Professor Dr. Dr.h.c. Carl Baudenbacher – Written Evidence (DYN0010)
Prof. Dr. Dr.h.c. Carl Baudenbacher – Dynamic Alignment Call for Evidence
Prof. Dr. Dr. h.c. Carl Baudenbacher
9 April 2026
Written evidence to the House of Lords European Affairs Committee
I am the former President of the EFTA Court. The EFTA Court fulfils the judicial function in the EFTA-pillar of the European Economic Area (EEA), interpreting the EEA Agreement with regard to the EFTA States party to that treaty. At present those EFTA States are Iceland, Liechtenstein and Norway. Today, I am a partner at the international law firm Baudenbacher Law AG, based in Zurich, Oslo and Brussels, a door tenant at Monckton Chambers, and a visiting professor at the London School of Economics (LSE). During the Brexit years, I gave written and oral evidence to both Houses of Parliament and advice to the Foreign Office as well as the UK’s devolved governments. In 2019, I acted as an expert for the Government of the Kingdom of Morocco on the question of whether the country should conclude a Deep and Comprehensive Free Trade Agreement with the EU. Very recently, I have , at the invitation of the Icelandic Parliament (Alþingi), given my view on whether Iceland should start negotiations in EU-membership (https://www.althingi.is/altext/erindi/157/157-2080.pdf).
His Majesty’s Government plans to conclude bilateral agreements with the EU under a ‘dynamic alignment’ framework in the areas of Sanitary and Phytosanitary (SPS) measures, electricity trade, and Emissions Trading Schemes (ETS). In the following, I shall confine myself to the most significant institutional implications that ‘dynamic alignment’ would entail. In doing so, I draw on my experience as President of the EFTA Court and as a Swiss lawyer who has advised both the Swiss Federal Council and the Swiss Federal Parliament, as well as the Governments of individual Cantons.
I assume that the Committee is interested in information regarding the sectoral agreements with the European Union, which the Federal Council signed in Brussels on 13 March 2026 and which are expected to be put to a referendum in 2027 or 2028.
I. Surveillance
In all its official documents, the Federal Council claims that the sectoral agreements establish a two-pillar model comprising an EU pillar and a Swiss pillar, under which Switzerland would monitor itself. In my view, this is incorrect. A two-pillar model exists within the European Economic Area (EEA), where the EFTA pillar comprises independent institutions – the EFTA Surveillance Authority and the EFTA Court – staffed by their own College Members and Judges. Under the sectoral agreements, however, there would only be the EU pillar comprising the European Commission and the Court of Justice of the European Union (CJEU); there would be no institutions constituting a Swiss pillar. The European Commission would have the right to bring Switzerland before the CJEU via the ‘arbitration tribunal’ unilaterally, i.e. without Switzerland’s consent. It would therefore effectively act as Switzerland’s supervisory authority.
In my experience, by pursuing a bilaterial sectoral path, it is inconceivable that the UK will be able to negotiate a better solution in this regard. Any ‘preference’ or advantage provided by the EU to the UK or Switzerland will be presumed to be sought by the other. As a consequence, the EU will deny any such ‘preference’ to both the UK and Switzerland. However, I note that the UK has not sought to negotiate to ‘dock’ its sectoral model to the EEA/EFTA institutions in which it has been proposed that a UK Judge and College Member would sit (https://www.ucl.ac.uk/european-institute/events/2017-18/efta-president-lecture).
II. “Role of the CJEU”
Official documents of the UK Government consistently state that the CJEU “would have a role to play” in dispute resolution. However, the decision-making authority would lie with “an independent arbitration panel” (Cabinet Office, UK-EU Summit: Common Understanding, gov.uk, 19 May 2025, para 29). The CJEU would “in particular” be the “ultimate authority for all questions of European Union law” in any UK-EU dispute.
This wording is semantically incorrect. In fact, one must assume that it refers to the provision already laid down in Article 174(1) of the UK-EU Withdrawal Agreement. The provision reads as follows:
“Disputes raising questions of Union law
Where a dispute submitted to arbitration in accordance with this Title raises a question of interpretation of a concept of Union law, a question of interpretation of a provision of Union law referred to in this Agreement or a question of whether the United Kingdom has complied with its obligations under Article 89(2), the arbitration panel shall not decide on any such question. In such case, it shall request the Court of Justice of the European Union to give a ruling on the question. The Court of Justice of the European Union shall have jurisdiction to give such a ruling which shall be binding on the arbitration panel.”
This model was given the name “Ukraine” mechanism during the Brexit years, because it originates from the EU’s association agreements with the former Soviet republics of Armenia, Georgia, Moldova, and Ukraine. The EU would like to see this same mechanism enshrined in future Deep and Comprehensive Free Trade Agreements with the countries of the Southern Mediterranean.
Therefore, one cannot speak of an “independent” arbitration tribunal. In fact, such a body, which would be bound by instructions, cannot even be described as an arbitration tribunal.
The Swiss government has approved the aforementioned mechanism. Certain official documents claim that the “arbitration tribunal” would have the authority to decide independently whether to refer a matter to the CJEU and that, despite being bound by the CJEU’s interpretation, it would have the final say in resolving the dispute (Erläuternder Bericht [Explanatory Report] of 13 June 2025, 59, 82;).
In my view, this claim is incorrect, as it would violate the principle of the autonomy of Union law, which is sacrosanct in the EU. If the arbitration panel were to fail to invoke the CJEU or to follow the latter's ruling, thereby breaching its duty, the ECJ would have the means to take action.
In truth, the mechanism serves to obscure the transfer of power to the CJEU (The EU-Ukraine Association Agreement and Deep and Comprehensive Free Trade Area – A New Legal Instrument for EU Integration Without Membership | Brill). It was also said that the arbitration tribunal serves as a fig leaf for the CJEU (https://mailings.cer.eu/in-the-press/ukraine-no-blueprint-brexit-success). There are numerous other similar characterisations. From a legal perspective, the decisive factor is that this constitutes a breach of the natural law general principle of nemo iudex in causa sua, which dates back to Emperor Justinian’s Corpus Juris Civilis (Code 3.5.1: ‘neminem sibi esse iudicem vel ius sibi dicere debere’).
Sir Edward Coke emphasised this principle in the famous Bonham case of 1610. Dr Thomas Bonham, a trained physician, twice sought admission to the College of Physicians and was rejected. After he continued practising, the College fined him and threatened imprisonment, then had him arrested and jailed. Bonham denied the College’s authority over Oxford and Cambridge graduates and, when sued for a fine in the King’s Bench, counterclaimed for trespass and false imprisonment. The College argued that statute authorised it to decide who could practise medicine and to punish unlicensed practice, including by imprisonment. Bonham asserted the statutes targeted malpractice, not mere practice without a licence.
Coke CJ held that the statutory power to fine for illicit practice was distinct from the power to imprison for malpractice; practising without a licence was not malpractice, so imprisonment was unlawful. He also criticised that the College of Physicians could not act as a judge in a case in which it was itself a party (Thomas Bonham v College of Physicians (1610) 8 Co Rep 114 [Dr Bonham’s Case]). This was interpreted to mean that the principle could not be overridden by statutory provisions either.
It should be noted here that the principle of ‘nemo iudex’ is also part of EU law as Advocate General Nicholas Emiliou as recently re-emphasised (Advocate General Nicholas Emiliou, C-748/23 Gekus, EU:C:2025:630).
If I recall correctly, the Withdrawal Agreement was described as an “unequal treaty” in the Brexit debate because of this mechanism. One of the reasons for Brexit was, after all, that the UK had doubts about the European Court of Justice’s willingness to pursue the goal of creating an “ever closer Union” through teleological interpretation.
III. Electricity agreement
In my view, there are three things to keep in mind regarding a future electricity agreement:
(1) In the field of state aid, Switzerland’s experience shows that the UK would need to establish an independent authority that applies the same rules and has the same powers as the European Commission. This would represent a significant tightening of the rules compared with current legislation.
(2) The “Explanatory Notes” of the Swiss Government claim that the “two-pillar” approach means that state aid which has already been assessed by the Swiss authority may not be reviewed again by the EU (113). I believe this to be incorrect. It must always be possible for the Commission to submit a case to the CJEU via the arbitration tribunal. In the EU’s view, state aid control is a central component of European economic law. Following Brexit, the UK was only able to conclude a Trade and Cooperation Agreement with the EU after it agreed to accept state aid control albeit using the term ‘subsidy control’. As the UK has left the single market, it is free to regulate its own state aid (Rebuilding Trust Between London and Brussels Will Not Be Easy - St. Gallen Symposium). However, anyone wishing to participate in the EU single market –on a sectoral basis – is ultimately subject to the Commission’s supervision and the jurisdiction of the CJEU.
(3) Finally, the question arises as to where the UK could source its electricity. Europe’s most important power source, Norway, is divided into five price zones. The southern zones, which are connected to the EU and UK grids, have seen sharp price increases in the recent past. Germany’s ideologically driven energy policy (Energiewende) plays a key role here. Norwegian politicians have called for a renegotiation of Norway’s energy export agreements with the UK and Germany.
IV. Does the CJEU model fit?
The Swiss government has for the time being managed to largely divert attention away from the two issues under discussion here – who would monitor Switzerland and who would decide in the event of conflicts. Both of these problem areas are omitted from the official charts published online by the Foreign Ministry.
The United Kingdom, together with other imperial powers, invented the concept of unequal treaties with their extraterritorial courts in the 19th century (https://www.britannica.com/event/Unequal-Treaty). Countries such as China and Japan had no choice at the time. The question arises as to whether the UK is in a comparable situation today. Two points should be noted here: over the past few decades, the European Commission has seen its role less as guardian of the treaties and has instead chosen to act in an increasingly political manner. Furthermore, in the words of former German Federal Constitutional Court judge Dieter Grimm, the CJEU is freer in its interpretation of the law than any national court (Deutscher Bundestag - Autorenlesung: Dieter Grimm fordert ein „besseres“ Europa).
When I take my home country, Switzerland, into account, I wonder whether it makes sense for the only two long-standing democracies in Europe to effectively place themselves under the authority and jurisdiction of a supranational organisation whose democratic legitimacy appears to be less pronounced.
China’s rise and Russian aggression have turned the global balance of power on its head. The reliability of the US has come into question. In this situation, it may make sense for both countries to have a structured relationship with the European Union. But in my view, that cannot be a relationship of subordination.
V. An alternative
I would therefore like to draw on a model that the European Commission proposed to Switzerland in 2013 and to the UK in 2018: the idea that these two non-EU states should ‘dock’ onto the institutions of the EFTA pillar of the EEA – the EFTA Surveillance Authority and the EFTA Court. ‘Docking’ refers to an arrangement where a non-EU country (such as the UK post-Brexit or Switzerland) agrees to align itself to the EFTA Surveillance Authority and the EFTA Court to manage their trade relationship with the EU. This would allow the country to use the EFTA Court for dispute resolution rather than the CJEU and to have a College Member on the EFTA Surveillance Authority and a Judge on the EFTA Court.
This proposal was not pursued by the Swiss Federal Council in 2013. It is important to note that, at the time, the Federal Council was aiming to join the EU sooner or later. However, ‘docking’ was widely discussed in the UK in 2018, for example at an event at UCL on 7 February 2018, chaired by the then Director for Europe at the Foreign & Commonwealth Office, Caroline Wilson CMG. Dame Caroline Wilson DCMG is now the incoming British Ambassador to the EU (https://www.ucl.ac.uk/laws/events/2018/feb/brexit-context-what-does-docking-mean). It has recently been proposed by Thérèse Blanche, Secretary-General, Council of the European Union and European Council (Blanchet, Could Using the EFTA Surveillance and Judicial Pillar Help the Schengen Associates Deepen their Cooperation with the EU in JHA Matters and beyond?, in: EFTA Court The EFTA Court Developing the EEA over Three Decades, Hart Publishing (2024) 63-75).)
These EFTA institutions have endured and have been respected, both legally and politically, by the EU and its institutions as well as by the member states. In the seminal Icesave case (E-16/11 EFTA Surveillance Authority v Iceland), the EFTA Court demonstrated its independence by ruling against the position of the European Commission. On the subject of ‘docking’, I also refer to the written evidence given by Marina Wheeler KC in March 2018 ( BED0020 - Evidence on Brexit: enforcement and dispute resolution) and to a contribution by my former Head of Cabinet at the EFTA Court, Michael-James Clifton, an English barrister ((Re)Solving the governance puzzle for the future UK-EU relationship - LSE BREXIT).
Should the Committee deem it appropriate, I would be prepared to appear before it and answer any questions.
Received 9 April 2026
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