Convergence, Competition, ‘Centros’ and conflicts of law: European Company Law in the 21st Century

Abstract:

In this article it is submitted that European company law will change remarkably. First, the conflict of law principles and the possibility of cross border companies will become more liberal. The decision of the European Court of Justice in Centros is only the first step in this development. Secondly, this will lead to some competition among rules. Although there are some facts which might encourage businesses to corporate in a foreign Member State, the result will not be a 'race to the bottom' since existing counter-incentives will prevent a European 'Delaware effect'. Thirdly, as long as there remains competition and as long as some Member States are going to attract foreign companies, its consequences will be limited since the incentives are not very high and other Member States can enact provisions to protect their domestic company law. However, some harmonisation by facts will come and European company law of the 21st century will therefore continue its convergence.