Kamer van Koophandel en Fabrieken voor Amsterdam v Inspire Art Ltd.
Date: 2003-09-30
42. In this connection, settled case-law makes it clear that the procedure provided for by Article 234 EC is an instrument for cooperation between the Court of Justice and the national courts (see, inter alia, Case C-343/90  Lourenço Dias  [1992] ECR I-4673, paragraph 14).
43. In the context of that cooperation, the national court before which the dispute has been brought, which alone has direct knowledge of the facts of the case in the main proceedings and must assume responsibility for the subsequent judicial decision, is in the best position to determine, in the light of the particular circumstances of the case, both the need for a preliminary ruling in order to enable it to deliver judgment and the relevance of the questions which it submits to the Court ( Lourenço Dias , cited above, paragraph 15, and Case C-390/99  Canal Satélite Digital  [2002] ECR I-607, paragraph 18).
44. Consequently, where the question submitted by the national court concerns the interpretation of Community law, the Court of Justice is, in principle, bound to give a ruling ( Lourenço Dias , paragraph 16; Case C-415/93  Bosman  [1995] ECR I-4921, paragraph 59; Case C-379/98  PreussenElektra  [2001] ECR I-2099, paragraph 38, and  Canal Satélite Digital , cited above, paragraph 18).
45. It is nevertheless equally settled case-law that the Court considers that it may, if need be, examine the circumstances in which the case was referred to it by the national court, in order to assess whether it has jurisdiction (Case 244/80  Foglia  [1981] ECR 3045, paragraph 21, and  Canal Satélite Digital , paragraph 19).  The spirit of cooperation which must prevail in preliminary ruling proceedings requires the national court for its part to have regard to the function entrusted to the Court of Justice, which is to contribute to the administration of justice in the Member States and not to give opinions on general or hypothetical questions (see,  inter alia ,  Foglia , cited above, paragraphs 18 and 20;  Lourenço Dias , paragraph 17;  Bosman , cited above, paragraph 60, and Case C-451/99  Cura Anlagen  [2002] ECR I-3193, paragraph 26).
46. Moreover, in order to enable the Court to give a useful interpretation of Community law, it is essential for the national court to explain why it considers that an answer to its questions is necessary for resolving the dispute (see, inter alia,  Foglia , paragraph 17).
47. With that information in its possession, the Court will then be in a position to ascertain whether the interpretation of Community law which is sought is related to the actual nature and subject-matter of the main proceedings.  If it should appear that the question raised is manifestly irrelevant for the purposes of deciding the case, the Court must declare that there is no need to proceed to judgment ( Lourenço Dias , paragraph 20).
62. The Court has consistently held that where a Community regulation does not specifically provide any penalty for an infringement or refers for that purpose to national laws, regulations and administrative provisions, Article 10 EC requires the Member States to take all measures necessary to guarantee the application and effectiveness of Community law.  For that purpose, while the choice of penalties remains within their discretion, they must ensure in particular that infringements of Community law are penalised in conditions, both procedural and substantive, which are analogous to those applicable to infringements of national law of a similar nature and importance and which, in any event, make the penalty effective, proportionate and dissuasive (Case 68/88  Commission  v  Greece  [1989] ECR 2965, paragraphs 23 and 24; Case C-326/88  Hansen  [1990] ECR I-2911, paragraph 17; Case C-36/94  Siesse  [1995] ECR I-3573, paragraph 20, and Case C-177/95  Ebony Maritime and Loten Navigation  [1997] ECR I-1111, paragraph 35).
95. The Court has held that it is immaterial, having regard to the application of the rules on freedom of establishment, that the company was formed in one Member State only for the purpose of establishing itself in a second Member State, where its main, or indeed entire, business is to be conducted ( Segers , paragraph 16, and  Centros , paragraph 17).  The reasons for which a company chooses to be formed in a particular Member State are, save in the case of fraud, irrelevant with regard to application of the rules on freedom of establishment ( Centros , paragraph 18).
96. The Court has also held that the fact that the company was formed in a particular Member State for the sole purpose of enjoying the benefit of more favourable legislation does not constitute abuse even if that company conducts its activities entirely or mainly in that second State ( Segers , paragraph 16, and Centros , paragraph 18).
97. It follows that those companies are entitled to carry on their business in another Member State through a branch, and that the location of their registered office, central administration or principal place of business serves as the connecting factor with the legal system of a particular Member State in the same way as does nationality in the case of a natural person (Case 270/83  Commission  v  France  [1986] ECR 273, paragraph 18;  Segers , paragraph 13, and  Centros , paragraph 20.
98. Thus, in the main proceedings, the fact that Inspire Art was formed in the United Kingdom for the purpose of circumventing Netherlands company law which lays down stricter rules with regard in particular to minimum capital and the paying-up of shares does not mean that that company ' s establishment of a branch in the Netherlands is not covered by freedom of establishment as provided for by Articles 43 EC and 48 EC.  As the Court held in  Centros  (paragraph 18), the question of the application of those articles is different from the question whether or not a Member State may adopt measures in order to prevent attempts by certain of its nationals improperly to evade domestic legislation by having recourse to the possibilities offered by the Treaty.
100. The effect of the WFBV is, in fact, that the Netherlands company-law rules on minimum capital and directors ' liability are applied mandatorily to foreign companies such as Inspire Art when they carry on their activities exclusively, or almost exclusively, in the Netherlands.
101. Creation of a branch in the Netherlands by companies of that kind is therefore subject to certain rules provided for by that State in respect of the formation of a limited-liability company.  The legislation at issue in the case in the main proceedings, which requires the branch of such a company formed in accordance with the legislation of a Member State to comply with the rules of the State of establishment on share capital and directors ' liability, has the effect of impeding the exercise by those companies of the freedom of establishment conferred by the Treaty.
103. It must be stressed that, unlike the case at issue in the main proceedings,  Daily Mail and General Trust  concerned relations between a company and the Member State under the laws of which it had been incorporated in a situation where the company wished to transfer its actual centre of administration to another Member State whilst retaining its legal personality in the State of incorporation.  In the main proceedings the national court has asked the Court of Justice whether the legislation of the State where a company actually carries on its activities applies to that company when it was formed under the law of another Member State (Case C-208/00  Überseering  [2002] ECR I-9919, paragraph 62).
107. Given that those rules constitute an impediment to freedom of establishment, it must be considered whether they can be justified on one of the grounds set out in Article 46 EC or, failing that, by an overriding reason relating to the public interest.
Observations submitted to the Court
132. The justifications put forward by the Netherlands Government, namely, the aims of protecting creditors, combating improper recourse to freedom of establishment, and protecting both effective tax inspections and fairness in business dealings, fall therefore to be evaluated by reference to overriding reasons related to the public interest.
133. It must be borne in mind that, according to the Court ' s case-law, national measures liable to hinder or make less attractive the exercise of fundamental freedoms guaranteed by the Treaty must, if they are to be justified, fulfil four conditions: they must be applied in a non-discriminatory manner; they must be justified by imperative requirements in the public interest; they must be suitable for securing the attainment of the objective which they pursue, and they must not go beyond what is necessary in order to attain it (see, in particular, Case C-19/92  Kraus  [1993] ECR I-1663, paragraph 32; Case C-55/94  Gebhard  [1995] ECR I-4165, paragraph 37, and  Centros , paragraph 34).
135. First, with regard to protection of creditors, and there being no need for the Court to consider whether the rules on minimum share capital constitute in themselves an appropriate protection measure, it is clear that Inspire Art holds itself out as a company governed by the law of England and Wales and not as a Netherlands company.  Its potential creditors are put on sufficient notice that it is covered by legislation other than that regulating the formation in the Netherlands of limited liability companies and, in particular, laying down rules in respect of minimum capital and directors ' liability.  They can also refer, as the Court pointed out in  Centros , paragraph 36, to certain rules of Community law which protect them, such as the Fourth and Eleventh Directives.
136. Second, with regard to combating improper recourse to freedom of establishment, it must be borne in mind that a Member State is entitled to take measures designed to prevent certain of its nationals from attempting, under cover of the rights created by the Treaty, improperly to circumvent their national legislation or to prevent individuals from improperly or fraudulently taking advantage of provisions of Community law ( Centros , paragraph 24, and the decisions cited therein).
137. However, while in this case Inspire Art was formed under the company law of a Member State, in the case in point the United Kingdom, for the purpose in particular of evading the application of Netherlands company law, which was considered to be more severe, the fact remains that the provisions of the Treaty on freedom of establishment are intended specifically to enable companies formed in accordance with the law of a Member State and having their registered office, central administration or principal place of business within the Community to pursue activities in other Member States through an agency, branch or subsidiary ( Centros , paragraph 26).
138. That being so, as the Court confirmed in paragraph 27 of  Centros , the fact that a national of a Member State who wishes to set up a company can choose to do so in the Member State the company-law rules of which seem to him the least restrictive and then set up branches in other Member States is inherent in the exercise, in a single market, of the freedom of establishment guaranteed by the Treaty.
139. In addition, it is clear from settled case-law ( Segers , paragraph 16, and  Centros , paragraph 29) that the fact that a company does not conduct any business in the Member State in which it has its registered office and pursues its activities only or principally in the Member State where its branch is established is not sufficient to prove the existence of abuse or fraudulent conduct which would entitle the latter Member State to deny that company the benefit of the provisions of Community law relating to the right of establishment.
141. To the extent that the provisions concerning minium capital are incompatible with freedom of establishment, as guaranteed by the Treaty, the same must necessarily be true of the penalties attached to non-compliance with those obligations, that is to say, the personal joint and several liability of directors where the amount of capital does not reach the minimum provided for by the national legislation or where during the company ' s activities it falls below that amount.