By Prof. Dr. Dr. h.c. Carl Baudenbacher, former President of the EFTA Court (2003-2017)
20 December 2024 will go down in the history books in Switzerland. The Federal Council, the country’s directorial government that consists of seven members with equal rights, approved a Framework Agreement with the European Union without knowing its exact content. As a lawyer, it reminds of someone signing an unread document. The following applies here: anyone who signs a document without reading it and with knowledge of its legal relevance cannot generally contest it (see e.g. Swiss Federal Supreme Court, ATF 135 IV 12). The fact that the Federal Council has not yet signed the treaty is irrelevant. It has undertaken to sign it in the presence of EU Commission President Ursula von der Leyen.
However, in view of the complexity of the RA2.0 and the many unclear clauses, one could imagine an analogy with the law on general terms and conditions (‘Allgemeine Geschäftsbedingungen’, ‘AGB’). According to Article 8 of the Swiss Unfair Competition Act, ‘anyone who uses general terms and conditions that provide for a significant and unjustified imbalance between contractual rights and contractual obligations to the detriment of consumers in a manner that is contrary to good faith’ is acting unfairly.
This agreement between the European Union and Switzerland is historic.
In this challenging environment, where global power relations are constantly shifting, strong partnerships like ours are not just an advantage.
They are a must ↓ https://t.co/G4xqJObgSm
— Ursula von der Leyen (@vonderleyen) December 20, 2024
There is no doubt that there is a significant and unjustified imbalance between Switzerland’s contractual rights and obligations. Swiss industry only continues to have limited access to the internal market; service providers, i.e. banks and insurers in particular, are excluded. In return, Switzerland undertakes to dynamically adopt EU law on an ongoing basis and to submit to monitoring by the European Commission and a monopoly on interpretation by the CJEU. Both institutions lack neutrality. There is an ‘arbitration panel’ which formally takes the decisions in case of conflict, but this is a mere disguise for this treaty imbalance. The model was adopted from the association agreements with the post-Soviet republics of Armenia, Georgia, Moldova and Ukraine, all of which are on the EU’s financial drip.
Contrary to what Federal Councillor Ignazio Cassis, the Foreign Minister, supported by nods from his chief negotiator, claimed twice at the media conference held on the occasion of the approval of the unread treaty, the ‘arbitration tribunal’ must, not can, ask the CJEU for a binding ruling. The Foreign Minister’s statement is fake news in optima forma, and this on a day when the little Swiss had the opportunity to pay homage to the President of the powerful EU Commission. In addition to its semi-colonisation, Switzerland is also supposed to pay CHF 350 million a year to the EU. The comparison that the Federal Council makes in this respect with the EEA/EFTA states Iceland, Liechtenstein and Norway is untenable, as these states are not subject to monitoring by the Commission and the jurisdiction of the CJEU.
It is questionable whether the Federal Council was in violation of good faith bamboozled by the EU Commission. If you think back to 2013, the answer is no. Back then, the illustrious body, under the influence of the then Foreign Minister Didier Burkhalter, expressly wished for subordination to the EU Commission and the CJEU. The then EU ambassador in Bern, Richard Jones, a Briton, was astonished by this. Even then, fake news played a decisive role. Among other things, the Federal Council claimed that the CJEU would merely provide ‘expert opinions’. The campaign of lies has continued ever since.
On 20 December 2024, the EU did not rip off the Federal Council. Its own chief negotiator withheld the treaty text from the seven Ministers and instead handed them so-called fact sheets written by his team. As an initial review shows, the fact sheets contain the usual fake news. It is hard to believe, but the Federal Councillors accepted this patronising treatment by a bureaucrat who finds himself in an obvious conflict of interest.
It is unclear whether the Swiss Federal Council can be compared with consumers to be protected under the Unfair Competition Act. Consumers are considered to be in need of protection because they are the economically, intellectually and structurally inferior party. In the present context, however, there can be no question of economic inferiority. Switzerland is much better off economically than the EU. Berne should also be able to keep up structurally, even if the systematic employment of head nodders in the federal civil service is of course a problem. At best, one might be tempted to take a closer look at the element of intellectual inferiority.
In the end, however, the question would perhaps end up before the CJEU according to the Framework Agreement. So let us leave it at that. Nevertheless, 20 December 2024 will always be a memorable day, in a negative sense.
EU, Swiss hail ‘historic’ new deal resetting relations https://t.co/TVGl0FIeeO
— Inquirer (@inquirerdotnet) December 20, 2024
Post Scriptum: On the same day, the FT reported that US President-elect Donald Trump has promised his own policy of deregulation, appointing billionaire entrepreneur Elon Musk to co-head a new government efficiency department. Eurocrats expect that Musk will trigger a race to the bottom on regulation. European companies, meanwhile, fear they will become so bogged down in red tape that they will fall even further behind their US competitors.
Exactly one month after the grotesque ballyhoo in Bern, on 20 January 2025, Donald Trump will be sworn in as President of the USA in Washington DC. The question arises as to whether the Federal Council will still be as happy with its unread treaty after this event as it or its majority now pretends to be. Or was the whole thing just a farce to look good to the Great Chairwoman of the Commission?
Prof. Dr. iur. Dr. rer. pol. h.c. Carl Baudenbacher is a partner in a Swiss-Norwegian law firm, Visiting Professor LSE, President of the EFTA Court 2003-2017. A version of this article was originally published in German by Swiss magazine Nebelspalter.
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