Guillotine clause

A guillotine clause is a contractual stipulation that an adoption of a contract package depends on the adoption of all of the individual treaties or contracts therein. If only one of the treaties is not accepted by an involved party, or it is canceled later, all of the contracts will be deemed not accepted or terminated.

The guillotine clause is used to prevent one party from cherry-picking the treaties of the contract package that they view as favorable, while at the same time it is essential for the other party that the contract package is enforced in its entirety.

An example of the guillotine clause is found in the body of bilateral treaties between the European Union to Switzerland. These treaties give Switzerland access to the Internal market if Switzerland follow its rules. The clause states that, if any of the seven treaties are to be terminated, all of the treaties are automatically terminated. Also, later changes in the underlying EU directives must be accepted by Switzerland. One reason for the creation of this clause is that the more cumbersome decision-making processes of the European Union would make it difficult for the EU to respond to the termination of other contracts, should Switzerland terminate them.

In 2009 Switzerland accepted a change to one of the treaties, the treaty on free movement, extending it to the new EU countries. This was relatively controversial in Switzerland, but the referendum gave a positive result, fearing the guillotine clause. Following the success of the 2014 Swiss referendum to limit EU immigration through quotas, the invocation of guillotine clause has been suggested to terminate all the other agreements signed since 1999. The EU has claimed that the bilateral treaties have given Switzerland more cherry-picking in its relation to the EU than any other country, and shouldn't be allowed more. Switzerland has a deadline in 2017 for a negotiated resolution.

EU also has guillotine clauses in the EEA agreements with Norway (2001), Iceland (2001), and Liechtenstein (2008). These countries must directly accept existing and added EU directives within several fields, relating to trade (except food), and free movement, the Internal market. Refusing such directives would give the EU the right to terminate the entire EEA agreement, so the EEA countries have avoided doing so.

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