The EU Association Agreement with Andorra and San Marino
Reaching the Boundaries of the EU’s Association Competence
On 26 April 2024, the European Commission put forward a proposal for the Council to conclude the Association Agreement (AA) between the European Union and Andorra and San Marino. In a press release, the Commission underscored that the AA will provide an access to the EU’s internal market comparable to Norway, Iceland and Liechtenstein under the EEA Agreement, i.e. the most far-reaching form of integration of third countries in the EU’s internal market so far. However, the AA with Andorra and San Marino goes another step further and introduces in an unprecedented manner the supervision and jurisdiction of the European Commission and the Court of Justice (CJEU) in the context of an association agreement.
As acknowledged by EU Commissioner Šefčovič, the AA will constitute “the most comprehensive agreement the EU will have with any third country”, going beyond the scope, content and depth of the existing association agreements. This begs the question how far the EU can go under its association competence laid down in Article 217 TFEU in integrating third countries in the EU legal order. This blog post argues that the AA goes yet another step further in the EU’s association practice by largely integrating Andorra and San Marino in the procedures before the CJEU, to the extent that the Union may now have fully exhausted its association competence when it comes to the depth of integration it may offer third countries.
The judicial integration of Andorra and San Marino in the EU legal order
The AA with Andorra and San Marino incorporates both countries to a large extent in the enforcement mechanisms provided for in the EU legal order. In the field of competition law, Articles 40 and 46 of the respective AA empower the European Commission to enforce the competition rules within the extended internal market established by the AA, and to review all new and existing state aid granted by Andorra and San Marino. If Andorra or San Marino do not comply with the Commission’s state aid decisions, the Commission may directly launch an infringement proceeding before the CJEU. This corresponds to Article 108(2) of the TFEU, which allows the Commission to immediately bring EU Member States, that do not comply with its state aid decisions, before the CJEU without first having to send a letter of formal notice and reasoned opinion in line with Article 258 TFEU.
Apart from competition law, potential disputes regarding the incorrect or non-application of the relevant EU rules would first be addressed by the Joint Committee set up by the AA. If the Joint Committee is unable to find a solution within six months from its first meeting, either of the Parties may decide to refer the matter to the CJEU in accordance with Article 90 of the AA. This is different from the EEA Agreement, which requires the consent of all Contracting Parties to refer the matter to the CJEU (see Article 111(3) EEA Agreement). In addition, Articles 92 and 93 of the AA allow Andorra and San Marino, as well as their inhabitants, similar access to the CJEU as the EU Member States and EU citizens by providing for an action for failure to act and an action for damages against EU institutions, bodies and agencies similar to Articles 265 and 268 TFEU.
Regarding the validity of EU law, Article 91(1) of the AA underscores the exclusive jurisdiction of the CJEU over the legality of EU law in order to ensure the autonomy of the EU legal order. When an EU act is addressed to San Marino or Andorra, or to a natural or legal person domiciled or established there, the second paragraph of Article 91 specifies that any review of the validity of such acts should be left to the CJEU in accordance with the action for annulment procedure in Article 263 TFEU. One of the open questions, which the CJEU will have to clarify in the future, concerns the status of Andorra and San Marino in the context of Article 263 TFEU, especially when the EU act is not directly addressed to them – in case of general application of an EU act. Given the depth of integration of the AA, should Andorra and San Marino be assimilated to the EU Member States and be treated as privileged parties under Article 263(2) TFEU? If so, they would have direct access to the CJEU and would not have to prove that they meet the more burdensome conditions of being directly and/or individually concerned by the EU act in line with Article 263(4) TFEU.
Article 6 of Protocol 24 to the EEA Agreement explicitly grants Norway, Iceland and Liechtenstein the status of privileged party for actions of annulment before the CJEU, but only in case of certain Commission decisions in the field of concentrations. The AA with Andorra and San Marino appears to go way beyond that by bestowing upon them the status of privileged party in a more general fashion. Article 95 of the AA hints in this direction by prescribing that any action brought before the CJEU under Articles 90 to 94, including the provision that any review of the legality of EU acts shall fall within the exclusive jurisdiction of the CJEU, shall be subject to the same procedural rules as those provided for within the TFEU. In addition, Article 10 of Framework Protocol 1 stipulates that rights conferred upon the EU Member States shall be understood to be conferred upon San Marino and Andorra. So far, similar claims by Switzerland have, however, been avoided by the CJEU. In any event, even if Andorra and San Marino cannot be considered privileged parties under Article 263(2) TFEU, they will still be able to resort to Article 263(4) TFEU. As the CJEU acknowledged in Venezuela v Council, third countries too may institute an action for annulment against acts of EU law under Article 263(4) TFEU, provided they meet the conditions laid down therein.
Lastly, Article 94 of the AA duplicates the Article 267 TFEU preliminary reference procedure. That provision stipulates that national courts of Andorra and San Marino may, or in the case of the apex courts must, seek a preliminary ruling from the CJEU when in the domestic proceedings a question is raised relating to the interpretation of the AA or the validity of EU law. This full-fledged integration of Andorra and San Marino in the preliminary reference procedure goes much further than what is legally required under EU law and what has been the practice in association agreements up to now. In Opinion 1/91, the CJEU clarified that international agreements may grant the national courts of third countries the possibility to refer a preliminary reference to the CJEU. However, EU law does not require that certain courts (particularly apex courts) are obliged to do so. Yet, the latest AA clearly introduces this obligation to the national apex courts of Andorra and San Marino.
Reaching the boundaries of the EU’s association competence
The AA with Andorra and San Marino establishes the most far-reaching (judicial) integration of third countries in the EU legal order so far. In various areas of EU law, Andorra and San Marino will be equated with the EU Member States to a large extent, both with respect to the substantive rules applicable in both countries as well as with respect to the judicial enforcement procedures. Given the far-reaching sectoral integration of the association established with Andorra and San Marino, one could almost speak of de facto “partial EU membership”, yet without the right to vote on the adoption of new EU legislation. In light of the EU’s decision-making autonomy, decision-making powers are necessarily a benefit connected to EU membership.
Blurring the boundaries between EU membership and third country status, this begs the question as to the limits of the EU’s association competence. Article 217 TFEU allows the Union to conclude with one or more third countries an agreement establishing an association involving reciprocal rights and obligations, common action and special procedure. In Demirel, the CJEU clarified that this provision empowers the EU to guarantee commitments towards non-member countries in all fields covered by the Treaties. Yet, as the CJEU stressed in UK v Council (Turkey), this provision does not allow the Union to conclude association agreements exceeding the powers conferred on it. As it follows from Article 49 TEU, the final decision on accession of third countries to the EU remains a prerogative of the EU Member States. Hence, although Article 217 TFEU allows the Union to integrate third countries in the EU legal order in a far-reaching manner, the EU should guard the (increasingly thin) line between EU Membership and third country status. Through the full integration of Andorra and San Marino in selected areas of EU law, including by subjecting them to a large extent to the corresponding procedures before the CJEU, the envisaged AA introduces an unprecedented (judicial) integration of third countries. To the extent that they are largely equated with EU Member States, yet without the right to vote as a prerogative reserved to EU Member States, the EU appears to have neared, if not entirely reached, the limits of its association competence when it comes to the depth of integration it may offer third countries.
