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((Short description|EU inter-member trade rule))((Use American English|date=January 2019))((Use mdy dates|date=January 2019))((for|a discussion of labelling and marketing products according to their place of manufacture|Country of origin))
((refimprove|date=November 2017))
'''Home state regulation''' is a principle in the [[law of the European Union]] for resolving conflict of laws between Member States when dealing with cross-border selling or marketing of goods and services. 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. It is also called '''home country control''',  '''country of origin rule''', or '''country of origin principle'''. It is one possible rule of EU law, specifically of [[European Single Market]] law, that determines which laws will apply to [[good (economics)|goods]] or [[service (economics)|service]]s that cross the border of Member States.

The opposing principle is '''host state regulation''' or the '''country of reception principle'''. In a [[European Union directive|directive]], or [[European Union regulation|regulation]], where this principle applies, if a firm based in country A is selling into customers living in country B, they are regulated according to the laws of country B. Host state regulation is sometimes seen as hindering the single market, as firms need to be aware of 28 sets of national law. However, it is also argued that it gives better protection to consumers, who are unlikely to be aware of their rights under the laws of other EU member states.

==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. ((Fact|date=February 2007))

Home state regulation is often held to help the single market, as firms only need to be aware of their own country's laws, rather than 27 sets of national law.

==Application ==
EU law requires that the goods or services produced legally in one Member States should be allowed unhindered access to markets of other Member States. The latter are not allowed to apply their laws except in specific circumstances. When they are allowed to do so, this will be under a specifically developed test called '''General Good Test'''.((clarify|date=November 2017)) 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.

The provision underlying the [[European Single Market|four freedoms]] (and therefore also the Home Country Control) is the prohibition of discrimination based on nationality: Article 12 (ex 6) of the [[EC Treaty]]. Over the course of years, this policy evolved to include prohibition on some behaviors that were non-discriminatory, based on the fact that their implementation created obstacles to trade between states. In a [[European Union directive|directive]], or [[European Union regulation|regulation]], where home state regulation applies, if a firm based in country A is selling into customers living in country B, they are regulated according to the laws of country A. In turn, country B has to accept that the laws of country A are sufficient under the principle of mutual recognition. 

In the sphere of goods, what these “non-discriminatory” obstacles were and how they were to be removed was clarified in [[Rewe-Zentral AG v Bundesmonopolverwaltung für Branntwein|''Cassis'']] (C-120/78, [1979] ECR 649) and ''[[Keck and Mithouard|Keck]]'' (Joined Cases C-267 and 268/91, 1993 [ECR] I-6097) cases of the Court of Justice. In services, this was done in ''Säger'' (C-76/90, [1991] ECR I-4221), and in establishment in ''[[Gebhard v Consiglio dell'Ordine degli Avvocati e Procuratori di Milano|Gebhard]]'' (C-55/94, [1995] ECR I-4165). The power of these cases lies in making the products and services legally made in one state (Home State) available in other state (Host State), where the latter is only exceptionally able to apply its law to the said good or service. In other words, once a good or a service gains a “passport” in its Home State, it can be freely exported into any other Member State. 

===New Approach as the basis for home country control===
The New Approach((clarify|date=November 2017)) consists of three important elements: 
* minimum harmonization
* mutual recognition of rules
* home country control

and was based on prohibition of non-discriminatory obstacles to trade. 

The first part, '''minimum harmonization''', aims to unify the absolute minimum of necessary standards. This would, in turn enable '''mutual recognition''' of laws, where the bulk of legal control takes place in the country of origin (Home State) and the country of destination acknowledges the former's regulatory power. This was considered practical, as control would be exercised at first port of call and, since the minimum of mutual standards would exist, there would be no danger of reducing the stringency to the standards of the least developed state. 

For example, a [[bank]]ing service is part of wider efforts to harmonize [[financial services]]. A French bank is able to open a branch in the [[United Kingdom]] and all prudential supervision is conducted in [[France]]. The ''consolidated directive on the business of credit institutions'' from 2000<ref>((Cite web|url=https://eur-lex.europa.eu/legal-content/EN/ALL/?uri=CELEX%3A32000L0012|title=EUR-Lex - 32000L0012 - EN - EUR-Lex|website=eur-lex.europa.eu|language=en|access-date=2019-01-01))</ref> represents the minimum of ''harmonized'' EC law. Britain (Host State) is obliged to recognize the fact that France only, as the country of origin (Home State) is entitled to conduct prudential supervision. Thus, there is only one control, in the Home State, and dual-burden of control in both states, which makes the service less competitive, disappears. The only option for Britain to apply its law to this banking service is to justify it under the General Good test.

===Examples of application===
Directive 2000/31/EC,<ref>((cite web|url=http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:32000L0031:EN:HTML|title=EUR-Lex - 32000L0031 - EN|website=eur-lex.europa.eu))</ref> 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<ref>((cite web|url=http://news.bbc.co.uk/1/hi/world/europe/4698524.stm|title=Q&A: Services Directive|date=15 November 2006|publisher=|via=news.bbc.co.uk))</ref> in negotiation of the proposed [[Directive on services in the internal market|Services Directive]].

==See also==
*[[CE marking]]
*[[Country of origin]]
*[[European Union law]]
*[[Harmonisation of law]]
*[[Last substantial transformation]]
*[[Mutual recognition agreement]]
*[[Rules of origin]]

==References==
((reflist))

===General===
* ''The Law of the Single European Market: Unpacking the Premises''. [[Catherine Barnard]], Joanne Scott (editors). Hart Publishing, 2002. ((ISBN|9781841132716)).

((DEFAULTSORT:Country of origin principle))

[[Category:European Union law]]
[[Category:International trade law]]
[[Category:Country of origin]]

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