Ruling on Swiss role in EU electricity system skirts existential issues for Alpine nation

(CN) — How far EU rules can stretch beyond the bloc’s borders became a live issue Wednesday, after EU judges tossed a decision that sidelined Switzerland’s grid operator from EU power-balancing platforms, calling out the process but stopping short of the policy.

The contested move came in a December 2020 letter from the bloc’s executive arm, the European Commission, instructing EU grid operators to exclude Swissgrid from the platforms, which help stabilize electricity networks by matching supply and demand across borders. Those platforms are a core component of the EU’s internal power market, designed to respond instantly to sudden disruptions and prevent outages from spreading.

What sank the measure was not what Brussels decided but how it did so. Judges at the General Court of the European Union said when an EU move carries real legal consequences, it cannot be made by a single official acting alone. It must come from the body empowered to speak for the institution as a whole.

The refusal to let Switzerland’s grid operator into the platforms, the court found, was not informal guidance or routine correspondence but a binding decision that altered legal positions. It therefore had to meet EU law’s procedural safeguards.

That requirement mattered because the decision involved judgment calls, including risks to electricity security and cross-border flows. Under EU law, the commission’s full top leadership, not a single official, must sign off on such choices.

That safeguard was missing. The refusal was signed by a director within the commission’s energy department, who lacked the authority to make such a decision.

Judges made clear this was no minor technicality but a core rule designed to ensure legal certainty and protect those affected by EU action.

“The decision contained in the contested letter is vitiated by lack of competence and must, on that ground, be annulled,” the court concluded.

That procedural emphasis was decisive, according to Graham Butler, a professor of EU and constitutional law at Linnaeus University.

“This case was lost by the commission purely on a procedural point of EU administrative law,” he said.

Because of that flaw, Butler said, the judges never reached the underlying dispute. The court annulled the letter on competence grounds alone, leaving the substance of Swissgrid’s claims legally unresolved.

Switzerland, the single market, and the price of access

That narrow focus feeds into a much bigger question that has hovered over Europe for years: How far Switzerland is expected to follow EU rules while staying outside the bloc’s political and legal system.

Switzerland has long chosen not to become an EU member. Instead, it relies on a patchwork of bilateral agreements that open access to parts of the EU’s single market, covering everything from the free movement of people to transport and energy cooperation.

The arrangement brings clear economic upsides but is not friction-free. Swiss authorities are often required to apply EU rules they have little role in shaping, while disputes over those rules tend to be settled within EU institutions rather than Swiss courts.

That balancing act became more strained in 2021, when Switzerland walked away from talks on a sweeping institutional framework agreement. The plan was meant to give order to the bilateral relationship, including how EU law would be updated in Switzerland and how to resolve disagreements over its interpretation.

With that framework left on the table, Brussels has since hardened its stance, warning that access to the single market without shared institutional safeguards risks weakening the consistency and authority of EU law.

Electricity sits squarely in that gray zone. Swissgrid, Switzerland’s sole electricity transmission system operator, has long sought to take part in EU power-balancing platforms.

On the ground, Switzerland is already tightly plugged into Europe’s power system. Its grid sits at the crossroads of north–south electricity flows, and Swiss and EU operators jointly helped build the Trans European Replacement Reserves Exchange, or TERRE, to handle cross-border imbalances when supply and demand suddenly shift. Both the EU-wide network of transmission operators and the bloc’s energy regulator supported Swiss participation, underscoring just how integrated Switzerland has become in practice.

Where law ends and politics begin

Legally and politically, however, the picture is more complicated. Opening EU-run platforms to a non-member state brings up thorny questions about oversight, accountability and ultimately who gets the final say on how EU rules are interpreted. For the commission, the Swiss case became a line-drawing exercise.

That approach crystallized in December 2020. Citing the absence of a formal electricity agreement with Switzerland and the lack of any binding commitment to apply EU power-market rules, the commission refused to authorize Swiss participation and instructed EU grid operators to keep Swissgrid out of the platform.

Swissgrid pushed back, arguing the move effectively locked it out of a system critical to regional electricity security. The challenge initially went nowhere, with the General Court throwing it out as inadmissible.

That changed last year, when the Court of Justice stepped in and ruled the commission’s letter could be reviewed precisely because it altered Swissgrid’s legal position, clearing the path for Wednesday’s judgment.

Matthias Goldmann, professor of international law and chair of international law at EBS University of Business and Law, said the ruling sends a clear signal about how EU institutions are expected to act when their decisions carry legal weight. As he put it, “the court does not allow the commission to issue decisions that fly below the radar.”

Measures with legal effects, he said, must go through the full decision-making process, including adoption by the authoritative body. Goldmann added the ruling reaches beyond this case, shaping how the EU conducts its external economic relations and its credibility as a rules-based actor beyond its own borders.

Electricity deal back on the table

The ruling lands as Switzerland’s long-frozen electricity file with the EU is back on the political front burner. After Bern walked away from the broader framework talks in 2021, formal negotiations restarted in March 2024 and produced a draft package by the end of that year, including an electricity deal meant to anchor Swiss access to EU power-market systems.

Supporters in the Swiss government say that kind of formal hook-up is becoming hard to avoid if Switzerland wants to stay fully connected to Europe’s power network. The Swiss People’s Party and other sovereignty hawks counter it would import EU rules and court oversight without Switzerland getting a real say in writing them.

Legal analysts say the court’s ruling should not be read as taking sides in that debate.

Carl Baudenbacher, former president of the EFTA Court — which interprets European Economic Area law for non-EU states including Norway, Iceland and Liechtenstein — warned against treating the ruling as a signal that EU courts would act as neutral referees under a future electricity agreement with Switzerland.

He said the outcome flowed from a straightforward procedural misstep that left the General Court little room to maneuver, rather than any engagement with the deeper institutional questions such an agreement would raise. In his view, the judgment settles none of the harder issues around judicial authority, accountability or legal certainty that would come with fully integrating Switzerland into EU power-market structures, leaving those battles firmly ahead.

The European Commission did not respond to a request for comment. Swissgrid said it is still analyzing the judgment.

For now, the judgment wipes out the commission’s 2020 letter and leaves Brussels free to start over, following its own decision-making rules.

The commission may still appeal on points of law to the EU’s top court within the required deadline. Short of that, it can revisit Swiss participation only through a new decision adopted by the competent authority under the proper procedure.

The commission, as the losing party, was ordered to pay the costs.

Courthouse News reporter Eunseo Hong is based in the Netherlands.