European private international law of companies after Cartesio

Justin Borg Barthet

    Research output: Contribution to journalArticlepeer-review

    2 Citations (Scopus)

    Abstract

    The European Court of Justice (ECJ) recently delivered another landmark judgment concerning the compatibility of the real seat theory with freedom of establishment The judgment in Cartesio addresses the question of whether Community law allows a Member State to stipulate that a company incorporated under its law must retain its operational headquarters within its territory. The factual context of the judgment was an attempt by Cartesio, a limited partnership constituted under Hungarian law, to transfer its registered office from Hungary to Italy. It was prevented from doing so because the application of the real seat theory required that companies established under Hungarian law retain their operational headquarters in Hungarian territory. Cartesio felt that its freedom of establishment had been unlawfully restricted and a Hungarian court of appeal referred the matter to the ECJ for interpretative guidance. The Court of Justice found that there had been no breach of Community law since the relationship between a company and the State in which it is incorporated is not subject to the right to freedom of establishment. The conclusions and the reasoning of the Court are neither uncontroversial nor completely persuasive, particularly when considered in the light of the ECJ’s own jurisprudence. Moreover, the judgment adds new inconsistencies to an already inconsistent body of case-law and, as such, may be harmful to legal certainty.
    Original languageEnglish
    Pages (from-to)1020-1028
    Number of pages9
    JournalInternational and Comparative Law Quarterly
    Volume58
    Issue number4
    DOIs
    Publication statusPublished - Oct 2009

    Keywords

    • Company law
    • European Union
    • Company incorporation
    • Freedom of establishment
    • Hungary
    • Principal place of business
    • Relocation

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