Introduction

The importance and role of the European Economic Area (EEA) Agreement has often been overlooked. Yet, as the UK exits the European Union, the question of the UK’s desired relationship with not only the EU27 but also the EEA30 has never been more live.

This blog post contends that the UK has not given the required notice of withdrawal from the EEA Agreement, and that the Government’s actions undermine the UK’s current and future negotiating positions with the EU27 and EEA30.

On 20th December 2018, the day after Parliament rose, the Government published an ‘EEA EFTA Separation Agreement’. This was accompanied by an ‘EEA EFTA Explainer‘. To date, the EEA EFTA (European Free Trade Association) Separation Agreement has been ‘agreed,’ but not ‘signed’. Subsequently, on 8th February 2019, the Government published another draft agreement, the ‘EEA EFTA No Deal Citizens’ Rights Agreement’. This second draft treaty will be addressed in a separate article.

The EEA Agreement: a mixed agreement

The EEA Agreement was signed in Oporto on 2 May 1992. The original signatories as ‘Contracting Parties’ were the then European Economic Community, the then European Coal and Steel Community, the then twelve EEC Member States including the UK, and the then seven EFTA States: Austria, Finland, Iceland, Liechtenstein, Norway, Sweden, and Switzerland. In short, the EEA Agreement extends the Single Market to the EEA/EFTA States. The EEA Agreement is based on two pillars of membership: EU and EFTA, each having their own respective mechanisms for supervision, in the form of the European Commission and EFTA Surveillance Authority, and courts, the Court of Justice of the European Union and the EFTA Court. As the EFTA Court held in E-9/97 Sveinbjörnsdóttir [1998] EFTA Ct. Rep. 95 para. 59, ‘[T]he EEA Agreement is an international treaty sui generis which contains a distinct legal order of its own.’ There are thus two legal orders that form the basis of the EEA Agreement: EU and EEA law. Within the EU, the provisions of the EEA Agreement are able to produce direct effect (see in particular, Case T-115/94 Opel Austria v Council 1997 ECR II-00039 para. 102). The EEA Agreement was incorporated into UK domestic law by the European Economic Area Act 1993.

The EEA Agreement is a mixed agreement as a matter of EU law. As Article 2(c) EEA makes explicit the UK is a Contracting Party to the EEA Agreement in its own right and also separately bound by the EEA Agreement as an EU Member State. This point is addressed also at some length by Yuliya Kaspiarovich and Nicolas Levrat in their piece ‘The UK and EU mixed agreements after Brexit: the case of the EEA’ 24 October 2018. The consequences of mixity were expressed by Advocate General Sharpston in her Opinion concerning Opinion procedure 2/15 concerning the EU’s free trade agreement with Singapore at points 76 and 77, in particular that ‘each Member State remains free under international law to terminate that agreement in accordance with whatever is the appropriate termination procedure under the agreement. Its participation in the agreement is, after all, as a sovereign State Party, not as a mere appendage of the European Union’ and that ‘[t]he ability to act independently as an actor under international law reflects the continuing international competence of the Member State; the fact that the Member State remains partially bound by the agreement even if, acting under international law, it terminates it reflects not international law but EU law.’

It follows that a country withdrawing from the EU needs also to withdraw, separately, in its own right from a mixed agreement, in order to cease to be one of the contracting parties.

How to leave

As is almost ubiquitously now known a Member State may withdraw from the EU by way of Article 50 TEU. What is much less well known is that the EEA Agreement contains its own ‘exit’ provision: Article 127 EEA, which provides:

‘Each Contracting Party may withdraw from this Agreement provided it gives at least twelve months’ notice in writing to the other Contracting Parties. Immediately after the notification of the intended withdrawal, the other Contracting Parties shall convene a diplomatic conference in order to envisage the necessary modifications to bring to the Agreement.’ (emphasis added)

On the basis of Advocate General Sharpston’s reasoning in Opinion 2/15, above, as a mixed agreement should the UK wish to leave the EEA Agreement in addition to leaving the EU, it must ‘give at least twelve months’ notice in writing to the other Contracting Parties pursuant to Article 127 EEA.

What the UK has done

On 3rd February 2017, the Divisional Court in Yalland and Wilding v Secretary of State, [2017] EWHC 630 (Admin) dismissed as premature the ‘Article 127 EEA’ litigation which followed on the coattails of Miller (see in particular [48] and [49]).

The following month, the Prime Minister’s letter to the President of the European Council Donald Tusk of 29 March 2017 gave notification of the UK’s intention to leave the EU and the European Atomic Energy Community pursuant to Article 50(2) TEU and as applied by Article 106a of the Treaty Establishing the European Atomic Energy Community.

The Prime Minister did not make mention of any desire of the UK to leave the European Economic Area. The letter could have given notice that the UK intended to withdraw from the EEA Agreement in parallel to the EU, thus exceeding the minimum twelve-month notification required by Article 127 EEA, paragraph 1. It would also have been straightforward to copy the letter to the other three non-EU Contracting Parties to the EEA, Iceland, Liechtenstein and Norway. Nevertheless, the UK chose not to act. Indeed, to-date the UK has made no written notification of its intention to withdraw from the EEA Agreement.

As noted above, the EEA Agreement has created a distinct sui generis legal system apart from international law. EEA law is, as a rule, interpreted in a teleological, or purposive manner by the EFTA Court. Rather than use Article 127 EEA to notify an intention to withdraw from the EEA, the UK Government appears to imply and rely upon a constructive interpretation of Article 126 EEA. Article 126 EEA concerns the territorial scope of the EEA Agreement. Article 126(1) EEA provides:

‘The Agreement shall apply to the territories to which the Treaty establishing the European Economic Community is applied and under the conditions laid down in that Treaty, and to the territories of Iceland, the Principality of Liechtenstein and the Kingdom of Norway.’

The UK Government’s argument effectively runs that once the UK has left the EU, the ‘territories to which the [EU treaties are] applied’ will shrink to exclude the UK. As a result, as the Lords Whip, Baroness Goldie, told the House of Lords on 25 April 2018 ‘Article 127 does not need to be triggered for the agreement to cease to have effect.’ That is, with respect, accurate only as far as it goes. As the author has previously written ‘as a standalone and independent treaty it is reasonable that the UK must make an Article 127 EEA notification or be in breach of its international obligations.’ Were the UK to do nothing in respect of its membership of the EEA, after withdrawing from the EU the UK would neither be subject to the EU nor EFTA pillars of the Agreement. This would be a breach of the UK’s obligations. Therefore, the EEA Agreement’s effects vis-à-vis the UK would enter into abeyance as it would be subject to neither the EU or EFTA supervisory and judicial mechanisms (i.e. the European Commission, and ECJ, and the EFTA Surveillance Authority and EFTA Court).

Future relationship with ‘Europe’ at large

Irrespective of whether the UK-EU Withdrawal Agreement is ratified by 29th March 2019, or whether there is an extension to the Article 50 TEU period (for which a suspension of the ‘ticking clock’ only would appear to provide the time for dispassionate negotiation, even if there were certain consequences for the UK as an EU Member State), the question of the UK’s relationship with ‘Europe’ is most unclear. Yet, some sort of positive relationship is needed.

EEA/EFTA membership is an achievable possibility in the draft UK-EU political declaration. As EU Chief Negotiator Michel Barnier noted on 29th November 2017, ‘Only the combination of the internal market and the customs union allows frictionless trade between us.‘ As this author has previously put forward, the Prime Minister’s desired ‘deep and special partnership agreement’ with the EU could perhaps best be achieved based on an updated version of the EEA Agreement. The Common Market 2.0 proposal published in January 2019 by Lucy Powell MP and Robert Halfon MP on behalf of the cross-party Norway Plus Group is entirely contingent upon the UK becoming an EEA/EFTA State. In the House of Lords, Lord Lea has called for the UK to stay part of an ‘evolving EEA family of nations.’ Given the closeness and content of such relationships while they would require a withdrawal agreement (pursuant to Article 50(2) TEU), such a withdrawal agreement’s content and design would look quite different from the UK-EU Withdrawal Agreement, and not merely in terms of the content of the Political Declaration.

Views in favour of an EEA/EFTA-based Brexit have been put forward by many including Mr Barnier, and the former President of the EFTA Court, Professor Carl Baudenbacher (here and here). Iceland’s Foreign Minister Guðlaugur Þór Þórðarson was interviewed on Newsnight on 27th November 2018 when he stated, ‘We would be very positive towards the idea of the UK joining EFTA or the EEA- you are the ones that started the organisation.’ The following day, the Norwegian Prime Minister Erna Solberg echoed those positive statements ((original interview in Norwegian), which was picked up by Reuters).

Unless, there is to be a cold, hard, snap in UK-EU relations the imperfect EEA Agreement is a sensible place from which to evolve relations; a scenario which Eurosceptics long-favoured as both Bloomberg and Juliet Samuel in the Telegraph have recently recalled. In such circumstances, the creative ambiguity created by failing to make an Article 127 EEA notification may be understood. Yet, the EEA EFTA Separation Agreement undermines the UK’s future negotiating position. It is difficult to perceive the rationale of withdrawing from the EEA Agreement, if membership thereof forms part of the UK’s future relationship with ‘Europe’ at large.

Conclusions

The nature of the EEA Agreement as a mixed agreement, as a matter of EU law, has consequences for an EU Member State seeking to withdraw from it. On the construction of both the EEA Agreement itself, and in particular Article 127 thereof, and the means by which it was ratified and incorporated by way of the EEA Agreement Act 1993, the UK needs to take appropriate action at both the domestic and international levels in order to withdraw from the EEA Agreement.

The consequences of the UK being in breach of its obligations vis-à-vis the EEA Agreement, and the treaty being put into abeyance as far as it concerns the UK, are significant. Nevertheless, if the UK seeks to have a treaty-based relationship, whether it is closer to Common Market 2.0 or a ‘deep and special partnership agreement’, with the thirty other contracting states to the EEA Agreement, it is surely more sensible to remain a signatory to the EEA but in breach of the EEA, than to withdraw and accede once more.

This blog post is based on part of a forthcoming article by the author. The author would like to thank in particular Arabella Lang, Parliament and Treaties Hub, House of Commons, and Dr. Jack Simson Caird, Senior Research Fellow in Parliaments and the Rule of Law at the Bingham Centre for the Rule of Law, for their invaluable comments and knowledge. All errors remain the author’s own.

Michael-James Clifton, Chef de Cabinet, Chambers of Judge Bernd Hammermann, EFTA Court. All views expressed are entirely personal.

(Suggested citation: MJ Clifton, ‘The UK’s Creative Ambiguity towards the EEA: Immediate and Future Relationship Problems’, U.K. Const. L. Blog (20th Feb. 2019) (available at https://ukconstitutionallaw.org/))