1. Introduction to Polish PIL: Law Applicable to Moral Persons Dr. Mateusz Pilich University of Warsaw, Chair of International Private & Trade Law

2. Law Applicable to Moral Persons

3. Law Governing Moral Persons Key Concepts Competing ideas of the connecting factor Competing ideas of the connecting factor The place of incorporation (setting up/registering) The place of incorporation (setting up/registering) The place of the company’s seat: The place of the company’s seat: - ‘real’ seat - statutory (formal) seat

4. Article 17(1) PILA A moral person is governed by the law of the state in which it has its seat. A moral person is governed by the law of the state in which it has its seat. What is the „seat”? Viewpoints among scholars What is the „seat”? Viewpoints among scholars

5. Case #1 An inhabitant of Warsaw Stefan B. set up an off-shore company named Alpha Trading Ltd. It is registered in the Cayman Islands. Alpha Trading operates only in the Polish national market, it does not seek to establish any true links to the foreign countries. It has regitered the website domain at.ky and the company’s director is a local lawyer but all the assets are located in Poland. Lodging his defense before the court, one of the company’s debtors petitions for rejecting the lawsuit due to the lack of the applicant’s capacity to take part in the dispute. An inhabitant of Warsaw Stefan B. set up an off-shore company named Alpha Trading Ltd. It is registered in the Cayman Islands. Alpha Trading operates only in the Polish national market, it does not seek to establish any true links to the foreign countries. It has regitered the website domain at.ky and the company’s director is a local lawyer but all the assets are located in Poland. Lodging his defense before the court, one of the company’s debtors petitions for rejecting the lawsuit due to the lack of the applicant’s capacity to take part in the dispute. Is the defendant right? Which national law applies: the Polish or the Cayman one? Is the defendant right? Which national law applies: the Polish or the Cayman one?

6. Real Seat Doctrine Under the continental (mainly German) doctrine of the real seat, the place where the company is administered plays a role (=where the strategic decisions are transformed into day-to-day activities of a company, where the company operates) Under the continental (mainly German) doctrine of the real seat, the place where the company is administered plays a role (=where the strategic decisions are transformed into day-to-day activities of a company, where the company operates) No party autonomy in the international company law! (?!) No party autonomy in the international company law! (?!) Even if the company is formally governed by the foreign law, it may be found to be a ‘false foreign company’ (German: die Scheinauslandsgesellschaft ) Even if the company is formally governed by the foreign law, it may be found to be a ‘false foreign company’ (German: die Scheinauslandsgesellschaft ) Such a company does not exist (!) in a legal sense, it is at the most a form of a pre-incorporation company Such a company does not exist (!) in a legal sense, it is at the most a form of a pre-incorporation company

7. Incorporation Doctrine Quite opposite to what may be established in the light of the real seat concept Quite opposite to what may be established in the light of the real seat concept Supports the shareholders’ autonomy Supports the shareholders’ autonomy In theory, the company may freely ‘emigrate’ from the one country to the other, it may move its centre of administration In theory, the company may freely ‘emigrate’ from the one country to the other, it may move its centre of administration

8. Approaching Techniques Rebuttable presumption that the main centre of administration concides with the seat fixed by the articles of incorporation Rebuttable presumption that the main centre of administration concides with the seat fixed by the articles of incorporation Groups of companies – even if the parent company effectively governs its subsidiary, their seats still are split Groups of companies – even if the parent company effectively governs its subsidiary, their seats still are split

9. Remarks on the C ase #1 The defendant’s contention makes no big sense The defendant’s contention makes no big sense The company’s director is in the Caymans, there are formal links to that country The company’s director is in the Caymans, there are formal links to that country Irrelevant where the company economically operates Irrelevant where the company economically operates There is a chance only if the defense proves that it is Stefan B. himself who governs the company There is a chance only if the defense proves that it is Stefan B. himself who governs the company Burden of proof lies with the defendant (excipiendo reus actor fit) Burden of proof lies with the defendant (excipiendo reus actor fit)

10. Remission or Transmission (Renvoi Revisited) Article 17(2) PILA: However, if the law determined under paragraph (1) refers to the law of the state according to which the legal person has been incorporated, that law applies. Article 17(2) PILA: However, if the law determined under paragraph (1) refers to the law of the state according to which the legal person has been incorporated, that law applies. The provision seeks to co-ordinate the opposing theories through the renvoi The provision seeks to co-ordinate the opposing theories through the renvoi Polish court has to make a ‘double-check’: (i) the Polish conflicts law; (ii) the foreign law of conflict of laws Polish court has to make a ‘double-check’: (i) the Polish conflicts law; (ii) the foreign law of conflict of laws Both kinds of renvoi (remission – coming back to Poland; transmission – going on abroad) are in view Both kinds of renvoi (remission – coming back to Poland; transmission – going on abroad) are in view

11. Case #2 A Dutch company Beta BV (besloten vennootschap = company limited) moves its center of administration from the Netherlands to Switzerland. It operates mainly in the Polish market. Which law applies? A Dutch company Beta BV (besloten vennootschap = company limited) moves its center of administration from the Netherlands to Switzerland. It operates mainly in the Polish market. Which law applies?

12. Remarks on the Case #2 Polish law designates the law of the company’s seat as applicable  the Swiss law as a whole applies Polish law designates the law of the company’s seat as applicable  the Swiss law as a whole applies Double-check: Article 154 of the Swiss PILA (IPRG): The companies are governed by the law of the country according to which they were organized, provided that they fulfil its rules on the publication or registration… Double-check: Article 154 of the Swiss PILA (IPRG): The companies are governed by the law of the country according to which they were organized, provided that they fulfil its rules on the publication or registration… Swiss law transmits the question of the company to the law of the country where it was set up  the Dutch law Swiss law transmits the question of the company to the law of the country where it was set up  the Dutch law The latter is to be understood as substantive only (we are cutting the conflicts rules off) The latter is to be understood as substantive only (we are cutting the conflicts rules off)

13. Scope of the Law Applicable Article 17(3) PILA – non-exhaustive enumeration: Formation, merger, division, transformation and dissolution of a legal person Formation, merger, division, transformation and dissolution of a legal person Nature of a legal person (What type of a company is it?) Nature of a legal person (What type of a company is it?) Name and business name Name and business name Capacity Capacity Corporate bodies (How many of them? What functions and powers? Who appointed and how?) Corporate bodies (How many of them? What functions and powers? Who appointed and how?) Representation (Who has to act in the name of the corporation/other body) Representation (Who has to act in the name of the corporation/other body) Shareholders’/Members’ status Shareholders’/Members’ status Subsidiary lialibity of the shareholders (and the like) Subsidiary lialibity of the shareholders (and the like) Legal responsibility for the breach of law, articles of incorporation… Legal responsibility for the breach of law, articles of incorporation…

14. Effects of the Transfer of Company’s Seat

15. Core Problems Moving of the company’s registered office from one country to the other may result in the change of the law applicable to it Moving of the company’s registered office from one country to the other may result in the change of the law applicable to it More probably in the model of the real seat More probably in the model of the real seat Less frequent (and theoretically impossible) if the incorporation theory is adopted Less frequent (and theoretically impossible) if the incorporation theory is adopted What to do in order to continue the moral personality untouched? What to do in order to continue the moral personality untouched?

16. The European Dimension (I) EU law fights out the real seat doctrine step by step EU law fights out the real seat doctrine step by step The significance of Articles 49 and 54 TFEU The significance of Articles 49 and 54 TFEUArticles 49 and 54 TFEUArticles 49 and 54 TFEU C-208/00 Überseering C-208/00 Überseering 1. 1. Where a company formed in accordance with the law of a Member State (`A') in which it has its registered office is deemed, under the law of another Member State (`B'), to have moved its actual centre of administration to Member State B, Articles 43 EC and 48 EC preclude Member State B from denying the company legal capacity and, consequently, the capacity to bring legal proceedings before its national courts for the purpose of enforcing rights under a contract with a company established in Member State B. 2. 2. Where a company formed in accordance with the law of a Member State (`A') in which it has its registered office exercises its freedom of establishment in another Member State (`B'), Articles 43 EC and 48 EC require Member State B to recognise the legal capacity and, consequently, the capacity to be a party to legal proceedings which the company enjoys under the law of its State of incorporation (`A').

17. The European Dimension (II) C-210/06 Carthesio, at 110-111 C-210/06 Carthesio, at 110-111 1. 1. …a Member State has the power to define both the connecting factor required of a company if it is to be regarded as incorporated under the law of that Member State and, as such, capable of enjoying the right of establishment, and that required if the company is to be able subsequently to maintain that status. That power includes the possibility for that Member State not to permit a company governed by its law to retain that status if the company intends to reorganise itself in another Member State by moving its seat to the territory of the latter, thereby breaking the connecting factor required under the national law of the Member State of incorporation. 2. 2. Nevertheless, the situation where the seat of a company incorporated under the law of one Member State is transferred to another Member State with no change as regards the law which governs that company falls to be distinguished from the situation where a company governed by the law of one Member State moves to another Member State with an attendant change as regards the national law applicable, since in the latter situation the company is converted into a form of company which is governed by the law of the Member State to which it has moved.

18. Conclusions In Überseering and Carthesio, a certain substantive effect was suggested but no true answer to the dilemmas of the conflict of laws In Überseering and Carthesio, a certain substantive effect was suggested but no true answer to the dilemmas of the conflict of laws The EU law does not treat preferentially the real seat doctrine but it does not definitively exclude it The EU law does not treat preferentially the real seat doctrine but it does not definitively exclude it The uniformity of application of laws is difficult to attain without a Community legislative action The uniformity of application of laws is difficult to attain without a Community legislative action

19. National Answer to the EU Requirements Article 19 PILA Article 19 PILA Confirms the changeability of the law applicable to the moral persons (1 st sentence) Confirms the changeability of the law applicable to the moral persons (1 st sentence) Seeks to preserve the acquired personality forbidding its non-recognition in the case of the seat transfer within the European Economic Area (2 nd and 3 rd sentence) Seeks to preserve the acquired personality forbidding its non-recognition in the case of the seat transfer within the European Economic Area (2 nd and 3 rd sentence) Provisions superfluous or even pointless Provisions superfluous or even pointless The core problem belongs to the substantive law of companies The core problem belongs to the substantive law of companies

20. International Transformation of the Company

21. Core Problems The continuation of the moral personality makes it necessary to enable the legal transformation of a company (moral person) into the entity governed by the law of the receiving country The continuation of the moral personality makes it necessary to enable the legal transformation of a company (moral person) into the entity governed by the law of the receiving country ECJ in C-378/10VALE Építési kft, point 1. of the Operating Part: ECJ in C-378/10 VALE Építési kft, point 1. of the Operating Part: Articles 49 TFEU and 54 TFEU must be interpreted as precluding national legislation which enables companies established under national law to convert, but does not allow, in a general manner, companies governed by the law of another Member State to convert to companies governed by national law by incorporating such a company. Articles 49 TFEU and 54 TFEU must be interpreted as precluding national legislation which enables companies established under national law to convert, but does not allow, in a general manner, companies governed by the law of another Member State to convert to companies governed by national law by incorporating such a company.

22. Thanks for your attention!