Dynamic Interpretation of the EEA Agreement and the Worrying Complacency of the Contracting Parties

In a challenging geopolitical climate, Norwegian politicians rally around the EEA Agreement as the cornerstone of Norway’s relationship with the EU. Much of the work of maintaining the very core of the EEA framework, however, has been left to the courts. This spring, both the Norwegian Supreme Court and the EFTA Court reaffirmed their willingness to go to great lengths to keep EEA law aligned with EU law. At the same time, both courts hinted at the limits of dynamic interpretation as a way to bridge “the widening gap” that has emerged between the EEA Agreement and the EU treaties as a result of the treaty changes on the EU side over the now 30-years history of the EEA. This is an appropriate warning which the Contracting Parties need to take seriously.

Author: Professor Halvard Haukeland.Fredriksen, University of Bergen / Centenol

A Principle of Free Movement for all EEA Citizens?

The Supreme Court’s most recent contribution to this debate came on March 17 in the MH case, concerning the derived right of residence in Norway for third-country nationals who have formed a family relationship with a Norwegian citizen during a stay in another EEA state. The Supreme Court endorsed the EFTA Court’s dynamic EEA interpretation of the EU Citizenship Directive (Dir. 2004/38/EC), explicitly aiming to ensure the same legal situation in the EEA as the Court of Justice of the European Union (CJEU) derives from Article 21 TFEU on the right of every citizen of the Union to move and reside freely within the territory of the Member States.

Although the Supreme Court did its best to downplay the judicial creativity deployed by the EFTA Court in its interpretation of the Directive, the fact remains that the Supreme Court endorsed an interpretation which the CJEU has repeatedly stated that the Directive’s wording, structure and purpose does not allow for as a matter of EU law. The different interpretation of the Directive as a matter of EEA law may still be justified by its additional role as the legal basis for the right to free movement in an EEA that lacks an equivalent to Article 21 TFEU, coupled with an result-oriented approach to the EEA Agreement’s overarching objective of homogeneity between EU and EEA law. But there can be no denial that the Supreme Court’s endorsement of this interpretation represents judicial bridge-building across the widening gap.

At the same time, the Supreme Court, in a principled opening, noted that concerns for State sovereignty, legal predictability, and legal certainty constrain the courts’ ability to ensure homogeneity between EEA and EU law. Strikingly, the Supreme Court omitted any reference to the EFTA Court’s recent assertions of an unwritten EEA legal principle of free movement for all EEA citizens – indicating that the Supreme Court sees this as a bridge too far.

It remains to be seen how the EFTA Court will respond to this. Recognition of a general principle of EEA law essentially mirroring Article 21 TFEU undeniably goes beyond the EEA-specific interpretation of the directive now endorsed by the Supreme Court. However, it would significantly ease the task of EEA lawyers currently struggling with the “transferability” of CJEU case law on free movement under Article 21 TFEU to the EEA legal order. Moreover, recognition of a general principle would likely make more sense to EU lawyers than the current attempt to interpret the Directive as if Article 21 TFEU was an inherent part of it (as opposed to its foundation).

Fundamental Rights as a Constraint on EEA Committee Decisions

The EFTA Court’s most significant contribution this spring to judicial bridge-building across the widening gap came on May 7 in Joined Cases E-1/24 and E-7/24 TC and AA, where the Court effectively established compliance with the EU Charter of Fundamental Rights as a precondition for the application of the EEA Joint Committee’s decisions incorporating novel EU legal acts of EEA-relevance into the Agreement.

The case concerned a provision of the Fifth Anti-Money Laundering Directive (Dir. 2018/843) that strengthened a provision on access to information on beneficial ownership in the Fourth Anti-Money Laundering Directive (Dir. 2015/849) by requiring Member States to ensure that such information is accessible to any member of the general public, without conditions. Back in 2022, the CJEU declared this amendment invalid as incompatible with the fundamental rights enshrined in Articles 7 and 8 of the EU Charter of Fundamental Rights, which concern respect for private and family life and the protection of personal data (Joined Cases C-37/20 and C-601/20 Luxembourg Business Registers).

For reasons unknown, the EEA Joint Committee had not followed up this judgment by repealing the corresponding provision within the EEA legal framework, thereby forcing the EFTA Court to “interpret it away” in order to preserve homogeneity between EEA and EU law. In reaching this outcome, the EFTA Court went further than in previous case law in recognizing the Charter as a source for the fundamental rights that Court considers to constitute unwritten principles of EEA law – despite the fact that the Charter has not been incorporated into the EEA Agreement or in other ways endorsed by the EFTA States. The Court went on to hold that in the case at hand, there was no basis to suggest that the fundamental rights protection guaranteed under EEA law differs from what is applicable as a matter of EU law. From this, the Court concluded that the provision on access to information on beneficial ownership had to be interpreted in accordance with its wording prior to the entry into force of the Fifth Anti-Money Laundering Directive(!), thus requiring any person or organisation requesting access to information on beneficial ownership to demonstrate a legitimate interest.

The judgment is both striking and just as expected. Striking, because it effectively introduces judicial review of the fundamental rights compatibility of decisions of the EEA Joint Committee, despite the fact that no provision of the EEA Agreement (or the accompanying EEA-EFTA Surveillance and Court Agreement) vest such jurisdiction in the EFTA Court. Just as expected, because EEA law cannot live with weaker protection of fundamental rights than that guaranteed by EU law.

The more surprising part of the judgment is therefore the EFTA Court’s rather open criticism of the Joint Committee’s failure to fulfil its “obligation … under Article 102 EEA to guarantee the legal security and homogeneity of the EEA” (para. 47). It is indeed rare for an international court to reproach the Contracting Parties in such terms, but the criticism is well-founded and must be taken seriously by both the EU and the EFTA States.

But what about the CJEU?

Both the Supreme Court in MH and the EFTA Court in TC and AA emphasize the problem of “the widening gap” that has emerged between the EEA Agreement and the EU treaties. Yet, both courts concluded that it was indeed possible to construct legally viable bridges across the gap in the cases at hand. For the EEA Agreement, this is obviously as such good news. Still, it might be feared that the Contracting Parties will consider both judgments as proof that the job of preserving homogeneity between EEA and EU law can be left to the courts.

One somewhat underappreciated risk with this approach lies with the CJEU. Although it is true that the CJEU has demonstrated a notably “EEA-friendly” stance in cases such as I.N. (Case C‑897/19), its willingness to engage in creative bridge-building across “the widening gap” has not yet been truly tested. Indeed, in I.N. as well as in Nordic Info (Case C‑128/22), there are elements in the opinions from the Advocate General that suggest that the judicial creativity increasingly accepted as normal in the EFTA pillar may not be recognized as such on the EU side.

Moreover, in a recent order by the EU General Court in Case T-319/24 Meta Platforms Ireland, EEA-specific arguments for a wide interpretation of Article 263 TFEU in order to compensate for the lack of indirect access to the CJEU via the national courts of the EFTA States were summarily rejected. The order offers little to those who hope that the EU judiciary is prepared to remedy the deficiencies in the judicial protection within the EFTA-pillar brought about by the limits put on the EFTA Court’s jurisdiction and the impossible situation the EFTA Court is put in if asked to assess the validity as a matter of EEA law of an EU legal act that has not already been declared invalid by the CJEU.

Almost 20 years ago, the new Danish member of the CJEU, Niels Fenger, wrote an article titled “Limits to a dynamic homogeneity between EC law and EEA Law” (2006). He may have since changed his views on how far the courts can go in bridging the widening gap between EU and EEA law —but that is by no means certain.

The Responsibility of the Contracting Parties

The EEA Agreement faces numerous challenges that are grossly under-communicated in the Norwegian public sphere, not least those related to the EU’s reorientation of the internal market as a tool of trade and security policy. The prospects for addressing these challenges improve if the EFTA States demonstrate willingness to help the courts in their efforts to maintain homogeneity between EU and EEA law.

Importantly, this does not require amendments to the Main Part of the EEA Agreement (for which there is no appetite on either side). Both the EEA Council and the EEA Joint Committee can provide formal recognition of a general right to free movement for all EEA citizens and of the relevance of the EU Charter of Fundamental Rights to EEA law. Both bodies can also declare that an EU legal act invalidated by the CJEU ipso facto loses its validity also as a matter of EEA law.

As part of such a much-needed “update” of the EEA framework, the legal protection on offer within the EFTA pillar should be strengthened—for example, by invoking Article 107 EEA to allow the EFTA Court to ask the CJEU to rule on the validity under EU law of a legal act at issue in a case before the EFTA Court.

If Norwegian authorities do not heed the signals from the Supreme Court and the EFTA Court, they are failing to fulfil their duty to safeguard “the legal security and homogeneity of the EEA.”

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How to cite

Fredriksen, Halvard Haukeland (2025): Dynamic Interpretation of the EEA Agreement and the Worrying Complacency of the Contracting Parties. Blog. EFTA-Studies.org.