E-9/20 EFTA Surveillance Authority v The Kingdom of Norway 

EFTA-case

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Deadlines: Motivation departement:    26 October 2020
Written observations:                          9 December 2020

Keywords : freedom of establishment; freedom of movement;

Subject :

-           EEA Agreement;

-           TFEU article 49;

-           Regulation (EU) No 492/2011 of the European Parliament and of the Council of 5 April 2011 on freedom of movement for workers within the Union;

-           Eleventh Council Directive 89/666/EEC of 21 December 1989 concerning disclosure requirements in respect of branches opened in a Member State by certain types of company governed by the law of another State;

Facts of the case:

This application concerns various (nationality and/or) residence requirements laid down in Norwegian company law in respect of persons who occupy certain management roles in companies registered and incorporated in Norway. Stated generally, the legislative provisions require a proportion of the founders of companies, managers, board members and members of the corporate assembly to be resident in Norway. These provisions determine that these requirements do not apply to nationals of EEA States, but only provided they are resident in such a State. The EFTA Surveillance Authority (hereafter: ESA) submits that the provisions referred to amount to an unjustified restriction of the freedom of establishment in Norway of companies which have been formed in accordance with the law of an EEA State and which have their seat in the EEA and, consequently, infringe Article 31 EEA. In addition, these requirements are incompatible with Directive 89/666. The case was opened in 2014 at ESA’s initiative. In the course of its contacts with the Norwegian Government in the intervening years, the Norwegian Government explained that the residence requirements were designed to ensure accessibility to company management and to enable the national authorities to exercise jurisdiction over these companies. The Norwegian Government considered the requirements to be necessary, suitable and appropriate for this purpose. ESA does not agree with this position, particularly in the light of a number of decisions of both the EFTA Court and the EU Court of Justice in which similar requirements were found to be contrary to Article 31 EEA and Article 49 TFEU respectively.

It should be noted that the Norwegian Government effectively acknowledges that the residence requirements at issue are at odds with the obligations arising from Article 31 EEA, in particular and, consequently, drew up proposals aimed at relaxing these requirements. The public consultation phase of the legislative process was concluded on 16 January 2020. These proposals had not yet been adopted at the time of lodging the present application. At any rate, for the purposes of assessing the merits of the present application, it is the situation which prevailed at the end of the two-month time-limit following the receipt of the reasoned opinion of 12 October 2016. Kindly consult Norway’s Statement of Defence for the Norwegian view on the matter.

Accordingly, ESA requests the Court to:

1. Declare that, by maintaining in force provisions such as Sections 6-11(1) and 6-36(2) of the Public Limited Companies Act, Section 6-11(1) of the Private Limited Companies Act and Sections 7-5 and 8-4(5) of the Financial Undertakings Act the Kingdom of Norway has failed to fulfil its obligations under Articles 31 and 28 of the EEA Agreement, Article 1(1) of the Act referred to at point 2 of Annex V to the EEA Agreement (Regulation (EU) No 492/2011 of the European Parliament and of the Council of 5 April 2011 on freedom of movement for workers within the Union) and Article 2 of the Act referred at point 8 of Annex XXII to the EEA Agreement (Eleventh Council Directive 89/666/EEC of 21 December 1989 concerning disclosure requirements in respect of branches opened in a Member State by certain types of company governed by the law of another State).

2. Order the Kingdom of Norway to bear the costs of the proceedings.

Cited (recent) case-law: E-3/98, E-2/01,4 E-8/04, ESA v. Liechtenstein and C- 299/02, Commission v. Netherlands.

Policy area: EZK; JenV