International Corporate Law - Shown on the Cases of Centros, Überseering and Inspire Art

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University of Applied Sciences Heilbronn, Germany
Studies: International Business & Intercultural Studies
Winter Term 2004/2005

Course International Law

"International Corporate Law
Shown on the Cases of
Centros, Überseering and Inspire Art"

Alexandra Klank
Sabrina Fährmann


2.Daily Mail and General Trust PLC4
3.Centros Ltd.4
4.Überseering BV5
5.Inspire Art Ltd.6
6.Evaluation and future prospects6


The European domestic market shall comprise an area without internal frontiers. The contract between the members of the European Community ensures for every citizen of an EU-member state the free movement of goods, services, workers and capital in the European domestic market. This includes as well the freedom of establishment, regulated in art. 43 and 48 ECT.

Article 43:
"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. Such prohibition shall also apply to restrictions on the setting-up of agencies, branches, or subsidiaries by nationals of any Member State established on the territory of any Member State."

Article 48:
"Companies or firms formed in accordance with the law of a Member State and having their registered office, central administration or principle place of business within the Community shall be treated in the same way as natural persons who are nationals of Member States."

Especially the founding of an affiliated company in another member state or the relocation of a company from one member state to another is regulated. But unlike the freedom of establishment for natural persons there is always a conflict with the particular corporate law of the member states. There is no unified corporate base; the corporate law differs from one member state to another.

In its most recent judicature the European Court of Justice (ECJ) continued its tendency of deciding in favour of the freedom of establishment by holding that rules submitting pseudo-foreign companies to the company law of the host state were inadmissible. It clarified that a foreign company is not only to be respected as a legal entity having the right to be a party to legal proceedings, but rather has to be respected as such, i.e. as a foreign company that is subject to the company law of its state of incorporation. Any adjustment to the company law of the host state is, hence, not compatible with European law. In addition to commenting on the decision and its effects, this article points out potential for corporate restructuring in the field of codetermination.

Questions concerning the freedom of establishment of companies have always been both a central and controversial area of Community law. After the previous landmark decisions Daily Mail, Centros and Überseering, the ECJ decided in the case Inspire Art once again in favour of the freedom of establishment resulting in a now discernable consistent judicature. The place of incorporation theory, which determines the applicable law according to the statutory seat of a company, seems to be gradually replaced by the real seat theory, which regards the law of that state to be applicable where the actual centre of administration, i.e. headquarters, of the company is located.

2.Daily Mail and General Trust PLC
Case C-81/87 – The Queen versus Daily Mail and General Trust PLC, 27 September 1988


Daily Mail was founded in Great Britain and wanted to shift it's headquarter to the Netherlands. British law allows British companies to shift their administrative centre abroad without losing their legal personality and capacity of a company incorporated under British law. There were no restrictions to this from the Dutch law point of view. The British tax law defines the fiscal headquarter of a company as domicile of the management. The...
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