kom (2025) 0308 - Ingen titel

Europaudvalget 2025
KOM (2025) 0308
Offentligt

EUROPEAN

COMMISSION

Brussels, 13.6.2025

COM(2025) 308 final

ANNEX 2

ANNEX

to the

Proposal for a Council Decision

on the signing, on behalf of the European Union, of a broad package of agreements to

consolidate, deepen and expand the bilateral relations with the Swiss Confederation, and

on the provisional application of the Agreement on the terms and conditions for the

participation of the Swiss Confederation in the European Union Agency for the Space

Programme

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AMENDING PROTOCOL

TO THE AGREEMENT BETWEEN

THE EUROPEAN COMMUNITY

AND THE SWISS CONFEDERATION

ON AIR TRANSPORT

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THE EUROPEAN UNION, hereinafter referred to as the "Union",

and

THE SWISS CONFEDERATION, hereinafter referred to as "Switzerland",

hereinafter referred to as the "Contracting Parties";

HAVING REGARD to the Agreement between the European Community and

the Swiss Confederation on air transport, done at Luxembourg on 21 June 1999, which entered

into force on 1 June 2002 ("the Agreement");

RECOGNISING the crucial importance of civil aviation in creating connectivity for passengers,

freight and airmail;

WHEREAS a broad bilateral package, including the Institutional Protocol to this Agreement, has

been agreed between the Contracting Parties in order to stabilise and develop mutual relations in the

fields related to the internal market in which Switzerland participates;

REITERATING, in the context of the broad bilateral package between the Contracting Parties, the

joint commitment of the Contracting Parties towards safe, secure, competitive, sustainable and

innovative civil aviation,

HAVE AGREED AS FOLLOWS:

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ARTICLE 1

Amendments to the Agreement

The Agreement is amended as follows:

(a)

in Article 2, the words "as mentioned in the Annex to this Agreement" are deleted;

(b)

in Article 15, paragraph 3 is replaced by the following:

"3.

Traffic rights between points within Switzerland and between points within the

Member States of the Union shall be granted starting from the first scheduling season after the

entry into force of the Amending Protocol to the Agreement between the European

Community and the Swiss Confederation on air transport.";

(c)

in Article 18, paragraph 3 is replaced by the following:

"3.

Any enforcement action under this Article shall be carried out in accordance with

Article 19.";

(d)

Article 21 is replaced by the following:

"ARTICLE 21

A Joint Committee is hereby established.

The Joint Committee shall be composed of representatives of the Contracting Parties.

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The Joint Committee shall be co-chaired by a representative of the Union and a

representative of Switzerland.

The Joint Committee shall:

(a)

ensure the proper functioning and the effective administration and application of this

Agreement;

(b)

provide a forum for mutual consultation and a continuous exchange of information

between the Contracting Parties, in particular with a view to finding a solution to any

difficulty of interpretation or application of the Agreement or of a legal act of the Union

to which reference is made in the Agreement in accordance with Article 10 of the

Institutional Protocol to this Agreement;

(c)

make recommendations to the Contracting Parties in matters pertaining to this

Agreement;

(d)

adopt decisions where provided for in this Agreement; and

(e)

exercise any other competence granted to it in this Agreement.

In the event of an amendment to Articles 1 to 6, 10 to 15, 17 or 18 of the Protocol

(No 7) on the privileges and immunities of the European Union, annexed to the Treaty on the

Functioning of the European Union (hereinafter referred to as 'Protocol (No 7)'), the Joint

Committee shall amend Annex A to the Annex accordingly.

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The Joint Committee shall act by consensus.

Decisions shall be binding on the Contracting Parties, which shall take all necessary measures

to implement them.

The Joint Committee shall meet at least once a year, in Brussels and Bern alternately,

unless the co-chairs decide otherwise. It shall also meet at the request of either Contracting

Party. The co-chairs may agree that a meeting of the Joint Committee be held by

videoconference or teleconference.

The Joint Committee shall adopt its rules of procedure and update them as necessary.

The Joint Committee may decide to set up any working party or group of experts that

can assist it in carrying out its duties.";

(e)

the following article is inserted:

"ARTICLE 28a

Nothing in this Agreement shall be construed as requiring a Party to make available

classified information, except where this is provided for in a legal act of the Union integrated

into the Annex of this Agreement.

Classified information or material provided by, or exchanged between, the Contracting

Parties under this Agreement shall be handled and protected in compliance with the

Agreement between the European Union and the Swiss Confederation on the security

procedures for the exchange of classified information, done at Brussels on 28 April 2008, and

any security arrangement implementing it.

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The Joint Committee shall adopt, by means of a decision, handling instructions to

ensure the protection of sensitive non-classified information exchanged between the

Contracting Parties.";

(f)

Article 34 is replaced by the following:

"ARTICLE 34

This Agreement shall apply, of the one part, to the territory in which the Treaty on European

Union and the Treaty on the Functioning of the European Union (hereinafter referred to as

'TFEU') apply and under the conditions laid down in those Treaties, and, of the other part, to

the territory of Switzerland.".

The Annex to the Agreement is amended as follows:

(a)

the text below the heading "ANNEX" and above the subheading "1. Aviation liberalisation

and other civil aviation rules" is replaced by the following:

"SECTION A

–

Unless otherwise provided for in technical adaptations, rights and obligations provided

for in the legal acts of the Union integrated into this Annex for Member States of the

Union shall be understood to be provided for for Switzerland. This shall be applied in

full respect for the Institutional Protocol to this Agreement.

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–

Without prejudice to Article 15 of this Agreement, the term 'Community air carrier' as

referred to in the legal acts of the Union integrated into this Annex shall include an air

carrier which is licensed and has its principal place of business and, if any, its registered

office in Switzerland in accordance with the provisions of Regulation

(EC) No 1008/2008. Any reference to Council Regulation (EEC) No 2407/92 shall be

understood to be a reference to Regulation (EC) No 1008/2008.

–

Any reference in legal acts of the Union integrated into this Annex to Articles 81 and 82

of the Treaty or to Articles 101 and 102 TFEU shall be understood as a reference to

Articles 8 and 9 of this Agreement.

SECTION B";

(b)

in section 2 (Competition rules), in the entry concerning Council Regulation

(EC) No 139/2004, the introductory wording "With respect to Article 4(5) of the Merger

Regulation the following shall apply between the European Community and Switzerland:" is

replaced by "With respect to Article 4(5) of the Merger Regulation, the following shall

apply:";

(c)

in section 3 (Aviation safety), the entry concerning Regulation (EU) 2018/1139 is amended as

follows:

(i)

the following paragraph is deleted:

"Notwithstanding the horizontal adaptation provided for in the second indent of the

Annex to the Agreement between the European Community and the Swiss

Confederation on Air Transport, the references to the 'Member States' made in the

provisions of Regulation (EU) No 182/2011 mentioned in Article 127 of Regulation

(EU) 2018/1139 shall not be understood to apply to Switzerland.";

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(ii)

point (c) is replaced by the following:

"(c) In Article 96, the following paragraph is added:

'Switzerland shall grant to the Agency and its staff, within the framework of their

official functions for the Agency, the privileges and immunities provided for in

Annex A, which are based on Articles 1 to 6, 10 to 15, 17 and 18 of Protocol

(No 7). References to the corresponding articles of that Protocol are indicated

between brackets for information.'.";

(d)

in section 3 (Aviation safety), the entry concerning Commission Delegated Regulation

(EU) 2019/945, in the first paragraph the words "the second indent of the Annex" is replaced

by "the first indent of Section A of the Annex";

(e)

in section 3 (Aviation safety), the entry concerning Commission Implementing Regulation

(EU) 2019/947, in the first paragraph the words "the second indent of the Annex" is replaced

by "the first indent of Section A of the Annex";

(f)

in section 5 (Air traffic management), in the entry concerning Regulation (EC) No 549/2004,

the following paragraph is deleted:

"Notwithstanding the horizontal adjustment referred to in the second indent of the Annex to

the Agreement between the European Community and the Swiss Confederation on Air

Transport, the references to the 'Member States' made in Article 5 of Regulation

(EC) No 549/2004 or in the provisions of Decision 1999/468/EC mentioned in that provision

shall not be understood to apply to Switzerland.";

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(g)

in section 9 (Annexes), point A is replaced by the following:

"A: Privileges and immunities";

(h)

Annex A to the Annex and the Appendix to Annex A are replaced by the text set out in the

Appendix to this Protocol.

ARTICLE 2

Entry into force

This Protocol shall be ratified or approved by the Contracting Parties in accordance with their

own procedures. The Contracting Parties shall notify each other of the completion of the internal

procedures necessary to the entry into force of this Protocol.

This Protocol shall enter into force on the first day of the second month following the last

notification regarding the following instruments:

(a)

Institutional Protocol to the Agreement between the European Community and its

Member States, of the one part, and the Swiss Confederation, of the other, on the free

movement of persons;

(b)

Amending Protocol to the Agreement between the European Community and its

Member States, of the one part, and the Swiss Confederation, of the other, on the free

movement of persons;

(c)

Institutional Protocol to the Agreement between the European Community and

the Swiss Confederation on air transport;

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(d)

State Aid Protocol to the Agreement between the European Community and

the Swiss Confederation on air transport;

(e)

Institutional Protocol to the Agreement between the European Community and

the Swiss Confederation on the carriage of goods and passengers by rail and road;

(f)

Amending Protocol to the Agreement between the European Community and

the Swiss Confederation on the carriage of goods and passengers by rail and road;

(g)

State Aid Protocol to the Agreement between the European Community and

the Swiss Confederation on the carriage of goods and passengers by rail and road;

(h)

Amending Protocol to the Agreement between the European Community and

the Swiss Confederation on trade in agricultural products;

(i)

Institutional Protocol to the Agreement between the European Community and

the Swiss Confederation on mutual recognition in relation to conformity assessment;

(j)

Amending Protocol to the Agreement between the European Community and

the Swiss Confederation on mutual recognition in relation to conformity assessment;

(k)

Agreement between the European Union and the Swiss Confederation on Switzerland's

regular financial contribution towards reducing economic and social disparities in

the European Union;

(l)

Agreement between the European Union and the European Atomic Energy Community,

of the one part, and the Swiss Confederation, of the other part, on the participation of

the Swiss Confederation in Union programmes;

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(m) Agreement between the European Union and the Swiss Confederation on the terms and

conditions for the participation of the Swiss Confederation in the European Union Agency for

the Space Programme.

Done at […], on […], in duplicate in the Bulgarian, Croatian, Czech, Danish, Dutch, English,

Estonian, Finnish, French, German, Greek, Hungarian, Irish, Italian, Latvian, Lithuanian, Maltese,

Polish, Portuguese, Romanian, Slovak, Slovenian, Spanish and Swedish languages, each of these

texts being equally authentic.

IN WITNESS WHEREOF, the undersigned, duly authorised thereto, have signed this Protocol.

(Signature Block, to the effect of, in all 24 EU languages: “For the European Union” and “For the

Swiss Confederation”)

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Appendix

"ANNEX A

Privileges and immunities

ARTICLE 1

(corresponding to Article 1 of Protocol (No 7))

The premises and buildings of the Agency shall be inviolable. They shall be exempt from search,

requisition, confiscation or expropriation. The property and assets of the Agency shall not be the

subject of any administrative or legal measure of constraint without the authorisation of the Court of

Justice of the European Union.

ARTICLE 2

(corresponding to Article 2 of Protocol (No 7))

The archives of the Agency shall be inviolable.

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ARTICLE 3

(corresponding to Articles 3 and 4 of Protocol (No 7))

The Agency, its assets, revenues and other property shall be exempt from all direct taxes.

Goods and services exported to the Agency for its official use from Switzerland or provided

to the Agency in Switzerland shall not be subject to any indirect duties and taxes.

Exemption from VAT shall be granted if the actual purchase price of the goods and services

mentioned in the invoice or corresponding document totals at least one hundred Swiss francs

(inclusive of tax).The Agency shall be exempt from all customs duties, prohibitions and restrictions

on imports and exports in respect of articles intended for its official use; articles so imported shall

not be disposed of, whether or not in return for payment, in Switzerland, except under conditions

approved by the government of Switzerland.

The exemption from VAT, excise duty and any other indirect taxes shall be granted by way of

remit on presentation to the goods or services supplier of the Swiss forms provided for the purpose.

No exemption shall be granted in respect of taxes and dues, which amount merely to charges

for public utility services.

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ARTICLE 4

(corresponding to Article 5 of Protocol (No 7))

For its official communications and the transmission of all its documents, the Agency shall enjoy in

Switzerland the treatment accorded by that State to diplomatic missions.

Official correspondence and other official communications of the Agency shall not be subject to

censorship.

ARTICLE 5

(corresponding to Article 6 of Protocol (No 7))

The

laissez-passer

of the Union issued to members and servants of the Agency shall be recognised

as valid travel documents within the territory of Switzerland. Those

laissez-passer

shall be issued to

officials and other servants under conditions laid down in the Staff Regulations of Officials and the

Conditions of Employment of other servants of the Union (Regulation No 31 (EEC), 11 (EAEC),

laying down the Staff Regulations of Officials and the Conditions of Employment of Other Servants

of the European Economic Community and the European Atomic Energy Community (OJ 45,

14.6.1962, p. 1385), including any subsequent amendments).

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ARTICLE 6

(corresponding to Article 10 of Protocol (No 7))

Representatives of Member States of the Union taking part in the work of the Agency, their advisers

and technical experts shall, in the performance of their duties and during their travel to and from the

place of meeting in Switzerland, enjoy the customary privileges, immunities and facilities.

ARTICLE 7

(corresponding to Article 11 of Protocol (No 7))

In the territory of Switzerland and whatever their nationality, officials and other servants of the

Agency shall:

(a)

subject to the provisions of the Treaties relating, on the one hand, to the rules on the liability

of officials and other servants towards the Union and, on the other hand, to the jurisdiction of

the Court of Justice of the European Union in disputes between the Union and its officials and

other servants, be immune from legal proceedings in respect of acts performed by them in

their official capacity, including their words spoken or written. They shall continue to enjoy

this immunity after they have ceased to hold office;

(b)

together with their spouses and dependent members of their families, not be subject to

immigration restrictions or to formalities for the registration of aliens;

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(c)

in respect of currency or exchange regulations, be accorded the same facilities as are

customarily accorded to officials of international organisations;

(d)

enjoy the right to import free of duty their furniture and effects at the time of first taking up

their post in Switzerland, and the right to re-export free of duty their furniture and effects, on

termination of their duties in that country, subject in either case to the conditions considered

to be necessary by the government of Switzerland;

(e)

have the right to import free of duty a motor car for their personal use, acquired either in the

country of their last residence or in the country of which they are nationals on the terms ruling

in the home market in that country, and to re-export it free of duty, subject in either case to the

conditions considered to be necessary by the government of Switzerland.

ARTICLE 8

(corresponding to Article 12 of Protocol (No 7))

Officials and other servants of the Agency shall be liable to a tax for the benefit of the Union on

salaries, wages and emoluments paid to them by the Agency, in accordance with the conditions and

procedure laid down by Union law.

They shall be exempt from Swiss federal, cantonal and communal taxes on salaries, wages and

emoluments paid by the Agency.

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ARTICLE 9

(corresponding to Article 13 of Protocol (No 7))

In the application of income tax, wealth tax and death duties and in the application of conventions

on the avoidance of double taxation concluded between Switzerland and Member States of the

Union, officials and other servants of the Agency who, solely by reason of the performance of their

duties in the service of the Agency, establish their residence in the territory of Switzerland for tax

purposes at the time of entering the service of the Agency, shall be considered, both in Switzerland

and in the country of domicile for tax purposes, as having maintained their domicile in the latter

country provided that it is a Member State of the Union. This provision shall also apply to a spouse,

to the extent that the latter is not separately engaged in a gainful occupation, and to children

dependent on and in the care of the persons referred to in this Article.

Movable property belonging to persons referred to in the first paragraph and situated in Switzerland

shall be exempt from death duties in Switzerland; such property shall, for the assessment of such

duty, be considered as being in the country of domicile for tax purposes, subject to the rights of

third countries and to the possible application of provisions of international conventions on double

taxation.

Any domicile acquired solely by reason of the performance of duties in the service of other

international organisations shall not be taken into consideration in applying the provisions of this

Article.

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ARTICLE 10

(corresponding to Article 14 of Protocol (No 7))

Union law shall lay down the scheme of social security benefits for officials and other servants of

the Union.

Officials and other servants of the Agency shall therefore not be obliged to be members of the

Swiss social security system provided they are already covered by the scheme of social security

benefits for officials and other servants of the Union. Members of the family of staff members of

the Agency forming part of their household shall be covered by the scheme of social security

benefits for officials and other servants of the Union provided that they are not employed by another

employer than the Agency and provided that they do not receive social security benefits from a

Member State of the Union or from Switzerland.

ARTICLE 11

(corresponding to Article 15 of Protocol (No 7))

Union law shall determine the categories of officials and other servants of the Agency to whom the

provisions of Articles 7, 8, and 9 shall apply, in whole or in part.

The names, grades and addresses of officials and other servants included in such categories shall be

communicated periodically to Switzerland.

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ARTICLE 12

(corresponding to Article 17 of Protocol (No 7))

Privileges, immunities and facilities shall be accorded to officials and other servants of the Agency

solely in the interests of the Agency.

The Agency shall be required to waive the immunity accorded to an official or other servants

wherever that Agency considers that the waiver of such immunity is not contrary to the interests of

the Agency.

ARTICLE 13

(corresponding to Article 18 of Protocol (No 7))

The Agency shall, for the purpose of applying this Annex A, cooperate with the responsible

authorities of Switzerland or of the Member States of the Union concerned.".

________________

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INSTITUTIONAL PROTOCOL

TO THE AGREEMENT BETWEEN

THE EUROPEAN COMMUNITY

AND THE SWISS CONFEDERATION

ON AIR TRANSPORT

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THE EUROPEAN UNION, hereinafter referred to as the "Union",

and

THE SWISS CONFEDERATION, hereinafter referred to as "Switzerland",

hereinafter referred to as the "Contracting Parties";

WHEREAS the Union and Switzerland are bound by numerous bilateral agreements covering

various fields, providing for specific rights and obligations similar, in certain respects, to those

provided for within the Union;

RECALLING that the purpose of those bilateral agreements is to increase Europe's competitiveness

and to create closer economic ties between the Contracting Parties, based on equality, reciprocity

and the general balance of their advantages, rights and obligations;

RESOLVED to strengthen and deepen Switzerland's participation in the internal market of the

Union, on the basis of the same rules as those that apply to the internal market, while preserving

their independence and that of their institutions and, as regards Switzerland, respect for the

principles stemming from direct democracy, federalism and the sectoral nature of its participation in

the internal market;

REAFFIRMING that the competence of the Swiss Federal Supreme Court and all other Swiss

courts as well as that of the Member States' courts and of the Court of Justice of the European

Union to interpret the Agreement in individual cases is preserved;

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CONSCIOUS of ensuring uniformity in the fields related to the internal market in which

Switzerland participates, both current and future,

HAVE AGREED AS FOLLOWS:

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CHAPTER 1

GENERAL PROVISIONS

ARTICLE 1

Objectives

The objective of this Protocol is to guarantee for the Contracting Parties, and for economic

operators and individuals, greater legal certainty, equal treatment and a level playing field in the

field related to the internal market falling under the scope of the Agreement between the European

Community and the Swiss Confederation on air transport, done at Luxembourg on 21 June 1999

(hereinafter referred to as the "Agreement").

To this end, this Protocol provides new institutional solutions facilitating a continuous and

balanced strengthening of economic relations between the Contracting Parties. Taking account of

the principles of international law, this Protocol lays down, in particular, institutional solutions for

the Agreement which are common to the bilateral agreements concluded or to be concluded in the

fields related to the internal market in which Switzerland participates, without changing the scope

or the objectives of the Agreement, notably:

(a)

the procedure for aligning the Agreement with legal acts of the Union relevant to the

Agreement;

(b)

the uniform interpretation and application of the Agreement and of the legal acts of the Union

to which reference is made in the Agreement;

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(c)

the surveillance and application of the Agreement; and

(d)

the settlement of disputes in the context of the Agreement.

ARTICLE 2

Relation to the Agreement

This Protocol, its Annex and its Appendix shall form an integral part of the Agreement.

The provisions of the Agreement repealed by this Protocol are listed below:

(a)

Article 1(2);

(b)

Article 17;

(c)

Article 18(1);

(d)

Article 22;

(e)

Article 23;

(f)

Article 29;

(g)

Article 30(2);

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(h)

Article 31; and

(i)

Article 35(2).

References to the "European Community" or to the "Community" in the Agreement shall be

construed as references to the Union.

ARTICLE 3

Bilateral agreements in the fields related to the internal market

in which Switzerland participates

Existing and future bilateral agreements between the Union and Switzerland in the fields

related to the internal market in which Switzerland participates shall be considered as a coherent

whole which ensures a balance of rights and obligations between the Union and Switzerland.

The Agreement constitutes a bilateral agreement in a field related to the internal market in

which Switzerland participates.

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CHAPTER 2

ALIGNMENT OF THE AGREEMENT WITH LEGAL ACTS OF THE UNION

ARTICLE 4

Participation in the drafting of legal acts of the Union ("decision shaping")

When drafting a proposal for a legal act of the Union in accordance with the Treaty on the

Functioning of the European Union (hereinafter referred to as "TFEU") in the field covered by the

Agreement, the European Commission (hereinafter referred to as the "Commission") shall inform

Switzerland thereof and shall informally consult Switzerland's experts in the same way that it asks

for the views of experts from the Member States of the Union for the drafting of its proposals.

At the request of either Contracting Party, a preliminary exchange of views shall take place within

the Joint Committee.

The Contracting Parties shall consult each other again, at the request of either of them, within the

Joint Committee at important moments of the phase preceding the adoption of the legal act by the

Union, in a continuous process of information and consultation.

When preparing, in accordance with the TFEU, delegated acts concerning basic acts of Union

law in the field covered by the Agreement, the Commission shall ensure that Switzerland has the

widest possible participation in the preparation of the drafts and shall consult Switzerland's experts

on the same basis as it consults the experts of the Member States of the Union.

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When preparing, in accordance with the TFEU, implementing acts concerning basic acts of

Union law in the field covered by the Agreement, the Commission shall ensure that Switzerland has

the widest possible participation in the preparation of the drafts to be submitted later on to the

committees assisting the Commission in the exercise of its implementing powers and shall consult

Switzerland's experts on the same basis as it consults the experts from the Member States of the

Union.

Switzerland's experts shall be involved in the work of committees not covered by

paragraphs 2 and 3 where this is required for the proper functioning of the Agreement. A list of

those committees and, where appropriate, of other committees with similar characteristics, shall be

drawn up and updated by the Joint Committee.

This Article shall not apply with regard to legal acts of the Union or provisions thereof falling

within the scope of an exception referred to in Article 5(7).

ARTICLE 5

Integration of legal acts of the Union

In order to guarantee legal certainty and the homogeneity of the law in the field related to the

internal market in which Switzerland participates by virtue of the Agreement, Switzerland and the

Union shall ensure that legal acts of the Union adopted in the field covered by the Agreement are

integrated into the Agreement as quickly as possible after their adoption.

Legal acts of the Union integrated into the Agreement in accordance with paragraph 4 shall

be, by their integration into the Agreement, part of the legal order of Switzerland subject, as the

case may be, to the adaptations decided upon by the Joint Committee.

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When it adopts a legal act in the field covered by the Agreement, the Union shall inform

Switzerland thereof as quickly as possible through the Joint Committee. At the request of either of

the Contracting Parties, the Joint Committee shall conduct an exchange of views on the subject.

The Joint Committee shall act in accordance with paragraph 1 by adopting a decision as

quickly as possible to amend the Annex to the Agreement, including the necessary adaptations.

Without prejudice to paragraphs 1 and 2, if necessary in order to ensure coherence of the

Agreement with its Annex as amended pursuant to paragraph 4, the Joint Committee may propose,

for approval by the Contracting Parties according to their internal procedures, the revision of the

Agreement.

References in the Agreement to legal acts of the Union that are no longer in force shall be

construed as references to the repealing legal act of the Union as integrated into the Annex to the

Agreement as from the entry into force of the Joint Committee's decision on the corresponding

amendment of the Annex to the Agreement pursuant to paragraph 4, unless otherwise provided in

that decision.

The obligation set out in paragraph 1 shall not apply to legal acts of the Union or provisions

thereof falling within the scope of an exception. The Agreement does not contain an exception.

Subject to Article 6, decisions of the Joint Committee pursuant to paragraph 4 shall enter into

force immediately, but under no circumstances before the date on which the corresponding legal act

of the Union becomes applicable in the Union.

The Contracting Parties shall cooperate in good faith throughout the procedure set out in this

Article in order to facilitate decision-making.

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ARTICLE 6

Fulfilment of constitutional obligations by Switzerland

During the exchange of views referred to in Article 5(3), Switzerland shall inform the Union

whether a decision as referred to in Article 5(4) requires the fulfilment of constitutional obligations

by Switzerland in order to become binding.

Where the decision referred to in Article 5(4) requires Switzerland to fulfil constitutional

obligations in order to become binding, Switzerland shall have a time limit of two years maximum

from the date of the information provided for in paragraph 1, except where a referendum procedure

is launched, in which case this period shall be extended by one year.

Pending the information by Switzerland that it has fulfilled its constitutional obligations, the

Contracting Parties shall provisionally apply the decision referred to in Article 5(4), unless

Switzerland informs the Union that the provisional application of the decision is not possible and

provides the reasons for this.

Under no circumstances can the provisional application occur before the date on which the

corresponding legal act of the Union becomes applicable in the Union.

Switzerland shall notify the Union without delay through the Joint Committee once it has

fulfilled the constitutional obligations referred to in paragraph 1.

The decision shall enter into force on the day on which the notification provided for in

paragraph 4 is delivered, but under no circumstances before the date on which the corresponding

legal act of the Union becomes applicable in the Union.

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CHAPTER 3

INTERPRETATION AND APPLICATION OF THE AGREEMENT

ARTICLE 7

Uniform interpretation principle

For the purpose of achieving the objectives set out in Article 1 and in accordance with the

principles of public international law, the bilateral agreements in the fields related to the internal

market in which Switzerland participates and the legal acts of the Union to which reference is made

in such agreements shall be uniformly interpreted and applied in the fields related to the internal

market in which Switzerland participates.

The legal acts of the Union to which reference is made in the Agreement and, to the extent

that their application involves concepts of Union law, the provisions of the Agreement shall be

interpreted and applied in accordance with the case law of the Court of Justice of the European

Union, prior or subsequent to the signature of the Agreement.

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ARTICLE 8

Effective and harmonious application principle

The Commission and the competent Swiss authorities shall cooperate and assist each other in

ensuring the surveillance of the application of the Agreement. They may exchange information on

the activities of surveillance of the application of the Agreement. They may exchange views and

discuss issues of mutual interest.

Each Contracting Party shall take appropriate measures to ensure the effective and

harmonious application of the Agreement on its territory.

The surveillance of the application of the Agreement shall be carried out jointly by the

Contracting Parties within the Joint Committee.

If the Commission or the competent Swiss authorities become aware of a case of incorrect

application, the matter may be referred to the Joint Committee with a view to finding an acceptable

solution.

The Commission and the competent Swiss authorities respectively shall monitor the

application of the Agreement by the other Contracting Party. The procedure provided for in

Article 10 applies.

To the extent that certain surveillance competences of the institutions of the Union as regards one

Contracting Party are necessary to ensure the effective and harmonious application of the

Agreement, such as investigation and decision powers, the Agreement must foresee them

specifically.

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ARTICLE 9

Exclusivity principle

The Contracting Parties undertake not to submit a dispute regarding the interpretation or application

of the Agreement and of the legal acts of the Union to which reference is made in the Agreement or,

where applicable, regarding the conformity with the Agreement of a decision adopted by the

Commission on the basis of the Agreement to any method of settlement other than those provided

for in this Protocol.

ARTICLE 10

Procedure in the event of difficulty of interpretation or application

In the event of difficulty of interpretation or application of the Agreement or of a legal act of

the Union to which reference is made in the Agreement, the Contracting Parties shall consult each

other within the Joint Committee in order to find a mutually acceptable solution. To this end, all

useful elements of information shall be provided to the Joint Committee to enable it to make a

detailed examination of the situation. The Joint Committee shall examine all possibilities that allow

the proper functioning of the Agreement to be maintained.

If the Joint Committee is not able to find a solution to the difficulty referred to in paragraph 1

within three months of the date on which the difficulty was submitted to it, either of the Contracting

Parties may request that an arbitral tribunal settle the dispute in accordance with the rules laid down

in the Appendix.

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Where the dispute raises a question concerning the interpretation or application of a provision

referred to in Article 7(2), and if the interpretation of that provision is relevant to the settlement of

the dispute and necessary to enable it to decide, the arbitral tribunal shall refer that question to the

Court of Justice of the European Union.

Where the dispute raises a question concerning the interpretation or application of a provision that

falls within the scope of an exception from the dynamic alignment obligation referred to in

Article 5(7), and where the dispute does not involve the interpretation or application of concepts of

Union law, the arbitral tribunal shall settle the dispute without referral to the Court of Justice of the

European Union.

Where the arbitral tribunal refers a question to the Court of Justice of the European Union

pursuant to paragraph 3:

(a)

the ruling of the Court of Justice of the European Union shall be binding on the arbitral

tribunal; and

(b)

Switzerland shall enjoy the same rights as the Member States and the institutions of the Union

and shall be subject to the same procedures before the Court of Justice of the European Union,

mutatis mutandis.

Each Contracting Party shall take all measures necessary to comply in good faith with the

arbitral tribunal's decision.

The Contracting Party that has been found by the arbitral tribunal not to have complied with the

Agreement shall inform the other Contracting Party through the Joint Committee of the measures it

has taken to comply with the arbitral tribunal's decision.

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ARTICLE 11

Compensatory measures

If the Contracting Party that has been found by the arbitral tribunal not to have complied with

the Agreement does not inform the other Contracting Party, within a reasonable time period set in

accordance with Article IV.2(6) of the Appendix, of the measures it has taken to comply with the

arbitral tribunal's decision, or if the other Contracting Party considers that the measures

communicated do not comply with the arbitral tribunal's decision, this other Contracting Party may

adopt proportionate compensatory measures within the framework of the Agreement or of any other

bilateral agreement in the fields related to the internal market in which Switzerland participates

(hereinafter referred to as "compensatory measures") in order to remedy a potential imbalance. It

shall notify the Contracting Party that has been found by the arbitral tribunal not to have complied

with the Agreement of the compensatory measures, which shall be specified in the notification.

Those compensatory measures shall take effect three months from the date of this notification.

If, within one month from the date of the notification of the intended compensatory measures,

the Joint Committee has not taken a decision to suspend, amend or annul those compensatory

measures, either Contracting Party may submit to arbitration the question of the proportionality of

those compensatory measures, in accordance with the Appendix.

The arbitral tribunal shall decide within the time limits laid down in Article III.8(4) of the

Appendix.

Compensatory measures shall not have retroactive effect. In particular, the rights and

obligations already acquired by individuals and economic operators before the compensatory

measures take effect shall be preserved.

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ARTICLE 12

Cooperation between jurisdictions

To promote the homogeneous interpretation, the Swiss Federal Supreme Court and the Court

of Justice of the European Union shall agree on a dialogue and the modalities thereof.

Switzerland shall have the right to lodge statements of case or written observations with the

Court of Justice of the European Union where a court of a Member State of the Union refers to the

Court of Justice of the European Union a question concerning the interpretation of the Agreement

or of a provision of a legal act of the Union referred to therein for a preliminary ruling.

CHAPTER 4

OTHER PROVISIONS

ARTICLE 13

Financial contribution

Switzerland shall contribute to the financing of the activities of the Union agencies,

information systems and other activities listed in Article 1 of the Annex to which it has access, in

accordance with this Article and the Annex.

The Joint Committee may adopt a decision to amend the Annex.

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The Union may suspend the participation of Switzerland in the activities referred to in

paragraph 1 of this Article at any time if Switzerland fails to meet the payment deadline in

accordance with the terms of payment set out in Article 2 of the Annex.

Where Switzerland fails to meet a payment deadline, the Union shall send Switzerland a formal

letter of reminder. Where no full payment is made within 30 days of the date of reception of that

formal letter of reminder, the Union may suspend the participation of Switzerland in the relevant

activity.

The financial contribution shall take the form of the sum of:

(a)

an operational contribution; and

(b)

a participation fee.

The financial contribution shall take the form of an annual financial contribution and shall be

due at the dates specified in the calls for funds issued by the Commission.

The operational contribution shall be based on a contribution key defined as the ratio of the

gross domestic product (hereinafter referred to as "GDP") of Switzerland at market prices to the

GDP of the Union at market prices.

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For that purpose, the figures for GDP at market prices of the Contracting Parties shall be the latest

such figures available as of 1 January of the year in which the annual payment is made as provided

by the Statistical Office of the European Union (EUROSTAT), with due regard to the Agreement

between the European Community and the Swiss Confederation on cooperation in the field of

statistics, done at Luxembourg on 26 October 2004. If that agreement ceases to apply, the GDP of

Switzerland shall be the one established on the basis of data provided by the Organisation for

Economic Co-operation and Development.

The operational contribution for each Union agency shall be calculated by applying the

contribution key to its annual voted budget inscribed on the relevant Union budget subsidy line(s)

of the year in question, taking into account for each agency any adjusted operational contribution as

defined in Article 1 of the Annex.

The operational contribution for the information systems and other activities shall be calculated by

applying the contribution key to the relevant budget of the year in question as set out in documents

implementing the budget, such as work programmes or contracts.

All reference amounts shall be based on commitment appropriations.

The annual participation fee shall be 4 % of the annual operational contribution as calculated

in accordance with paragraphs 5 and 6.

The Commission shall provide Switzerland with adequate information in relation to the

calculation of its financial contribution. That information shall be provided having due regard to the

Union's confidentiality and data protection rules.

All financial contributions by Switzerland or payments from the Union, and the calculation of

amounts due or to be received, shall be made in euro.

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10.

Where the entry into force of this Protocol does not coincide with the beginning of a calendar

year, Switzerland's operational contribution for the year in question shall be subject to adjustment,

according to the methodology and terms of payment defined in Article 5 of the Annex.

11.

Detailed provisions for the application of this Article are set out in the Annex.

12.

Three years following the entry into force of this Protocol, and every three years

subsequently, the Joint Committee shall review the conditions of Switzerland's participation as

defined in Article 1 of the Annex and, where appropriate, adapt them.

ARTICLE 14

References to territories

Whenever the legal acts of the Union integrated into the Agreement contain references to the

territory of the "European Union", of the "Union", of the " common market" or of the "internal

market", the references shall for the purposes of the Agreement be understood to be references to

the territories referred to in Article 34 of the Agreement.

ARTICLE 15

References to nationals of Member States of the Union

Whenever the legal acts of the Union integrated into the Agreement contain references to nationals

of Member States of the Union, the references shall, for the purposes of the Agreement, be

understood to be references to nationals of the Member States of the Union and of Switzerland.

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ARTICLE 16

Entry into force and implementation of the legal acts of the Union

Provisions of the legal acts of the Union integrated into the Agreement on their entry into force or

implementation are not relevant for the purposes of the Agreement.

The time limits and dates for Switzerland for bringing into force and implementing the decisions

integrating legal acts of the Union into the Agreement follow from Article 5(8) and Article 6(5), as

well as from provisions on transitional arrangements.

ARTICLE 17

Addressees of the legal acts of the Union

Provisions of the legal acts of the Union integrated into the Agreement indicating that they are

addressed to the Member States of the Union are not relevant for the purposes of the Agreement.

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CHAPTER 5

FINAL PROVISIONS

ARTICLE 18

Implementation

The Contracting Parties shall take all appropriate measures, whether general or particular, to

ensure the fulfilment of the obligations arising from the Agreement and shall refrain from taking

any measure which could jeopardise the achievement of its objectives.

The Contracting Parties shall take all measures necessary to guarantee the intended result of

the legal acts of the Union to which reference is made in the Agreement and shall refrain from

taking any measure that could jeopardise the achievement of their aims.

ARTICLE 19

Entry into force

This Protocol shall be ratified or approved by the Contracting Parties in accordance with their

own procedures. The Contracting Parties shall notify each other of the completion of the internal

procedures necessary to the entry into force of this Protocol.

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This Protocol shall enter into force on the first day of the second month following the last

notification regarding the following instruments:

(a)

Institutional Protocol to the Agreement between the European Community and its

Member States, of the one part, and the Swiss Confederation, of the other, on the free

movement of persons;

(b)

Amending Protocol to the Agreement between the European Community and its

Member States, of the one part, and the Swiss Confederation, of the other, on the free

movement of persons;

(c)

Amending Protocol to the Agreement between the European Community and

the Swiss Confederation on air transport;

(d)

State Aid Protocol to the Agreement between the European Community and

the Swiss Confederation on air transport;

(e)

Institutional Protocol to the Agreement between the European Community and

the Swiss Confederation on the carriage of goods and passengers by rail and road;

(f)

Amending Protocol to the Agreement between the European Community and

the Swiss Confederation on the carriage of goods and passengers by rail and road;

(g)

State Aid Protocol to the Agreement between the European Community and

the Swiss Confederation on the carriage of goods and passengers by rail and road;

(h)

Amending Protocol to the Agreement between the European Community and

the Swiss Confederation on trade in agricultural products;

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(i)

Institutional Protocol to the Agreement between the European Community and

the Swiss Confederation on mutual recognition in relation to conformity assessment;

(j)

Amending Protocol to the Agreement between the European Community and

the Swiss Confederation on mutual recognition in relation to conformity assessment;

(k)

Agreement between the European Union and the Swiss Confederation on Switzerland's

regular financial contribution towards reducing economic and social disparities in the

European Union;

(l)

Agreement between the European Union and the European Atomic Energy Community,

of the one part, and the Swiss Confederation, of the other part, on the participation of

the Swiss Confederation in Union programmes;

(m) Agreement between the European Union and the Swiss Confederation on the terms and

conditions for the participation of the Swiss Confederation in the European Union Agency for

the Space Programme.

ARTICLE 20

Amendment and termination

This Protocol may be amended at any time by mutual agreement of the Contracting Parties.

Where the Agreement is terminated in accordance with Article 36(3) of the Agreement, this

Protocol shall cease to be in force on the date referred to in Article 36(4) of the Agreement.

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Where the Agreement ceases to be in force, the rights and obligations that individuals and

economic operators have already acquired by virtue of the Agreement before the date of the

cessation of the Agreement shall be preserved. The Contracting Parties shall settle by mutual

agreement what action is to be taken in respect of rights in the process of being acquired.

Done at […], on […], in duplicate in the Bulgarian, Croatian, Czech, Danish, Dutch, English,

Estonian, Finnish, French, German, Greek, Hungarian, Irish, Italian, Latvian, Lithuanian, Maltese,

Polish, Portuguese, Romanian, Slovak, Slovenian, Spanish and Swedish languages, each of these

texts being equally authentic.

IN WITNESS WHEREOF, the undersigned, duly authorised thereto, have signed this Protocol.

(Signature Block, to the effect of, in all 24 EU languages: “For the European Union” and “For the

Swiss Confederation”)

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ANNEX

ANNEX ON THE APPLICATION OF ARTICLE 13 OF THE PROTOCOL

ARTICLE 1

List of the activities of the Union agencies, information systems

and other activities to which Switzerland is to contribute financially

Switzerland shall contribute financially to the following:

(a)

agencies:

none.

(b)

information systems:

none.

(c)

other activities:

none.

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ARTICLE 2

Terms of payment

Payments due pursuant to Article 13 of the Protocol shall be made in accordance with this

Article.

When issuing the call for funds of the financial year, the Commission shall communicate the

following information to Switzerland:

(a)

the amount of the operational contribution; and

(b)

the amount of the participation fee.

The Commission shall communicate to Switzerland, as soon as possible and at the latest

on 16 April of each financial year, the following information in relation to Switzerland's

participation:

(a)

the amounts in commitment appropriations of the annual Union voted budget inscribed on the

relevant Union budget subsidy line(s) of the year in question for each Union agency, taking

into account for each agency any adjusted operational contribution as defined in Article 1, and

the amounts in commitment appropriations in relation to the Union voted budget of the year in

question for the relevant budget of the information systems and other activities, covering the

participation of Switzerland in accordance with Article 1;

(b)

the amount of the participation fee referred to in Article 13(7) of the Protocol; and

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(c)

as regards agencies, in year N+1, the amounts in budgetary commitments made on

commitment appropriations authorised in year N on the relevant Union budget subsidy line(s)

in relation to the annual Union budget inscribed on the relevant Union budget subsidy line(s)

of year N.

On the basis of its draft budget, the Commission shall provide an estimate of information

under points (a) and (b) of paragraph 3 as soon as possible, and at the latest, by 1 September of the

financial year.

The Commission shall issue to Switzerland, at the latest on 16 April and, if applicable to the

relevant agency, information system or other activity, at the earliest on 22 October and at the latest

on 31 October of each financial year, a call for funds that corresponds to the contribution of

Switzerland under the Agreement for each of the agencies, information systems and other activities

in which Switzerland participates.

The call(s) for funds referred to in paragraph 5 shall be structured in instalments as follows:

(a)

the first instalment of each year, in relation to the call for funds to be issued by 16 April, shall

correspond to an amount up to the equivalent of the estimate of the annual financial

contribution of the agency, information system or other activity in question referred to in

paragraph 4;

Switzerland shall pay the amount indicated in this call for funds at the latest 60 days after the

call for funds is issued.

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(b)

where applicable, the second instalment of the year, in relation to the call for funds to be

issued at the earliest on 22 October and at the latest on 31 October, shall correspond to the

difference between the amount referred to in paragraph 4 and the amount referred to in

paragraph 5, where the amount referred to in paragraph 5 is higher.

Switzerland shall pay the amount indicated in this call for funds at the latest by 21 December.

For each call for funds, Switzerland may make separate payments for each agency, information

system or other activity.

For the first year of implementation of the Protocol, the Commission shall issue a single call

for funds, within 90 days of the entry into force of the Protocol.

Switzerland shall pay the amount indicated in the call for funds at the latest 60 days after the call for

funds is issued.

Any delay in the payment of the financial contribution shall give rise to the payment of

default interest by Switzerland on the outstanding amount as from the due date until the day on

which that outstanding amount is paid in full.

The interest rate for amounts receivable not paid on the due date shall be the rate applied by the

European Central Bank to its principal refinancing operations, as published in the C series of the

Official Journal of the European Union,

in force on the first day of the month in which the due date

falls, or 0 %, whichever is higher, plus 3,5 percentage points.

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ARTICLE 3

Adjustment of Switzerland's financial contribution

to Union agencies in the light of implementation

The adjustment of Switzerland's financial contribution to Union agencies shall be made in

year N+1, when the initial operational contribution shall be adjusted upwards or downwards by the

difference between the initial operational contribution and an adjusted contribution calculated by

applying the contribution key of year N to the amount of budgetary commitments made on

commitment appropriations authorised in year N under the relevant Union subsidy budget line(s).

Where applicable, the difference shall take into account, for each agency, the percentage-based

adjusted operational contribution as defined in Article 1.

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ARTICLE 4

Existing arrangements

Article 13 of the Protocol and this Annex shall not apply to specific arrangements between

Switzerland and the Union which include financial contributions by Switzerland. The agencies,

information systems and other activities covered by such arrangements are the following:

European Union Aviation Safety Agency, established by Regulation (EU) 2018/1139 of the

European Parliament and of the Council of 4 July 2018 on common rules in the field of civil

aviation and establishing a European Union Aviation Safety Agency, and amending Regulations

(EC) No 2111/2005, (EC) No 1008/2008, (EU) No 996/2010, (EU) No 376/2014 and

Directives 2014/30/EU and 2014/53/EU of the European Parliament and of the Council, and

repealing Regulations (EC) No 552/2004 and (EC) No 216/2008 of the European Parliament and of

the Council and Council Regulation (EEC) No 3922/91 (OJ L 212, 22.8.2018, p. 1), as applicable

according to the Annex of the Agreement.

ARTICLE 5

Transitional arrangements

In the event that the date of entry into force of the Protocol is not 1 January, this Article shall apply

by way of derogation from Article 2.

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For the first year of implementation of the Protocol, in relation to the operational contribution due

for the year in question applicable to the relevant agency, information system or other activity, as

established in accordance with Article 13 of the Protocol and Articles 1 to 3 of this Annex, the

operational contribution shall be reduced on a

pro rata temporis

basis by multiplying the amount of

the annual operational contribution due to the ratio of the following:

(a)

the number of calendar days from the date of entry into force of the Protocol

until 31 December of the year in question; and

(b)

the total number of calendar days of the year in question.

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Appendix

APPENDIX ON THE ARBITRAL TRIBUNAL

CHAPTER I

PRELIMINARY PROVISIONS

ARTICLE I.1

Scope

If one of the Contracting Parties (hereinafter referred to as "parties") submits a dispute for

arbitration in accordance with Articles 10(2) or 11(2) of the Protocol, the rules set out in this

Appendix shall apply.

ARTICLE I.2

Registry and secretarial services

The International Bureau of the Permanent Court of Arbitration at the Hague (hereinafter referred to

as "International Bureau") shall fulfil the functions of registry and provide the necessary secretarial

services.

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ARTICLE I.3

Notices and calculation of time limits

Notices, including communications or proposals, may be sent by any means of

communication that certifies their transmission, or enables them to be certified.

Such notices may be sent electronically only if an address has been designated or authorised

by a party specifically for this purpose.

Such notices served on the parties shall be sent, for Switzerland, to Switzerland's Europe

Division of the Federal Department of Foreign Affairs and, for the Union, to the Commission's

Legal Service.

Any time limit laid down in this Appendix shall run from the day after an event occurs or an

action takes place. If the last day for delivery of a document falls on a non-working day of the

institutions of the Union or of the government of Switzerland, the time period for the delivery of the

document shall end on the first following working day. Non-working days that fall within the time

period shall be counted.

ARTICLE I.4

Notice of arbitration

The party taking the initiative to use arbitration (hereinafter referred to as "applicant") shall

send to the other party (hereinafter referred to as "defendant") and to the International Bureau a

notice of arbitration.

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Arbitration proceedings shall be deemed to commence on the day after that on which the

notice of arbitration is received by the defendant.

The notice of arbitration shall include the following information:

(a)

the demand that the dispute be referred to arbitration;

(b)

the names and contact details of the parties;

(c)

the name and address of the applicant's agent(s);

(d)

the legal basis of the proceedings (Article 10(2) or Article 11(2) of the Protocol) and:

(i)

in the cases referred to in Article 10(2) of the Protocol, the question causing the dispute

as officially entered, for resolution, on the agenda of the Joint Committee in accordance

with Article 10(1) of the Protocol; and

(ii)

in the cases referred to in Article 11(2) of the Protocol, the decision of the arbitral

tribunal, any implementation measures mentioned in Article 10(5) of the Protocol and

the disputed compensatory measures;

(e)

the designation of any rule causing the dispute or related to it;

(f)

a brief description of the dispute; and

(g)

the designation of an arbitrator or, if five arbitrators are to be appointed, the designation of

two arbitrators.

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In the cases referred to in Article 10(3) of the Protocol, the notice of arbitration may also

contain information concerning the need for a referral to the Court of Justice of the European

Union.

Any claims on the sufficiency of the notice of arbitration shall not prevent the constitution of

the arbitral tribunal. The dispute shall be decided definitively by the arbitral tribunal.

ARTICLE I.5

Response to the notice of arbitration

Within 60 days of receiving the notice of arbitration, the defendant shall send a response to

the notice of arbitration to the applicant and the International Bureau, which shall include the

following information:

(a)

the names and contact details of the parties;

(b)

the name and address of the defendant's agent(s);

(c)

a response to the information given in the notice of arbitration in accordance with

points (d) to (f) of Article I.4(3); and

(d)

the designation of an arbitrator or, if five arbitrators are to be appointed, the designation of

two arbitrators.

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In the cases referred to in Article 10(3) of the Protocol, the response to the notice of

arbitration may also contain a response to the information given in the notice of arbitration in

accordance with Article I.4(4) of this Appendix and information concerning the need for a referral

to the Court of Justice of the European Union.

The lack of, or an incomplete or late, response from the defendant to the notice of arbitration

shall not prevent the constitution of an arbitral tribunal. The dispute shall be decided definitively by

the arbitral tribunal.

If the defendant requests that the arbitral tribunal consist of five arbitrators in its response to

the notice of arbitration, the applicant shall designate an additional arbitrator within 30 days of

receipt of the response to the notice of arbitration.

ARTICLE I.6

Representation and assistance

The parties shall be represented before the arbitral tribunal by one or more agents. The agents

may be assisted by advisers or lawyers.

Any change to the agents or their addresses shall be notified to the other party, the

International Bureau and the arbitral tribunal. The arbitral tribunal may, at any time, on its own

initiative or at the request of a party, request evidence of the powers conferred on the agents of the

parties.

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CHAPTER II

COMPOSITION OF THE ARBITRAL TRIBUNAL

ARTICLE II.1

Number of arbitrators

The arbitral tribunal shall be composed of three arbitrators. If the applicant in its notice of

arbitration or the defendant in its response to the notice of arbitration so request, the arbitral tribunal

shall be composed of five arbitrators.

ARTICLE II.2

Appointment of arbitrators

If three arbitrators are to be appointed, each of the parties shall designate one of them. The

two arbitrators appointed by the parties shall select the third arbitrator, who shall be the chair of the

arbitral tribunal.

If five arbitrators are to be appointed, each of the parties shall designate two of them. The four

arbitrators appointed by the parties shall select the fifth arbitrator, who shall be the chair of the

arbitral tribunal.

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If, within 30 days of the designation of the last arbitrator appointed by the parties, the

arbitrators have not reached agreement on the selection of the chair of the arbitral tribunal, the chair

shall be appointed by the Secretary-General of the Permanent Court of Arbitration.

To assist in the selection of arbitrators to compose the arbitral tribunal, an indicative list of

persons possessing the qualifications referred to in paragraph 6, which shall be common to all

bilateral agreements in the fields related to the internal market in which Switzerland participates as

well as the Agreement between the European Union and the Swiss Confederation on health,

done at […] on […] (hereinafter referred to as "Agreement on health"), the Agreement between the

European Community and the Swiss Confederation on trade in agricultural products, done at

Luxembourg on 21 June 1999 (hereinafter referred to as "Agreement on trade in agricultural

products") and the Agreement between the European Union and the Swiss Confederation on

Switzerland's regular financial contribution towards reducing economic and social disparities in the

European Union, done at […] on […] (hereinafter referred to as "Agreement on Switzerland's

regular financial contribution"), shall be established and updated when necessary. The Joint

Committee shall adopt and update that list by a decision for the purposes of the Agreement.

Where a party fails to designate an arbitrator, the Secretary-General of the Permanent Court of

Arbitration shall appoint that arbitrator from the list referred to in paragraph 4. In the absence of

such a list, the arbitrator shall be appointed by lot by the Secretary-General of the Permanent Court

of Arbitration from the individuals who have been formally proposed by one party or both parties

for the purposes of paragraph 4.

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The persons constituting the arbitral tribunal shall be highly qualified persons, with or without

ties to the parties, whose independence and lack of conflicts of interest is guaranteed, along with a

wide range of experience. In particular, they shall have demonstrated expertise in law and the

matters covered by this Agreement; they shall not take instructions from either party; and they shall

serve in their individual capacities and not take instructions from any organisation or government

with regard to matters related to the dispute. The chair of the arbitral tribunal shall also have

experience in dispute settlement procedures.

ARTICLE II.3

Arbitrators' declarations

When a person is being considered for appointment as an arbitrator, that person shall report

all circumstances likely to give rise to legitimate doubts as to his or her impartiality or

independence. From the appointment and throughout the entire arbitration proceedings, an arbitrator

shall report such circumstances to the parties and to the other arbitrators without delay, if the

arbitrator has not already done so.

Any arbitrator may be dismissed if circumstances exist that could give rise to legitimate

doubts about his or her impartiality or independence.

A party may only request the dismissal of an arbitrator that it has appointed for a reason that

becomes known to it after that appointment.

If an arbitrator fails to act or if it is impossible

de jure

de facto

for an arbitrator to fulfil his

or her role, the procedure for the dismissal of arbitrators laid down in Article II.4 shall apply.

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ARTICLE II.4

Dismissal of arbitrators

Any party wishing to dismiss an arbitrator shall make a request for dismissal within 30 days

of the date on which it is notified of the appointment of that arbitrator or within 30 days of the date

on which it becomes aware of the circumstances referred to in Article II.3.

The request for dismissal shall be sent to the other party, to the dismissed arbitrator, to the

other arbitrators and to the International Bureau. It shall set out the reasons for the request for

dismissal.

When a request for dismissal has been made, the other party may accept the request for

dismissal. The arbitrator in question may also step aside. The acceptance or stepping aside does not

imply acknowledgement of the reasons for the request for dismissal.

If, within 15 days of the date of the notification of the request for dismissal, the other party

does not accept the request for dismissal or the arbitrator in question does not step aside, the party

requesting the dismissal may ask the Secretary-General of the Permanent Court of Arbitration to

take a decision on the dismissal.

Unless the parties agree otherwise, the decision referred to in paragraph 4 shall indicate the

reasons for that decision.

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ARTICLE II.5

Replacement of an arbitrator

Subject to paragraph 2 of this Article, if it is necessary to replace an arbitrator during the

arbitration proceedings, a replacement shall be appointed or selected in accordance with the

procedure laid down in Article II.2 applicable to the appointment or selection of the arbitrator to be

replaced. That procedure shall apply even if one party had not exercised its right to appoint or to

participate in the appointment of the arbitrator to be replaced.

In the event of replacement of an arbitrator, the procedure shall resume at the stage where the

replaced arbitrator ceased to perform his or her functions, unless the arbitral tribunal decides

otherwise.

ARTICLE II.6

Exclusion of liability

Except in cases of intentional wrongdoing or gross negligence, the parties renounce, to the

maximum extent permitted by the applicable law, any action against the arbitrators for any act or

omission related to the arbitration.

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CHAPTER III

ARBITRATION PROCEEDINGS

ARTICLE III.1

General provisions

The date of establishment of the arbitral tribunal shall be the date on which the last arbitrator

has accepted his or her appointment.

The arbitral tribunal shall ensure that the parties are treated equally and that, at an appropriate

stage of the proceedings, each of them has sufficient possibility to assert their rights and present

their case. The arbitral tribunal shall conduct the proceedings in such a way as to avoid delays and

unnecessary expenditure and to ensure the dispute between the parties is settled.

A hearing shall be organised, unless the arbitral tribunal decides otherwise, having heard the

parties.

When a party sends a communication to the arbitral tribunal, it shall do so through the

International Bureau and shall send a copy to the other party at the same time. The International

Bureau shall send a copy of that communication to each of the arbitrators.

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ARTICLE III.2

Place of arbitration

The place of arbitration is The Hague. The arbitral tribunal may, if exceptional circumstances so

require, meet at any other place that it considers appropriate for its deliberations.

ARTICLE III.3

Language

The languages of the proceedings shall be French and English.

The arbitral tribunal may order all documents enclosed with the statement of claim or the

statement of defence and all further documents produced during the proceedings, submitted in their

original language, to be accompanied by a translation in one of the languages of the proceedings.

ARTICLE III.4

Statement of claim

The applicant shall send its statement of claim in writing to the defendant and to the arbitral

tribunal through the International Bureau, within the time limit set by the arbitral tribunal. The

applicant may decide to deem its notice of arbitration referred to in Article I.4 a statement of claim,

provided that it also meets the conditions in paragraphs 2 and 3 of this Article.

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The statement of claim shall include the following information:

(a)

the information set out in points (b) to (f) of Article I.4(3);

(b)

a statement of facts submitted in support of the claim; and

(c)

the legal arguments put forward in support of the claim.

The statement of claim shall, as far as possible, be accompanied by any documents and other

evidence mentioned by the applicant or should refer to them. In the cases referred to in Article 10(3)

of the Protocol, the statement of claim shall also, as far as possible, contain information concerning

the need for a referral to the Court of Justice of the European Union.

ARTICLE III.5

Statement of defence

The defendant shall send the statement of defence in writing to the applicant and to the

arbitral tribunal through the International Bureau, within the time limit set by the arbitral tribunal.

The defendant may decide to deem the response to the notice of arbitration referred to in Article I.5

a statement of defence, provided that the response to the notice of arbitration also meets the

conditions in paragraph 2 of this Article.

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The statement of defence shall respond to the points in the statement of claim indicated in

accordance with points (a) to (c) of Article III.4(2) of this Appendix. It shall, as far as possible, be

accompanied by any documents and other evidence mentioned by the defendant or should refer to

them. In the cases referred to in Article 10(3) of the Protocol, the statement of defence shall also, as

far as possible, contain information concerning the need for a referral to the Court of Justice of the

European Union.

In the statement of defence, or at a later stage in the arbitration proceedings if the arbitral

tribunal decides that a delay is justified by circumstances, the defendant may make a counterclaim

provided that the arbitral tribunal has jurisdiction in respect of it.

Article III.4(2) and (3) shall apply to a counterclaim.

ARTICLE III.6

Arbitral jurisdiction

The arbitral tribunal shall rule on whether it has jurisdiction on the basis of Articles 10(2)

or 11(2) of the Protocol.

In the cases referred to in Article 10(2) of the Protocol, the arbitral tribunal shall have a

mandate to examine the question causing the dispute as officially entered, for resolution, on the

agenda of the Joint Committee in accordance with Article 10(1) of the Protocol.

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In the cases referred to in Article 11(2) of the Protocol, the arbitral tribunal that heard the

main case shall have a mandate to examine the proportionality of the disputed compensatory

measures, including where those measures have in whole or in part been taken in another bilateral

agreement in the fields related to the internal market in which Switzerland participates.

A preliminary objection of lack of jurisdiction of the arbitral tribunal shall be made at the

latest in the statement of defence or, in the case of a counterclaim, in the reply. The fact that a party

has appointed an arbitrator or has taken part in their appointment shall not deprive it of the right to

make such a preliminary objection. The preliminary objection that the dispute would exceed the

arbitral tribunal's powers shall be made as soon as the question alleged to exceed its powers is

raised during the arbitration proceedings. In any event, the arbitral tribunal may allow a preliminary

objection made after the time limit laid down has elapsed if it believes that the delay was for a valid

reason.

The arbitral tribunal may rule on the preliminary objection referred to in paragraph 4 either by

treating it as a preliminary question or in the decision on the substance of the case.

ARTICLE III.7

Other written submissions

The arbitral tribunal shall, after having consulted the parties, decide what other written submissions,

in addition to the statement of claim and statement of defence, the parties shall or may submit and

shall set the time limit for their submission.

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ARTICLE III.8

Time limits

The time limits set by the arbitral tribunal for the communication of the written documents,

including the statement of claim and the statement of defence, shall not exceed 90 days, unless the

parties agree otherwise.

The arbitral tribunal shall take its final decision within 12 months of the date of its

establishment. In exceptional circumstances of particular difficulty, the arbitral tribunal may extend

that period by up to three additional months.

The time limits laid down in paragraphs 1 and 2 shall be halved:

(a)

upon request by the applicant or the defendant, if, within 30 days of that request, the arbitral

tribunal rules, after hearing the other party, that the case is urgent; or

(b)

if the parties so agree.

In the cases referred to in Article 11(2) of the Protocol, the arbitral tribunal shall take its final

decision within six months of the date on which the compensatory measures have been notified in

accordance with Article 11(1) of the Protocol.

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ARTICLE III.9

Referrals to the Court of Justice of the European Union

In application of Article 7 and Article 10(3) of the Protocol, the arbitral tribunal shall make a

referral to the Court of Justice of the European Union.

The arbitral tribunal may make a referral to the Court of Justice of the European Union at any

time in the proceedings, provided that the arbitral tribunal is able to define precisely enough the

legal and factual background of the case, and the legal questions it raises.

The proceedings before the arbitral tribunal shall be suspended until the Court of Justice of the

European Union has delivered its ruling.

Each party may send a reasoned request to the arbitral tribunal to make a referral to the Court

of Justice of the European Union. The arbitral tribunal shall reject such a request if it considers the

conditions for a referral to the Court of Justice of the European Union referred to in paragraph 1 not

to be met. If the arbitral tribunal rejects a party's request for a referral to the Court of Justice of the

European Union, it shall give reasons for its decision in the decision on the substance of the case.

The arbitral tribunal shall make a referral to the Court of Justice of the European Union by

means of a notice. The notice shall contain at least the following information:

(a)

a brief description of the dispute;

(b)

the legal act(s) of the Union and/or the provision(s) of the Agreement at issue; and

(c)

the concept of Union law to be interpreted in accordance with Article 7(2) of the Protocol.

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The arbitral tribunal shall give notice of the referral to the Court of Justice of the European Union to

the parties.

The Court of Justice of the European Union shall apply, by analogy, the internal rules of

procedure applicable to the exercise of its jurisdiction to make a preliminary ruling on the

interpretation of the Treaties and acts made by the Union's institutions, bodies, offices and agencies.

The agents and lawyers authorised to represent the parties before the arbitral tribunal pursuant

to Articles I.4, I.5, III.4 and III.5 shall be authorised to represent the parties before the Court of

Justice of the European Union.

ARTICLE III.10

Interim measures

In the cases referred to in Article 11(2) of the Protocol, either party may, at any stage of the

arbitration procedure, apply for interim measures consisting of the suspension of the compensatory

measures.

An application pursuant to paragraph 1 shall state the subject matter of the proceedings, the

circumstances giving rise to urgency and the pleas of fact and law establishing a

prima facie

case

for the interim measures applied for. It shall contain all the evidence and offers of evidence

available to justify the grant of the interim measures.

The party requesting the interim measures shall send its application in writing to the other

party and to the arbitral tribunal through the International Bureau. The arbitral tribunal shall set a

short time limit within which that other party may submit written or oral observations.

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The arbitral tribunal shall, within one month of the submission of the application referred to in

paragraph 1, adopt a decision on the suspension of the contested compensatory measures if the

following conditions are met:

(a)

the arbitral tribunal is

prima facie

satisfied of the merit of the case submitted by the party

requesting the interim measures in its application;

(b)

the arbitral tribunal considers that, pending its final decision, the party requesting the interim

measures would suffer serious and irreparable harm absent the suspension of the

compensatory measures; and

(c)

the harm caused to the party requesting the interim measures by the immediate application of

the contested compensatory measures outweighs the interest in the immediate and effective

application of those measures.

The suspension of proceedings referred to in the second subparagraph of Article III.9(2) shall

not apply in proceedings pursuant to this Article.

A decision taken by the arbitral tribunal in accordance with paragraph 4 shall have only an

interim effect and shall be without prejudice to the decision of the arbitral tribunal on the substance

of the case.

Unless the decision taken by the arbitral tribunal in accordance with paragraph 4 of this

Article sets an earlier date for the end of the suspension, the suspension shall lapse when the final

decision pursuant to Article 11(2) of the Protocol is taken.

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For the avoidance of doubt, for the purposes of this Article, it is understood that, in

considering the respective interests of the party requesting the interim measures and the other party,

the arbitral tribunal shall take into account those of the individuals and economic operators of the

parties, but that consideration shall not amount to granting any standing to such individuals or

economic operators before the arbitral tribunal.

ARTICLE III.11

Evidence

Each party shall provide evidence of the facts forming the grounds of its claim or its defence.

On request of a party, or on its own initiative, the arbitral tribunal may seek from the parties

relevant information it considers necessary and appropriate. The arbitral tribunal shall set a time

limit for the parties to respond to its request.

On request of a party, or on its own initiative, the arbitral tribunal may seek from any source

any information it considers appropriate. The arbitral tribunal may also seek the opinion of experts

as it considers appropriate and subject to any terms and conditions agreed by the parties, where

applicable.

Any information obtained by the arbitral tribunal under this Article shall be made available to

the parties, and the parties may submit comments on that information to the arbitral tribunal.

After seeking the views of the other party, the arbitral tribunal shall adopt appropriate

measures to address any questions raised by a party with regard to the protection of personal data,

professional secrecy and the legitimate interests of confidentiality.

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The arbitral tribunal shall be the judge of the admissibility, relevance and strength of the

evidence submitted.

ARTICLE III.12

Hearings

When a hearing must take place, the arbitral tribunal, having consulted the parties, shall notify

the parties sufficiently far in advance of the date, time and place of the hearing.

The hearing shall be public, unless the arbitral tribunal, of its own motion or on application by

the parties, decides otherwise for serious reasons.

Minutes of each hearing shall be drawn up and signed by the chair of the arbitral tribunal.

Only those minutes shall be authentic.

The arbitral tribunal may decide to hold the hearing virtually in accordance with the practice

of the International Bureau. The parties shall be informed of this practice in a timely manner. In

such cases, paragraph 1,

mutatis mutandis,

and paragraph 3 shall apply.

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ARTICLE III.13

Default

If, within the time limit set by this Appendix or by the arbitral tribunal, without showing

sufficient cause, the applicant has not submitted its statement of claim, the arbitral tribunal shall

order the closure of the arbitration proceedings, unless there are outstanding questions on which a

ruling may be necessary and if the arbitral tribunal considers it appropriate to do so.

If, within the time limit set by this Appendix or by the arbitral tribunal, without showing sufficient

cause, the defendant has not submitted its response to the notice of arbitration or its statement of

defence, the arbitral tribunal shall order the continuation of the proceedings, without considering

that default of itself to constitute acceptance of the applicant's allegations.

The second subparagraph also applies where the applicant fails to submit a reply to a counterclaim.

If a party, duly convened in accordance with Article III.12(1), does not appear at a hearing

and does not demonstrate sufficient cause for its failure to do so, the arbitral tribunal may continue

the arbitration.

If a party, duly invited by the arbitral tribunal to produce further evidence, fails to do so

within the time limits set without showing sufficient cause for its failure to do so, the arbitral

tribunal may rule on the basis of the evidence it has available.

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ARTICLE III.14

Closure of the procedure

Where it is demonstrated that the parties have reasonably had the possibility of presenting

their arguments, the arbitral tribunal may declare the closure of the proceedings.

The arbitral tribunal may, if it considers it necessary because of exceptional circumstances,

decide on its own initiative or at the request of a party to reopen the proceedings at any time before

it has taken its decision.

CHAPTER IV

DECISION

ARTICLE IV.1

Decisions

The arbitral tribunal shall strive to take its decisions by consensus. If, however, it proves impossible

to take a decision by consensus, the arbitral tribunal's decision shall be taken by a majority of the

arbitrators.

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ARTICLE IV.2

Form and effect of the decision of the arbitral tribunal

The arbitral tribunal may take separate decisions on different questions at different times.

All decisions shall be issued in writing and shall state the reasons on which they are based.

They shall be final and binding on the parties.

The decision of the arbitral tribunal shall be signed by the arbitrators, shall contain the date on

which it was taken and state the place of arbitration. A copy of the decision signed by the arbitrators

shall be communicated to the parties by the International Bureau.

The International Bureau shall make the decision of the arbitral tribunal public.

When making the decision of the arbitral tribunal public, the International Bureau shall respect the

relevant rules on the protection of personal data, professional secrecy and the legitimate interests of

confidentiality.

The rules referred to in the second subparagraph shall be identical for all bilateral agreements in the

fields of the internal market in which Switzerland participates as well as for the Agreement on

health, the Agreement on trade in agricultural products and the Agreement on Switzerland's regular

financial contribution. The Joint Committee shall adopt and update those rules by a decision for the

purposes of the Agreement.

The parties shall comply with all decisions of the arbitral tribunal without delay.

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In the cases referred to in Article 10(2) of the Protocol, having obtained the opinion of the

parties, the arbitral tribunal shall set a reasonable time limit in the decision on the substance of the

case to comply with its decision in accordance with Article 10(5) of the Protocol taking account of

the parties' internal procedures.

ARTICLE IV.3

Applicable law, rules of interpretation, mediator

The applicable law consists of the Agreement, the legal acts of the Union to which reference

is made therein, as well as any other rule of international law relevant to the application of those

instruments.

The arbitral tribunal shall decide in accordance with the rules of interpretation referred to in

Article 7 of the Protocol.

Prior decisions taken by a dispute settlement body with regard to the proportionality of

compensatory measures under another bilateral agreement among those referred to in Article 11(1)

of the Protocol shall be binding upon the arbitral tribunal.

The arbitral tribunal shall not be permitted to decide as mediator or

ex aequo et bono.

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ARTICLE IV.4

Mutually agreed solution or other reasons for closure of the proceedings

The parties may, at any time, mutually agree a solution to their dispute. They shall jointly

communicate any such solution to the arbitral tribunal. If the solution requires approval pursuant to

the relevant domestic procedures of either party, the notification shall refer to that requirement, and

the arbitration procedure shall be suspended. If such approval is not required, or upon notification

of the completion of any such domestic procedures, the arbitration procedure shall be closed.

If, in the course of proceedings, the applicant informs the arbitral tribunal in writing that it

does not wish to further pursue the proceedings, and if, at the date on which that communication is

received by the arbitral tribunal, the defendant has not yet taken any step in the proceedings, the

arbitral tribunal shall issue an order officially recording the closure of the proceedings. The arbitral

tribunal shall decide on the costs, which shall be borne by the applicant, if this appears justified by

the conduct of that party.

If, before the decision of the arbitral tribunal is taken, the arbitral tribunal concludes that the

continuation of the proceedings has become pointless or impossible for any reason other than those

referred to in paragraphs 1 and 2, the arbitral tribunal shall inform the parties of its intention to issue

an order closing the proceedings.

The first subparagraph does not apply where there are outstanding questions on which it may be

necessary to rule and if the arbitral tribunal judges it appropriate to do so.

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The arbitral tribunal shall communicate to the parties a copy of the order closing the

arbitration proceedings or of the decision taken by agreement between the parties, signed by the

arbitrators. Article IV.2(2) to (5) shall apply to arbitration decisions taken by agreement between

the parties.

ARTICLE IV.5

Correction of the decision of the arbitral tribunal

Within 30 days of receiving the decision of the arbitral tribunal, a party may, by giving notice

to the other party and to the arbitral tribunal through the International Bureau, ask the arbitral

tribunal to correct in the text of the decision of the arbitral tribunal any errors in computation, any

clerical or typographical errors, or any errors or omissions of a similar nature. If it considers the

request to be justified, the arbitral tribunal shall make the correction within 45 days of receiving the

request. The request shall not have a suspensive effect on the time limit provided for in

Article IV.2(6).

The arbitral tribunal may, within 30 days of communicating its decision, make the corrections

referred to in paragraph 1 on its own initiative.

The corrections referred to in paragraph 1 of this Article shall be done in writing and form an

integral part of the decision. Article IV.2(2) to (5) shall apply.

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ARTICLE IV.6

Arbitrators' fees

The fees referred to in Article IV.7 shall be reasonable, taking account of the complexity of

the case, the time spent on it by the arbitrators and all other relevant circumstances.

A list of daily compensation and maximum and minimum hours, which shall be common to

all bilateral agreements in the fields related to the internal market in which Switzerland participates

as well as the Agreement on health, the Agreement on trade in agricultural products and the

Agreement on Switzerland's regular financial contribution, shall be established and updated when

necessary. The Joint Committee shall adopt and update that list by a decision for the purposes of the

Agreement.

ARTICLE IV.7

Costs

Each party shall bear its own costs and half of the costs of the arbitral tribunal.

The arbitral tribunal shall set its costs in its decision on the substance of the case. Those costs

shall include only:

(a)

the arbitrators' fees, to be stated separately for each arbitrator and to be set by the arbitral

tribunal itself in accordance with Article IV.6;

(b)

the travel and other expenses incurred by the arbitrators; and

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(c)

the fees and expenses of the International Bureau.

The costs referred to in paragraph 2 shall be reasonable, taking account of the amount in

dispute, the complexity of the dispute, the time that the arbitrators and any experts appointed by the

arbitral tribunal have spent on it and any other relevant circumstances.

ARTICLE IV.8

Deposit of costs

At the start of the arbitration, the International Bureau may ask the parties to deposit an equal

amount as an advance for the costs referred to in Article IV.7(2).

During the arbitration proceedings, the International Bureau may request from the parties

deposits supplementary to those referred to in paragraph 1.

All amounts deposited by the parties in application of this Article shall be paid to the

International Bureau and paid out by it to cover the costs actually incurred, including, in particular,

the fees paid to the arbitrators and to the International Bureau.

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CHAPTER V

FINAL PROVISIONS

ARTICLE V.1

Amendments

The Joint Committee may adopt, by decision, amendments to this Appendix.

________________

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STATE AID PROTOCOL

TO THE AGREEMENT BETWEEN

THE EUROPEAN COMMUNITY

AND THE SWISS CONFEDERATION

ON AIR TRANSPORT

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THE EUROPEAN UNION, hereinafter referred to as the "Union",

of the one part, and

THE SWISS CONFEDERATION, hereinafter referred to as "Switzerland",

of the other part,

hereinafter individually referred to as a "Contracting Party" and jointly referred to as the

"Contracting Parties",

AIMING to strengthen and deepen the participation of Switzerland and its undertakings in the

internal market of the Union, in which Switzerland participates on the basis of the Agreement

between the European Community and the Swiss Confederation on air transport, done in

Luxembourg on 21 June 1999 (hereinafter the "Agreement");

RECOGNISING that the proper functioning and homogeneity in the fields of the internal market in

which Switzerland participates requires a level playing field for competition between Swiss and

Union undertakings based on substantive and procedural rules equivalent to those that apply in the

internal market as regards State aid;

REAFFIRMING the autonomy of the Contracting Parties and the role and competences of their

institutions and, as far as Switzerland is concerned, respect for the principles deriving from its

constitutional order, including direct democracy, the separation of powers, and federalism,

HAVE AGREED AS FOLLOWS:

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ARTICLE 1

Objectives

The objectives of this Protocol are to ensure a level playing field for competition between Union

and Swiss undertakings in the fields of the internal market falling under the scope of the Agreement

and to guarantee the proper functioning of the internal market by laying down substantive and

procedural rules on State aid.

ARTICLE 2

Relation to the Agreement

This Protocol and its Annexes shall form an integral part of the Agreement. They shall alter

neither the scope nor the objectives of the Agreement.

Articles 13 and 14 of the Agreement are repealed.

Article 12(2) of the Agreement shall not apply for the purposes of this Protocol.

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ARTICLE 3

State aid

Save as otherwise provided in the Agreement, any aid granted by Switzerland or by a Member

State of the Union, or through State resources in any form whatsoever, which distorts or threatens to

distort competition by favouring certain undertakings or the production of certain goods shall, in so

far as it affects trade between the Contracting Parties within the scope of the Agreement, be

incompatible with the proper functioning of the internal market.

The following shall be compatible with the proper functioning of the internal market:

(a)

aid having a social character, granted to individual consumers, provided that such aid is

granted without discrimination related to the origin of the products concerned;

(b)

aid to make good the damage caused by natural disasters or exceptional occurrences;

(c)

the measures set out in Section A of Annex I.

The following may be considered to be compatible with the proper functioning of the internal

market:

(a)

aid to promote the economic development of areas where the standard of living is abnormally

low or where there is serious underemployment;

(b)

aid to promote the execution of an important project of common European interest, or of

common interest to the Contracting Parties, or to remedy a serious disturbance in the economy

of a Member State of the Union or Switzerland;

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(c)

aid to facilitate the development of certain economic activities or of certain economic areas,

where such aid does not adversely affect trading conditions to an extent contrary to the

interest of the Contracting Parties;

(d)

aid to promote culture and heritage conservation where such aid does not affect trading

conditions and competition to an extent contrary to the interest of the Contracting Parties;

(e)

the categories of aid set out in Section B of Annex I.

Aid granted in accordance with Section C of Annex I shall be presumed compatible with the

proper functioning of the internal market and shall be exempted from notification requirements

under Article 4.

Aid granted to undertakings entrusted with the operation of services of general economic

interest or having the character of a revenue-producing monopoly shall be subject to the rules

contained in this Protocol, in so far as the application of these rules does not obstruct the

performance, in law or in fact, of the particular tasks assigned to them. The development of trade

must not be affected to such an extent as would be contrary to the interest of the Contracting

Parties.

This Protocol shall not apply to aid where the amount granted to a single undertaking for

activities within the scope of the Agreement constitutes

de minimis

aid as set out in Section D of

Annex I.

The Joint Committee may decide to update Sections A and B of Annex I by specifying

measures that shall be compatible, or categories of aid that may be considered to be compatible,

with the proper functioning of the internal market.

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ARTICLE 4

Surveillance

For the purposes of Article 1, the Union, in accordance with the distribution of competences

between the Union and its Member States, and Switzerland, in accordance with its constitutional

order of competences, shall supervise the application of State aid rules in their respective territory in

accordance with this Protocol.

For the purposes of the implementation of this Protocol, the Union shall maintain a State aid

surveillance system in accordance with Articles 93, 106, 107 and 108 of the Treaty on the

Functioning of the European Union as supplemented by Union legal acts in the field of State aid

and Union legal acts concerning State aid in the air transport sector listed in point 1 of Section A of

Annex II.

For the purposes of the implementation of this Protocol, Switzerland shall, within five years

of the entry into force of this Protocol, establish and maintain a State aid surveillance system that

ensures at all times a level of surveillance and enforcement equivalent to that applied in the Union,

as set out in paragraph 2, including the following:

(a)

an independent surveillance authority; and

(b)

procedures to ensure the review by the surveillance authority of the compatibility of aid with

the proper functioning of the internal market, including the following:

(i)

prior notification to the surveillance authority of planned aid;

(ii)

assessment by the surveillance authority of notified aid and its competence to review

non-notified aid;

(iii) challenge before the competent judicial authority, with suspensive effect from the

moment the act is challengeable, of aid that the surveillance authority considers to be

incompatible with the proper functioning of the internal market; and

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(iv) recovery, including interest, of aid granted and found incompatible with the proper

functioning of the internal market.

In accordance with Switzerland's constitutional order of competences, paragraph 3,

point (b), (iii) and (iv), does not apply to acts of the Swiss Federal Assembly or of the Swiss Federal

Council.

Where the Swiss surveillance authority cannot challenge the aid of the Swiss Federal

Assembly or of the Swiss Federal Council before a judicial authority due to its limitations of

competence under the Swiss constitutional order, it shall challenge the application by other

authorities of that aid in all specific cases. If the judicial authority finds that that aid is incompatible

with the proper functioning of the internal market, the competent Swiss judicial and administrative

authorities shall take that finding into account when assessing whether to apply that aid in the case

before them.

ARTICLE 5

Existing aid

aid.

Article 4(3), point (b) shall not apply to existing aid, including aid schemes and individual

For the purposes of this Protocol, existing aid shall include aid granted before the entry into

force of this Protocol and within a period of five years thereof.

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Within twelve months of the date of establishment of the surveillance system pursuant to

Article 4(3), the surveillance authority shall gain an overview of existing aid schemes within the

scope of the Agreement that are still in force and make a

prima facie

assessment of those schemes

against the criteria set out in Article 3.

All existing aid schemes in Switzerland shall be subject to constant review by the surveillance

authority as to their compatibility with the proper functioning of the internal market pursuant to

paragraphs 5, 6 and 7.

If the surveillance authority considers that an existing aid scheme is not, or is no longer,

compatible with the proper functioning of the internal market, it shall inform the competent

authorities about the obligation to comply with this Protocol. If such an aid scheme is amended or

terminated, the competent authorities shall inform the surveillance authority.

If the surveillance authority considers the measures taken by the competent authorities to be

appropriate to ensure the compatibility of the aid scheme with the proper functioning of the internal

market, it shall publish those measures.

Notwithstanding paragraph 1 of this Article, if the surveillance authority considers that the aid

scheme remains incompatible with the proper functioning of the internal market, the surveillance

authority shall publish its assessment and challenge the application of that aid scheme in all specific

cases, in accordance with Article 4(3), point (b)(iii), and Article 4(5).

For the purposes of this Protocol, if an existing aid scheme is amended in such a way as to

affect the compatibility of the aid with the proper functioning of the internal market, the aid shall be

considered to be new aid and shall therefore be subject to Article 4(3), point (b).

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ARTICLE 6

Transparency

With regard to aid granted in their territory, the Contracting Parties shall ensure transparency.

For the Union, transparency shall be based on substantive and procedural rules that apply in the

Union on State aid within the scope of the Agreement. For Switzerland, transparency shall be based

on substantive and procedural rules equivalent to those that apply in the Union on State aid within

the scope of the Agreement.

Each Contracting Party shall, in respect of its territory and unless otherwise provided in this

Protocol, ensure the publication of:

(a)

aid granted;

(b)

opinions or decisions of its surveillance authorities;

(c)

rulings of its competent judicial authorities on the compatibility of aid with the proper

functioning of the internal market; and

(d)

guidelines and communications applied by its surveillance authorities.

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ARTICLE 7

Terms of cooperation

The Contracting Parties shall cooperate and exchange information on State aid, subject to

their respective laws and available resources.

For the purposes of the uniform implementation, application and interpretation of the

substantive rules on State aid and of harmonious development thereof:

(a)

the Contracting Parties shall cooperate and consult each other with regard to the relevant

guidelines and communications referred to in Section B of Annex II; and

(b)

the surveillance authorities of the Contracting Parties shall conclude arrangements for a

regular exchange of information, including on the implications for the application of rules on

existing aid.

ARTICLE 8

Consultations

At the request of a Contracting Party, the Contracting Parties shall consult each other, within

the Joint Committee, on matters relating to the implementation of this Protocol.

In the event of developments concerning important interests of a Contracting Party that may

affect the operation of this Protocol, the Joint Committee shall, at the request of a Contracting Party,

meet at an appropriately high level within 30 days of that request in order to discuss the matter.

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ARTICLE 9

Integration of legal acts

Notwithstanding Article 5 of the Institutional Protocol to the Agreement between the

European Community and the Swiss Confederation on Air Transport (hereinafter referred to as

the "Institutional Protocol"), for the purposes of Article 3(4) and (6) and Article 4(2) and (3), and in

order to guarantee legal certainty and the homogeneity of the law in the fields of the internal market

in which Switzerland participates by virtue of the Agreement, Switzerland and the Union shall

ensure that legal acts of the Union adopted in the fields covered by Sections C and D of Annex I as

well as Section A of Annex II are integrated into those Annexes as quickly as possible after their

adoption.

When it adopts a legal act in the field covered by Sections C and D of Annex I or Section A of

Annex II, the Union shall inform Switzerland thereof as quickly as possible through the Joint

Committee. At the request of either of the Contracting Parties, the Joint Committee shall conduct an

exchange of views on the subject.

The Joint Committee shall act in accordance with paragraph 1 by adopting a decision as

quickly as possible to amend Sections C and D of Annex I as well as Section A of Annex II,

including the necessary adaptations.

Subject to Article 6 of the Institutional Protocol, decisions of the Joint Committee pursuant to

paragraph 3 of this Article shall enter into force immediately, but under no circumstances before the

date on which the corresponding legal act of the Union becomes applicable in the Union.

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ARTICLE 10

Entry into force

This Protocol shall be ratified or approved by the Contracting Parties in accordance with their

own procedures. The Contracting Parties shall notify each other of the completion of the internal

procedures necessary to the entry into force of this Protocol.

This Protocol shall enter into force on the first day of the second month following the last

notification regarding the following instruments:

(a)

Institutional Protocol to the Agreement between the European Community and its

Member States, of the one part, and the Swiss Confederation, of the other, on the free

movement of persons;

(b)

Amending Protocol to the Agreement between the European Community and its

Member States, of the one part, and the Swiss Confederation, of the other, on the free

movement of persons;

(c)

Institutional Protocol to the Agreement between the European Community and

the Swiss Confederation on air transport;

(d)

Amending Protocol to the Agreement between the European Community and

the Swiss Confederation on air transport;

(e)

Institutional Protocol to the Agreement between the European Community and

the Swiss Confederation on the carriage of goods and passengers by rail and road;

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(f)

Amending Protocol to the Agreement between the European Community and

the Swiss Confederation on the carriage of goods and passengers by rail and road;

(g)

State Aid Protocol to the Agreement between the European Community and

the Swiss Confederation on the carriage of goods and passengers by rail and road;

(h)

Amending Protocol to the Agreement between the European Community and

the Swiss Confederation on trade in agricultural products;

(i)

Institutional Protocol to the Agreement between the European Community and

the Swiss Confederation on mutual recognition in relation to conformity assessment;

(j)

Amending Protocol to the Agreement between the European Community and

the Swiss Confederation on mutual recognition in relation to conformity assessment;

(k)

Agreement between the European Union and the Swiss Confederation on Switzerland's

regular financial contribution towards reducing economic and social disparities in the

European Union;

(l)

Agreement between the European Union and the European Atomic Energy Community,

of the one part, and the Swiss Confederation, of the other part, on the participation of

the Swiss Confederation in Union programmes;

(m) Agreement between the European Union and the Swiss Confederation on the terms and

conditions for the participation of the Swiss Confederation in the European Union Agency for

the Space Programme.

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ARTICLE 11

Amendment and termination

This Protocol may be amended at any time by mutual agreement of the Contracting Parties.

Where the Agreement is terminated in accordance with Article 36(3) of the Agreement, this

Protocol shall cease to be in force on the date referred to in Article 36(4) of the Agreement.

Where the Agreement ceases to be in force, the rights and obligations that individuals and

undertakings have already acquired by virtue of the Agreement before the date of the cessation of

the Agreement shall be preserved. The Contracting Parties shall settle by mutual agreement what

action is to be taken in respect of rights in the process of being acquired.

Done at […], on […], in duplicate in the Bulgarian, Croatian, Czech, Danish, Dutch, English,

Estonian, Finnish, French, German, Greek, Hungarian, Irish, Italian, Latvian, Lithuanian, Maltese,

Polish, Portuguese, Romanian, Slovak, Slovenian, Spanish and Swedish languages, each of these

texts being equally authentic.

IN WITNESS WHEREOF, the undersigned, duly authorised thereto, have signed this Protocol.

(Signature Block, to the effect of, in all 24 EU languages: “For the European Union” and “For the

Swiss Confederation”)

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ANNEX I

EXEMPTIONS AND CLARIFICATIONS

SECTION A

MEASURES COMPATIBLE WITH THE PROPER FUNCTIONING

OF THE INTERNAL MARKET, AS REFERRED TO IN ARTICLE 3(2), POINT (c)

The following measures shall be compatible with the proper functioning of the internal market and

shall not be subject to Article 4(3), point (b):

[…].

SECTION B

CATEGORIES OF AID THAT MAY BE CONSIDERED TO BE COMPATIBLE

WITH THE PROPER FUNCTIONING OF THE INTERNAL MARKET,

AS REFERRED TO IN ARTICLE 3(3), POINT (e)

The following categories of aid may be considered to be compatible with the proper functioning of

the internal market:

[…].

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SECTION C

BLOCK EXEMPTIONS, AS REFERRED TO IN ARTICLE 3(4)

Aid shall be presumed compatible with the proper functioning of the internal market and shall be

exempted from the notification requirements under Article 4 if it is granted in accordance with the

substantive conditions set out in the following provisions:

(1)

Chapters I and III of Commission Regulation (EU) No 651/2014 of 17 June 2014 declaring

certain categories of aid compatible with the internal market in application of Articles 107

and 108 of the Treaty (OJ L 187, 26.6.2014, p. 1), as last amended by Commission Regulation

(EU) 2023/1315 of 23 June 2023 (OJ L 167, 30.6.2023, p. 1);

(2)

Articles 1 to 6 of Commission Decision of 20 December 2011 on the application of

Article 106(2) of the Treaty on the Functioning of the European Union to State aid in the form

of public service compensation granted to certain undertakings entrusted with the operation of

services of general economic interest (OJ L 7, 11.1.2012, p. 3).

SECTION D

DE MINIMIS

AID, AS REFERRED TO IN ARTICLE 3(6)

"De

minimis

aid" shall have the meaning that it has in Commission Regulation (EU) 2023/2831

of 13 December 2023 on the application of Articles 107 and 108 of the Treaty on the Functioning of

the European Union to

de minimis

aid (OJ L, 2023/2831, 15.12.2023).

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For aid granted to undertakings entrusted with the operation of services of general economic

interest, "de

minimis

aid" shall have the meaning that it has in Commission Regulation

(EU) 2023/2832 of 12 December 2023 on the application of Articles 107 and 108 of the Treaty on

the Functioning of the European Union to

de minimis

aid granted to undertakings providing services

of general economic interest (OJ L, 2023/2832, 15.12.2023).

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ANNEX II

GENERAL AND SECTORAL ACTS APPLICABLE IN THE EUROPEAN UNION

AS REFERRED TO IN ARTICLE 4(2)

SECTION A

GENERAL AND SECTORAL ACTS

(1)

For the purposes of this Protocol and pursuant to Article 4(2), the following acts shall be

applied by the Union:

(a)

Council Regulation (EU) 2015/1589 of 13 July 2015 laying down detailed rules for the

application of Article 108 of the Treaty on the Functioning of the European Union

(OJ L 248, 24.9.2015, p. 9);

(b)

Commission Regulation (EC) No 794/2004 of 21 April 2004 implementing Council

Regulation (EU) 2015/1589 (OJ L 140, 30.4.2004, p. 1), as last amended by

Commission Regulation (EU) 2016/2105 of 1 December 2016 (OJ L 327, 2.12.2016,

p. 19);

(c)

Commission Regulation (EU) No 651/2014 of 17 June 2014 declaring certain categories

of aid compatible with the internal market in application of Articles 107 and 108 of the

Treaty (OJ L 187, 26.6.2014, p. 1), as last amended by Commission Regulation

(EU) 2023/1315 of 23 June 2023 (OJ L 167, 30.6.2023, p. 1);

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(d)

Commission Decision of 20 December 2011 on the application of Article 106(2) of the

Treaty on the Functioning of the European Union to State aid in the form of public

service compensation granted to certain undertakings entrusted with the operation of

services of general economic interest (OJ L 7, 11.1.2012, p. 3);

(e)

Commission Regulation (EU) 2023/2831 of 13 December 2023 on the application of

Articles 107 and 108 of the Treaty on the Functioning of the European Union to

de minimis

aid (OJ L, 2023/2831, 15.12.2023);

(f)

Commission Regulation (EU) 2023/2832 of 13 December 2023 on the application of

Articles 107 and 108 of the Treaty on the Functioning of the European Union to

de minimis

aid granted to undertakings providing services of general economic interest

(OJ L, 2023/2832, 15.12.2023);

(g)

Regulation (EC) No 1008/2008 of the European Parliament and of the Council

of 24 September 2008 on common rules for the operation of air services in the

Community (OJ L 293, 31.10.2008, p. 3).

(2)

For the purposes of this Protocol and pursuant to Article 4(3), Switzerland shall establish and

maintain a State aid surveillance system that ensures at all times a level of surveillance and

enforcement equivalent to that applied by the Union, as set out in Article 4(2) and point (1) of

this Section.

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SECTION B

GUIDELINES, COMMUNICATIONS AND DECISIONAL PRACTICE

OF THE EUROPEAN COMMISSION

(1)

For the purposes of this Protocol and pursuant to Article 4(3), the Swiss surveillance authority

and the competent judicial authorities in Switzerland shall take due account of, and follow to

the extent possible, the relevant guidelines and communications binding on the European

Commission, as well as its decisional practice, in order to ensure a level of surveillance and

enforcement equivalent to that of the Union.

(2)

The European Commission shall notify to the Joint Committee, and publish, the guidelines

and communications it considers relevant under the Agreement.

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