Have the dikes collapsed? : Inspire Art a further break-through in the freedom of establishment of companies

Abstract

On30September 2003, theEuropeanCourtof Justice (hereinafter: the ECJ), in full court, handed down a judgment in the Inspire Art case1 in which it found certain provisions of the Dutch Law on Formally Foreign Companies of 17 December 1997 (Wet op de Formeel Buitenlandse Vennootschappen. Hereinafter: the WFBV)2 to be contrary to Article 2 of the Eleventh Company Law Directive3 and others to form a restriction to the exercise of the right of secondary establishment incapable of justification under Article 46 of the EC Treaty or the case law on overriding reasons relating to the public interest, also referred to as the ‘rule of reason’ case law.4 Ten days later, a leading Dutch legal periodical5 stated that this judgment would lead to the Netherlands being inundated by private limited liability companies incorporated in England under English company law. Does the ruling in Inspire Art mean that the dikes erected in the Netherlands to prevent an influx of so-called formally foreign or pseudo-foreign companies6 have collapsed?