2.1 Introduction

This chapter explores the rules and developments at the European level, which are relevant to exit rights of minority shareholders in a Dutch private limited company.

European rules affect Dutch law in different ways. With respect to treaties and resolutions of international institutions, Dutch law has a moderate monistic system. Treaties and aforementioned resolutions become directly binding after publication in the Netherlands if they have a generally binding character by virtue of their content. This rule is contained in Art. 93 of the Dutch Constitution (Grondwet). The monistic system is moderate, because a treaty requires the prior approval of Parliament before the Kingdom of the Netherlands is bound by this treaty.1 This implies that further implementation of treaties and international resolutions into Dutch law is not required. An example of a treaty examined in this study is the European Convention on Human Rights (ECHR), of which the First Protocol ECHR forms part.

The EC rules are treated somewhat differently than other international treaties and resolutions of international institutions. As has been pointed out by the ECJ in the Van Gend & Loos case:

EC regulations have a generally binding character in all EC Member States pursuant to Article 288 TFEU.3 As a general principle throughout the European Community, and as has been clarified in the Costa/ENEL case, EC law takes precedence over the national law of EC Member States.4 An example of an EC Regulation is the Council Regulation on the Statute for a European Company (SE).

The direct implementation of treaties and resolutions may have the effect that Dutch statutory rules remain inapplicable. Pursuant to Art. 94 of the Dutch Constitution, Dutch statutory provisions remain inapplicable if application thereof is not compatible with rules contained in treaties and resolutions of international institutions that have a generally binding character. It should be noted that the precedence of EC rules has a specific character. The precedence of EC rules follows directly from the TEU and the TFEU, irrespective of application of Art. 94 of the Dutch Constitution.5

In consequence, Dutch courts are allowed to test statutory rules on compatibility with EC and international treaties and resolutions of international institutions. Dutch citizens may directly invoke generally binding rules contained in EC Regulation, international treaties and resolutions of international institutions. It should be noted that not all rules contained in EC and international treaties and resolutions of international institutions have a generally binding character and, therefore, cannot be invoked by parties in proceedings. Although Dutch statutory rules can be tested for compatibility with treaties, Dutch statutory rules cannot be tested for compatibility with the Dutch Constitution.6

Other sources of European law include directives, decisions and judgments of the ECJ.7 Directives are binding as to their result, but each Member State is free to choose how the directive concerned will be implemented into national legislation. Directives are not directly binding. Examples of directives referred to in this study are the Tenth EC Directive on cross-border mergers of limited liability companies and the Thirteenth EC Directive on takeover bids. Although directives do not apply directly, legislation of Member States must be interpreted in accordance with EC Directives that have become binding for those Member States. In the event that a Member State has not implemented a directive in due time or in the way prescribed by the directive, the legislation of that Member State must be interpreted in accordance with the wording and objective of this directive. This interpretation in accordance with the relevant directive is, nonetheless, limited to the scope offered by the national legislation, whereas directives cannot take precedence over national law. Directives cannot be directly invoked against citizens, even if they have not, or have incorrectly, been implemented.8 Decisions have no general binding character, but only bind the persons to whom they are addressed. Judgments are, in principle, addressed to the parties in proceedings.

In contrast with the Netherlands, Germany, England and Wales maintain a dualistic system. This implies that, in principle, treaties and resolutions of international institutions do not form part of English and German law, but require implementation into national statutory instruments. Citizens cannot directly invoke international rules, but can only invoke rules that have been integrated into national law. Nonetheless, as demonstrated by the abovementioned cases Van Gend & Loos and Costa v. ENEL, EC rules take precedence over German and English national law, as is also the case in the Netherlands.

In this chapter, I will investigate two important European rules that are of relevance to this study on exit rights. First, I will focus on Art. 1 First Protocol ECHR in § 2.2.2. This provision safeguards the property rights of natural persons and legal entities. It is of particular interest that shares in limited liability companies are property rights that fall within the ambit of this provision. Secondly, Art. 6 ECHR is explored, which provision regards the right to a für trial (§ 2.2.3). This provision is important as it indicates the framework in which statutory exit rights must be implemented.

In addition, § 2.3 investigates the broad debate at the European level on the introduction of exit rights. Finally, this chapter deals with the proposal for a European private limited company, abbreviated as SPE. Attention will be paid to how exit rights, available to minority shareholders of the SPE, should be shaped (§ 2.4). This chapter ends with conclusions, which are included in § 2.5.