Country of origin principle
The country of origin principle is a principle in the law of the European Union for resolving conflict of laws between Member States. The principle states that, where an action or service is performed in one country but received in another, the applicable law is the law of the country where the action or service is performed. The opposing principle is the country of reception principle. For example, if a sale of goods is made over the Internet from a website in France to a purchaser in Italy, the country of origin principle would be said to apply if French law applied to the transaction, and the country of reception principle if Italian law prevailed.
Directive 2000/31/EC 1, commonly known as the Electronic Commerce Directive, establishes that the country of origin principle shall prevail in European law for most, but not all, Information Society Services. Recital 22 of that Directive states:
- Information society services should be supervised at the source of the activity, in order to ensure an effective protection of public interest objectives; to that end, it is necessary to ensure that the competent authority provides such protection not only for the citizens of its own country but for all Community citizens; in order to improve mutual trust between Member States, it is essential to state clearly this responsibility on the part of the Member State where the services originate; moreover, in order to effectively guarantee freedom to provide services and legal certainty for suppliers and recipients of services, such information society services should in principle be subject to the law of the Member State in which the service provider is established.
The extent to which the country of origin principle should be applied to provision of services generally was a main point of political controversy 2 in negotiation of the proposed Services Directive.
Political objectives
The "country of origin principle" is a rule that is sometimes advanced with the intention of facilitating the free movement of goods or service providers so as to encourage cross-border competition or, possibly, to encourage individuals or companies to test other markets without having to establish in the target market. It is also sometimes intended to free providers of goods and service from the obligation to accommodate multiple regulatory regimes when trading across borders from a single location.
References
[1] Directive 2000/31/EC, the Electronic Commerce Directive.
[2] BBC report describing the Services Directive, the changes made during the legislative process, and the controversy surrounding it.