish Salmon Growers Association v EFT A Surveillance Authority (pending). 8 EFTA Surveillance Agreement, art 37. 9 Ibid, art 34. 10 EEA Treaty, Protocol 35. 11 Only Austria adopted.s~0 a ~e. 12 Case E-1/94 RavintolOltsljam L!/ton Kustannus ay Restamark v Helsingin Piiritullikamari, judg• ment of 16 December 1994. Para 7 Appendix I: The European Economic Area 150 7.Relationship between the Court of Justice and the EFTA Court. The orig• inal EEA Treaty envisaged an EEA Court of Justice, comprised of judges drawn from the Court of Justice and the EFTA member states, to which the entire EEA- both the Community and EFfA - would be subject. This mech• anism was declared by the Court of Justice to be incompatible with the EEC Treaty (as it then was)!, and the amended text of the Treaty provides for no EEA Court and no direct co-operation between the Court of Justice and the EFTA Court. However, a judgment of the Court of Justice is binding upon the EFTA Court in so far as it addresses a Community rule which is identical in substance to an EEA provision and was decided prior to the signature of the EEA Treaty2.A judgment delivered after that date must be given 'due consideration' by the EFTA Court'. The contracting states have power to agree to request from the Court of Justice a ruling on the interpretation of a provision of the EEATreaty identical in substance to an EC provision4, and an EFTA state can permit its national courts to seek from the Court ofJustice an advisory opinion on the interpretation of such a provisions. However, there would be political difficulties in activating the latter jurisdiction, and no EFfA state has done so. In the interests of harmonious interpretation of the Treaty the EEAJoint Committee is obliged to keep the developments of the case law of the Court of Justice and the EFfA Court under constant review6 and to establish a system for the exchange of information between them7• 8.