Companies in a Free Market: Symposium in honour of Prof. Dr. Peter Behrens

Symposium honouring 70th birthday of Prof. Dr. Peter Behrens

MPI for Private Law, Hamburg 05.02.2010 , 14:00

The Max Planck Institute for Comparative and International Private Law held a Symposium for the 70th Birthday of Peter Behrens on the 5th February 2010, Jürgen Basedow and Wolfgang Wurmnest had invited. Inspired by the work of the guest of honour, the celebration was titled “Unternehmen auf offenen Märkten” (Companies in a Free Market).

The symposium began with comprehensive praise for the lifelong contributions of Peter Behrens to academia and legal literature. The first speaker was Jürgen Basedow, Director of the Max Planck Institute. He outlined the academic development of Peter Behrens, who worked at the Max Planck Institute for 20 years. Special praise was given for his characteristic readiness to go beyond existing boundaries, whether with regard to areas of speciality or academic disciplines, and his academic courage in seeking untrodden paths for further research. Following this presentation, Hans-Heinrich Trute greeted the attendees on behalf of the Hamburg faculty where Peter Behrens also worked for 20 years. He made specific mention of Behrens’ openness, curiosity, international focus and committed engagement, as well as his capacity as a mediator. Wolfgang Wurmnest spoke about Behrens’ academic writing, praising his internationality, interdisciplinary approach and liberality.

As befitting the diverse range of Peter Behrens’ research areas, the presentations on the day were separated into three themes.

I. International and Comparative Corporate Law

Eva-Maria Kieninger presented an analysis of international corporate law after Cartesio focusing on the legal situation in EU law and Germany. Companies also enjoy freedom of establishment thanks to article 49 together with article 54 AEUV. As national law is decisive for the “creation, life and misdemeanours” (Federal Court of Justice) of a company, conflicts with the freedom of establishment in the European Union may arise, as Peter Behrens recognised even before the European Court decision in Daily Mail. Kieninger vividly explained the difference between real seat and statutory seat theory, and their effect on corporate relocations. Following Cartesio, member states may still place legislative restrictions on a company leaving the country; similar restrictions on relocating into a country however are fundamentally not permissible. Changes to a company’s form are still problematic, as this would then prevent a company moving into a country due to national regulations, thereby restricting the freedom of establishment. Relief can only be provided by the legislature, meaning that the European Commission must once more look into the development of the guidelines for the transfer of a company. Eva-Maria Kieninger described the Cartesio decision as a confirmation of Daily Mail, which however provided a different result for the future direction of European Community law development.

Under the title of Cross-border Cash Management Justus Jansen provided an explanation based on comparative law for cross-border corporate financing from a capital maintenance perspective. The often-used practice of cash pooling enables a parent company to borrow from the excess liquidity of subsidiaries, or to offset a subsidiary’s deficit. Particularly since the introduction of the Euro, cross-border cash pooling has become an interesting prospect for companies operating Europe-wide. Advantages such as capital location, transparency, interest rate optimisation, optimising bank accounts and the collection of investment capital rank however as disadvantages in terms of legal securities, implementation requirements and acceptance problems. The creation of cash pooling contracts must reflect all relevant regulations and legal issues. In Germany, cash pooling has been made more difficult through the ‘November Judgment’ of the Federal Court, which dealt with the matter of the transferred funds.  In 2008, the Law for the Modernisation of the Private Limited Companies Act and to Combat its Abuse (MoMiG) returned the focus to the balance sheet, with the effect that a subsidiary can lodge a financial claim against the parent company to compensate for a removal of funds from the balance sheet. Cash pooling is only permissible in Germany when there is an entitlement to full repayment. In any case, there are still a range of questions on the matter, dealing for example with controlling and information rights and duties. Justus Jansen closed his presentation with an overview of the approach in France and Great Britain.

II. Law of the European Single Market

Building on the seminal article written by Peter Behrens in 1992, Carsten Nowak showed how the Convergence of Economic Freedom has developed through the judgments of the ECJ. The entering into force of the Lisbon Treaty required adaptations to the Behrens formula – basic freedoms, together with competition law create the basis of what is known as the Single Market. To illustrate convergence in the scope of protection, Mr Nowak discussed the ECJ decision handed down in European Communities v French Republic (Bauernprotest case). This case first determined, based on the principle of Community loyalty, that member states had an obligation to ensure fundamental freedoms are respected (in this case, dealing with the free movement of goods) even against restrictions arising from private sources. To that effect, this decision was interpreted as meaning that the exercise of fundamental freedoms must be protected against incursions arising from private persons. The court reserved its judgment on questions of an analogous application to the Keck judgments from 1993 relating to other basic freedoms, as shown in the decision given for case C-356/08 in 2009. As an example of the convergence of basic freedoms concerning barriers to trade, Carsten Nowak referred to the cases Schmidberger, Omega and Laval. In these cases, the ECJ recognised that basic rights in Europe were a new category of justification, which required an assessment of proportionality on a case-by-case basis. The new development of the law has shown that increasingly strict benchmarks have been introduced in the assessment of proportionality. In any case, European legislative acts were only assessed for obvious breaches of basic freedoms. European case law on basic principles should be regarded as a supplement to the law governing effective protections.

The second Single Market topic dealt with competition law in its broadest sense, an area where Peter Behrens had spoken forcefully against excessive intervention in the market. Against this background, Katharine Stasch gave a presentation on a highly relevant topic at the time, Bankenbeihilfen und Ordnungspolitik (Bail-outs and Regulatory Policy). She pointed out that the government response to the global financial crisis was to rescue the banks. These measures were heavily criticised both on an economic level and with regard to the EU from an integration politics perspective. Economically, a rescue package for banking institutions was required by the nature of the financial situation; the benefits of a bank rescue program (stability of the financial market) outweighed the costs. The expenses which would have followed any other course of action were particularly clearly demonstrated through the Lehman case. For a rescue vehicle, most turn to the State. The Member States of the EU had to follow EU guidelines, even though the European Commission clearly recognised the need for State intervention under the threat of market instability.  For the banking sector there was certainly no general application of assistance, it was very much a matter of case-by-case assessment. Katharina Stasch saw in this a tendency towards special treatment for the banks. She described the European Commission communication released in AB1. 2009 c 195 p.9 as an indication of this treatment, as the document revealed no prohibition on the provision of financial assistance had been made up to January 2010 and that the principles which had previously applied (e.g. the principle of one-off assistance payments) had been softened. She emphasised that it made sense to give a high value to stability in the financial market, and saw the challenges for the future as a question of accurately gauging the time when a cessation of bank subsidies would be necessary and appropriate, together with the foundation of a supranational European Rescue Fund.

III. Economic Theory Basis of the Law

Stefan Voigt gave a presentation on the topic of von Euckens Ordnungspolitik zu Neuen Institutionenökonomik (From Euckens Regulatory Policy to a New Institutional Economics). He began his deliberations with Peter Behrens’ professorial dissertation from 1986, in which he sought theoretical principles for an economic analysis of the law and the potential for its integration into German regulatory policy. Stefan Voigt presented the hypothesis that institutional theory which reflects political economic principles could serve as the basis for an economic analysis of law. He assessed this hypothesis through an analysis and comparison with the deficiencies of regulatory policy and the advantages of the new institutional theory. In addition, he showed, based on the results of relevant studies, that different political institutions can have important effects on regulatory policy. He closed by pointing out that regulatory policy has been primarily examined with regard to the institutional aspects of economic regulation, while the economic analysis of law has been predominantly interested in an efficiency analysis of civil law. Institutional economics could be useful, in his opinion, for furthering and broadening the economic analysis of law through the economic analysis of constitutional and international law.

Ernst-Joachim Mestmäcker, who supervised Peter Behrens’ professorial dissertation in 1986, gave the closing speech. He spoke of their mutually enriching academic collaboration. In particular, he praised Peter Behrens’ internationality and interdisciplinary abilities.

Peter Behrens then took the opportunity to thank the organisers and presenters for the interesting and stimulating presentations and discussion, as well as thanking his former colleagues for the productive time spent working together. In addition, he added that he was planning to carry out many more academic projects over the next few years.

It is planned to release the presentations together with the greetings and laudatio in a conference volume as part of the EUROPA-KOLLEG HAMBURG series on Integration Research.