Interpretation, Application and Monitoring

Source: Dispatch of the Federal Council on Bilateral III, pp. 105--107
PDF of the dispatch

¶ Summary

The interpretation, application and monitoring of the single market agreements follow the two-pillar model: Switzerland and the EU each independently monitor compliance with the agreements on their own territory. There is no supranational monitoring body (unlike the EEA with the EFTA Surveillance Authority). Uniform interpretation is promoted through principles of international law and the dialogue between the Federal Supreme Court and the CJEU.

¶ Uniform interpretation

¶ Principle

Authorities and courts of both parties interpret the agreements uniformly. In doing so, they take into account:

The principles of international law (in particular the Vienna Convention on the Law of Treaties)
The wording, context and purpose of the agreement provisions
The case law of both parties on the corresponding provisions

¶ The Polydor case law

A central protective pillar for Switzerland is the so-called Polydor case law of the CJEU (Polydor judgment, Case 270/80, 1982):

The CJEU's case law on EU single market law cannot per se (not automatically) be transposed to bilateral agreements.

Aspect	EU single market	Bilateral agreements
Objective	Full economic integration	Sectoral, limited participation
Legal order	Supranational, primacy of EU law	International law, equal ranking
CJEU interpretation	Directly applicable	Only as guidance, not transposable per se
Dynamics	Automatic application of new law	Adoption requires a decision

Significance: The Polydor case law prevents the CJEU from applying its single market jurisprudence to the bilateral agreements without examination. The agreements have a different context and purpose than the EU single market.

¶ The two-pillar model

¶ Basic structure

Pillar	Competence	Authority
Swiss pillar	Monitoring on Swiss territory	Swiss authorities and courts (in particular the Federal Supreme Court)
EU pillar	Monitoring on EU territory	EU bodies (in particular the European Commission and the CJEU)

¶ No supranational monitoring body

Unlike the EEA, where the EFTA Surveillance Authority (ESA) monitors compliance with EEA law in the EFTA states, under Bilateral III no such body exists:

Switzerland monitors compliance independently on its territory
The EU monitors compliance independently on its territory
In case of disputes, the dispute settlement mechanism applies

¶ Dialogue Federal Supreme Court -- CJEU

¶ Basic idea

To promote uniform interpretation, a dialogue on equal footing between the Federal Supreme Court and the CJEU is envisaged:

No hierarchical relationship: The Federal Supreme Court is not subordinate to the CJEU
Reciprocal exchange: Both courts may address questions of interpretation to the other court
Voluntary character: The dialogue is not imposed but is based on mutual interest in coherent interpretation
Practice: Already today, the Federal Supreme Court takes CJEU case law into account when interpreting the bilateral agreements (and vice versa)

¶ Difference from the CJEU in dispute settlement proceedings

Aspect	Dialogue FSC-CJEU	CJEU in AP proceedings
Type	Voluntary, informal	Formalised, when needed
Initiation	By either court	By the arbitration panel
Binding character	Guidance	Binding for EU law questions
Purpose	Coherent interpretation	Clarification of specific legal questions

¶ Comparison with the EEA model

Criterion	Bilateral III	EEA/EFTA
Monitoring	Two pillars (independent)	EFTA Surveillance Authority (ESA)
Court	Federal Supreme Court (CH), CJEU (EU)	EFTA Court
Supranational	No	Yes (ESA)
Dialogue	FSC-CJEU on equal footing	EFTA Court oriented towards CJEU
Sovereignty	Higher	Lower

¶ Key points

Two-pillar model: Each party monitors independently on its own territory
No supranational body: Unlike the EEA, no surveillance authority
Polydor protection: CJEU case law not automatically transposable
Dialogue on equal footing: Federal Supreme Court and CJEU without hierarchical relationship
International law interpretation: Vienna Convention on the Law of Treaties as benchmark