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Article
Deja Vu All Over Again? The Internal Affairs Rule and Entity Law Convergence Patterns in Europe and the United States
Brooklyn Journal of Corporate, Financial and Commercial Law (2014)
  • Matthew G Dore, Drake University
Abstract
Many scholars embrace the view that corporate law convergence is an inevitable byproduct of the internal affairs rule and market competition by jurisdictions that seek to attract new entity formations by offering ever more efficient business association laws. Yet recent developments in Europe and the U.S. cast doubt on this proposition. As the article describes, the European Court of Justice embraced the internal affairs rule more than a decade ago, and European Union legislation now offers new opportunities for EU Member States to compete in the company law field. But Europe has experienced neither U.S.-style jurisdictional competition for business entity formations nor meaningful company law convergence. At nearly the same time, state laws in the U.S. converged around new "uncorporation" entity options--LLCs and LLPs. This convergence occurred before it became clear that the internal affairs rule applied to the new entities, and thus could not have been a result of jurisdictional competition under the internal affairs rule. The article argues that these developments support more nuanced views of scholars who question whether the internal affairs rule creates a market for business association laws that is sufficiently strong to foster convergence around a single set of “efficient” norms. The article concludes that scholars should shift their focus away from the phenomenon of convergence of business association laws and concentrate instead on a number of potentially productive areas for comparative U.S.-European business association law study.
Keywords
  • internal affairs,
  • european union,
  • EU Treaty,
  • company law,
  • limited liability company law,
  • limited liability partnerships
Publication Date
2014
Citation Information
Matthew G Dore. "Deja Vu All Over Again? The Internal Affairs Rule and Entity Law Convergence Patterns in Europe and the United States" Brooklyn Journal of Corporate, Financial and Commercial Law Vol. 8 (2014)
Available at: http://works.bepress.com/matthew_dore/5/