In September 2024, the EFTA Surveillance Authority (ESA) decided through a series of decisions to proceed with infringement proceedings against Iceland for its alleged failure to give national legal effect to four different regulations concerning financial services.
Infringement proceedings in the EFTA pillar
Article 31 of the Court and Surveillance Agreement (SCA) provides for infringement proceedings to be brought by the ESA against EFTA-EEA states. It provides,
‘If the EFTA Surveillance Authority considers that an EFTA State has failed to fulfil an obligation under the EEA Agreement or of this Agreement, it shall, unless otherwise provided for in this Agreement, deliver a reasoned opinion on the matter after giving the State concerned the opportunity to submit its observations.
If the State concerned does not comply with the opinion within the period laid down by the EFTA Surveillance Authority, the latter may bring the matter before the EFTA Court.’
The infringement proceedings in the EFTA pillar of the EEA are largely similar to those in the EU pillar. First, there is a formal Letter of Formal Notice. Second, there is a Reasoned Opinion. And third, there is the Referral of the case to the EFTA Court, if the ESA so choose.
The alleged infringement
In the cases at hand, the ESA states that Iceland has not implemented the following pieces of EEA secondary law into Icelandic law, which are included in Annex IX of the Agreement:
- Commission Implementing Regulation (EU) 2022/1859 of 10 June 2022 amending the implementing technical standards laid down in Implementing Regulation (EU) No 1248/2012 as regards the format for applications for registration as trade repositories and for applications for extension of registration as trade repositories.
- Commission Delegated Regulation (EU) 2022/750 of 8 February 2022 amending the regulatory technical standards laid down in Delegated Regulation (EU) 2015/2205 as regards the transition to new benchmarks referenced in certain OTC derivative contracts
- Commission Delegated Regulation (EU) 2023/314 of 25 October 2022 amending the regulatory technical standards laid down in Delegated Regulation (EU) 2016/2251 as regards the date of application of certain risk management procedures for the exchange of collateral.
- Commission Delegated Regulation (EU) 2023/315 of 25 October 2022 amending the regulatory technical standards laid down in Delegated Regulations (EU) 2015/2205, (EU) 2016/592 and (EU) 2016/1178 as regards the date at which the clearing obligation takes effect for certain types of contracts.
Responsibility to give effect to EEA secondary law
Article 7 of the EEA Agreement provides,
‘Acts referred to or contained in the Annexes to this Agreement or in decisions of the EEA Joint Committee shall be binding upon the Contracting Parties and be, or be made, part of their internal legal order as follows:
(a) an act corresponding to an EEC regulation shall as such be made part of the internal legal order of the Contracting Parties;
(b) an act corresponding to an EEC directive shall leave to the authorities of the Contracting Parties the choice of form and method of implementation.’
Not having given effect the aforementioned regulations (Commission implementing and delegated regulations), the ESA is asking the EFTA Court to declare Iceland has failed to fulfil its obligations under EEA law.
The cases
The cases have been lodged at the EFTA Court, as, respectively,
- Case E-19/24, ESA v Iceland (Trade repositories application format).
- Case E-20/24, ESA v Iceland (OTC derivative contract technical standards).
- Case E-21/24, ESA v Iceland (Collateral risk management technical standards).
- Case E-21/24, ESA v Iceland (Clearing obligations technical standards).
No fines for infringement
Regrettably, there is no formal system of fines, in the strict letter of the law, for the EFTA Court to levy fines on an infringing EFTA-EEA state. Though it would always be open in future cases for the ESA to ask for such, and for the EFTA Court to consider that possibility, in the name of homogeneity of infringement proceedings that are brought by the Commission in the EU pillar of the EEA.
Read the cases
They can be found regarding Case E-19/24, ESA v Iceland (Trade repositories application format) here; Case E-20/24, ESA v Iceland (OTC derivative contract technical standards) here, Case E-21/24, ESA v Iceland (Collateral risk management technical standards) here, and Case E-21/24, ESA v Iceland (Clearing obligations technical standards) here.