European Economic Interest Grouping

as an instrument of cross-border cooperation in the European Union

Preface

The World is changing. Globalization requires new legal forms of cross-border cooperation. Entrepreneurs from different countries with completely different legal systems seek for standard legal formula for conducting commercial activity. Should be created supranational legal institution opened for the entrepreneurs from legally, culturally and mentally different parts of the shrinking World? One could state that there are hardly any perspectives for preparing international convention dealing with supranational institution for conducting cross –border activity. Besides, it is very difficult to create self-sufficient legal formula that does not have to use the backbone of national legal norms. Nevertheless legal attempts to create a common, trans-border platform for the convenience of global entrepreneurs should be taken. An example of cross-border cooperation between entrepreneurs from different countries is European Economic Interest Grouping in the legislation of the present European Union.[1] This construction is really worth to be considered as a prelude to the discussion about global common cooperation formula for entrepreneurs.

The history of European Economic Interest Grouping

The European Economic Interest Grouping (EEIG) was established – on the level of the European Community[2] - by Council Regulation No. 2137/85 of July 25, 1985, Office Journal EC of 31.07.1985, no. L 199 (the legal provisions cited in this study, without specifying the source of their origin, are taken from this regulation). The ordinance came into force on October 3, 1985. The creation of the first European grouping of economic interests became possible after July 1, 1989 (see Article 43). Work on the draft regulation of the grouping was started in 1970. The EEIG draft regulation was considered by the Commission on December 21, 1973. The Commission presented a draft regulation, after consultation with the Economic and Social Committees of the European Parliament on 22.4.1978. It should be remembered that during the work on the regulation there was a dispute not only about the details of the regulation, but also an absolutely emotional dispute between supporters of introducing such an institution and skeptics denying such a need.[3]

The EEIG is an institution with a transnational, not domestic dimension, created to enable interested entities to operate effectively across borders (indent 5 of the Regulation). This institution was introduced to enable international cooperation as well as to overcome legal, fiscal, psychological barriers that may arise in connection with such cooperation (recital 6 of the preamble to the Regulation).[4]

A characteristic feature of the grouping is its legal eclecticism. The European institutions preceded formulas of a European company (societas europaea)[5] and a European cooperative society (societas cooperativa europaea, SCE)[6], but EEIG is the first Community institution destined for economic trans-border cooperation.

The Treaty establishing the European Economic Community concluded between the Member States of the European Community did not contain any specific authorization to establish such a legal institution (recital 7 of the preamble to the Regulation). The legal basis for creating a grouping was art. 235 the former Treaity. Consequently, the unanimity of the Council was necessary for the adoption of the Regulation. The literature emphasized that the mode of adoption of the regulation forced the adoption of some compromise solutions.[7]

The “prototype” model of EEIG regulation

The prototype for the EEIG regulation was an institution educated in French law under the name Groupement d'Interet Economique (GIE). The source of law for GIE is Ordonans No. 67 - 821 of September 23, 1976, later amended, among others in connection with the law issued to supplement the domestic Regulation.[8] The GIE formula was conceived as an institutionalized form of cooperation between entities, which kept their legal and organizational autonomy. The aim of GIE is to facilitate and develop the business of its participants, not to achieve its own profits. GIE can be founded without capital. GIE has legal personality. The GIE members are jointly and severally liable for the GIE's obligations.[9]

GIE should be distinguished from another French legal institution Groupment d'Interet Public (GIP). GIP was originally conceived as a legal structure for conducting scientific research and technological development, mainly in the relations between universities and entrepreneurs, and later also in the social and health fields. GIP is created by way of a contract between private and public law entities; Regional and local authorities may participate in GIP. Currently, GIP can be used in many areas such as management of public utilities, technological development, etc. GIP is subject to control by the public authorities, in particular in the field of financial operations.[10]

The essence of EEIG

The EEIG can be described as a flexible and informal institution, equipped with legal subjectivity, which allows its members from at least two different EU Member States to link certain types of their economic activities while maintaining economic and legal independence.

The Commission's Communication of 10.07.1996 on the participation of the European Economic Interest Groupings in public contracts and programs financed from public funds (Journal of Laws of 1997, No. C 285) in point II lists five characteristic features of the EEIG:

a) the community nature of the institution

b) the legal capacity of the grouping and the simultaneous autonomy of its members

c) the auxiliary nature of the activities of the grouping

d) a stable and at the same time flexible internal structure

e) unlimited and joint liability of the members of the grouping for obligations

At the level of cooperation in the European dimension, the EEIG has become a competitive instrument, in relation to such legal forms as the creation of subsidiaries, the creation of branches, conclusion of contracts for economic cooperation, acquisition of shares, exchange of shares, etc.[11]

EEIG is a new legal structure and cannot be classified as a company. EEIG is in fact a hybrid creation. On the one hand, the grouping is similar to a partnership (partnership, societe en nom collectif, offel Handelsgesellschaft, general partnership), in particular due to the principle of unlimited and joint liability of members for the grouping's obligations. On the other hand, the grouping is similar to a limited company (GmbH, a limited liability company) mainly due to the principle of EEIG's operation by the managers. EEIG is, however, a relationship of persons rather than capital.[12] In the construction of a grouping, personal characteristics over capital features prevail. Flexible legal regulation allows to intensify or reduce personal characteristics. An expression of the personal nature of the grouping is, in particular:

a) the purpose of the grouping, which causes that the grouping serves a subordinate role in the activities of its members (in order for the grouping to fulfill its goals, its members must, in principle, be derived from a specific key interest);

b) introduction of special criteria for obtaining membership in a grouping, introduction of restrictions on changes in the composition of the grouping, special regulation regarding the termination of membership in the grouping, the principle of direct notification of members of the group about the loss of another person's membership in the grouping;

c) prohibition of publishing a public subscription by a grouping;

d) the principle of the personal liability of members for the obligations of the grouping;

e) special tax rules regarding the income of the grouping;

f) the principle of allocating to each member of the grouping only one vote,

g) preferring the unanimity rule when adopting crucial resolutions,

h) granting members an individual right of control.

EEIG is subject to multi-layered legal regulations. First of all the sources of EEIG regulation include the provisions of Regulation No. 2137/85, which is the directly dedicated regulation of the grouping. Many other European legal acts also refer to the grouping, but they do not constitute an important legal basis for the regulation of the EEIG. Most often the institution of EEIG appears in them as a legal formula recommended by the legislator for servicing community programs, etc. The regulation of the EEIG in the sphere of European law is not exhaustive.

The second group of EEIG regulation sources is therefore the provisions of the national law of individual Member States of the European Union.

Finally, among the sources of regulation of the EEIG, within the limits set by the provisions of European law and national law should be mentioned, the so-called lex contractus, or contract for the formation of a grouping.

Numerous references to the national law regarding the regulation of the EEIG (as well as the SE) are treated as a weakness of this regulation. It is worth mentioning that in the draft regulation of the European Private Company (hereinafter EPC) it was stipulated that in the scope regulated by the provisions of the EPC Regulation, the application of the national law will be excluded, even if the EPC Regulation does not contain explicit regulation of the given issue. In this case, the general principles of the EPC Regulation, the general principles of European company law and the general principles common to all national legal systems will apply. Specific provisions of national law could apply to the EPC only in cases where the EPC Regulation will refer to them.[13]

Application of EEIG

The statistical data could lead to the conclusion that EEIG is a marginal phenomenon. However, taking into account the fact that EEIG is not a formula serving in principle for direct operations, but is aimed at supporting the activities of its members, the assessment of the scale of this phenomenon cannot be so severe. The constant increase in interest in this institution is also significant.

The actual scope of application of the grouping is determined by the practice of trading. The Regulation itself does not exclude EEIG from any of the areas of economic life. The grouping allows to combine participants' experiences and knowledge, concentration of financial resources, and repartition of risk related to the conducted activity. In its construction assumption, the grouping can be used in almost every area of ​​the economy.

The grouping can be used in particular to:

a) joint efforts to obtain orders, coordination of acquired orders,

b) joint market research, development of necessary statistics, etc.

c) obtaining joint loan guarantees

d) joint collection of receivables

e) joint investments,

f) joint distribution,

g) joint marketing and advertising

h) organizing the exchange of human resources (staff)

i) organizing specialized training

j) joint as-built and repair service

k) joint use of machinery, storage and transport equipment

l) organizing services in the field of international (freight and passenger) transport as well as logistics and export

m) organizing legal services

n) running an international television station / radio station

o) organizing cooperation between chambers of commerce from different countries

p) conduct joint scientific research

q) information exchange and know-how

r) implementation of programs financed from Community sources, with the competence to receive, dispose of and monitor Community funds[14]

In its assumption, the grouping was to be a construction that was particularly useful for small and medium-sized enterprises. European Economic ..., p. 12. I. Hykawy [in:] Prawo Unii ..., pp. 271-227. Small and medium-sized enterprises are forced to combine their potentials to conduct cross-border activities and increase their competitiveness. However, creation of EEIG by large enterprises is not excluded.

The territorial scope of Regulation 2137/85

First of all, by virtue of the regulation, the grouping may operate on the territory of European Union countries. Currently, the European Union has 28 countries. In the event of further enlargement of the European Union by new Member States, the institution of the EEIG will, in principle, also be applied in the new Member States.

Secondly, the grouping may operate in the European Economic Area (EEA), also outside the European Union. The EEA is a free trade area, covering the countries of the European Union and the European Free Trade Association (except Switzerland), Norway, Iceland and Liechtenstein. Agreement on the creation of the EEA, signed in Porto on 2.5.1992, entered into force on January 1, 1994. Under the agreement with Porto, the EFTA States undertook to adopt Community law in the fields of free movement of persons, goods and capital, freedom to provide services, copyright, competition, state aid and elements of social policy. On the other hand, the member countries of the Communities have agreed to extend the Single Market to EFTA countries. Approximately 80% of Community law on the Single Market applies to the EEA.[15] Regulation No 2137/85 applies in the EEA in accordance with art. 77 of the Agreement on the European Economic Area and point 10 of Annex XXII - Company law (Journal of EC Treaty of 1994, No. 1, pp. 517-522). The provision of art. 6 par. 5 of the Athens Treaty of 16.4.2003. (Journal of Laws of 2004, No. 90, item 864) imposed on new Member States of the European Union (including Poland - see Act of 16.4.2004, Journal of Laws of 2004, No. 130, item 1375) obligation to accede to the Agreement on the European Economic Area.

Incidentally, the EEIG may operate not only in the EEA, but also in third countries, for example to search for, explore new markets or facilitate access to them. The grouping may cooperate with other entities from third countries by entering into joint-venture agreements with them. However, the activities of the EEIG in third countries will have a limited scope, as the grouping may only be established in the EEA.

Legal capacity of EEIG, legal subjectivity, judicial capacity.

From the day of registration, the grouping may in its own name acquire all kinds of rights and obligations, incur liabilities, sue and be sued (Article 1 paragraph 2). The grouping has, therefore, legal capacity and judicial capacity (and, moreover, also the capacity for procedural acts), which are important determinants of its legal subjectivity. The grouping has full capacity to conclude contracts under public procurement and participate in programs financed from public funds. According to art. 35 ust. 3 legal subjectivity within the meaning of art. 1 point 2 grouping retains until the end of liquidation. EEIG's equipment in legal subjectivity is - which should be emphasized - an important element that distinguishes this construction from purely conventional forms of cooperation.

However in the field of tax law, the legal entity has the members of the grouping to the extent that it is provided for in art. 40, according to which profits and losses resulting from the activities of the grouping should be taxed only in relation to the members of the grouping.

From the moment the contract of the grouping was concluded until the entry of the grouping into the register, one can talk about the grouping in the so-called the initial period.

The issue of the legal personality of EEIG

The Regulation leaves Member States free to decide whether a grouping registered in their registers will be provided with legal personality or not (Article 1 (3)). This is because the legal systems of the Member States have approached in a different way - and continue to approach - the problem of legal personality. The range of assumptions is rich: from the very wide consent to equip legal personality (eg in French law) to the conviction that not all categories of entities have matured to be a legal person (eg in the German, Polish law).

The French prototype of the grouping was equipped with legal personality. However, the French case-law undermined the legal personality of the grouping, recognizing, for example, that the grouping did not have its own clientele, or that the employee of the grouping employed by the grouping could be dismissed by one of the members of the grouping. The concept of limiting the legal personality of the grouping, however, met with numerous critical voices.[16]

The groupings in most EU countries have legal personality. The exception in this regard are in particular Germany, Italy and Poland.

The EEIG's equipment in legal personality evokes doctrinal disputes regarding its character (legal personality sui generis, "ambiguous", "imperfect"), due to the joint and unlimited liability of members for grouping commitments and fiscal transparency.[17] This issue builds the image of a grouping as a hybrid and eclectic creation.

Conclusions

Can EEIG be a prototype for a global legal formula for trans-border commercial cooperation? Probably EEIG could be just an important inspiration. A new supranational formula is to be invented.

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