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FREE AT LAST? CHOICE OF CORPORATE LAW IN THE EU FOLLOWING THE JUDGMENT IN VALE

Published online by Cambridge University Press:  09 April 2013

Justin Borg-Barthet*
Affiliation:
Lecturer, School of Law, University of Aberdeen, jborgbarthet@abdn.ac.uk.

Abstract

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Type
Current Developments: Private International Law
Copyright
Copyright © British Institute of International and Comparative Law 2013

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References

1 EC Convention on the Mutual Recognition of Companies and Bodies Corporate of 29 February 1968, Bulletin of the European Communities, Supplement 2/69, 7–18.

2 For academic commentary, see Drury, RR, ‘The Regulation and Recognition of Foreign Corporations: Responses to the Delaware Syndrome’ (1998) CLJ 165, 181–2Google Scholar. Ballarino, T, ‘Sulla mobilità delle società nella Comunità Europea. Da Daily Mail a Überseering: norme imperative, norme di conflitto e libertà comunitarie’ (2003) Rivista delle società 669, 670Google Scholar; Stein, E, ‘Conflict-of-Laws Rules by Treaty: Recognition of Companies in a Regional Market’ (1970) MichLRev 1327, 1337Google Scholar; Maria, A Santa, European Economic Law (Kluwer 2009) 10Google Scholar; Borg-Barthet, J, The Governing Law of Companies in EU Law (Hart 2012) 106–9Google Scholar.

3 Goldman, M, ‘La nationalité des sociétés dans la Communauté économique européenne’ (1969) Travaux du Comité français de droit internationale privé 215, 219–26Google Scholar; Stein (n 2) 1329–31.

4 Case 81/87 The Queen v HM Treasury and Commissioners of Inland Revenue, ex parte Daily Mail and General Trust plc. [1988] ECR 5483.

5 Santa Maria (n 2) 11; Rammeloo, S, Corporations in Private International Law: A European Perspective (OUP 2001), 36–7CrossRefGoogle Scholar; Stein (n 2) 1330; Ballarino, T, ‘From Centros to Überseering: EC Right of Establishment and the Conflict of Laws’ (2002) Yearbook of Private International Law 203, 208Google Scholar.

6 For an overview of the two theories, see Rammeloo (n 5) 11–20; Rabel, E, The Conflict of Laws: A Comparative Study (2nd edn, University of Michigan 1960) vol 2, 3146Google Scholar; Alférez, FJ Garcimartín, ‘Cross-Border Listed Companies’ (2007) 328 Recueil des Cours de l'Académie de Droit International 13, 4855Google Scholar; Borg-Barthet (n 2), 4–6, 13–14.

7 AG La Pergola in Case C-212/97 Centros Ltd v Erhvervs-og Selskabsstyrelsen [1999] ECR I-01459 para 20. To similar effect, see Ballarino (n 5) 208.

8 AG La Pergola (n 7) para 20.

9 For empirical evidence, see: Becht, M, Mayer, C and Wagner, HF, ‘Where Do Firms Incorporate?’ (2008) Journal of Corporate Finance 241, 242Google Scholar. Becht et al note that the United Kingdom experienced a 400 per cent increase in incorporations of companies that had their headquarters in other Member States after Centros.

10 Centros (n 7).

11 Daily Mail (n 4) paras 21–23; Case C-208/00 Überseering BV v Nordic Construction Company Baumanagement GmbH (NCC) [2002] ECR I-9919, para 69; Case C-210/06 Cartesio Oktató és Szolgáltató bt [2008] ECR I-9641, paras 108–110.

12 Borg-Barthet (n 2) 135–8.

13 Cartesio (n 11) para 110.

14 Case C-378/10 VALE Épitési kft [2012] ECR 00000.

15 Daily Mail (n 4) para 19; Cartesio (n 11) para 104; VALE (n 14) para 27.

16 Daily Mail (n 4) para 19; Überseering (n 11) para 40; Cartesio (n 11) para 104; Case C-371/10 National Grid Indus [2011] ECR I-0000, para 26; VALE (n 14) para 29.

17 Daily Mail (n 4) para 23; Überseering (n 11) para 40; Cartesio (n 11) para 110; National Grid Indus (n 16) para 27; VALE (n 14) para 29.

18 Centros (n 7) para 17; Überseering (n 11) para 80.

19 See Schmitthoff, CM, ‘Company Structure and Employee Participation in the EEC—the British Attitude’ (1976) ICLQ 611, 611–20CrossRefGoogle Scholar; Pasa, B, Benacchio, GA and Orme, L (trans), The Harmonization of Civil and Commercial Law in Europe (Central European University Press 2005) 365–71Google Scholar.

20 See Schmitthoff (n 19); also Pasa, Benacchio and Orme (n 19).

21 See eg Coase, RH, ‘The Nature of the Firm’ (1937) Economica, 386, 386405CrossRefGoogle Scholar; Jensen, MC and Meckling, WH, ‘Theory of the Firm: Managerial Behaviour, Agency Costs and Ownership Structure’ (1976) Journal of Financial Economics 305, 305–60CrossRefGoogle Scholar; Alchian, AA and Demsetz, H, ‘Production, Information Costs and Economic Information’ (1977) The American Economic Review 777, 777–95Google Scholar; Eisenberg, MA, ‘The Structure of Corporation Law’ (1989) ColumLRev 1461, 14611525Google Scholar; Fama, EF, ‘Agency Problems and the Theory of the Firm’ (1980) Journal of Political Economy 288, 288307CrossRefGoogle Scholar; Weitzman, ML, ‘Increasing Returns and the Foundations of Unemployment Theory’ (1982) The Economic Journal 787, 787804CrossRefGoogle Scholar; Williamson, OE, The Economic Institutions of Capitalism (Free Press 1985)Google Scholar; Williamson, OE, ‘The Theory of the Firm as Governance Structure: From Choice to Contract’ (2002) Journal of Economic Perspectives 171, 171–95CrossRefGoogle Scholar.

22 For an account of the spectrum of theories of the firm and their potential deployment in company law, see eg Paterson, J, ‘The Company Law Review in the UK and the Question of Scope: Theoretical Concerns, Practical Constraints and Possible New Directions’ in Cobbaut, R and Lenoble, J (eds), Corporate Governance. An Institutional Approach (Kluwer Law International 2003) 141, 141–79Google Scholar; Dine, J, The Governance of Corporate Groups (CUP 2000) 136Google Scholar; Belcher, A, ‘The Boundaries of the Firm: The Theories of Coase, Knight and Weitzman’ (1997) Legal Studies 22, 2239CrossRefGoogle Scholar.

23 Dine (n 22) 67; Drury (n 2) 182–3; Ebke, WFThe “Real Seat” Doctrine in the Conflict of Laws’ (2002) IntlLaw 1015, 1027–9Google Scholar; Borg-Barthet (n 2) 13–72.

24 See Borg-Barthet (n 2) 8–11.

25 A rare example of relatively engaged analysis of the diversity of corporate law is to be found in the Advocate General's Opinion in Powell Duffryn, a case concerning prorogation of jurisdiction. However, even here, the AG was eager to dismiss the doctrinal controversy in company law in order to resolve the matter with reference to the aims of the Brussels Convention. See AG Tesauro in Case C-214/89 Powell Duffryn plc v Petereit [1992] ECR I-01745, para 4.

26 ‘Within the framework of the provisions set out below, restrictions on the freedom of establishment of nationals of a Member State in the territory of another Member State shall be prohibited… .’

27 ‘Companies or firms formed in accordance with the law of a Member State and having their registered office, central administration or principal place of business within the Union shall, for the purposes of this Chapter, be treated in the same way as natural persons who are nationals of Member States.’

28 Cartesio (n 11) paras 111–112.

29 VALE (n 14) paras 32–33.

30 VALE (n 14) para 35.

31 See Borg-Barthet (n 2) 27–9.

32 VALE (n 14) para 39.

33 ibid paras 46–56.

34 Centros (n 7) para 17; Überseering (n 11) para 80.

35 Case C-167/01 Kamer van Koophandel en Fabrieken voor Amsterdam v Inspire Art Ltd [2003] ECR I-10155, para 105.

36 Case C-411/03 SEVIC Systems AG [2005] ECR I-10805.

37 See Siems, MM, ‘SEVIC: Beyond Cross-Border Mergers’ (2007) European Business Organization Law Review 307, 312–13Google Scholar; Siems, MM, ‘The European Directive on Cross-Border Mergers: An International Model?’ (2005) ColumJEurL 167, 179–81Google Scholar; Hansen, LL, ‘Merger, Moving and Division Across National Borders – When Case Law Breaks through Barriers and Overtakes Directives’ (2007) European Business Law Review 181, 196–8Google Scholar; Mucciarelli, FM, ‘Company “Emigration” and EC Freedom of Establishment: Daily Mail Revisited’ (2008) European Business Organization Law Review 267, 276–7Google Scholar.

38 VALE (n 14) para 33.

39 However, if the company decides to change its governing law, the Member State in which it was originally established may no longer prescribe its governance arrangements: Cartesio (n 11) paras 111–112.

40 Dine (n 22) 67; Drury, RR, ‘The Regulation and Recognition of Foreign Corporations: Responses to the Delaware Syndrome’ (1998) CLJ 165, 182–3Google Scholar; Ebke (n 23) 1027–9.

41 Angelette, B, ‘The Revolution That Never Came and the Revolution Coming—De Lasteyrie du Salliant, Marks & Spencer, SEVIC Systems and the Changing Corporate Law in Europe’ (2006) VaLRev 1189, 1193–4Google Scholar.

42 VALE (n 14) para 27.

43 Borg-Barthet (n 2) 133.

44 See the submissions of the government of the Netherlands in Inspire Art as reported in the Advocate General's opinion: AG Alber in Inspire Art (n 35) para 43; and the submissions of the Netherlands, Germany, Spain and Italy as reported in Überseering (n 11) paras 23–25.

45 Daily Mail (n 4) para 23.

46 Überseering (n 11) para 55. However, the Court's substantive findings in this judgment did no violence to the substance of the judgment in Daily Mail; see Überseering (n 11) para 62.

47 Cartesio (n 11), para 114.

48 ibid paras 114–24.

49 VALE (n 14) para 29.

50 Timmermans, C, ‘Impact of EU Law on International Company Law’ (2010) ERPL 549, 554Google Scholar.

51 AG Jääskinen in Case C-378/10 VALE Épitési kft [2011] ECR 0000, para 57.

52 ibid para 58.

53 Timmermans (n 50) 554.