CYIL vol. 12 (2021)

tomáš křivka CYIL 12 (2021) in the decision in the Cartesio case in connection with the definitive rejection of the seat principle and forcing the Member States to fully abandon that principle, were not confirmed by the CJEU in the end. This means that the EU Member States have retained a possibility of regulating the personal statute of companies in outgoing situations according to their own legal traditions and doctrines. At the same time, it was just the CJEU, thanks to its long-term emphasis on the application of freedom of establishment as broad as possible and its general focus on effet utile of European law, that enabled, in the field of establishment of legal entities, the so-called horizontal competition of legal orders , when founders can choose, to some extent, the legal order and thereby also the personal statute of the new company. That is why the CJEU contributed to the practice that on foundation of a company in one Member State of the EU the other Member States cannot impede secondary freedom of establishment and operation of its activities in the other Member States of the European Union. A clear consequence of this competition is then the virtually European-wide reform of the legal form of limited liability companies, when fundamental changes were adopted, under the influence of liberal English legislation, in capital protection at this form of companies in a number of Member States, including the Czech Republic, with the effect of a general reduction of the minimum registered capital of such companies. Although in connection with the phenomenon of legal orders, an emphasis is sometimes placed on concerns that such a competition should not lead to reduction of national standards to the very bottom, Member States have a simple possibility of supporting creation of a common European legislation, which determines, in a uniform way, certain minimum standards that cannot be disregarded by national law. This way it is possible to avoid the threatening “race to the bottom”, if this risk is too high from the viewpoint of the Member States. I believe that a clear advantage of facilitation of a regulatory competition in the field of freedom of establishment of companies (but also of legal entities not doing business) in the EU is the maintaining of diversity of various legal solutions. Like in nature, also in the sphere of legal entities this approach leads to long-term sustainability of the entire system thanks to “natural selection” of the models functioning in the best way. At the same time, this approach makes it possible to perform ex post evaluation of non-functioning concepts and their subsequent abandonment. On principle, such an advantage cannot be offered by uniform regulation by way of unification regulations, because regardless of the quality of preparation of the legislation the uniform regulation leads inevitably to the fact that the functionality of a particular solution must always be evaluated “ex ante” and it is not possible to wait for actual results from practice and their subsequent mutual comparison. A unification integration is therefore based on the presumption that the legislator is able to set up, in advance, a predefined solution that is as satisfactory as possible, which is not a correct approach in my opinion. On the other hand, however, the current system of multinational Union legal entities existing next to the national system of legal entities extends the existing horizontal competition of legal orders with a new dimension, and so this current system completes the ongoing “natural selection” with another aspect which could be called as a vertical competition of legal orders. This way, the intensity of the regulatory competition is still increased and an arising entity desiring its incorporation has a choice at present, namely whether the company should be established according to national law or according to another legal system of a Member State of the EU or whether a multinational form should be used, such as the

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