AG's Opinion in Case C‑210/06 Cartesio Oktató és Szolgáltató bt
Advocate General Maduro (ECJ) today delivered his opinion in Case C‑210/06 Cartesio Oktató és Szolgáltató bt, a reference for a preliminary ruling from a Hungarian Court of Appeal. The case concerns the compatibility of the real seat theory with Articles 43 and 48 EC. The relevant question referred is the following:
Hungarian law provides that a company must have its operational headquarters in its State of incorporation. The litigation in the main proceedings concerns the refusal of the Hungarian courts to allow a Hungarian company to transfer its seat to Italy while remaining incorporated under Hungarian law.
There are conflicting precedents that could apply to this matter. On the one hand, if the precedent in Daily Mail is followed, it would appear that the fact that the litigation concerns the relationship between a company and its State of incorporation would render inapplicable Articles 43 and 48. However, if one follows the reasoning of the later judgments in Centros and subsequent cases, the better view would be that the conflict of corporate laws is not outwith the scope of the freedom of establishment. Accordingly, the refusal to allow the company to emigrate without being dissolved would constitute a restriction of the freedom of establishment.
AG Maduro takes note of the conflicting judgments, and of the Court’s efforts to consolidate the precedents. However, he emphasises that ‘these efforts were never entirely convincing’, and that the law has moved on since Daily Mail. The Advocate General thus frees himself of the constraints that the Court has imposed upon itself in refusing to explicitly override the judgment in Daily Mail. In keeping with the later case-law, Maduro finds that the refusal to allow a Hungarian company to transfer its operational headquarters to another Member State is incompatible with the Treaty.
This opinion thus constitutes a clean break from the convoluted precedents and is welcome to the extent that it signals the way for a more coherent body of law. It remains to be seen if the Court of Justice will follow the Advocate General’s reasoning, or if it will persist in the illogical approach of consolidating manifestly incompatible precedents.
‘(4(a)) If a company, constituted in Hungary under Hungarian company law and entered in the Hungarian commercial register, wishes to transfer its seat to another Member State of the European Union, is the regulation of this field within the scope of Community law or, in the absence of the harmonisation of laws, is national law exclusively applicable?
(b) May a Hungarian company request transfer of its seat to another Member State of the European Union relying directly on community law (Articles 43 [EC] and 48 [EC])? If the answer is affirmative, may the transfer of the seat be made subject to any kind of condition or authorisation by the Member State of origin or the host Member State?
(c) May Articles 43 [EC] and 48 [EC] be interpreted as meaning that national rules or national practices which differentiate between commercial companies with respect to the exercise of their rights, according to the Member State in which their seat is situated, is incompatible with Community law?
May Articles 43 [EC] and 48 [EC] be interpreted as meaning that, in accordance with those articles, national rules or practices which prevent a Hungarian company from transferring its seat to another Member State of the European Union, are incompatible with Community law?’
Hungarian law provides that a company must have its operational headquarters in its State of incorporation. The litigation in the main proceedings concerns the refusal of the Hungarian courts to allow a Hungarian company to transfer its seat to Italy while remaining incorporated under Hungarian law.
There are conflicting precedents that could apply to this matter. On the one hand, if the precedent in Daily Mail is followed, it would appear that the fact that the litigation concerns the relationship between a company and its State of incorporation would render inapplicable Articles 43 and 48. However, if one follows the reasoning of the later judgments in Centros and subsequent cases, the better view would be that the conflict of corporate laws is not outwith the scope of the freedom of establishment. Accordingly, the refusal to allow the company to emigrate without being dissolved would constitute a restriction of the freedom of establishment.
AG Maduro takes note of the conflicting judgments, and of the Court’s efforts to consolidate the precedents. However, he emphasises that ‘these efforts were never entirely convincing’, and that the law has moved on since Daily Mail. The Advocate General thus frees himself of the constraints that the Court has imposed upon itself in refusing to explicitly override the judgment in Daily Mail. In keeping with the later case-law, Maduro finds that the refusal to allow a Hungarian company to transfer its operational headquarters to another Member State is incompatible with the Treaty.
This opinion thus constitutes a clean break from the convoluted precedents and is welcome to the extent that it signals the way for a more coherent body of law. It remains to be seen if the Court of Justice will follow the Advocate General’s reasoning, or if it will persist in the illogical approach of consolidating manifestly incompatible precedents.
Comments
See today's judgment