‘On a proper interpretation of the case law of the European Court of Justice, there can be no doubt that the real seat theory is dead throughout the EU.’

1726 Words Oct 5th, 2014 7 Pages
1.Introduction
The application of the real seat theory has become a widely discussed topic, progressively changing with the judgements of cases by the ECJ concerning freedom of establishment in Europe. It has been accepted that the courts objective of extending the freedom of establishment leads to the support of the incorporation theory, while conflicting with principles of the real seat theory. However, this alone does not imply that the real seat theory is "dead." The development of the application of the real seat theory can foremost be presented by comparing the ECJ 's judgements in moving-in and moving-out scenarios, case-by-case, in the scope of application of articles 49, 541 TFEU2.
2.Opposing Theories
The "Real seat theory,"3
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Überseering wanted to transfer its actual centre of administration from the Netherlands10 to Germany11. German jurisdiction was applicable, due to the real seat of Überseering12. But, according to German law, Überseering was denied legal capacity, necessary to sue, as it had not fulfilled the required formation formalities.13 The ECJ 's decision was in agreement with the Centros judgement. MS had to recognize legal capacity of companies which are officially incorporated in another MS. The real seat countries had to adjust significantly after this judgement. While, the ECJ 's decision once again benefits the incorporation states as they no longer have to comply with additional conditions formerly emplaced by real seat states.
With the later case, Inspire Art14, the ECJ once again continued its "in dubio pro freedom of establishment"15 approach and continued to clarify the interpretation of provisions and support the incorporation doctrine. Inspire Art incorporated in the UK and its business activities were in the Netherlands. Like Centros, Inspire Art wanted to benefit from liberal British law. A branch was registered in the Netherlands, but without fulfilling obligatory disclosure requirements16. The ECJ decided these requirements were inacceptable. The judgement once again affirmed the incorporation theory. The theory states that the relevant jurisdiction is of the country of registration, making it seemingly overt

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