Action brought on 8 November 2004 by the EFTA Surveillance Authority against the Principality of Liechtenstein (Case E-8/04)
Date: 2004-11-08
Institutions: EFTA Court
Subjects: European Economic Area, Liechtenstein, law of banking, right of establishment, supervisory power

17.2.2005

EN

Official Journal of the European Union

C 40/17

Action brought on 8 November 2004 by the EFTA Surveillance Authority against the Principality
of Liechtenstein

(Case E-8/04)

(2005/C 40/10)

An action against the Principality of Liechtenstein was brought before the EFTA Court on 8 November
2004 by the EFTA Surveillance Authority, represented by Niels Fenger and Elisabethann Wright, acting as
Agents of the EFTA Surveillance Authority, 35, Rue Belliard, B-1040 Brussels.

The applicant claims that the Court should:

1. Declare that by maintaining in force the provisions of Article 25 of the Banking Act, whereby a resi-
dence requirement is imposed on at least one member of the management board and of the executive
management in a bank established on its territory, the Principality of Liechtenstein has failed to respect
the freedom of establishment for which Article 31 of the Agreement on the European Economic Area
provides; and

2. Order the Principality of Liechtenstein to pay the costs of the proceedings.

Legal and factual background and pleas in law adduced in support:

— Article 31(1) EEA requires equal treatment between EEA nationals invoking their right to freedom of

establishment and those nationals of the country where the establishment is effected.

— Article 33 EEA provides a derogation from the right to freedom of establishment.

— The EFTA Court has stated in Case E-3/98 Rainford-Towning [1998] EFTA Ct. Rep. 205, and Case E-2/
01 Pucher [2002] EFTA Ct. Rep. 44, that ‘it is settled case law of the ECJ that the rules of equal treat-
ment prohibit not only overt discrimination based on nationality but also all covert forms of discrimi-
nation which, by applying other distinguishing criteria, achieve, in practice, the same result’.

— Both the EFTA Court and the Court of Justice of the European Communities have concluded that
‘national rules under which a distinction is drawn on the basis of residence are liable to operate mainly
to the detriment of nationals of other Contracting Parties, as non-residents are in the majority of cases
foreigners’. Rainford-Towning, paragraph 29.

— The EFTA Court has further concluded that ‘[a]s regards justification on grounds of public policy, as
envisaged in Article 33 EEA, it must be held that, in so far as it may justify special treatment of foreign
nationals who are subject to the EEA Agreement, recourse to the concept of public policy presupposes,
in any event, the existence, in addition to the perturbation of the social order which any infringement
of the law involves, of a genuine and sufficiently serious threat affecting one of the fundamental inter-
ests of society’. Rainford-Towning, paragraph 42.

— The EFTA Court has acknowledged that protection of the function and good reputation of the financial
services sector is a legitimate public policy objective and that certain complications may arise from the
fact that Liechtenstein is not party to the Lugano Convention.