Filip Køepelka, Masarykova univerzita (krepelka@law.muni.cz)

                           Course: Introduction to the European Union Law

                            [7] Companies, services, capital - payments

   

   Free movement of legal entities (companies)

   Same chapter of ECT covers both individuals and legal entities: both enjoy right of
   establishment (to do continuous bussiness according to host state legislation.

   The liberalisation of continuous commercial presence in other states is more important -- from
   economical point of view - than freedom of establishment (of individuals). Corporations are
   key tool for modern economic activities individuals are not capable to perform.

   In general, legal entities are legal instrument for collective action: modern state laws
   enable existence and activity of various legal entities (legal persons): companies,
   cooperatives, foundations, associations including churches and political parties, various
   state or public institutions or private charities. There is big difference among states in
   variability of forms of legal entities. However, every legal entity serves human needs:
   individuals or groups of individuals are behind all legal entitities. Even states and
   international organisations (incl. ECs) are legal entities. 

   If compared with individuals it is more difficult to describe the group of legal entities
   enjoying community right to establishment.

   Individuals = member state citizenship (nationality): EU citizenship. EU-aliens are entitled
   only in special circumstances (family members)

   Legal entities = only if based  on (incorporated) legislation of some member states and with
   seat in some of them (formal seat is sufficient). Only legal entities enjoy the right of
   establishment if the law creates them for making profits: companies (majority of European
   states allow creation of several types of companies)  are generally covered and cooperatives
   expressly mentioned. On the other hand,  other legal entities (associations, various
   institutions) do not enjoy the right of establishment expressed in ECT.

   Member states companies are entitled to establish agency, branch or subsidiary ("doughter
   companies"), participation of citizens of other member states in their capital enjoys same
   treatment. 

   EC law provides for extensive harmonisation of company legislation of member states, including
   their book-keeping (accounts) and holding taxations. This harmonisation enables far-reaching
   richt to establishment. Nevertheless, different requirements open the door to deliberate
   selection of law for incorporation (Delaware effect?) 

   New EC regulations enable establishment of "EC legal entities", including "Societas Europea"
   (European stock company).  

   Freedom to provide services

   The freedom to provide services fulfills the internal market. It covers all economic
   activities crossing borders of member states which are not delivery of goods, movement of
   workers, right to establishment or investment or payment. ECT additionally provides
   non-exhaustive list of services.

   Services are the most important part of economy of all modern rich countries. There are many
   kinds of services: banking and insurance, construction, transport, data processing, education
   and training, healthcare, social services, telecommunication, leasing, tourism services,
   various advises and consultations etc. etc.  

   However, international trade in services is limited, although it increases significantly.
   There are several natural obstacles (language barriers, distance) and legal obstacles. New
   technologies (data transmission, Internet) enable new kinds of services to be provided
   internationally. 

   ECT prohibits every discrimination (based on nationality or residence) of providers or
   consumers of cross-border services or these services in general.  The Court of Justice has
   added occassional refusals of restrictive measures applied without distinction. Case-law
   condemns many state legal and administrative practices. However, this -- according to opinion
   of the Commission and many experts -- has not removed artificial obstacles based on them.
   Therefore, there is proposal of "services directive" for final "liberalisation". 

   Special ECT provisions and rich secondary law  cover financial services and transport.

   Financial services are subject of complicated harmonisation (exclusively directives). These
   directives provided for standard regulatory environment throughout the EU, ensuring similar
   protection of consumers of financial services.

   Transport is key service for all EC integration. Therefore, EC law covers all modes of
   transport: road, rail, air, river and maritime transports. EC law enhances liberalisation of
   these sectors, usually monopolized several decades ago.

   The interpretation of ECT provisions on freedom to provide services by the Court of Justice
   touched many social services provided by states or reimboursed by them (actually healthcare,
   culture, potentially social services, education). It contributes to more competition and
   improvement. However, it can destabilise these sensitive sectors. The powers of ECs are
   limited, ECT recognizes the importance of services of general interests and confirm the powers
   of member states to organize and finance their healthcare and education services.

   Payments and capital

   EC law provides for removal of all barriers to payments. Freedom to pay for goods, services
   and labour is necessary for realisation of free movement of goods, workers, right to
   establishment or freedom to provide services. Without possibility to pay without any obstacles
   these basic freedoms cannot be achieved. EC law allows controls of payments (various types:
   cash, bank transfers etc.) necessary for prevention of tax evasion or money-laundering.
   Freedom to pay covers also transactions with non-member states.

   EC law gradually liberalised movement of capital (freedom to invest). Broad definition of
   capital shall be taken into consideration. Capital is property used for investment by any of
   wide range of legal instruments (loans, bank savings, acquisition of shares, movable or
   immovable property etc.). Usually, money is trasferred from state to state. EC law prohibits
   any obstacles of investment, use (taxation) or withdrawal of capital. EC law allows -- in
   exceptional circumstances -- temporary restriction of capital flows with the third countries.

   Homework: read judgement Kohll (C-158/96), ECR, 1998, I-1931