Companies' freedom of establishment after the ECJ cartesio Judgment

European Business Organization Law Review

Volumn 10, Issue 4, 2009, Pages 595-625

  Wiśniewski, Andrzej W ^a   Opalski, Adam ^a  

^a UNIVERSITY OF WARSAW   (Poland)

Author keywords

14th Company Law Directive; Cartesio judgment; cross border transfer of a company's seat; cross border transformation; EC company law; freedom of emigration; freedom of establishment

Indexed keywords

EID: 77954527180     PISSN: 15667529     EISSN: 17416205     Source Type: Journal    
DOI: 10.1017/S1566752909005953     Document Type: Article

References (73)

1. Intervention by primary legislation is much less probable, and the opinion that it might have exclusive competence in matters of conflict of laws and treatment of foreign companies is clearly obsolete.
2. In this paper, the term 'articles' is used as an equivalent of the French 'statute' or the German 'Satzung', thus encompassing both the memorandum of association and articles of association within the meaning of English company law.
3. Written in capitals to distinguish it from the reference to the ECJ case, Cartesio.
4. Though only a partnership, as a commercial partnership CARTESIO has been subject to the registration requirement and has been treated essentially as a legal entity under Hungarian law. Consequently, it is a 'company' within the meaning of Article 48 of the EC Treaty and may be treated, in most regards, as a company for purposes of national conflict of laws rules and national regulations concerning incorporation and emigration of companies.
5. See paragraphs 11-20 of the Cartesio judgment. Compare the imprecise statement of the Advocate General, according to which Hungarian law follows the incorporation theory (.paragraph 23 of the Advocate General's Opinion). The legal status under Hungarian law is presented by C.G. Beuerle and M. Schillig, The Mysteries of Freedom of Establishment after Cartesio (11.2.2009) p. 12 (note 70), available at: http://ssrn.com/abstract=1340964.
6. W. Meilicke, Der GmbHR-Kommentar [commentary on the Cartesio judgment], 2 GmbHRundschau (2009) pp. 92-94.
7. In the German original, 'zu achten' - to respect; there is a shade of difference between both language versions of the Überseering judgement. In our opinion, the German version better reflects the ECJ's idea of requesting respect for the acquired personality rather than its full recognition 'as granted' (under incorporation law).
8. See S. Leible and J. Hoffmann, 'Cartesio - fortgeltende Sitztheorie, grenzüberschreitender Formwechsel und Verbot materiellrechtlicher Wegzugsbeschränkungen', 3 Betriebs-Berater (2009) p. 62;
9. P. Kindler, 'Ende der Diskussion über die sogenannte Wegzugsfreiheit', 4 Neue Zeitschrift für Gesellschaftsrecht (2009) pp. 131-132.
10. Quoting this position, the ECJ failed to mention that such a 'transfer' necessary involves sacrificing the present corporate identity for the sake of a new one; the evident purpose of CARTESIO was to avoid exactly this result.
11. ECJ, Case C-81/87 The Queen v H.M. Treasury and Commissioners of Inland Revenue, ex parte Daily Mail and General Trust plc [1988] ECR 5483.
12. Now, Articles 43 and 48.
13. ECJ, Case C-208/00 Überseering BV v Nordic Construction Company Baumanagement GmbH [2002] ECR I-9919.
14. ECJ, Case C-411/03 SEVIC Systems AG [2005] ECR I-10805.
15. Opinion of Advocate General Poiares Maduro in Cartesio, delivered on 22 May 2008.
16. M. Lutter, Europäisches Gesellschaftsrecht, 4th edn. (Berlin 1996) at pp. 41-42;
17. W. Schön, 'The Mobility of Companies in Europe and the Organizational Freedom of Company Founders', 2 European Company and Financial Law Review (2006) p. 129, at p. 138;
18. W.-H. Roth, 'From Centros to Ueberseering: Free Movement of Companies, Private International Law, and Community Law', 52 International and Comparative Law Quarterly (2003), at pp. 189-190.
19. Meilicke, supra n. 6, p. 93;
20. Kindler, supra n. 8, p. 131.
21. These words have been taken from paragraph 21 of the SEVIC Systems judgment and are, of course, related to immigration restrictions. However, since in Cartesio the ECJ declared that emigration restrictions are not immune from control for conformity with the freedom of establishment, the phrase must be considered equally relevant for the latter, too.
22. First Council Directive 68/151/EEC of 9 March 1968 on coordination of safeguards which, for the protection of the interests of members and others, are required by Member States of companies within the meaning of the second paragraph of Article 58 of the Treaty, with a view to making such safeguards equivalent throughout the Community.
23. The 1st Directive does not cover limited partnerships.
24. Such analysis cannot be compressed into the framework of this paper; it has been presented by A.W. Wi?niewski, 'Statut personalny spóek kapitaowych i uznawanie spóek zagranicznych: orzecznictwo Trybunau Wspólnot a reforma polskiego prawa prywatnego midzynarodowego' [Personal law of companies: judgments of the ECJ and the reform of Polish private international law], in Wspóczesne wyzwania europejskiej przestrzeni prawnej, liber amicorum for Professor Eugeniusz Piontek (Cracow 2005) pp. 718-722.
25. The basis for declaring that the immigré company is non-existent is predicated upon the assumption that, at the point of the seat transfer, it passes under the rule of the immigration state's law, the incorporation conditions of which it does not meet. Leaving aside the simple counterargument that the company in question does not attempt to reincorporate at all and its existence is a product of a legal process completed under the incorporation law which at that time was undoubtedly applicable thereto, it should be pointed out that either the company has effectively passed under the rule of the host country's law and is then protected by Article 11 of the 1st Directive, or it has not, and then this law has nothing to say about its existence. That is why we call this product of the 'real seat' theory the 'disappearing trick': the company could be annulled neither before the seat transfer because there was as yet no ground for this (and it was not yet governed by the host state law anyway) nor after the seat transfer because this would be contrary to Community harmonisation measures. It seems to have evaporated into thin air in the non-existent space of time between being governed by the incorporation law and the host state's law.
26. Winiewski, supra n. 20, pp. 712-717.
27. This is a substantive and not a conflict rule because it does not order the judge to apply a certain pre-determined national law to decide whether a company exists, but merely instructs him to take into account the certified result of an earlier application of any national law which considers itself applicable. The same reason prohibits qualification of the recognition of a company as a conflict of laws matter.
28. The ECJ's ruling in Cartesio, item (4), and paragraph 110 of this judgement.
29. See, e.g., H.-D. Assmann, in K.J. Hopt and H. Wiedemann, eds., Aktiengesetz Großkommentar, Vol.I (Berlin 2004) p. 243 et seq. The most conservative part of the German legal doctrine still attempts to defend this position.
30. See Kindler, supra n. 8, p. 132.
31. ECJ, Case C-167/01 Kamer van Koophandel en Fabrieken voor Amsterdam v Inspire Art Ltd. [2003] ECR I-10155.
32. Gesetz zur Modernisierung des GmbH-Rechts und zur Bekämpfung von Missbräuchen (MoMiG), 23.10.2008.
33. However, see the draft reform of the German private international law on legal persons: Referentenentwurf - Gesetz zum Internationalen Privatrecht der Gesellschaften, Vereine und juristischen Personen, 7.1.2008, available at: http://www.bmj.bund.de.
34. Paragraphs 92-93 of the Überseering judgment.
35. Winiewski, supra n. 20, p. 717 et seq.
36. Third Council Directive 78/855/EEC of 9 October 1978 based on Article 54(3)(g) of the Treaty concerning mergers of public limited liability companies; Sixth Council Directive 82/891/EEC of 17 December 1982 concerning the division of public limited liability companies.
37. Directive 2005/56/EC of the European Parliament and of the Council of 26 October 2005 on cross-border mergers of limited liability companies.
38. See paragraph 33 of the Advocate General's Opinion; Meilicke, supra n. 6, p. 93.
39. Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters.
40. See paragraph 32 of the Advocate General's Opinion.
41. This provision establishes the abovementioned three connecting factors for companies in such a manner that each is an equivalent of the domicile of a natural person.
42. Council Regulation (EC) No 1346/2000 of 29 May 2000 on insolvency proceedings
43. Paragraph 23 of the SEVIC Systems judgment.
44. Paragraphs 26 and 28-29 of the SEVIC Systems judgment. See also, e.g., ECJ judgments in Case C-12/92 Kraus [1993] ECR I-1663, paragraph 32; Case C-55/94 Gebhard [1995] ECR I-4165, paragraph 37; and Case C-212/97 Centros [1999] ECR I-1459, paragraph 34.
45. Presently, only some Member States have or contemplate having regulations regarding cross-border conversions.
46. M. Szydo, Commentary on the Cartesio judgment, 46 Common Market Law Review (2009) p. 721.
47. D. Zimmer and Ch. Naendrup, 'Das Cartesio-Urteil des EuGH: Rück-oder Fortschritt für das internationale Gesellschaftsrecht?', 9 Neue Juristische Wochenschrift (2009) p. 547 et seq.;
48. Leible and Hoffmann, supra n. 8, pp. 58, 60 et seq.
49. German courts continue the practice of reclassification of immigré companies from non-Member States into German partnerships.
50. See the decision of the German Bundesgerichtshof of 27.10.2008, II ZR 158/06, Betriebs-Berater 2009, No.1, p. 14, related to a Swiss company.
51. Paragraph 113 of the Cartesio judgment.
52. ECJ, Case C-9/02 Hughes de Lasteyrie du Saillant and Ministère de l'Économie, des Finances et de l'Industrie [2004] ECR I-2431.
53. W.-G. Ringe, 'No Freedom of Emigration for Companies?', 16 European Business Law Review (2005) pp. 621, 624 et seq.;
54. F.M. Mucciarelli, Companies' Emigration and EC Freedom of Establishment (15.10.2007), available at: http://papers.ssrn.com/sol3/papers.cfm?abstract-id= 1078 407, p. 26 et seq.
55. Zimmer and Naendrup, supra n. 42, pp. 547-548; Kindler, supra n. 8, p. 131.
56. Declared admissible by the ECJ in SEVIC Systems.
57. Outside the EU, see Articles 161-163 of the Swiss Act on Private International Law of 18.12.1987, which provide for delimitation of Swiss and foreign law in the process of cross-border transformation. See F. Vischer, in D. Girsberger, et al., Zürcher Kommentar zum IPRG, 2nd edn. (Zürich 2004) p. 1800 et seq.
58. See Articles 8 and 17-31 of the Regulation on the Statute for a European Company, and Articles 10-11 of the 10th Directive on cross-border merger of limited liability companies.
59. See Articles 8 and 17-31 of the Regulation on the Statute for a European Company.
60. Paragraphs 115-116 of the Cartesio judgment.
61. Paragraphs 119-120 of the Cartesio judgment.
62. Underlying the decision itself was the Commission Staff Working Document: Impact assessment on the Directive on the cross-border transfer of registered office, 12.12.2007, SEC (2007) 1707.
63. Communication from the Commission to the Council and the European Parliament: Modernising Company Law and Enhancing Corporate Governance in the European Union - A Plan to Move Forward, 21.5.2003, COM (2003) 284, sec. 3.4.
64. Ch. McCreevy, Speech at the 5th European Corporate Governance and Company Law Conference, Berlin, 28.6.2007, available at: http://www.bdi.eu; Speech by Commissioner McCreevy at the European Parliament's Legal Affairs Committee, 3.10.2007, pp. 3-4.
65. E. Wymeersch, 'Is a Directive on Corporate Mobility Needed?', 8 European Business Organization Law Review (2007) p. 161;
66. G.-J. Vossestein, 'Transfer of the Registered Office. The European Commission's Decision Not to Submit a Proposal for a Directive', 4(1)Utrecht Law Review (2008) p. 53;
67. A. Opalski, 'Stan i perspektywy europejskiego prawa spóek a rozwój polskiego prawa spóek' [The state and prospects of European company law and the evolution of Polish company law], 1(8) Studia Prawa Prywatnego [Private Law Studies] (2008) p. 96.
68. Zimmer and Naendrup, supra n. 42, p. 549 et seq.;
69. Leible and Hoffmann, supra n. 8, p. 63;
70. J. Napieraa, 'Transgraniczne przeniesienie siedziby spóki w wietle wyroku Trybunau Sprawiedliwoci w sprawie Cartesio' [Cross-border transfer of a company's seat in the light of the ECJ Cartesio judgment], Kwartalnik Prawa Prywatnego (Private Law Quarterly) (forthcoming, 2009).
71. H.J. Sonnenberger, ed., Vorschläge und Berichte zur Reform des europäischen und deutschen internationalen Gesellschaftsrechts (Tübingen, Mohr Siebeck 2007).
72. See paragraph 36 of the Advocate General's Opinion: 'Articles 43 EC and 48 EC preclude national rules which make it impossible for a company constituted under national law to transfer its operational headquarters to another Member State.'
73. Kindler, supra n. 8, p. 131; Leible and Hoffmann, supra n. 8, p. 62.