The CESL as a European Brand - Paypalizing European Contract Law
According to the Commission, the main political goal behind the Common European Sales Law (CESL) is advancing cross-border trade between EU member states, thereby helping to further establish and strengthen a common market within the EU. The CESL is chosen and even symbolized by an already legendary blue button that consumers have to push in order to opt into the new European law. However, the blue button is more than a mere technicality: It aims at increasing consumer trust in cross-border trade by using the (expectedly) positive signaling effect of the European brand. Thus, if traders know that consumers are more likely to engage in cross-border trade on the basis of the CESL than by relying on a national contract law, offering to contract on this basis will be attractive to them for precisely this reason. If a CESL offer can be expected to increase consumers’ trust in a prospective transaction, traders will be able to use such an offer as a marketing instrument. A similar branding strategy is known from the US online payment service PayPal who has established its “payment trust button” already a decade ago. The present article deals with the question to what extent PayPal’s success story can be transferred to European contract law and what lessons the European legislator can learn from it. Could the CESL with its blue button potentially become a new, PayPal-like mechanism for consumer protection by creating and strengthening consumer trust in cross-border trade?
Incorporating under European Law: The Societas Europaea as a Vehicle for Legal Arbitrage
After a slow start, the European Company (Societas Europaea — SE) has become increasingly popular. Besides documenting the growth of this new company type, we examine whether firms choose to incorporate in the SE corporate form because they engage in ‘legal arbitrage’ by exploiting differences in legal rules between jurisdictions. We specify a number of hypotheses on particular legal arbitrage motives. To validate our hypotheses, we use a broad telephone survey among SE users in Germany as well as a simple country-level regression model based on a unique, hand-collected dataset on SE incorporations. We find strong evidence that firms use the SE to mitigate the effect of mandatory co-determination rules. Establishing a one-tier board structure (in jurisdictions that impose a two-tier structure on their national public companies) and taking advantage of the SE’s mobility for tax purposes also seem to be driving SE formations. By contrast, our analysis fails to support the suggestion that firms use the SE to shop for the most favourable national company law to fill the gaps in the SE Regulation.
The European Company Statute in the Context of Freedom of Establishment
One of the key features of the new Europe-wide legal form “European Company” (“Societas Europaea” or “SE”) is the possibility of transferring the company's seat from one Member State to another without having to be wound up or to re-register. As this possibility does not exist for companies formed under national law, the formation of an SE will often present the only possibility for companies to transfer their incorporation and corporate headquarters between Member States. This is a big advantage and a milestone towards the European Internal Market. However, some doubts remain as to the practicability of the system. The mandatory linkage of the head office to the registered office within the same Member State according to Article 7 of the SE Regulation is very problematic and, in light of recent ECJ decisions such as Centros, Überseering and Inspire Art, may violate EC primary legislation. Why should companies that are formed under national law be allowed to have the head office in a Member State different from their registration state, while an SE—as an instrument of Community law and a symbol of the Internal Market—is not? Furthermore, the detailed procedural rules laid down in the Regulation are sometimes overprotective and may significantly reduce the attractiveness of the SE's mobility. It is argued that Article 7 of the SE Regulation is secondary law that itself is inconsistent with the (primary) EC Treaty. Furthermore, the Member States also tend to be overprotective when enacting safeguard measures for the benefit of creditors, minority shareholders and employees. Here again, freedom of establishment does not allow protectionist measures that contravene the gist of the SE's mobility.