¹ See Latty, E.R., “Pseudo-Foreign Corporations” (1955) 65 Yale L.J. 137.CrossRefGoogle Scholar

² See Grossfeld, , Rabels Z, 1967, 1Google Scholar; Caflisch, Ann. Suisse de Dr. Int. 1967; Grasman, , System des lnternationalen Gesellschaftesrechts (1970)Google Scholar; Steiner, and Vagts, , Transnational Legal Problems, (1968)Google Scholar; Baade, , Rabels Z. 1973, at p. 34.Google Scholar

³ Rabel, Ernst, The Conflict of Laws A Comparative Study, 2nd. ed. (1960), Vol. II p. 3Google Scholar

⁴ Consider the criteria used initially by the British Government when it wanted to protect its nationals from “quota hopping” by Spanish owned British registered fishing vessels. It redefined eligibility to register as a British fishing vessel in the Merchant Shipping Act 1988 in terms of the vessel needing to be British owned, a concept which referred to the legal and beneficial ownership of vessels being vested in “qualified persons or companies”. Qualified companies for this purpose were defined as those which were incorporated in the United Kingdom, had their principal place of business there, had a defined percentage of their shares legally and beneficially owned by “qualified persons” and had such “qualified persons” as a defined percentage of its directors. “Qualified persons” were in turn defined as British citizens resident and domiciled in the United Kingdom. This legislation used quite a number of connecting factors in a cumulative way, but was held to fall foul of Articles 52 and 221 of the Treaty of Rome in the Factortame decision. See R. v. Secretary of State for Transport ex parte Factortame Ltd. (No. 2) (Case C–213/89) [1991] 1 A.C. 603.

⁵ It is interesting to note that Swiss law has recently adopted the place designated in the articles or contract of association as the test for determining the seat, and hence the domicile, of a company in its private international law (see below).

⁶ This may not always be such an easy matter where, for example, two states lay claim to the same territory, or where there are both de facto and de jure authorities competing for international recognition. For an explanation of the way in which some of these problems are resolved under UK law see the Foreign Corporations Act 1991 and the comments in Dicey, and Morris, , The Conflict of Laws, 12th ed. by Collins, L. (1993), at pp. 1109–1110.Google Scholar

⁷ Op. cit., at p. 1107.

⁸ Ibid., at p. 1111.

⁹ Ibid., at p. 1112.

¹⁰ See the cases cited ibid., at p. 1113.

¹¹ For example, in the case of Russian Reinsurance Co. v. Stoddard, 240 NY. 149, 147 N.E. 703 (1925) the Court of Appeals stated, “If the existence of the [foreign] corporation, its capacity to sue, or the authority of its directors to represent it or to bring the action is challenged, we look to the charter and the law of its corporate domicile for the data upon which we may rest our determination of such questions.”

¹² The Restatement (Second), Conflict of Laws, § 301 (1971) provides: “The rights and liabilities of a corporation with respect to a third person that arise from a corporate act of a sort that can likewise be done by an individual are determined by the same choice-of-law principles as are applicable to non-corporate parties.”

¹³ Rees, W. and Kaufman, E., “The Law Governing Corporate Affairs: Choice of Law and Full Faith and Credit”, (1958) 58 Columbia L.Rev. 1118, 1121.Google Scholar

¹⁴ Op. cit., at p. 1122.

¹⁵ The Restatement (Second), Conflict of Laws, § 302 (1971) provides: “(1) issues involving the rights and liabilities of a corporation, other than those dealt with in § 301, are determined by the local law of the state which, with respect to the particular issue, has the most significant relationship to the occurrence and the parties … (2) The local law of the state of incorporation will be applied to determine such issues, except in the unusual case where, with respect to the particular issue, some other state has a more significant relationship to the occurrence and the parties, in which event the local law of the other state will be applied.”

¹⁶ Op. cit., at p. 1125.

¹⁷ See for example the case of Hausman v. Buckley, 299 F.2d 696, 93 A.L.R. 2d 1340 (2d Cir.), cert, denied, 369 (US) 885 (1962) concerning a Venezuelan corporation.

¹⁸ Western Airlines Inc. v. Sobieski, 191 Cal.App. 2d 399, 12 Cal.Rptr. 719 (1961). See also Weede v. Bechtel, 239 Iowa 1298, 31 N.W. 2d 853, 8 A.L.R. 2d 1162 cert, denied 337 U.S. 918 (1948).

¹⁹ Leflar, R., American Conflicts Law, 3rd ed. (1977) at p. 512Google Scholar, see also Latty, “Pseudo Foreign Corporations” (op. cit. n. 1 above), and the case of Mansfield Hardwood Lbr. Co. v. Johnson, 268 F.2d 317 (5th Cir.), cert, denied. 361 U.S. 885, 926 (1959).

²⁰ Op. cit. n. 13 above, at p. 1144.

²¹ The author is indebted to Mark Farrell, a lawyer working with the legal department of ABB, for this information on Swiss law.

²² This translation of the Swiss text is taken from, Karrer, P. and Arnold, K., Switzerland's Private International Law Statute of 18 December 1987.Google Scholar

²³ Vischer , III, Der fraus legis—Vorbehalt unter der Herrschaft des IPRG p. 1346—translation by Farrell, Mark (see n.21 above).Google Scholar

²⁴ See art. 21 of the Swiss Private International Law Statute of 18 December 1987 set out above.

²⁵ Swiss Private International Law Statute Arts. 154 and 155.

²⁶ Vischer III op. cit. p. 1346—translation by Mark Farrell (see n. 21 above).

²⁷ Bundesgericht, 17 December 1991, BGE, II, 7, 494 et seq.

²⁸ See chapter by Rammeloo, S. in Wouters, J. and Schneider, H. (eds.), Current Issues of Cross-Border Establishment of Companies in the European Union (Antwerp, 1995), at p. 65.Google Scholar

²⁹ Loussouarn, Y. and Bourel, P., Droit International Privé (Paris, 1993) at p. 657.Google Scholar

³⁰ Batiffol, H. and Lagarde, P., Droil International Privé 8th ed. (Paris. 1993) Vol. 1 at p. 339.Google Scholar

³¹ Ibid., citing Req. 28 Oct. 1941. G.P. 1942.1.18; and Req. 22 Dec. 1941. S. 1942.1.31. They also cite Greek decisions to the same effect.

³² Op. cit., at p. 339 n.5.

³³ Wulf-Henning Roth in his contribution to Current Issues of Cross-Border Establishment of Companies in the European Union at p. 32, referring to the decision reported at BGH, 21 March 1986, BGHZ, 97, 269, 272.

³⁴ See for example the views of Laurent, in Droit Civil International 1880–1881, Vol. 4, pp. 256Google Scholar, 293 §§ 130, 154, and in Prineipes de droit français, 5th ed. 1893, Vol. 4, pp. 232, 285 § 119, Weiss, , Traitè Thèoretique et Practique de Droit International Privé Vol. II p. 448Google Scholar, and Vol. IV p. 695, Taney, Judge in Bank of Augusta v. Earle (1839) 13 Pet. S.C. 519, at p. 588Google Scholar, and Field, J. in Paul v. Virginia (1868) 8 Wall. 168.Google Scholar See generally Rabel, , The Conflict of Laws: A Comparative Study, at pp. 124–128.Google Scholar

³⁵ See for example the views on the “real will” and the “real” existence of corporations and other associations put forward by Gierke, Otto in Die Genossenschaftstheorie und die Deutsche Rechtsprechung (1887) 5, 604.Google Scholar

³⁶ Rabel, op. cit., at p. 132.Google Scholar

³⁷ In their “Explanation of the Civil Code”, Georgiades and Stathopoulos, commenting on art. 10, state, “The formation of the legal entity is to be regulated by the law of its seat (Athens Court of Appeal 2701/1968). Even if the type of company is unknown to Hellenic law, this does not affect the acknowledgement of the legal personality within Hellas.” [Translation by Grace Katsoulis]

³⁸ Beltramo., M.Longo, G. and Merryman, J., The Italian Civil Code (Dobbs Ferry, N.Y., 1969).Google Scholar

³⁹ Ibid.

⁴⁰ Maisto, & Miscali, , Business Law Guide to Italy (Wiesbaden 1992) § 404 at p. 35.Google Scholar

⁴¹ See BGH, NJW. 1986, 2194, 2195; OLG München, NJW 1986. 2197, 2198; OLG Hamburg. NJW 1986, 2199; OLG Oldenburg, NJW 1990, 1422.

⁴² See the decision of the Bayerisches Oberstes Landgericht. (BayObLG, 7 May 1992. ZIP, 1992. 842), cited by Wulf-Henning Roth in his contribution to Current Issues of Cross-Bonier Establishment of Companies in the European Union, at p. 31.

⁴³ L.G. Marburg. RIW, 1994, 63.

⁴⁴ (1728) 2 Ld.Raym. 1532. 92 E.R. 494.

⁴⁵ See Dicey, and Morris, , The Conflict of Laws, at p. 1107.Google Scholar

⁴⁶ Dreyfus v. CIR (1929) 14 TC 560 at 576–577.

⁴⁷ See the discussion by Rammeloo, Stephan in Current Issues of Cross-Border Establishment of Companies in the European Union, at pp. 52–55.Google Scholar

⁴⁸ Ibid., at p. 54.

⁴⁹ Netherlands Supreme Court, 20 April 1990, RvdW, 1990, 84, NJ, 1991, 560.

⁵⁰ See Rb. Amsterdam, 6 April 1982, WPNR 5765, p. 817. The matter may also be affected by the application of the doctrine of “fraus legis”. However, in a later case before the Dutch Supreme Court, 11 November 1988, NJ, 1989, 606, known as the Texelse Visser case, the court showed itself to be unwilling to subject foreign companies to the provisions of Book II of the Dutch Civil Code which require Dutch companies to register, on pain of the joint and several liability of their directors.

⁵¹ There are reputed to be some 6,000 of such companies according to Prof. L. Timmerman (University of Groeningen).

⁵² See section IV D below.

⁵³ Pasicrisie 1849.1.221.

⁵⁴ See Goldman, B. and Lyon-Caen, A., Droit Commercial Européen, 4th ed., (Paris, 1993) at p. 130.Google Scholar

⁵⁵ See the sub-committee draft of the League of Nations for an international treaty on commercial companies.

⁵⁶ A commentary on these rules from an essentially UK perspective is provided by Drucker, T., “Companies in Private International Law”, (1968) 17 I.C.L.Q. 28.CrossRefGoogle Scholar

⁵⁷ [1897] A.C. 22, House of Lords.

⁵⁸ See Charny, David, “Competition among Jurisdictions in formulating Corporate Law Rules: An American Perspective on the ‘Race to the Bottom’ in the European Communities” (1991) 32 Harv.Int.L.J. 423 at. pp. 427–428Google Scholar, citing, inter alia, Butler, Henry N., “Nineteenth Century Jurisdictional Competition in the Granting of Corporate Privileges”, (1985) 14 J. Legal Stud. 129.CrossRefGoogle Scholar

⁵⁹ David Charny ibid.

⁶⁰ Bebchuk, Lucian A., “Federalism and the Corporation: The Desirable Limits on State Competition in Corporate Law”, (1992) 105 Harv.L.R. 1437.CrossRefGoogle Scholar

⁶¹ See the dissenting opinion of Brandeis, J. in Liggett v. Lee, 288 U.S. 517, 557–560 (1933).Google Scholar

⁶² Cary, William, “Federalism and Corporate Law: Reflections upon Delaware”, (1974) 83 Yale L.J. 663.CrossRefGoogle Scholar

⁶³ Ibid., at p. 705.

⁶⁴ Bebchuk, op. cit., at p. 1445.

⁶⁵ Easterbrook, Frank, “Managers' Discretion and Investors' Welfare: Theories and Evidence”, 9 Del.J.Corp.L. 540Google Scholar; Easterbrook, Frank & Fischel, Daniel, “Voting in Corporate Law”, (1983) 26 J.L. & Econ. 395Google Scholar; Fischel, Daniel, “The ‘Race to the Bottom’ Revisited: Reflections on Recent Developments in Delaware's Corporation Law”, (1982) 76 Nw.U.L.Rev. 913Google Scholar; Winter, Ralph, “State Law, Shareholder Protection, and the Theory of the Corporation”, (1977) 6 J. Legal Stud. 251CrossRefGoogle Scholar; Dodd, Peter & Leftwich, Richard, “The Market for Corporate Charters: ‘Unhealthy Competition’ Versus Federal Regulation”, (1980) 53 J.Bus. 259.CrossRefGoogle Scholar

⁶⁶ See for example Coffee, John, “The Future of Corporate Federalism: State Competition and the New Trend Toward De Facto Federal Minimum Standards” (1987) 8 Cardozo L.Rev. 759.Google Scholar

⁶⁷ See Romano, Roberta, “The Political Economy of Takeover States” (1987) 73 Va.L.Rev. 111; “The State Competition Debate in Corporate Law” (1987) 8 Cardozo L.Rev. 709; “Law as a Product: Some Pieces of the Incorporation Puzzle” (1985) 1 J.L.Econ. & Org. 225.CrossRefGoogle Scholar

⁶⁸ Bebchuk, op. cit., at pp. 1446–47.Google Scholar

⁶⁹ Ibid., at p. 1510.

⁷⁰ Ibid.

⁷¹ See for example the excellent Chapter 9 in Cheffms, Brian, Company Law: Theory Structure and Operation, (Oxford 1997), pp. 421–151Google Scholar; David Charny op. cit.; Ebke, Werner, “The Limited Partnership and Transnational Combinations of Business Forms: ‘Delaware Syndrome’ Versus European Community Law” (1988) 22 Int. Lawyer 191.Google Scholar

⁷² Batiffol, and Lagarde, op. cit., at p. 338.Google Scholar

⁷³ Germain, Michel, “La société par actions simplifiée”, (1994) La Semaine Juridique (JCP) Éd. G. no. 12 p. 153.Google Scholar

⁷⁴ Dr. Meinhardt, P., Company Law in Europe, 3rd ed. (Aldershot, 1981), at entry FL.-Intr(ii).Google Scholar

⁷⁵ Ibid., at FL(AG)-2(iii) where publicity for the formation of a domiciliary enterprise is not published in the official journals as ordinary public companies (AG) are, but is instead posted as a notice on the announcement board of the court (Personen- und Gesellschaftsrecht art. 955).

⁷⁶ Sealy, L.S., Xuereb, P.G., Drury, R.R., Emmanuel, C.R., Gray, S.J., Murphy, C. and Smith, D. (eds.), International Corporate Procedures (Jordans, loose-leaf), entry for Leichtenstein IV A 1.Google Scholar

⁷⁷ For further details of these cases see Batiffol, and Lagarde, op. cit., at p. 338.Google Scholar

⁷⁸ Cath, Inne G.F., “Freedom of Establishment of Companies: a New Step Towards Completion of the Internal Market” (1986) 6 Y.B.Eur.L. 247, 250.Google Scholar

⁷⁹ See for example Ebke, Werner, “The Limited Partnership and Transnational Combinations of Business Forms: ‘Delaware Syndrome’ versus European Community Law” (1988) 22 The International Lawyer 191.Google Scholar

⁸⁰ Latty, Elvin R., “Pseudo–Foreign Corporations” (1955) 65 Yale L.J. 137.CrossRefGoogle Scholar

⁸¹ 128 N.Y. 205, 28 N.E. 645 (1891).

⁸² Latty, , op. cit., at p. 150.Google Scholar

⁸³ Cleaton v. Emery, 49 Mo.App. 345 (K.C.Ct.App. 1892).

⁸⁴ Latty, op. cit., at p. 140.Google Scholar

⁸⁵ Ibid., at p. 141.

⁸⁶ Carney, William in Current Issues of Cross Border Establishment of Companies in the European Union, at p. 256.Google Scholar

⁸⁷ See Rabel, E., The Conflict of Laws: A Comparative Study, at pp. 203–204Google Scholar, where it is noted that the party dealing with the corporation is still bound to the contract, and the offending corporation may sue on the contract in the courts of other states and in the federal courts.

⁸⁸ Ibid., at p. 205.

⁸⁹ Latty, op. cit., at pp. 156–158.Google Scholar

⁹⁰ Latty, op. cit., at p. 154.Google Scholar He cites as an example the case of State ex rel. Weede v. Iowa Southern Utilities Co. of Delaware, Iowa 784, 2 N.W. 2d 372 where a local Iowa statute that made certain provisions of Iowa corporations law applicable to foreign public utility corporations was applied to a Delaware corporation with utility properties solely in Iowa by a court which emphasised the essentially local character of the corporation.

⁹¹ See for example the provisions of ss. 406–114 of the Companies Act 1948, and later those of Part XXIII Companies Act 1985. The registration process included the provision of copies of the constitution of the company, a list of directors and secretary and the names of one or more persons resident in Great Britain authorised to accept service of process and notices. Names used by overseas companies are regulated, and they are required to register copies of their balance sheet and profit and loss accounts.

⁹² 87/666/EC implemented in the UK by the Oversea Companies and Credit and Financial Institutions (Branch Disclosure) Regulations 1992.

⁹³ The provisions governing the registration of accounts are now slightly less rigorous than formerly, because accounts which under the law of the place of incorporation are required to be prepared, audited and disclosed are now acceptable in the UK.

⁹⁴ See for example the decision of the Bundesgericht, 7 October 1982, BGE, 108, II, 318 et seq.

⁹⁵ Swiss Private International Law Statute Art. 154. See Samuel, A., “The New Swiss Private International Law Act”, (1988) I.C.L.Q. 681.CrossRefGoogle Scholar

⁹⁶ Switzerland's Private International Law Statute, trans. Karrer, P. and Arnold, K., (Deventer, 1989), at p. 143.Google Scholar

⁹⁷ Ibid.

⁹⁸ Case 79/85 Segers v. Bedrijfsvereging voor Bank-en Vezekeringswezen, Groothandel en Vrije Beroepen [1986] ECR 2375.

⁹⁹ Rammeloo, S. in Current Issues of Cross Border Establishment of Companies in the European Union, at p. 56.Google Scholar

¹⁰⁰ Ibid., at p. 59.

¹⁰¹ Ibid., at p. 56. These rules include registration, certification of compliance with Dutch minimum capital rules and submission of annual accounts and audit rules. These latter provisions though do not apply to companies governed by the law of an EU state.

¹⁰² Ibid. at pp. 60–61. These rules will relate in a similar fashion to registration, publicity, minimum capital and disclosure of accounts.