Brexit, European Economic Area (EEA) membership, and Article 127 EEA

02 Dec 2016 | by Professor Panos Koutrakos

Introduction

Does Brexit entail an obligation for the United Kingdom to notify the European Economic Area (EEA) of its intention to withdraw? This question has arisen recently in the context of the different ways in which the UK could maintain its links with the single market. This blog entry will address this question in the light of EEA law – it will not examine the domestic constitutional law issues pertaining to the appropriate procedure for withdrawing from the EEA.

Leaving the EEA – Article 127 EEA

 The EEA consists of the EU, the EU’s Member States, Norway, Iceland, and Liechtenstein. The contracting parties may withdraw from the Agreement under Article 127 EEA. This provision reads as follows:

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.

The above provision sets out a process markedly different from that laid down in Article 50 TEU: it imposes a notification requirement on the withdrawing party, but does not provide for a negotiation process with the remaining parties. Instead, it is the latter that are to discuss how to adjust the Agreement to the new circumstances. Article 127 EEA is also silent on the consequences of non-compliance with the provision laid down thereunder.

The UK as a contracting party

 The EEA Agreement refers expressly to the United Kingdom as an autonomous contracting party. In doing so, it differs from other international agreements in which the UK participates along with the EU and the bilateral nature of which is clear. Compare it, for instance with the 2000 Cotonou Agreement which was concluded between ‘the African, Caribbean and Pacific Group of States of the one part, and the European Community and its Member States, of the other part’.

The autonomous nature of the UK’s membership is also borne out by Article 2(c) EEA which defines the term ‘Contracting Parties’ in relation to the Community (as it then was) and the EC Member States as ‘the Community and the EC Member States, or the Community, or the EC Member States’. The meaning of this formulation ‘in each case is to be deduced from the relevant provisions of this Agreement and from the respective competences of the Community and the EC Member States as they follow from the Treaty establishing the European Economic Community …’.

Two points follow from the above. First, whilst Article 2(c) EEA confirms the autonomous nature of the UK’s membership (‘or the EC Member States’), it also suggests that the latter is a party in the context of its EU membership. Secondly, the UK’s EEA membership is to be understood in relation to the areas where competence has not been passed on to the EU. In other words, whilst autonomous, the UK’s membership is also limited.

The question that would, then, arise is whether, in the light of the above, there is scope in the EEA Agreement for continuing membership once the UK has left the EU. The scope of its existing membership and its link with EU membership, in the light of Article 2(c) EEA, would suggest a negative answer. This conclusion is also supported by other features of the Agreement.

 The territorial clause – Article 126 

Article 126 EEA defines the territorial scope of the EEA Agreement. It provides that the latter ‘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 …’ (Article 126(1) EEA). Article 126(2) EEA provides for an exception in relation to Åland Islands.

The above clause defines the territorial scope of the EEA Agreement with reference to the territorial scope of the EU’s primary law. As, following Brexit, the UK would not be part of the latter, it would also be excluded from the former.

The binary system set out under the EEA Agreement

 The EEA Agreement establishes a system that is binary in its conception, and involves EU and European Free Trade Area (EFTA) members. In its preamble, the Agreement ‘reaffirm[s] the high priority attached to the privileged relationship between the European Community, its Member States and the EFTA States…’ (second paragraph).

This view is also borne out by the institutional characteristics of the EEA. The membership of the EEA Council, for instance, consists of the members of the EU’s Council and Commission and one member of the Government of each of the EFTA States (Article 90(1) EEA). As for the EEA Joint Committee, whilst its membership is couched in broader terms (‘shall consist of representatives of the Contracting Parties’: Article 93(1) EEA), its decisions are to be taken ‘by agreement between the Community, on the one hand, and the EFTA States speaking with one voice, on the other’ (Article 93(2) EEA).

In terms of judicial supervision, there is provision for the EFTA Court (Article 108(2) EEA) the jurisdiction of which would cover the enforcement of the Agreement in the EFTA States and the settlement of disputes between EFTA States. The EEA Joint Committee is responsible, amongst others, for reviewing the development of the case-law of the Court of Justice of the European Union and the EFTA Court. It would be difficult to envisage the participation of a member which would be subject to the jurisdiction of neither court.

The role of monitoring and enforcing the Agreement is conferred on two institutions, namely the EFTA Surveillance Authority and the European Commission, the latter acting in conformity with EU primary law (Article 109 EEA).

 It follows from the above that EEA membership is tied in with EU or EFTA membership. This conclusion is also borne out by Article 128(1) EEA which provides that ‘[a]ny European State becoming a member of the Community shall, and the Swiss Confederation or any European State becoming a member of EFTA may, apply to become a party to this Agreement. It shall address its application to the EEA Council’. This provision does not expressly confine EEA membership to EU or EFTA members. Viewed, however, in the light of the logic and structure of the Agreement, it supports the view that there is no scope within the existing Agreement for a third type of a contracting party, the latter being neither an EU nor an EFTA member.

Conclusion

 Whilst a party to the EEA, the UK’s membership is conditioned by its EU membership. Notification pursuant to Article 126 EEA is a procedural duty which would need to be complied with. Failure to notify, however, would not maintain EEA membership, unless either the EEA Agreement was amended or the UK became an EFTA member (on the latter, see this report). Instead, leaving the EU without having notified the EEA under Article 126 EEA would have consequences for the UK in the public international law sphere. The other EEA members, for instance, would be able to consider Brexit a fundamental change of circumstances (under Article 62 of the Vienna Convention on the Law of Treaties) and terminate the Agreement.

The above analysis has been carried out in the light of the EEA Agreement as it currently stands. The outcome of the negotiations between the EU and the UK under Article 50 TEU may well entail adjustments of the system set out under the Agreement. In legal terms, however, such adjustments would require an amendment of the Agreement.

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