Artificial Intelligence (AI) a Legal Person and Freedom of Movement - European Union (EU) Perspectiv

"Everything that is really great and inspiring is created by persons who can labor in freedom." - Albert Einstein

I. INTRODUCTION

As Artificial Intelligence (hereinafter referred to as "AI") develops legal systems need to understand the changing advances in AI and come to a conclusion on a type of legal framework that would address the ever changing conduct of AI. Some, such as the European Union (hereinafter referred to as "EU"), for example, have been considering the need to redefine the legal status of AI and the grant of "electronic person” status to this entity. [1] This is not to say that AI deserves recognition like it was a human rights & duties argument but as a tool of convenience. [2] The author of this note lobbies for the grant of dependent legal personhood to AI and its inextricable link to a new type of a company that would have legal personality as a public limited liability company (hereinafter referred to as "AI company"). In addition, she argues that the AI comany should take a form of European Private Company, or Societas Privata Europaea (hereafter referred to as “SPE”). In 2007, the European Commission proposed the creation of the SPE an instrument with the aim of facilitating the establishment and operation of small and medium-sized enterprises (SMEs) in the Single Market. The main aim of this proposal was the creation of European Private Companies that would be widely accessible and uniform throughout the EU.[2a]

How the author understands the process of AI recognition and the design of a new legal framework that would accommodate the grant of dependent legal personhood to AI and its connection with an AI company that partially would accommodate the virtues of SPE, will be considered in her new book (which is coming out, soon!). Here, she aims to take a futures approach to understanding the benefits and challenges this solution would provide with regards to the freedom of movement for Artificial Intelligence.

The EU has at its core a number of characteristics designed to promote the functioning of the internal markets. A key aspect of this is the freedom within the EU for businesses and other undertakings to establish themselves in any of the member states of the EU. This mobility of legally recognized entities are the opportunities to implement and manage “undertakings” in any member state contained within the EU. These rights are now contained within Title IV Chapter 2 “Right of Establishment” of the Treaty on the Functioning of the European Union (hereinafter referred to as "TFEU" ). Whilst these articles have under the general principles of the EU direct effect on member states, numerous cases illustrate the existence of an ongoing conflict between European Union Law and the law of individual nation states.

The movement of artificial persons presents a special case. [3] Some scholars argue that the member states have systematically tried to stop any interference into their domestic legislation in the right of establishment area which in turn has confined cross-border mobility of artificial persons. [4] Others agree that cross-border transfer is frequently a ‘mission impossible’ [5] because of the artificial nature of companies and differences between artificial and natural persons. [6] While a natural person’s nationality is not influenced by migration, the nationality of an artificial person, according to national laws, might be influenced by both artificial persons’ emigration and immigration. [7]

In considering how far the European Community has succeeded in developing an appropriate infrastructure to explore the merits of artificial persons' mobility (hereafter referred to as “APM”), the focus of this note is on the right of establishment. This is a distinctive attribute of EU law, implemented by the European Court of Justice’s (hereinafter referred to as “ECJ”) Centros case, which sets the baseline for ‘cross-border movement of administrative headquarters and the migration of new artificial persons to more favourable jurisdictions’.[8] Furthermore, this note analyses the legal background and presents state of affairs of artificial persons’ cross-border mobility in the EU and seeks to discuss the following issues:

1. What is the legal and empirical background of the

Freedom of Establishment?

2. Freedom of Establishment under Articles of TFEU - with a particular focus on Articles 43 (now Art.49 TFEU), 48 (now Art.54 TFEU) and Article 46 (now Art.52 TFEU).

3. Three judgments by the ECJ: Daily Mail,[9] Überseering,[10] Centros,[11] and the ongoing conflict between European Union Law and the law of individual Member States with a special focus on the unwillingness of the ECJ to grant the right of Primary Establishment to a company.

4. The Cartesio case [12] and the delivery of another interpretation of Articles 43 (now Art.49 TFEU) and 48 (now Art.54 TFEU).

5. The implementation of the Societas Europaea (European Company, SE) Statute and its objectives and the Statute for the European Private Company (SPE) and the process of its preparation.

7. What has been done so far?

8. What remains to be done?

II. LEGAL AND EMPIRICAL BACKGROUND

2.1 Artificial Person Mobility. Considering that the aim of this note is to explore the mobility of artificial persons within the context of European Union Law and the law of individual nation states, an introductory question appears: What is the significance of this type of mobility with relation to Artificial Intelligence recognized as a legal person and inextricably linked to a new type of a public limited liability company? As argued by Brynjolfsson Andrew McAfeeor "[f]or more than 250 years the fundamental drivers of economic growth have been technological innovations. The most important of these are what economists call general-purpose technologies — a category that includes the steam engine, electricity, and the internal combustion engine. Each one catalyzed waves of complementary innovations and opportunities. The internal combustion engine, for example, gave rise to cars, trucks, airplanes, chain saws, and lawnmowers, along with big-box retailers, shopping centers, cross-docking warehouses, new supply chains, and, when you think about it, suburbs. Companies as diverse as Volkswagen, UPS, and Uber found ways to leverage the technology to create profitable new business models.' [13] At present this is Artificial intelligence which is set to make sweeping changes to entire industries and any business infrastructures. [14] Artificial intelligence recognized by EU as a legal person that would depend on a new type of a a public limited liability company and its mobility could lead to a more efficient use of AI resources. A mobile AI is essential for European businesses' competiveness in a rapidly-changing and global market. Yet it will also be beneficial to individuals working with and on AI.

Artificial persons mobility would represent the liberty of an AI company from conducting its professional dealings in the jurisdiction of its original incorporation. Therefore, AI company would have the right to decide which set of national company law rules would best suit its business needs.[15] Consequently, artificial persons mobility may take the shape of an AI company managing business activities in a foreign jurisdiction, without having a real legal presence there. The AI company could manage its business activities abroad through agencies or branches. This could move an essential part of its management to that foreign jurisdiction, whilst still being incorporated in its home Member State. (Ultimately, an AI company could set up a subsidiary in a host Member State. This, however, would be a new AI legal personality rather than a continuation of that AI company.) [16]

All of the above scenarios sound so free from ambiguity and each of the scripts looks so capable of being accomplished. Nevertheless, they are not. For instance, an AI company could be impeded from transferring its central administration abroad without having to dissolve its legal personality in its home Member State. Furthermore, taxes, the possibility of excessive formalities associated with administration of an AI company’s branch in the host Member State, refusal to recognize the branch by the host Member State, are only a few obstacles that may arise during the process of ‘transposing (an AI company) into today’s complex multi-jurisdictional landscape’.[17] Therefore, at this stage the freedom of establishment should always be seen as a specific tool in achieving an AI company mobility and not as synonymous with the generic term “corporate mobility”’.

2.2 Artificial Person Mobility v Private International Law

Roth argues that artificial persons mobility refers to both statutory company law and private international law of companies.[18] Under the private international law of companies, there are two crucial law theories: the Incorporation Theory and the Real Seat Theory. From the above differentiation arises the link which would connect AI company to a system of law. Furthermore, these theories would deal with issues such as the law which is applicable to that company, recognition of that company by the host Member State, and the cross boarder transfer of seat.[19] However, establishing the AI company’s connecting law theory, during the process of its mobility from one Member State to the other, under the current law, would appear to be be very opaque and unclear. [20] The issue is discussed in the following section.

2.3 The Theory of Incorporation and the Theory of Real Seat. Since the essence of controversies is based on several specific terms, this note begins by defining these terms. The first question is then, what would be an AI company’s registered office? The AI company’s registered office would be the place where the AI company’s offices are located according to its official registration and its statutes. The second question would be, what would be the head office of an AI company? The head office of the AI company would be where the management and main administration will actually be situated. [21] After answering the basic questions this note proceeds to the consideration of the first theory which is the Incorporation Theory.

2.3.1 Incorporation Theory. The Incorporation Theory determines the applicable company law by reference to the country in which the AI company will be incorporated. Therefore, this theory would connect the AI company to the jurisdiction of the company’s state of incorporation. The Incorporation Theory connecting factor would be the AI company’s registered office, regardless of where the AI company business would conduct or manage (a theory which has been adopted, among other countries, in Denmark, Ireland, the Netherlands and United Kingdom). [22] Under this theory, the existence, dissolution, or liquidation of an AI company would be regulated by the law of the state of incorporation.

Drury argues that the Incorporation Theory was originally devised by nations which are keen on trade liberalization. [23] Under this theory, an AI company could transfer its central management (head office) to another Member State following the Incorporation Theory without losing its legal personality. [24] In addition, the AI company when emigrating to the other Member State still would remain subject to the laws of the incorporation state as long as the AI company’s registered office would remain in this state. [25] Consequently, the legal personality of the AI company would also be recognized by the host Member State following the Incorporation Theory, and there would be no need to reincorporate the AI company in the host Member State. As such the Incorporation Theory would promotes simplicity, predictability, and legal certainty. [26] One may counter this argument by stating as Vaccaro [27] that the Incorporation Theory could facilitate abuse of the system when the AI company would set up in the state of incorporation mainly for the tax reasons or more tolerant system of company law.

After focusing on the Incorporation Theory this note proceeds to the consideration of the second theory which is the Real Seat Theory.

2.3.2 Real Seat Theory. The second law theory which is considered by this note with relation to the new AI company is the Real Seat Theory. Under this theory, only the Member State in which an AI company had its real seat (head office) would have the power to regulate the AI company’s internal affairs (a theory which has been adopted, among other countries, in Belgium, France, Germany, Greece, Luxembourg, and Portugal). [28] There would be a need for incorporation or registration of that AI company where it would have its central administration (head office). The theory is premised on the assumption that the real seat state is mostly affected by the company’s business activities and that therefore it should have the power to govern the company’s internal affairs. [29]

According to that an AI company incorporated in one Member State but having its centre of administration (head office) in other Member State that follows the Real Seat Theory could lose its personal identity within the real seat state. This theory would prevent an AI company from escaping a state’s legal system via incorporation in a jurisdiction with more satisfactory company law regimes. Consequently, some argue, such as Rammeloo that the Real Seat Theory stands for ‘equal treatment and the protection of fair competition’. [30]

As can be seen from the above analysis the Theory of Incorporation and the Theory of Real Seat plainly affirm the opposite of each other. Therefore, the law correlation could create meaningful issues within the sphere of private international law and AI company and its mobility. This is considered in the following section.

2.4 The Conflict of Theories of Law. The evident clash between the above theories may emerge when an AI company incorporates by reference to the Member State, in which the AI company is registered, establishes a branch to undertake all of its business activities in jurisdiction established in the Real Seat Theory. From the perspective of the Incorporation Theory the law applicable to the AI company would be the law of its place of registration. However, in accordance with the Real Seat Theory, the law applicable to the AI company would be the law of the place in which the AI company undertakes its major business activities (i.e. has its actual center of administration). To understand the conflict of law rules, it is important to focus on the paradigm from which we are going to analyse the artificial person mobility. This note proceeds to do that.

2.5 Transfer of Registered Office or Administrative Seat - AI Company Mobility Scenarios. The artificial person movement could be analysed from different perspectives. First perspective would be the transfer of the AI company’s registered office. From this perspective the possibility of the transfer would depend on conflict of law rules, and substantive law of the home and the host Member State. If an AI company came from a home Member State that follows the Incorporation Theory and wanted to transfer its registered office to a Member State that follows Incorporation Theory or Real Seat Theory this transfer would require the winding-up of the AI company in the home Member State and its reincorporation in the host Member State. [31] Furthermore, if the AI company came from a home Member State that follows the Real Seat Theory and wanted to transfer its registered office to a Member State that follows Incorporation Theory or Real Seat Theory, this transfer would require the winding-up of the AI company in the home Member State and its reincorporation in the host Member State. Otherwise, the laws of the home Member State would not be capable of being enforced.

Second, one may analyze an AI company and its potential mobility from the paradigm of a transfer of the administrative seat. From this perspective, the possibility of the transfer would depend on conflict of laws rules, the home and the host Member State substantive law. If an AI company came from a home Member State that follows the Incorporation Theory and wanted to transfer its administrative seat to a Member State that follows Incorporation Theory this transfer would be possible. Furthermore, it would not require the winding-up of the AI company in the home Member State or its reincorporation in the host Member State. The host Member State would be likely to recognise the legal personality of the foreign AI company. [32]

Nonetheless, if an AI company came from a home Member State that follows the Incorporation Theory and wanted to transfer its registered office to a Member State that follows Real Seat Theory, this transfer would require the winding-up of the AI company in the home Member State and its reincorporation in the host Member State. In addition to what has been stated above, if an AI company came from a home Member State that follows the Real Seat Theory and wanted to transfer its registered office to a Member State that follows the Incorporation Theory or Real Seat Theory, this transfer would require the winding-up of the company in the home Member State and its reincorporation in the host Member State. [33]

In line with the above, most of the time, the transfer of an AI company from one Member State to the other without the AI company re-registration will be simply impossible. Re-registration of an AI company would have to be preceded by the AI company liquidation in its home Member State first. Furthermore, an AI company wanting to enter the host Member State legal environment may not be recognized by that legal environment. De facto, in most of the cases, any companies are not allowed to freely change their legal regime, and become subject to the laws of the host Member State. They are forced to do it by otherwise being 'sentenced to death'. [34] With this thought in mind the analysis proceeds into the direction of artificial persons mobility and freedom of establishment under treaty provisions & other legal instruments.

III. CORPORATE MOBILITY AND FREEDOM OF ESTABLISHMENT UNDER TREATY PROVISIONS & OTHER LEGAL INSTRUMENTS

Issues related to the artificial persons mobility have important implications in the context of European Community. The main goal of the European Union is to achieve an Internal Market, a so called ‘area without internal frontiers in which the free movement of goods, persons, services and capital is ensured’. [35] The freedom of establishment of companies is one crucial way of achieving this objective. However, there is no European Community legislation that deals with the corporate migration per se. There are only general Treaty provisions and some ECJ judgements. Therefore, in terms of this present analysis, it is important to examine the legislative framework in which such issues arise and might arise further with relation to an AI company.

3.1 EC Treaty

Articles 43 (now Art. 49 TFEU) and 48 (now Art.54 TFEU) provide that restrictions on the freedom of establishment of companies of a Member State in another Host Member State are prohibited. This prohibition ensures the right to do business by the ‘setting-up of agencies, branches or subsidiaries by companies of any Member State established in the territory of any Member State.’ [36] Article 48 (now Art. 54 TFEU) treats companies in the same ways as a natural person in relation to freedom of establishment. Nonetheless, Article 46 (now Art. 52 TFEU) gives permission to the Member States to restrict the freedom of establishment of foreign companies by adopting ‘provisions laid down by law, regulation or administrative action’, [37] as long as these provisions are justified on ‘grounds of public policy, public security or public health.’ [38]

3.2 Statute for the European Company (SE) and Statute for the European Private Company (SPE). Any analysis of the freedom of establishment would not be complete without a brief reference to the above. Under the Societas Europaea (hereafter referred to as “SE”) Regulation, a public company that converts into an SE (or is formed as such) may transfer its registered office without having to wind-up and change its legal personality. Nevertheless, the registered office of the SE has to be located in the same Member State as its head office. In addition, Member States have the right to require that the registered office and head office of the SE are in the same place. Consequently, the transfer of the registered office of an AI company would have to be followed by a transfer of the AI company’s head office to be effective.

As we may notice, two enacted instruments (the SE and EC Treaty) will be only indirectly relevant to AI company and its mobility. By contrast, European company law in respect of the freedom of establishment has evolved significantly with the judicial contribution of the ECJ and my shed more light on the aforementioned issues. The freedom of company’s establishment was invoked in a number of cases in which companies transferred their seat (or endeavoured to transfer their seat) to another Member State. The judgments which have had an impact on the freedom of establishment will be discussed in following section IV.

IV. A REVIEW OF THE ECJ’S CASE-LAW FROM THE DAILY MAIL TO CARTESIO CASES

The ECJ has in many cases expounded how this dispute between the Real Seat Theory, Incorporation Theory and freedom of establishment should be interpreted. The interpretation has resulted in various milestone judgments by the ECJ, such as the Daily Mail, [39] Centros, [40] Überseering, [41] and Cartesio [42] cases. The aforementioned cases and the ECJ judgements have gradually restricted the power of individual countries to limit the establishment of companies, agencies, branches, and subsidiaries in other European countries. [43]

4.1 C-81/87 Daily Mail - Primary Establishment: The Right to Leave. In the Daily Mail case,[44] the British company Daily Mail & General Trust PLC was aiming to transfer its central administration outside the United Kingdom to the Netherlands. The company was trying to keep their legal persona status under British law but avoid UK capital gains taxes on assets which the company was intending to sell after the transfer of its residency.[43] According to UK company law, if the company was incorporated in the UK, the company may establish its central administration outside the UK and still holds its legal personality. However, the company would become non-resident and would no longer be subject to UK corporation tax. [44] Therefore, the consent from the Treasury was required. The Treasury agreed to give its consent, but only under certain circumstances, namely that the company sells part of the assets before transferring its residence outside of the UK.[45] The Daily Mail argued that this condition was a violation of its freedom of establishment and initiated proceedings before the High Court of Justice. The High Court of Justice referred the case to ECJ.

In this particular case, the ECJ explicitly ruled that, due to lack of legislation in this area, the TFEU cannot be interpreted as a green light for a company incorporated under the law of a Member State to transfer their central administration (head office) and control to another Member State while retaining its status company incorporated under the legislation of the home Member State. [46] This was also in this particular case where the ECJ developed a rule that companies, unlike natural persons, are ‘creatures of national laws’. [47] These rules, relating to companies transferring their central administration (head office), exist only by virtue of the varying national legislation which determines their incorporation and functioning, [48] and therefore, Member States are permitted to restrict the transfer of a company‘s seat. [49]

4.1.1 The Fourteenth Company Law Directive

The search for a workable directive to facilitate the corporate mobility denied to the legal person in the Daily Mail case began soon after that case in 1993 with the publication of a draft proposal for a Fourteenth Company Law Directive on the transfer of the head office to another Member State.[50] According to the proposal, an AI company transferring its registered office would be registered in the host Member State and would gain a legal personality there. However, at this same time, the AI company would be removed from the register in its home Member State giving up its legal identity there. In addition, the AI company would not be forced to go through winding-up proceedings in its home Member State or to set up a new company in the host Member State. In 2017 Věra Jourová, the EU Commissioner for Justice, Consumers and Gender Equality, who is in charge of drafting the new law on behalf of the EU executive, confirmed that the European Commission has been preparing a new directive on the cross-border transfer of company headquarters, a move that could have far-reaching implications for other areas of corporate governance, including tax planning and cross-border mergers. [51] Whilst it could be a frustrating development for some, the Commission's position taking such a long time to generate this directive is, arguably, understandable given the magnitude of the task. Let us hope that the 14th directive will see the light of day soon. Now, let us focus on the C-208/00 Überseering ECJ case that is relevant to this note and its discussion.

4.2 C-208/00 Überseering - Primary Establishment: The Right to Enter. The Daily Mail case was considering relations between a company and the Member State under whose laws it had been incorporated. The company was trying to transfer its head office to another Member State without losing its legal personality in the Member State of incorporation. In contrast, the Überseering case concerned the issue of a foreign company, incorporated under the laws of other Member State, and its recognition by the host Member State. [52]

In the Überseering case, a company incorporated under Netherlands law acquired a piece of land in Germany. The company had contracted with a German company called Nordic Construction Company (NCC) to refurbish a garage and a motel on the site. In the meantime, all the shares in Überseering had been acquired by German nationals. According to Überseering, the contractual work that was performed was defective. Therefore, the company initiated proceedings before the German courts claiming costs and interests incurred. The German courts (The Landgericht (Regional Court) and Oberlandesgerich (Higher Regional Court) dismissed the action. The German courts found that Überseering’s real seat (head office) was transferred to Germany, while the registered office was still in the Netherland’s. Therefore, Überseering lost its legal personality in Germany and was unable to bring its legal proceedings there, unless reincorporated in Germany. The issues were referred to the ECJ. [53]

In this case, the ECJ explained the difference between the facts in Daily Mail and Überseering cases and ruled that since the obstruction was made by one Member State with respect to a company established under the laws of another Member State, an appeal could be made to the freedom of establishment principles. [54] Furthermore, the ECJ found that the refusal to recognise the legal capacity of a company validly incorporated in another Member State was a restriction to the freedom of establishment which could not be justified. [55]

It is noteworthy that, in the Daily Mail and the Überseering cases, the ECJ protected the interests of the Member States that applied the Real Seat Theory and excluded their fears that the companies established under their laws would choose other jurisdictions by transferring their central administration (head office). Furthermore, the ECJ judgments safeguarded the right to leave and the right to enter for companies as regards the secondary establishment. [56] So what then makes the primary establishment different, if the same EC Treaty article covers both? The answers can be found in another ECJ case, by the name of C-212/97 Centros and which will be considered in the following section.

4.3 C-212/97 Centros: primary or secondary establishment? The factual background of the Centros case was as follows: two Danish natural persons Mr. and Mrs Bryde wanted to create a private limited company in Denmark. To set up a private limited company in Denmark, Danish law requires substantial capital input (approximately 28,000 Euros). To avoid the cost, Mr. and Mrs Bryde had formed private limited company; Centros Ltd, in the UK, with the minimum capital amount of one-pound. [57] The company applied to be registered at the Danish registry office so that it could carry out its business activity in Denmark. The Danish authorities turned down the application because Centros Ltd. had not established any business in the UK and did not trade in the UK. [58] Furthermore, Centros Ltd. was seeking to set its primary establishment, not a branch, in Denmark and was thereby ‘circumventing Danish rules’ on minimum capital. 'One could say that this is only a matter of perspective’. [59]

The company, Centros Ltd., initiated proceedings before the ECJ. Centros Ltd. claimed that according to Articles 43 (now Art. 49 TFEU) and 48 (now Art. 54 TFEU), they were eligible to set up a branch in Denmark regardless of whether they had established a trade or business in the UK. The ECJ rejected all the arguments of the Danish Government about the requirements to register the branch of Centros Ltd, even though it was established that a UK private company had been chosen as the corporate structure for carrying on business in Denmark in order to avoid the capital requirements applicable to Danish private companies. [60]

In this particular case, the ECJ explicitly ruled that, if a person establishes a company in one Member State with a view to carrying on business through a branch of the company in that person’s Home State, this can constitute a connecting factor (sometimes referred as an “U-turn”).[61] Lawyers and entrepreneurs found that it represented a ‘green light’ to change the formation of companies in Member States with high formation costs for incorporation in Member States with lower formation costs. [62]

The decision of the Court opened up the possibility of regulatory competition in European corporate law and, as such, enabled Member States to enact and enforce corporate law preferred by entrepreneurs and thus ‘lure’ [63] companies away from other Member States with less appealing company law. [64] As feared by some scholars, the Real Seat Theory ‘lost its teeth’ and therefore Member States lost one of their main instruments to restrain companies. [65] The Court, in the Centros case, ‘opened the door wide to the “immigration” of companies in EU’ by allowing them to refer to the community right of secondary establishment.

It is important to note that in this case, most of the scholars analysed the impact of Centros case on the Real Seat Theory. However, the main question should be asked as to whether the Centros case involved primary or secondary establishment. Danish Government authorities have claimed that the facts in Centros involve questions of primary establishment: when establishing a company in the UK Danish nationals have both established the registered office and head office there, and afterwards tried to transfer their central administration (head office) to Denmark by establishing a branch. However, the ECJ looked at this case from a formal point of view analysing only questions which are related to secondary establishment. e

4.4 C-210/06 Cartesio case and the delivery of another interpretation of Articles 43 (now Art. 49) & 48 (now Art. 54) TFEU. In the Cartesio case, [66] a company incorporated in Hungary wanted to transfer its head office to Italy. Cartesio aimed to transfer its central administration abroad but without changing its governing law. According to Hungarian company law, the company may only establish its central administration outside the Hungary if it first winds-up in Hungary and then reincorporates under Italian law. Therefore, the commercial court, in its registry function, rejected Cartesio’s request for the transfer of its operational headquarters abroad. [67] Cartesio argued that this condition was a violation of its freedom of establishment and initiated proceedings before the Hungarian Court. The Hungarian Court of Appeal referred the case to the ECJ. The Advocate General found this restriction to be incompatible with freedom of establishment and accepted Cartesio’s claim. However, the FCJ rejected Cartesio’s claim. [68] It is stimulating to consider their arguments.

On 16 December 2008, the ECJ gave its judgment in the Cartesio case where it explicitly ruled that national rules that prevented a company from transferring its head office to another Member State did not violate the rights under the freedom of establishment set out in Articles 43(now Art. 49) & 48 (now Art. 54) TFEU. [69] The ECJ stated that a Member State by virtue of national law has the power to determine the connecting factor between company and national law as well as requirements for maintaining that connection. [70]

First, the ECJ judgment opposes national legislation against the freedom of establishment principle. [71] The Cartesio is the first case in which the ECJ analysed national laws against the Treaty rules in a situation when a company leaves the home Member State. The Court found that the rules on company’s dissolution or liquidation cannot prevent a company from ‘converting itself into a company governed by the law of the other Member State’. [72]

Second, the transfer to another jurisdiction has been allowed ‘to the extent that this conversion is permitted by the laws of the host State’. [73] Why are obligations of home Member State conditioned on the host Member State treatment of the migrating company? It seems that the issue can be now, in the absence of secondary law, clarified only by the national laws. The member states could either cooperate between each other in that matter by means of agreements or they could change the national laws in order to facilitate foreign companies to convert under their jurisdiction.

V. CONCLUSION

In the light of the discussion, it can be concluded that the European Community, supported by the ECJ judgments, has managed to dispel some restrictions on artificial persons mobility. However, as shown from the analysis of the case law, a number of issues have been left to national laws of Member States. Law is a work-in-progress and should be since ‘harmonisation is a process of ascertaining the admitted limits of international unification but does not necessarily amount to a vision of total uniformity’. [74]

Hence, the question as to “What is legal freedom?” should be the summing up question of this conclusion. Bruno Leoni in his book ‘Freedom and the Law’, argues that 'freedom is not only an economic or a political concept, but also, and probably above all, a legal concept, as it necessarily involves a whole complex of legal consequences.' [75] Lord Bacon said about lawyers: ‘They speak as if they were bound.’ [76] Law is a matter of boundaries. Law is a matter of responsibilities and rights. The aforementioned ECJ judgments were forced to speak on the basis of their creators’ professional knowledge and therefore in terms of contemporary systems of law. Given the interplay between national laws and conflict of law rules as to which they are referring, the freedom of establishment seems to be left supported by a whole complex of legal conditions and consequences.

In addition, these legal conditions and consequences bind those who wants to exercise the given freedom – artificial persons in addition to the natural ones. What legal systems need to realize is that the importance of the former drastically changes in contemporary society and as such, will depend on legislation. Whether we think of artificial persons in terms of corporations or inanimate AI does not really change the fact that both are in need of regulation. In fact, the increasing significance of AI is the most striking feature of our era, besides the need to regulate it. Consequently, the grant of dependent legal personhood to AI and its inextricable link to a new type of a company seems as the most reasonable and logical course of action to be taken. This in addition to other advantages would allow for its legally governed mobility between EU Member States.

References:

(OSCOLA style of referencing)

[1] M Bulman, 'EU to vote on declaring robots to be ‘electronic persons‘ (Independent, 14 January 2017 ) <www.independent.co.uk/life-style/gadgets-and-tech/robots-eu-vote-electronic-persons-european-union-ai-artificial-intelligence-a7527106.html> accessed 7 July 2018.

[2] Please, check my other work on that.

[2a] R Lewis and A Buzdrev, ‘The European Private Company: Entrepreneurial Flexibility & the Practicalities of National Law’ (2012) 3 International Journal of Business and Social Science 63 <www.ijbssnet.com/journals/Vol_3_No_21_November_2012/7.pdf63> accessed 7 July 2018.

[3] C Barnard, The Substantive Law of the EU: The Four Freedoms (3rd edn, Oxford University Press 2010) 331

[4] JA McCahery and EPM Vermeulen, ‘Understanding Corporate Mobility in the EU: Towards the Foundations of a European ‘Internal Affairs Doctrine’ (5th European Company Law and Corporate Governance Conference Working Paper 2007) <www.ecgi.org/presidency/presentations/2007_berlin_vermeulen_paper.pdf> accessed 7 July 2018.

[5] AF de Sousa, ‘Company's Cross- border Transfer of Seat in the EU after Cartesio’ Jean Monnet Working Paper (New York University School of Law 2009) 4< http://centers.law.nyu.edu/jeanmonnet/papers/09/090701.pdf > accessed 7 July 2018.

[6] ibid (n 4).

[7] Depending on the national laws of home and host member states.

[8] ibid (n 5).

[9] Case C -81/87 Daily Mail and General Trust [1988] ECR 5483

[10] Case C-208/00 U ̈berseering BV v Nordic Construction Baumanagement GmbH [NCC] [2002] ECR I-9919

[11] Case C-127/97 Centros Ltd v Erhvervs-og Selskabsstyrelsen [1999] ECR I-1459

[12] Case C-210/06 Cartesio [2008] ECR I-0000

[13] E Brynjolfsson and E McAfee, The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies (WW Norton & Company 2014)

[14] R Büst, 'How companies can leverage AI as a business model' (CEBIT, 28 September 2017) <https://www.cebit.de/en/news-trends/news/how-companies-can-leverage-ai-as-a-business-model-2883> accessed 7 July 2018.

[15] M Wyckaert and F Jenné, ‘Corporate Mobility’ 4 <http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1633448> accessed 7 July 2018.

[16] CH Panayi , ‘Corporate Mobility in Private International Law and European Community Law: Debunking Some Myths’ (2009) 28 Year Book of European Law<http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1437555 > accessed 7 July 2018.

[17] ibid.

[18] WH Roth, ‘From Centros to Ueberseering: Free Movement of Companies, Private International Law, and Community Law‘ (2003) 52 International Comparative Law Quarterly 184.

[19] G Maisto, ‘Residence of Companies under Tax Treaties and EC Law’ (2009) 4 IBFD <www.ibfd.org/sites/ibfd.org/> accessed on 7 July 2018.

[20] ibid (n 12) 214.

[21] CH Dickens, ‘Establishment of the SE Company: An Overview over the Provisions Governing the Formation of the European Company’ (2007) European Business Law Review 1426.

[22] A Roussos, 'Realising the Free Movement of Companies' (2001) 12 European Business Law Review.

[23] RR Drury, ‘The regulation and recognition of foreign corporations: The “Delaware syndrome” ’ (1998) 57(1) Cambridge Law Journal 182.

[24] ibid.

[25] ibid 182.

[26] ibid 165.

[27] E Vaccaro, ‘Transfer of Seat and Freedom of Establishment in European Company Law’ (2005) European Business Law Review 1349.

[28] ibid (n 22).

[29] ibid.

[30] S Rammeloo, Corporations in Private International Law: A European Perspective (Oxford University Press 2001) 14.

[31] ibid (n 4).

[32] ibid.

[33] E Wymeersch, ‘Is a directive on corporate mobility needed?’ (2007) 8 European Business Organization Law Review 168

[34] E Wymeersch, ‘The Transfer of the Company’s Seat in European’ (2003) 40 Common Market Law Review 690.

[35] The Treaty on the Functioning of the European Union, Article 14(2) EC

< http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:C:2010:083:0047:0200:en:PDF> accessed 7 July 2018.

[36] ibid Article 43(2) EC.

[37] ibid Article 46(1) EC

[38] ibid.

[39] Case C -81/87 Daily Mail and General Trust [1988] ECR 5483.

[40] Case C-127/97 Centros Ltd v Erhvervs-og Selskabsstyrelsen [1999] ECR I-1459.

[41] Case C-208/00 U ̈berseering BV v Nordic Construction Baumanagement GmbH [NCC] [2002] ECR I-9919.

[42] Case C-210/06 Cartesio [2008] ECR I-0000.

[43] PS Ryan, ‘Will there ever be a ‘Delaware of Europe?’ (2004/2005) 11 Columbia Journal of European 188.

[44] Daily Mail (n 39).

[45] P Craig and G De Búrca, EU law: Text, Cases and Materials (4th edn, Oxford University Press 2008) 797-806.

[46] FM Mucciarelli, ‘Company 'Emigration' and EC Freedom of Establishment: Daily Mail Revisited’ (2008) 9 European Business Organization Law Review, Cambridge 281-290.

[47] Daily Mail (n 39) para 8.

[48] ibid para 21 and 24.

[49] ibid para 19.

[50] Official Publications of the European Communities ‘Study on the transfer of the head office of a company from one member state to another’ (1993) <bookshop.europa.eu> accessed on 7 July 2018.

[51] F Simon, 'EU eyes corporate rules shake-up with law on seat transfer' (Euractiv, 2 October 2017) <www.euractiv.com/section/economy-jobs/news/eu-eyes-corporate-rules-shake-up-with-law-on-seat-transfer/> accessed on 7 July 2018.

[52] U ̈berseering (n 41).

[53] GJ Vossestein , ‘Transfer of the registered office. The European Commission’s decision not to submit a proposal for a Directive‘ (2008) 4 Utrech Law Review 54 <www.utrechtlawreview.org/index.php/ulr/article/view/URN%3ANBN%3ANL%3AUI%3A10-1-101080/61> accessed 7 July 2018.

[54] Ibid 57

[55] HV den Hurk and J Korving, ‘The ECJ’s Judgement in the N Case against the Netherlands and its Consequences for Exit Taxes in the European Union’ (2007) 4 Bulletin for International Taxation 150-158.

[56] AF de Sousa, ‘Company's Cross- border Transfer of Seat in the EU after Cartesio’ Jean Monnet Working Paper (New York University School of Law 2009) 4< http://centers.law.nyu.edu/jeanmonnet/papers/09/090701.pdf > accessed 7 July 2018.

[57] E Wymeersch, ‘Centros: A Landmark Decision in European Company Law’ (1999) 99-15 Financial Law Working Paper <ssrn.com/paper=190431> accessed 7 July 2018.

[58] ibid.

[60] Centros (n 40) para 12 and 14.

[61] SF Hansen, ‘The Free Movement of Companies’ (2003) 4 Nordisk Tidsskrift for Selskabsret 150

<www.scandinavianlaw.se/pdf/45-9.pdf> accessed 7 July 2018.

[62] P Pelle, ‘Companies crossing borders within Europe’ (2008) 4 Utrecht Law Review 9-10 <www.utrechtlawreview.org/> accessed 7 July 2018.

[63] C Kirchner et all, ‘Regulatory Competition in EU Corporate Law After Inspire Art: Unbudling Delaware’s Product for Europe’ University of Illinois College of Law, Law and Economics Working Paper 17 <http://law.bepress.com/cgi/viewcontent.cgi?article=1015&context=uiuclwps > accessed 7 July 2018.

[64] ibid.

[65] E Wymeersch, ‘Centros: A Landmark Decision in European Company Law’ (1999) 99-15 Financial Law Working Paper <ssrn.com/paper=190431> accessed 7 July 2018.

[66] Cartesio (n 42).

[67] It is worth noting that the request would not have been rejected if the transfer of the operational headquarters of the company had taken place in Hungary.

[68] C Gerner-Beuerle and M Schillig, 'The mysteries of freedom of establishment after Cartesio' (2010) 59 International & comparative law quarterly 308.

[69] The Treaty on the Functioning of the European Union, Article 14(2) EC < http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:C:2010:083:0047:0200:en:PDF> accessed 7 July 2018.

[70] Cartesio (n 42 ).

[71] ibid.

[72] ibid.

[73] ibid.

[74] KL Bhatia, Textbook on Legal Language and Legal Writing (Universal Law Publishing 2010) 242.

[75] B Leoni, Freedom and the Law (3rd edn, Princeton: Van Nostrad 1961 [1961]) http://oll.libertyfund.org accessed 7 July 2018.

[76] ibid.

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