Iceland Is Better Off than Switzerland

Valais Councillor of States (Senator) Beat Rieder, a lawyer and notary, spoke plainly in the parliamentary debate on the Switzerland–EU package of agreements on 28 September 2026. His comparative-law observations are also relevant to Iceland following the referendum. Comparative law is regarded as the highest discipline of law because it reveals the institutional, historical and political foundations of different legal orders and thereby enables sound judgements about one’s own arrangements.

Beat Rieder identifies dynamic incorporation of law as the central weakness of the new Switzerland–EU agreements. Switzerland would undertake to incorporate future EU law whose content it does not yet know and in whose creation it does not participate on an equal footing. This would shift legislative powers to Brussels and weaken sovereignty, direct democracy and federalism, particularly as rejection of new EU rules could trigger compensatory measures. The following comparative examples show why Rieder attaches greater weight to these risks than to the expected economic benefits.

This criticism recalls the Swiss EEA debate, which culminated in the rejection of accession on 6 December 1992. The concern was that Switzerland would have to adopt a growing body of EEC law without equal participation in its making. Although ‘decision shaping’ allows the EFTA States to contribute during the preparatory phase, it gives them no vote in the Community’s legislative bodies. According to Rieder, this imbalance between legal obligation and decision-making power returns in aggravated form in the new agreements with the EU.

Rieder draws three comparators. Although the EEA/EFTA States Norway, Iceland and Liechtenstein incorporate EU internal-market law, they have their own supervisory bodies in the EFTA Surveillance Authority and the EFTA Court. Even the British Empire, he argues, did not require its colonies dynamically to incorporate all future British legislation. Finally, Rieder compares the imbalance in the agreements with the ‘unequal treaties’ imposed on China and Japan by Western powers in the nineteenth century, which restricted their sovereignty in trade and jurisdiction.

The decisive difference lies in the institutional balance: the EEA/EFTA States have their own institutions, independent of the EU, in the EFTA Surveillance Authority and the EFTA Court. In Switzerland’s relationship with the EU, by contrast, supervision and judicial control would entail a further transfer of sovereignty to the EU. Against that background, the Federal Council’s (Government’s) June 2023 claim that the framework-agreement approach is superior to the EEA is all the less convincing.

For the constitutional analysis, Councillor of States Rieder refers to the American legal scholar Michael C. Dorf. Dorf describes dynamic incorporation as a mechanism by which the law of one polity changes automatically with another legal order. Benefits such as lower law-making costs and common standards must be weighed against the transfer of legislative powers; the harder that transfer is to reverse, the more closely it resembles a surrender of sovereignty. Delegation to a supranational organisation is particularly problematic, since even state representation in its bodies can only mitigate, not eliminate, democratic losses. Rieder concludes that this would create a pronounced deficit of sovereignty and democracy for Switzerland.

This reveals the fundamental problem: continuing legal obligation and equal participation in law-making diverge. In the words of the American Declaration of Independence, there arises a ‘Jurisdiction foreign to our Constitution, and unacknowledged by our Laws’. Paul Larkin illustrates the point by reference to capital punishment: even if France cared deeply about its abolition in the United States, the American people would resist allowing the French Parliament to participate in that decision. The principle is simple: no foreign law-making power over one’s own territory without one’s own participation.

Beat Rieder also refers to a hearing of the House of Lords European Affairs Committee on 24 March 2026 concerning the proposed ‘dynamic alignment’ between the United Kingdom and the EU. Professor David Collins of City St George’s, University of London, summarised the arrangement as follows: ‘You’re stuck with what the other party tells you to do in perpetuity, and you’re at the whim of the other party as things change.’

Asked by Lord Moynihan whether comparable trade agreements existed outside the EU, Collins replied: ‘I cannot find any example anywhere in the world that is like what the EU does.’ Despite close mutual recognition, no such mechanism existed between Canada and the United States or between Australia and New Zealand.

Lord Moynihan then asked whether such a model could be described as ‘extortionate’. Collins called it ‘excessive’ that a country running a trade deficit should become a mere rule-taker. This finding is directly relevant to the Swiss package of agreements.

The examples from the EEA, American constitutional thought and the British debate point in the same direction: dynamic incorporation concerns not merely technical regulatory alignment, but also democratic legitimacy and national self-determination. The decisive question is whether binding force of foreign law is balanced by equivalent rights of participation and control. Iceland shows how this works in practice.

For Iceland, the significance of EEA/EFTA membership lies in the autonomous EFTA pillar: application of EEA law is supervised not by the European Commission and the Court of Justice of the European Union, but by the EFTA Surveillance Authority and the EFTA Court. This was demonstrated by the Icesave case, in which the Surveillance Authority brought proceedings against Iceland over the failure to pay minimum compensation to British and Dutch depositors after the 2008 banking collapse. Although the European Commission supported the action, the EFTA Court dismissed it on 28 January 2013 because the Deposit Guarantee Directive did not impose the alleged guarantee of outcome on the state in a systemic crisis of that kind. The judgment shows that the EFTA Court interprets EEA law independently and can reach a different conclusion from the Surveillance Authority and the Commission. Iceland is therefore institutionally better placed than Switzerland: despite being bound by homogeneous internal-market law, it has its own supervisory bodies and participates in their composition and development. Iceland thus possesses the institutional balance for dynamic incorporation that Rieder finds lacking in Switzerland.

Iceland should draw three lessons from the No vote of 29 August 2026 on reopening EU accession negotiations. First, the EFTA Surveillance Authority and the EFTA Court must be strengthened as guardians of the EFTA pillar. Secondly, ‘decision shaping’ should be improved so that Iceland can participate earlier and more effectively in the preparation of EEA-relevant EU legislation. Thirdly, Reykjavík should consider how Switzerland and the United Kingdom might be brought into a broader European architecture of co-operation.

Prof. Dr. iur. Dr. rer. pol. h.c. Carl Baudenbacher

Baudenbacher Law AG, Lawyers & Advisors | Door Tenant Monckton Chambers | Visiting Professor London School of Economics | President of the EFTA Court 2003-2017