Increasing Corporate Mobility Through Outbound Establishment

Abstract

In the case C-210/06 Cartesio the ECJ decided that the outbound transfer of the central place of administration from a Member State (hereafter, MS) adhering to the real seat doctrine does not fall under the freedom of establishment when the national law applicable to that company does not change. With this judgement the Court increased the scope for corporate mobility in two respects. First, in the situation where there is an outbound transfer of the central place of administration with a simultaneous change of the applicable national law one can rely on the treaty freedom. Second, in the same situation such a transfer may no longer result in companies being killed off at the border. Moreover, the effect of this judgement is not to outlaw the real seat doctrine but, similar to Überseering, to limit the potential effects of the application of the real seat doctrine. Interestingly the application of this judgement to the situation in which a company transfers its central place of administration from a MS adhering to the incorporation doctrine results in a potentially discriminatory effect.

Keywords: Cartesio, freedom of establishment, EU company law, real seat doctrine, incorporation doctrine, outbound transfer of the central place of administration