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The ECJ, Volkswagen and European Corporate Law: Reshaping the European Varieties of Capitalism


Peer C Zumbansen


Dickson Poon School of Law - King's College London

Daniel Saam


Goethe University Frankfurt

November 15, 2007

CLPE Research Paper No. 30/2007

Abstract:     
On 23 October 2007, the European Court of Justice handed down its much-awaited Volkswagen decision (Case C-112/2005), following a suit launched by the Commission against the Federal Republic of Germany in 2005. The Volkswagen statute, through which first the Federal government together with the Land (federal state) of Niedersachsen (Lower Saxony), later only Lower Saxony, had reserved a veto against majority acquisition while only holding a fifth of all shares, had come into the Commission's purview as part of its large-scale attempts at reforming and modernizing European company law. The preparatory steps in that regard had been the suits brought by the Commission with regard to other, 'golden share' provisions under Portuguese, French, Belgian and English company laws in recent years. Yet, the Volkswagen decision of the ECJ is of interest in more than one respect. Not only does it constitute a continuation and further accentuation of a line of argument that the Court has been unfolding over past few years with regard to the Member State provisions in conflict with the EC's guarantee of the free movement of capital as laid down in Art. 56 EC. In addition, the impact of the ECJ's new ruling will have to be assessed in the context of a high-powered regulatory field, in which member states, the Commission, and the Court have been finding themselves in an ongoing negotiation and contestation of historically grown company law regimes and the pressures of globalizing capital markets. In that regard, the Volkswagen decision raises a host of questions relating to the Commission's future agenda of corporate governance reform on the one hand and the persisting differences among member states' corporate law regimes on the other. The following article lays out the Court's reasoning, before observing both the immediate and the more long-term effect of the decision.

Number of Pages in PDF File: 37

Keywords: Corporate Governance, European Corporate Law, Volkswagen, Golden Shares, Co-determination, Works Councils

JEL Classification: G34, J29, J53, K22, K33

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Date posted: November 17, 2007  

Suggested Citation

Zumbansen, Peer C and Saam, Daniel, The ECJ, Volkswagen and European Corporate Law: Reshaping the European Varieties of Capitalism (November 15, 2007). CLPE Research Paper No. 30/2007. Available at SSRN: http://ssrn.com/abstract=1030652 or http://dx.doi.org/10.2139/ssrn.1030652

Contact Information

Peer C Zumbansen (Contact Author)
Dickson Poon School of Law - King's College London ( email )
Somerset House East Wing
Strand
London, WC2R 2LS
United Kingdom
Daniel Saam
Goethe University Frankfurt ( email )
Grüneburgplatz 1
Frankfurt am Main, 60323
Germany
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