Freedom of Establishment for Companies: the European Court of Justice confirms and refines its Daily Mail Decision in the Cartesio Case C-210/06

Abstract

On 16 December 2008 the European Court of Justice delivered its judgment in the case C-210/06 Cartesio Bt. It is the latest case in the line of company law cases on freedom of establishment. While closing a chapter opened with Daily Mail some 20 years ago, the Court raises many new questions. Following Daily Mail, Centros, Überseering and Inspire Art, the referring Hungarian court wanted to know whether national company law provisions which prohibit a company, constituted in Hungary under Hungarian company law and entered in the Hungarian Companies Register, to request the transfer of its seat to another Member State of the European Union while remaining governed by Hungarian law, are compatible with Community law. Advocate General Maduro took the view that Articles 43 and 48 EC preclude national rules which make it impossible for a company constituted under national law to transfer its operational headquarters to another Member State. However, against all expectations and the AG Opinion, the European Court of Justice confirmed that in the absence of uniform Community legislation national law decides whether a national company can rely on the freedom of establishment enshrined in Art. 43 EC. The pro-freedom of establishment attitude of the Court witnessed in recent years seems to have yielded to a more conservative approach, upholding the distinctions between outbound v inbound and primary v secondary freedom of establishment.