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Behme, Caspar (2016): The Principle of Mutual Recognition in the European Internal Market With Special Regard to the Cross-Border Mobility of Companies. In: European Company and Financial Law Review, Vol. 13, No. 1: pp. 31-54 [PDF, 1MB]

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Abstract

Several rulings of the ECJ regarding the cross-border mobility of companies, from Daily Mail to Vale and National Grid Indus, have inspired numerous authors from throughout the European Union to discuss these judgments' justification and relevance with regard to international corporate law and its dichotomy between the "incorporation" and the "real seat" theory. This approach fails to understand that the Court deduces a principle of mutual recognition from the European fundamental freedoms which, albeit originally developed for the freedom to move goods, also applies to the freedom of establishment for companies. This principle grants the Member States autonomy in defining qualification standards in their capacity as country of origin, while at the same time obliging them to recognize as functionally equivalent other Member States' qualification standards once they become the host State for a foreign corporation. The fundamental freedoms thus allocate competences in cross-border situations by assigning the country of origin the competence to define and enforce qualification standards and the host State the authority to define and enforce framework conditions. Companies can consequently choose the country of origin within the common market whose qualification standards they wish to fulfil and can then operate throughout the common market under these laws. The article therefore demonstrates how European corporate cross-border mobility is not a question of the interaction of national laws, but part and parcel of the overall European order of fundamental freedoms and the obligations these create.

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