In this article, Prof. Christa Tobler describes how the Swiss–EU talks and negotiations on the institutional issues developed over time.
Having discussed the EU’s models for a reform of the institutional side of the Swiss–EU legal relations, we now turn to what has actually happened so far.
As a starting point
, remember that the European Union’s (EU) original idea was to develop a model that would follow the system of the European Economic Area (EEA) Agreement, ie a two-pillar system including not only rules on the updating of the law and its homogeneous interpretation but also on mechanisms for international supervision and dispute settlement including a judicial element. However, the Swiss Federal Government felt unable to agree to such a model. In June 2012 it sent much more modest suggestions to the EU (notably without an international supervision on the Swiss side). These were rejected by the Union as insufficient.
Thereafter, the parties engaged in informal talks
at the level of high officials of both sides. Through this process, a possible approach emerged which then was used as the basis for the adoption of negotiating mandates
by the parties. On the Swiss side, the negotiation mandate was adopted in December 2013, on the EU side in May 2014. The reason for the delay on the EU side was the Swiss vote of 9 February 2014 on migration and the initial decision of the Swiss Federal Government not to sign the Croatia protocol to the Free Movement of Persons Agreement. The EU then felt that now the entire relationship had to be re-evaluated, which led to a certain delay in the adoption of the mandate.
In line with a generally practised approach, the content of the negotiating mandates is not made public. This is particularly true for the EU side. The Federal Council at least to a certain extent described the general framework of its planned approach before it adopted the mandate.
The negotiations between the EU and Switzerland
commenced in spring 2014. During the negotiations it soon became clear that the views of the parties on important aspects differed
quite considerably. Notably, the Swiss Federal Government has taken the line that (full) incorporation of the Union Citizenship Directive (Directive 2004/38)  and of the new EU law on the posting of workers (Directive 96/17, as revised by Directive 2018/957, as well as the so-called Enforcement Directive 2014/67)  into the bilateral acquis
is part of the red lines that it is not prepared to cross.
In December 2018, the Federal Government published the draft text as it is resulted from the negotiations so far.  If concluded as presented, the Institutional Agreement will cover five agreements directly, namely those on the free movement of persons, land and air transport, agricultural goods and conformity assessments. For the future, the text also envisages a modernisation of the Free Trade Agreement. Finally, the new rules of the Institutional Agreement are also intended to be the model for future bilateral market access agreements.
For the five first-mentioned agreements, the draft text essentially provides for:
- A system of continued updating of the bilateral market access law in view of changes in the relevant EU law, with a possibility of legal sanctions in case one party refuses. In the field of labour protection in the context of the posting of workers, the draft text contains certain special rules for Switzerland which deviate from EU law. There are no special rules with respect to the Union Citizenship Directive, which means that it would be left to the updating negotiations between the parties to determine in how far this Directive falls under the obligation to update;
- An interpretation of the bilateral market access law in line with the case-law of the Court of Justice of the European Union on the same EU law matters;
- A mechanism for the resolution of disputes between the parties with several levels: first, discussions in the Mixed/Joint Committee of the relevant agreement. If the dispute cannot be solved on this level, a party can demand that the case goes to an arbitration panel. Where the interpretation of provisions or concepts derived from EU law are at issue, the arbitration panel requests a ruling on the correct interpretation from the Court of Justice and thereafter applies this interpretation to the dispute before it. The interpretative ruling of the Court of Justice is binding. For the EU, this emerges without any doubt from rulings of the Court given in other contexts, in particular that of the dispute settlement mechanism under Art. 111(3) of the EEA Agreement. According to Opinion 1/92, even though the aim of Art. 111(3) EEA Agreement is not to entrust the Court with the settlement of the dispute, which continues to be the responsibility of the EEA Joint Committee, the interpretation to be given by the CJEU is binding, as is clear from the very wording of the Agreement. As a consequence, ‘the Contracting Parties and the EEA Joint Committee alike will be bound by the Court’s interpretation of the rules at issue’. 
In contrast to the EU’s original wishes, the draft text does not provide for an international mechanism to supervise the application similar to that of EU or EEA law. The text notes that there is mutual supervision through the different avenues of the dispute settlement mechanism.
With respect to the Air Transport Agreement, the draft text also provides for a modernisation of the existing provision on state aid (which is part of competition law). Again, a future modernisation of the Free Trade Agreement would also extend to this issue.
After having published the draft text, the Swiss Federal Government held consultations in order to find out what important players think about the draft text. At the time of writing, it remains to be seen what will be the Government’s next step.
Those of you who are interested in more details on these matters and who understand German will find a link in the references to this article. 
 Press Release of the Federal Council of 21 August 2013, ‘Europe: Federal Council submits draft institutional terms of reference for consultation’
 Directive 2004/38/EC on the right of citizens of the Union and their family members to move and reside freely within the territory of the Member States amending Regulation (EEC) No 1612/68 and repealing Directives 64/221/EEC, 68/360/EEC, 72/194/EEC, 73/148/EEC, 75/34/EEC, 75/35/EEC, 90/364/EEC, 90/365/EEC and 93/96/EEC, OJ 2004 L 158/77 (as corrected).
 Directive 2014/67/EU of the European Parliament and of the Council of 15 May 2014 on the enforcement of Directive 96/71/EC concerning the posting of workers in the framework of the provision of services and amending Regulation (EU) No 1024/2012 on administrative cooperation through the Internal Market Information System ( ‘the IMI Regulation’ ), OJ 2014 L 159/11
 Draft text of the institutional agreement
(in the original French language; unofficial translations in the Italian and German languages).
 Opinion 1/92 (EEA II), ECLI:EU:C:1992:189, para. 35.
 For more information, see the “Tobler/Beglinger-Brevier” on the Institutional Agreement (only in German).