Understanding the nature of the EEA Agreement: On the direct applicability of regulations

Abstract

In two judgments, the European Court of Justice has stated that regulations are directly applicable under the EEA Agreement and automatically become part of the internal legal order of the EEA EFTA States.The EFTA Court has taken the opposite position. In legal literature, the ECJ’s interpretation of Article 7 EEA has been dismissed as a plain misunderstanding. This paper sides with the ECJ; it shows that a principle of direct applicability is consistent with the wording of Article 7 EEA and that the principles of homogeneity and loyalty underpin the Court’s reasoning. Formally, the ECJ’s interpretation of Article 7 EEA is not binding on the EFTA Court or the EEA EFTA States. The EFTA Court should however consider whether legal and factual developments justify a revision of its current position. It would serve the interests of the dualist EEA EFTA States to embrace the ECJ’s position.