Jurisdictional Competition in the European Community

52 Pages Posted: 8 Aug 2013 Last revised: 13 Oct 2015

Seth Chertok

University of Florida Levin College of Law

Date Written: January 1, 2006


The main purpose of this article is to analyze how four company law cases (Daily Mail, Centros, Uberseering, and Inspire Art) in the European Community have expanded the Freedom of Establishment to potentially open the door to corporate jurisdictional competition in the European Community, similar to the sort that exists in the United States through the Delaware effect. However, in Europe, this type of jurisdictional competition has traditionally been thought of as undesirable, particularly in certain Member States such as Germany that have co-determination and minimum capital requirements. These Member States have continued to adhere to the real seat and stakeholder theory doctrines and it is highly likely that they will continue to try to employ national level restrictions in order to evade the evolving EC jurisprudence and to ultimately evade jurisdictional competition.

Recently, the SE statute was enacted. This statute on its face appears inconsistent with the evolving case law that appears to open the door to jurisdictional competition, and to therefore potentially further the cause of the anti-jurisdictional competition Member States. However, this article shows that the SE statute will most likely not halt jurisdictional competition due to a loophole in the SE statute that allows a European SE company to merge into a national subsidiary and in a two year period to become subject to the law of that Member State. Although Member States such as Germany will be able to continue to burden emigration by potentially imposing tax constraints or appraisal rights, such Member States will risk not being able to participate in the forthcoming European international corporate reorganization movement. As a result, this article predicts that in the long run, a full jurisdictional competition will ensue in Europe, to the detriment of the values embodied in the stakeholder theory of corporate law.

Keywords: European Union Law, Corporate Law

Suggested Citation

Chertok, Seth, Jurisdictional Competition in the European Community (January 1, 2006). University of Pennsylvania Journal of International Economic Law, 27 U. PA. J. INT’L ECON. L. 465 (Summer 2006). Available at SSRN: https://ssrn.com/abstract=2307157 or http://dx.doi.org/10.2139/ssrn.2307157

Seth Chertok (Contact Author)

University of Florida Levin College of Law ( email )

P.O. Box 117625
Gainesville, FL 32611-7625
United States

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