Mutual Recognition of Companies as an Agency Problem

Justin Borg Barthet* (Corresponding Author)

*Corresponding author for this work

Research output: Chapter in Book/Report/Conference proceedingChapter

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This chapter theorises mutual recognition and the attendant redistribution of prescriptive sovereignty as agency problems between the Member States. It takes corporate mobility as an illustrative example of mutual recognition as it operates in politically contentious aspects of internal market regulation. Worryingly, there are few mechanisms to align the interests of principal and agent. Quite the contrary. In a market for laws, a regulatory agent may be motivated to seek to maximise self-utility by undercutting the principal with a view to rendering its legal product more attractive to consumers of that product. The situation is exacerbated as a consequence of a lack of robust ex post and ex ante mechanisms which would enable the principal to limit the effects of the agent’s behaviour. In political terms, mutual recognition of companies raises two distinct questions concerning corporate decision-making. The first requires an inquiry into the nature of companies; the other related question concerns the distribution of power in the market as between European demoi. It is argued in conclusion that, while agency analysis provides lawmakers with the means to identify the extent of the democratic disconnect in the Union’s present regulatory landscape, the resolution of that disconnect requires sustained and systematic engagement with corporate law and theory with a view to replacing wholesale market-driven judicial reordering with deliberative adjustment of the choice of law and substantive rules governing European corporations.
Original languageEnglish
Title of host publicationResearch Handbook on the Politics of EU Law
EditorsPaul James Cardwell, Marie-Pierre Granger
Place of PublicationCheltenham
PublisherEdward Elgar Publishing Ltd.
Number of pages20
ISBN (Electronic)9781788971287
ISBN (Print)978 1 78897 127 0
Publication statusPublished - 24 Jul 2020

Publication series

NameResearch Handbooks in Law and Politics
PublisherEdward Elgar publishing


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