The Efta court clashes with Norway’s Supreme Court

It is not common for judges to criticise each other’s decisions in such an open and candid manner as that used by the Efta Court’s President Carl Baudenbacher when he attacked Norway’s Supreme Court’s judgement in the STX Norway case, or the ‘shipbuilder case’ as it is also known. Baudenbacher presented his criticism in an article published in the Norwegian legal trade magazine ‘Lov og Rett’. But these are not only his personal views. Some of them are echoed by an Efta Court judgement which came only weeks after the Supreme Court had passed its judgement. The argument centres on what the EEA agreement actually means – and which of the two courts have the final say.

Row over collective agreement

The story began when Norway’s Tariff Board decided certain parts of the collective agreement for the ship building industry would be universally applicable. The decision meant that foreign companies with posted workers in Norway were forced to comply with the agreement’s rules on working hours and overtime pay, as well as paying a special so-called utenbystillegg [out of town fee] plus travel, board and lodging expenses. Nine Norwegian ship yards went to court and asked for the Tariff Board’s decision to be declared void, arguing it was in breach of the EU directive on the posting of workers as well as the EEA agreement’s rules on the free movement of services. Because the case centred on how to interpret EEA law, the issue ended up in the Efta Court.

Different conditions

When a national court sends questions to the Efta Court it is still the domestic court’s job to pass judgement in the dispute. The Efta Court must only pronounce what EEA law means in principle, before the native court applies the answer to the facts of the case. The same happens when courts in EU countries send questions to the EU Court of Justice. But there are differences too. While for instance Swedish courts are obliged to refer certain cases to the EU Court of Justice, the EEA agreement only says that national courts, like the Norwegian ones, “may” consult the Efta Court. In other words; it is a possibility but not an obligation. Another difference is that the EU Court of Justice’s decisions are binding for Swedish courts. The Efta Court’s pronouncements, however, are only advisory - that, at least, is how it is formulated. The difference is deliberate and stems from the fact that Norway and the other Efta countries were not prepared to give up as much of their sovereignty as the EU member states have to do.

Question already decided?

The problem is that pronouncements from the EU Court of Justice and the Efta Court sometimes are so definite that they have practically already decided the outcome of the case. There is no room for manoeuvre left for the domestic courts, even though they are the ones to pass judgement. This seems to be the case in the shipbuilder case. The Efta Court did say, as usual, that it was the Norwegian court’s job to judge the facts of the case, but at the same time it was obvious that the Efta Court considered the Tariff Board’s decision to be in breach of the posted workers directive on two points: utenbystillegget and the compensation for travel, board and lodging. 

That is when Norway’s Supreme Court did something it had never done before: it passed a judgment which flew in the face of the Efta Court’s clear directions. The two courts have enjoyed a very frosty relationship ever since.

The Supreme Court argues that a domestic court must be allowed from time to time to pass a judgement which goes against the Efta Court’s opinion as long as the EEA agreement clearly states that they are advisory - although of course there needs to be special reasons for doing so.

Demands loyalty

But Carl Baudenbacher argues this self determination is just a formality; in actual fact the Efta countries’ courts are expected to loyally follow the Efta Court’s pronouncements in the same way that courts in EU countries must follow the EU Court of Justice. If not, you would end up with a separate Norwegian EEA law, running contrary to the principle of interpreting rules based on EU directives in the same way no matter where you are, he thinks. For that same reason Norwegian courts are for instance obliged to refer cases to the Efta Court even though that is not how it is formulated. The Norwegian courts are not doing well here either, he seems to think.

No appeal

The nine ship yards that lost the case in the Norwegian Supreme Court have no right of appeal. Nevertheless, the Efta Court’s President is hinting that the last word has not yet been had. He points out that Efta’s surveillance authority ESA can bring a state before the Efta Court if it fails to fulfil its obligations according to the EEA agreement, for instance if the country’s highest court applies EEA law in the wrong way. If that happens, the Efta Court can decide an issue which it has already taken a position to beforehand.