The Country-of-Origin Principle and Balancing Jurisdiction between Home Member States and Host Member States

Abstract

The country-of-origin principle is frequently used as the foundation for secondary legislation aiming to realise the internal market. Even if it does promote free movement, the principle also has the consequence that host Member States to some extent lose the ability to regulate and supervise activities occurring in their territories. In some situations, such a loss of regulatory and supervisory sovereignty may seem particularly unacceptable. When looking at how the country-of-origin principle is implemented, it becomes clear that there are different mechanisms in place to ensure that the host and/or the home Member State may prevent some of these unacceptable effects. Consequently, through the interaction of the legislator and the Court of Justice of the European Union the host Member States are not without protection. The country-of-origin principle is used in many different areas of secondary law, but nevertheless, the solutions to the problem of balancing jurisdiction between the home Member State and the host Member State are more or less the same, and an overall model seems to be developing. To describe this model, the article examines how the interests of the host Member States are taken into account when issuing an authorisation, licence etc. Next, it examines the extent to which the host Member State has the duty to recognise the authorisation, licence etc., and the extent to which the host Member State may still regulate the activities of the holder of an authorisation, licence etc. These aspects are evaluated in the light of different areas applying the country-of-origin principle, and it is contrasting the solutions found in these areas with the solutions found in company law, where a very different version of the principle has emerged.