Significance of the Prohibition of Discrimination on the Grounds of Nationality

Abstract

In 2009 most Swedes and other Europeans probably are of the opinion that foreigners have a right of establishment and a right to carry on business in their countries on the same terms as themselves. As an achievement of the EU, this is no longer merely opinions but reality. However, we do not have to go far back in time to find a situation which was completely different. If we take Sweden as a case in point, the state of affairs as recently as in the beginning of the 1990s was that freedom of establishment applied only to Swedish legal subjects, in other words Swedes, Swedish companies and other legal entities. The opposite applied, however, to foreign legal subjects, that is to say, natural and legal persons from other countries. Foreigners and foreign companies were also discriminated against in many other ways.

In this context it should be noted that a company is deemed to be a Swedish legal entity if it has been founded under Swedish law. The same applies to other types of legal persons such as associations and foundations. According to Swedish law, a company cannot change its nationality. Even if a Swedish company moves its entire business to Denmark, for example, the company is still deemed to be Swedish. In the same way, a foreign company is not deemed to have moved to Sweden merely because its business is conducted here. In this respect, the legal situation is different from the majority of continental countries. There, a company is deemed to be able to move, even if this normally entails many legal complications. However, Great Britain, the Netherlands and, probably, the other Nordic countries apply the same principle as Sweden.