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Introduction to Polish PIL: Law Applicable to Moral Persons

This article provides an introduction to the law applicable to moral persons in Poland, discussing key concepts such as the place of incorporation and the real seat doctrine. It also explores relevant case studies and the European dimension of this area of law.

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Introduction to Polish PIL: Law Applicable to Moral Persons

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

  2. Law Applicableto Moral Persons

  3. Law GoverningMoralPersonsKeyConcepts • Competingideas of the connectingfactor • The place of incorporation(settingup/registering) • The place of the company’sseat: • ‘real’ seat • statutory (formal) seat

  4. Article 17(1) PILA A moral person isgoverned by the law of the state in whichithasits seat. Whatis the „seat”? Viewpointsamongscholars

  5. Case #1 • Aninhabitant of Warsaw Stefan B. set upan off-shorecompanynamedAlpha Trading Ltd. It isregistered in the CaymanIslands. Alpha Trading operatesonly in the Polishnational market, itdoes not seek to establishanytruelinks to the foreigncountries. It hasregitered the websitedomainat .ky and the company’sdirectoris a locallawyer but all the assetsarelocated in Poland. Lodginghisdefensebefore the court, one of the company’sdebtorspetitions for rejecting the lawsuitdue to the lack of the applicant’scapacity to take part in the dispute. • Is the defendantright? Whichnational law applies: the Polishor the Cayman one?

  6. Real Seat Doctrine • Under the continental (mainly German) doctrine of the real seat, the place where the companyisadministeredplays a role (=where the strategicdecisionsaretransformedintoday-to-dayactivities of a company, where the companyoperates) • No party autonomy in the internationalcompany law! (?!) • Evenif the companyisformallygoverned by the foreign law, itmay be found to be a ‘falseforeigncompany’ (German: dieScheinauslandsgesellschaft) • Such a companydoes not exist (!) in a legalsense, itisat the most a form of a pre-incorporationcompany

  7. Incorporation Doctrine Quite opposite to what may be established in the light of the real seat concept 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

  8. Approaching Techniques Rebuttablepresumptionthat the maincentre of administrationconcides with the seat fixed by the articles of incorporation Groups of companies– evenif the parentcompanyeffectivelygovernsitssubsidiary, theirseatsstillaresplit

  9. Remarks on the Case #1 The defendant’scontentionmakes no big sense The company’sdirectoris in the Caymans, thereareformallinks to that country Irrelevantwhere the companyeconomicallyoperates Thereis a chanceonlyif the defenseprovesthatitis Stefan B. himselfwhogoverns the company Burden of proof lies with the defendant (excipiendoreusactorfit)

  10. Remission or Transmission(Renvoi Revisited) Article 17(2) PILA:However, if the law determinedunderparagraph (1) refers to the law of the stateaccording to which the legal person hasbeenincorporated, that law applies. The provisionseeks to co-ordinate the opposingtheoriesthrough the renvoi Polishcourthas to make a ‘double-check’: (i) the Polishconflicts law; (ii) the foreign law of conflict of laws Both kinds of renvoi (remission – comingback to Poland; transmission – going on abroad) are in view

  11. Case #2 A Dutch company Beta BV (beslotenvennootschap= companylimited) movesitscenter of administration from the Netherlands to Switzerland. It operatesmainly 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 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 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 Nature of a legal person (What type of a company is it?) Name and business name Capacity 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) Shareholders’/Members’ status Subsidiary lialibity of the shareholders (and the like) Legal responsibility for the breach of law, articles of incorporation…

  14. Effects of the Transferof Company’s Seat

  15. Core Problems Moving of the company’sregisteredoffice from one country to the othermayresult in the change of the law applicable to it Moreprobably in the model of the real seat Less frequent (and theoreticallyimpossible) if the incorporationtheoryisadopted What to do in order to continue the moralpersonalityuntouched?

  16. The European Dimension (I) EU law fights out the real seat doctrine step by step The significance of Articles 49 and 54 TFEU C-208/00 Überseering 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. 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 …a MemberStatehas the power to defineboth the connectingfactorrequired of a companyifitis to be regarded as incorporatedunder the law of thatMemberState and, as such, capable of enjoying the right of establishment, and thatrequiredif the companyis to be ablesubsequently to maintainthat status. Thatpowerincludes the possibility for thatMemberStatenot to permit a companygoverned by its law to retainthat status if the companyintends to reorganiseitself in anotherMemberState by movingits seat to the territory of the latter, therebybreaking the connectingfactorrequiredunder the national law of the MemberState of incorporation. Nevertheless, the situationwhere the seat of a companyincorporatedunder the law of one MemberStateistransferred to anotherMemberState with no change as regards the law whichgovernsthatcompanyfalls to be distinguished from the situationwhere a companygoverned by the law of one MemberStatemoves to anotherMemberState with anattendantchange as regards the national law applicable, since in the lattersituation the companyisconvertedinto a form of companywhichisgoverned by the law of the MemberState to whichithasmoved.

  18. Conclusions 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 uniformity of application of laws is difficult to attain without a Community legislative action

  19. National Answerto the EU Requirements Article 19 PILA Confirms the changeability of the law applicable to the moralpersons (1stsentence) Seeks to preserve the acquiredpersonalityforbiddingits non-recognition in the case of the seat transfer within the EuropeanEconomicArea (2nd and 3rdsentence) Provisionssuperfluousorevenpointless 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 ECJ in C-378/10VALEÉpítési 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.

  22. Thanks for yourattention!

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