European Free Trade Association Court

European Free Trade Association Court

legend|#008000|EFTA court jurisdictionlegend|#000080|ECJ jurisdictionThe European Free Trade Association Court is a supranational court covering the three European Free Trade Association (EFTA) members who are also members of the European Economic Area (EEA): Iceland, Liechtenstein and Norway.

As members of the EEA, the three countries have access to the internal market of the European Union. Consequently they are subject to a number of European laws. Enforcement of these laws would normally be carried out by the European Court of Justice (ECJ), however there were legal difficulties in giving Union institutions powers over non-members so the EFTA court was set up to perform the role of the ECJ.

Since September 1995, the Court has consisted of three judges and six ad-hoc judges. They are nominated by the three members and appointed by their Governments collectively through common accord.

General remarks

According to Article 108(2) of the European Economic Area Agreement (EEA) of May 2, 1992, the EFTA States taking part in the EEA Agreement shall establish a court of justice. That obligation was complied with by the conclusion of the Agreement between the EFTA States on the Establishment of a Surveillance Authority and a Court of Justice, cf. Art. 27. The EFTA Court was originally designed for the then seven EFTA States Austria, Finland, Iceland, Liechtenstein, Norway, Sweden and Switzerland. On 1 January 1994, upon the entry into force of the EEA Agreement, the EFTA Court took up its functions with five judges nominated by Austria, Finland, Iceland, Norway and Sweden. Switzerland was unable to ratify the EEA Agreement due to a negative referendum. Liechtenstein postponed membership until May 1, 1995. In 1995, Austria, Finland and Sweden left EFTA and joined the EU. Since September 1995, the EFTA Court has consisted of three judges and six ad-hoc judges nominated by the three actual EEA/EFTA States Iceland, Liechtenstein and Norway and appointed by their Governments through common accord.

When the EEA Agreement entered into force on January 1, 1994, the seat of the Court was the old EFTA capital Geneva. After the adherence of Austria, Finland and Sweden to the European Union, it was decided to place the Court’s seat to Luxembourg, where the European Court of Justice and the Court of First Instance are located. On September 1, 1996, the EFTA Court moved to Luxembourg.


The EFTA Court has essentially been modeled on the template of the European Court of Justice. The main difference is that it has no Advocates-General. The EFTA Court consists of 3 regular Judges. Each EEA/EFTA State has the right to nominate one candidate for judgeship. The Judges are appointed by common accord of the governments of the EEA/EFTA States for a renewable term of six years. They are chosen from persons whose independence is beyond doubt and who possess the qualifications required for appointment to the highest judicial offices in their respective countries or who are jurisconsults of recognized competence. One of the six ad hoc judge is called upon to sit if a regular judge is prevented from participating in a case due to bias or illness.Each judge has his or her cabinet which consists of the judge, a legal secretary and an administrative assistant.


The judges elect one of their colleagues to be President of the Court for a term of three years. The President may be re-elected. He or she directs the judicial business and the administration of the Court. The President assigns the cases to a Judge to act as a Judge-Rapporteur. He or she sets the dates and timetable for the sessions of the Court, presides at hearings and deliberations. The President is competent to take decisions on requests for the application of interim measures. Presidents of the EFTA Court include:
*Leif Sevón (Finland) 1994
*Bjørn Haug (Norway) 1995-1999
*Thór Vilhjálmsson (Iceland) 2000-2002
*Carl Baudenbacher (Liechtenstein ) 2003-present


The Court appoints a Registrar for a period of three years, after which he or she may be reappointed. The Registrar assists the Court in procedural matters, and he or she is the head of personnel. He or she is responsible for the Registry as well as for the receipt, transmission and custody of documents and pleadings. The Registrar is also responsible for the Court's archives and publications, for the administration of the Court, its financial management and its accounts. The Registrar supports the judges in their official and representative functions. The operation of the Court is in the hands of officials and other servants who are responsible to the Registrar under the authority of the President. The Court administers its own infrastructure and its own budget.


The EFTA Court’s Statute and its Rules of Procedure are modeled on those of the European Court of Justice. Individuals and economic operators have broad access to the Court. The EFTA Court is in particular competent to decide on:

*Actions brought by the EFTA Surveillance Authority against an EFTA State for infringement of the EEA Agreement or the Surveillance and Court Agreement. The commencement of proceedings before the EFTA Court is preceded by a preliminary procedure conducted by the EFTA Surveillance Authority, which gives the EFTA State concerned the opportunity to reply to the complaints against it. If that procedure does not result in termination of the failure by the Member State, the EFTA Surveillance Authority may bring an action for breach of EEA law before the EFTA Court. If the Court finds that an obligation has not been fulfilled, the EFTA State concerned must terminate the breach without delay;

*Actions concerning the settlement of disputes between two or more EFTA States regarding the interpretation or application of the EEA Agreement, the Agreement on a Standing Committee of the EFTA States or the present Agreement;

*Actions for nullity brought by an EFTA State or an individual or legal person against a decision of the EFTA Surveillance Authority;

*Actions for failure to act brought by an EFTA State or a natural or legal person against the EFTA Surveillance Authority;

*Moreover, the EFTA Court has jurisdiction to give judgment in the form of an advisory opinion on the interpretation of the EEA Agreement upon a request of a national court of an EEA/EFTA State. The referring national court will then decide the case before it based on the EFTA Court’s answer. Judgments in the form of an advisory opinion are not legally binding on the national court. In practice, they are, however, not weaker than the preliminary rulings rendered by the European Court of Justice under Article 234 EC.

The homogeneity goal

The EEA is based in a two pillar structure, the EC constituting one pillar and the three participating EFTA States the other. In substance, the EEA Agreement has extended the EC single market to the participating EFTA States. EEA law is therefore largely identical to EC law. In order to secure a level playing field for individuals and economic operators in both pillars, special homogeneity provisions have been laid down in the EEA Agreement and in the Surveillance and Court Agreement. Under these rules, the EFTA Court shall follow the relevant case law of the ECJ on provisions of Community law that are identical in substance to provisions of EEA law rendered prior to the date of signature of the EEA Agreement (May 2, 1992) and shall pay due account to the principles laid down by the European Court of Justice's relevant case law rendered after that date. The EFTA Court’s jurisprudence is in fact based on the case law of the European Court of Justice (ECJ). The politically important distinction between old and new ECJ case law has largely been qualified in practice. The EFTA Court also refers to the case law of the Court of First Instance of the European Communities (CFI). All three EEA courts (ECJ, CFI, EFTA Court) have not only emphasized the need for a uniform interpretation of EC and EEA law, but have actively seen to it that homogeneity has been preserved.

Judicial dialogue with the Community Courts

The EFTA Court has in the majority of its cases been faced with legal issues that have not or not fully been decided by the ECJ. The EEA Agreement does not contain a written rule that would oblige the ECJ to take into account the case law of the EFTA Court when interpreting EC or EEA law. In practice, both Community Courts (the ECJ and the CFI), have, however, made reference to EFTA Court jurisprudence. As to the interpretation of EEA law, the Community courts reverted to judgments by the EFTA Court with regard to the legal nature of the EEA Agreement, the principle of State liability in EEA law, the free movement of goods and the freedom of establishment.

When interpreting EC law, the Community Courts found support in the jurisprudence of the EFTA Court in cases concerning the Directive on Television without Frontiers, the Directive on Transfer of Undertakings, the precautionary principle in foodstuff law, and the selectivity criterion in State aid law. Advocates General of the European Court of Justice have also entered a judicial dialogue with the EFTA Court On the other hand, the EFTA Court regularly refers to Opinions of Advocates General.

Methods of interpretation

Like the ECJ, the EFTA Court does not follow the rules laid down in Articles 31 and 32 of the 1969 Vienna Convention on the Law of Treaties when interpreting EEA law, but rather the methodological rules usually applied by national Supreme and Constitutional Courts. Teleological interpretation is particularly important, but also dynamic interpretation is not uncommon.

Notable cases

Effect, supremacy and state liability

The EFTA Court has consistently held that the provisions of the EEA Agreement are intended for the benefit of individuals and economic operators throughout the European Economic Area and that the proper functioning of the EEA Agreement is dependent on those individuals and economic operators being able to rely on the rights before the national courts of EEA/EFTA States.

*In Restamark (Case E-1/94, 1994-1995 EFTA Court Report, 15) the EFTA Court found that it is inherent in Protocol 35 that individuals and economic operators must be entitled to invoke and to claim at the national level any rights that could be derived from the provisions of the EEA Agreement, as being or having been made part of the respective national legal order, if they are unconditional and sufficiently precise.
*In Einarsson (Case E-1/01, 2002 EFTA Court Report, 1), the EFTA Court held that it follows from the preamble to, and from the wording of, Protocol 35 that the undertaking assumed under that Protocol relates to EEA rules that have been implemented in national law and that are unconditional and sufficiently precise.
*In the Karlsson judgment (Case E-4/01, 2002 EFTA Court Report, 240, at paragraph 28), the EFTA Court considered it to be inherent in the general objective of the EEA Agreement of establishing a dynamic and homogeneous market, in the ensuing emphasis on the judicial defence and enforcement of the rights of individuals, as well as in the public international law principle of effectiveness, that national courts will consider any relevant element of EEA law, whether implemented or not, when interpreting national law.

State liability is, according to settled EFTA Court case law, part of EEA law so that Contracting Parties infringing primary or secondary EEA law and thereby causing damage to individuals or economic operators may be obliged to pay compensation. The EFTA Court ruled that way in its 1998 Sveinbjörnsdóttir judgment (Case E-7/97, 1998 EFTA Court Report, 95) and confirmed this jurisprudence in 2002 in Karlsson (Case E-4/01, 2002 EFTA Court Report, 240).

Legal nature of the EEA Agreement

In its judgment in the Sveinbjörnsdóttir case, the EFTA Court characterized the EEA Agreement as an international treaty sui generis which contains a distinct legal order of its own. Its depth of integration is less far-reaching than under the EC Treaty, but the scope and objective go beyond what is usual for an agreement under public international law (Case E-7/97, 1998 EFTA Court Report, 95). The distinct legal order sui generis established by the EEA Agreement is characterized by the creation of an internal market, the protection of the rights of individuals and economic operators and an institutional framework providing for effective surveillance and judicial review (Case E-2/03, 2003 EFTA Court Report, 185).

Fundamental rights

*In Case E-8/97 TV 1000 (1998 EFTA Court Report, 68), the Court interpreted the transmitting state principle underlying the so-called “TV Without Frontiers” Directive 89/552/EEC and referred to the freedom of expression granted by Article 10 ECHR as well as, with regard to the limitations of that freedom, to the landmark ruling of the European Court of Human Rights in the Handyside case.

*In Case E-2/02 Bellona (2003 EFTA Court Report, 52), the EFTA Court held in the context of an action for nullity against a decision of the EFTA Surveillance Authority approving state aid that access to justice constitutes an essential element of the EEA legal framework which is, however, subject to those conditions and limitations that follow from EEA law. The EFTA Court stated that it was aware of the ongoing debate with regard to the issue of the standing of natural and legal persons in actions against Community institutions and referred, inter alia, to the opinion of Advocate General Jacobs in Case C-50/00 Pequeños Agricultores (2002 ECR I-6677.). It added that this discussion is important at a time when the significance of the judicial function which is inspired by the idea of human rights appears to be on the increase, both on the national and international level. The Court found nevertheless that caution was warranted, not least in view of the uncertainties inherent in the current refashioning of fundamental Community law.

*In Case E-2/03 Ásgeirsson (2003 EFTA Court Report, 185), one of the defendants in the national proceedings had alleged that the reference of the case to the EFTA Court prolonged the duration of the proceedings and thereby infringed Article 6 of the European Convention on Human Rights. The EFTA Court held that provisions of the EEA Agreement as well as procedural provisions of the SCA are to be interpreted in the light of fundamental rights and that the provisions of the European Convention of Human Rights and the judgments of the European Court of Human Rights are important sources for determining the scope of these rights. With regard to the right to a fair and public hearing within a reasonable time granted by Article 6(1) ECHR, the EFTA Court observed that the European Court of Human Rights held in a case concerning a delay of two years and seven months due to a reference by a national court to the European Court of Justice for a preliminary ruling, that this period of time could not be taken into consideration in the assessment of the length of a particular set of proceedings. To take it into account would adversely affect the system instituted by Article 177 of the EEC Treaty (now Article 234 EC) and work against the aim pursued in substance in that Article (Case Pafitis). The EFTA Court held that the same must apply with regard to the procedure established under Article 34 of the SCA which, as a means of inter-court cooperation, contributes to the proper functioning of the EEA Agreement to the benefit of individuals and economic operators. The EFTA Court added that in the present case, the time period from the registration of the request to the delivery of judgment amounted to a little more than five months.

Fundamental freedoms

*In Case E-3/00 Kellogg’s (2000-2001 EFTA Court Report, 73), the EFTA Court had to rule on the compatibility with Article 11 EEA of a ban on the import and marketing in Norway of Kellogg’s cornflakes fortified with vitamins and iron which have been lawfully manufactured and marketed in other EEA States. It rejected the argument of the Norwegian government that in order to justify a marketing ban on fortified cornflakes produced in Denmark it was sufficient to show the absence of a nutritional need for the fortification with vitamins and iron in the Norwegian population because of the government had already taken care of the problem by giving out certain fortified products to school children on a regular basis. At the same time, the EFTA Court held that in examining whether the marketing of fortified cornflakes that were produced in Denmark may be banned on grounds of the protection of human health, a national government may, in the absence of harmonization, invoke the precautionary principle. According to that principle, it is sufficient to show that there is relevant scientific uncertainty with regard to the risk in question. Instead, the EFTA Court held that in examining whether the marketing of fortified cornflakes that were produced in Denmark may be banned on grounds of the protection of human health, a national government may, in the absence of harmonization, invoke the precautionary principle. According to that principle, it is sufficient to show that there is relevant scientific uncertainty with regard to the risk in question. The Court stated that measures taken must be based on scientific evidence; they must be proportionate, non-discriminatory, transparent, and consistent with similar measures already taken. The conditions to be fulfilled by a proper application of the precautionary principle were, in the view of the Court, firstly, an identification of potentially negative health consequences, and secondly, a comprehensive evaluation of the risk to health, which must be based on the most recent scientific information. The EFTA Court added that the precautionary principle can never justify the adoption of arbitrary decisions and can justify the pursuit of the objective of “zero risk” only in the most exceptional circumstances. Since the Norwegian fortification policy did not, at the relevant time, fulfil the requirements of EEA law pertaining to the application of that principle, the Court came to the conclusion that Norway had failed to fulfil its obligations under Article 11 EEA. In particular, the measures taken by Norway were considered inconsistent and not based on a comprehensive risk assessment.

*In Case E-1/04 Fokus Bank (2004 EFTA Court Report, 11), the EFTA Court declared the Norwegian imputation tax credit system with regard to the taxation of dividends to be in breach of Article 40 EEA. Under the Norwegian Corporate Tax Act, dividends paid out by Norwegian companies to shareholders were taxed in the hands of the distributing company and again as general income in the hands of the shareholder. To avoid this so-called economic double taxation, shareholders resident in Norway were granted an imputation tax credit to the effect that dividends were only taxed in the company’s hand. However, this credit was not granted to shareholders non-resident in Norway. Instead, they were taxed by way of a withholding tax for which the distributing company was liable. In making this differentiation, the Norwegian legislation was based on the assumption that non-resident shareholders were reimbursed in their respective home state. The Court held that the distribution and receipt of dividends constitutes movement of capital within the meaning of Article 40 EEA. That Contracting Parties are, within the framework of bilateral agreements concluded in order to prevent double taxation, at liberty to determine the connecting factors for the purposes of allocating powers of taxation as between themselves does not mean that in the exercise of the power of taxation so allocated, a Contracting Party may disregard EEA law. The Court found furthermore that Article 40 EEA confers a right upon individuals and economic operators to market access. The Norwegian legislation at issue was held to restrict that right, since differential treatment may have the effect of deterring non-resident shareholders from investing capital in Norwegian companies and of impeding Norwegian companies from raising capital outside Norway. Moreover, the differential treatment constituted discrimination. Possible tax advantages in the home state could not offset the restriction and discrimination resulting from tax legislation in Norway. Attempts of the Norwegian government to justify the violation of Article 40 EEA were rejected. The Court considered shareholders resident and non-resident in Norway to be in an objectively comparable situation, referring to the judgment of the European Court of Justice in Case C-319/02 Manninen (Judgment of 7 September 2004, not yet reported). The Court did not accept cohesion of the international tax system as a justification Since permitting derogations from the fundamental principle of free movement of capital laid down in Article 40 EEA on the grounds of safeguarding the cohesion of the international tax system would amount to giving bilateral tax agreements preference over EEA law. A Contracting Party cannot therefore make the rights conferred by Article 40 EEA subject to the contents of a bilateral agreement concluded with another Contracting Party.

Collective agreements and competition law

In Case E-8/00 LO (2002 EFTA Court Report, 114), the EFTA Court had to deal with whether a number of Norwegian municipalities had breached certain provisions of the Basic Collective Agreement for Municipalities when they transferred their occupational pension insurance scheme from one supplier, KLP, a private mutual life insurance company wholly owned by members of the Norwegian Association of Local and Regional Authorities, to other insurance companies. The municipalities submitted that several provisions in the Basic Collective Agreement were void because they infringed Articles 53 and 54 EEA, the provisions mirroring Articles 81 and 82 EC. The contested provisions stated, inter alia, that in the event of a change of the pension company, this should be discussed with union representatives; that before the decision-making body might begin to deal with a possible change of company relevant offers for a new occupational pension scheme should be put before those members of the pension committee who represent the parties to the collective agreement; that the occupational pension scheme had to be based on a financing system that is gender-neutral and does not have the effect of excluding older employees; that before the matter might be decided upon by the municipality there had to be approval from the Norwegian Public Service Pension Fund; and that the pension scheme had to be taken note of by the Banking, Insurance and Securities Commission.

The EFTA Court found that the relationship between the national law of collective bargaining and the EEA competition rules must be assessed by applying the test established by the ECJ in Case C-67/96 Albany (1999 ECR, I-5751) and in related cases. It concluded that on that basis, the contested provisions would prima facie fall outside the scope of Article 53 EEA. If, however, the national court found that the contested provisions do not pursue their apparent objectives, the provisions, in light of the objectives actually pursued, fall within the scope of Article 53 EEA. If so, and if the court found that these provisions in effect required the munici¬palities to obtain supplementary pension insurance services from specific insurers, thus excluding, or severely limiting, their possibility of selecting other qualified service providers, these provisions were also held capable of constituting a restriction of competition within the meaning of Article 53 EEA. The Court held that, in any case, the good faith of the parties in concluding and implementing a collective agreement must also be taken into account. When examining the several elements of a collective agreement, the national court must consider their aggregate effect. Whether an agreement restricts competition, and thereby infringes Article 53 EEA, is a legal question that must be examined in light of economic considerations. The EFTA Court found furthermore that Article 54 EEA may apply if the national court were to find that the supplier of the occupational pension scheme, KLP, enjoyed a dominant position in the relevant market, that an identification might be made between the Norwegian Association of Local and Regional Authorities and the supplier, and that their conduct in relation to the conclusion or the implementation of the contested provisions of the Basic Collective Agreement had in practice prevented transfers of supplementary pension insurance schemes from KLP to other insurance companies, in order to protect the position of KLP.

Transfer of Undertakings

In Case E-2/96 Ulstein (1995/1996 EFTA Court Report, 65), a company that had provided ambulance services for a hospital was no longer considered after public tenders had been invited, but was replaced by a second company. No tangible assets were taken over by the second service provider. The office in the hospital building that had been used by the first service provider was no longer available. The second company reemployed four of the first company’s nineteen employees. The other employees, including the two plaintiffs, were not offered employment. The EFTA Court ruled that a mere succession of two contracts for the provision of the same or similar services will not, as a rule, be sufficient for there to be a transfer of an undertaking, business, or part of a business within the meaning of the Transfer of Undertakings Directive 77/187/EEC.

International exhaustion of trademark rights

In Case E-2/97 Mag Instruments (1997 EFTA Court Report, 127), a parallel importer purchased Maglite flashlights in California, where they were manufactured, and imported them into Norway without the manufacturer’s and trade mark owner’s consent. According to established Norwegian law, international exhaustion applied for trade marks. The EFTA Court held that under the First Trade Mark Directive 89/104/EEC, the EFTA States were entitled to opt for international exhaustion of trade mark rights. The Court emphasized that they retained their sovereignty in foreign trade matters. Unlike the EC Treaty, the EEA Agreement did not establish a customs union, but an enhanced free trade area. The purpose and the scope of the EC Treaty and the EEA Agreement are therefore different. According to Article 8 EEA, the principle of free movement of goods as laid down in Articles 11 to 13 EEA applies only to goods originating in the EEA, while in the Community a product is in free circulation once it has been lawfully placed on the market in a Member State. In general, the latter applies in the context of the EEA only with respect to products originating in the EEA. In the case at hand, the product was manufactured in the United States and imported into Norway. Accordingly, it was not subject to the principle of the free movement of goods within the EEA. Based on this, the EFTA Court rejected the argument put forward by the governments of France, Germany, and the United Kingdom as well as by the European Commission that giving the EEA/EFTA States the right to opt for international exhaustion would lead to disparities in the EEA market. Article 7(1) of the Trade Mark Directive was interpreted so that it was for the EEA/EFTA States’ legislatures and courts to decide whether they wanted to introduce or to maintain the principle of international exhaustion of trade mark rights with regard to goods originating from outside the EEA. The EFTA Court found that international exhaustion was in the interest of free trade and competition and thus in the interest of consumers. Furthermore, the principle of international exhaustion was in line with the main function of a trade mark, to allow the consumer to identify with certainty the origin of the products. This interpretation of Article 7(1) of the Trade Mark Directive was also consistent with the TRIPs Agreement, which left the issue open for the Member States to regulate.

External links

* [ EFTA Court website]

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