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5 J. Corp. L. Stud. 1 (2005)

handle is hein.journals/corplstd5 and id is 1 raw text is: Journal of Corporate Law Studies A EUROPEAN LOOK AT THE AMERICAN EXPERIENCE OF THE DELAWARE SYNDROME ROBERT DRURY* Recent 4c iions of the European Court ofjustive on freedom of establishment of companies have effc tivey ooerturned the main barriers by ihich many Alember States have sought to protect hat they regard as their vital national interests. ie doors noi lie opa to afreer irgration of corporations tithin the European Union, and potentialy expose that i,'on to all of the consequences that the Dlaware Sylrome has brought to the US. 7i/s article examines the background to the deelopment of that Syndrome in the US, and looks at the ways in tthichotherLSstates responded to it. 7he effects ofthis marketfor corporate charter in the US are exfplored and current yiewds on the present situation summarised. 7he article then invesigates ihat, f anything. European jurisdictions can learn from this American e kperience. A. INTRODUCTION For more than a century a major concern of many European countries has been that businesses will incorporate in a jurisdiction which is perceived to have a lax regulatory framework, and will exploit that supposed advantage by trading in their own, more rigorously regulated, jurisdiction. Always before them has been the terrifying example of the US, where what Mr Justice Brandeis had called the race ... of laxity' had been in progress for about the same period of time. Because this European attitude still colours a great deal of current thinking on the subject, and because this attitude stands in the way of an integrated approach to free corporate migration within the single market of the European Union, it is worth examining this whole area in greater detail and questioning some of the assumptions that have been made. Now is a good time to conduct this exercise because the European Union is not far short of its first half century of existence as a common market and now * Director of Postgraduate Studies, School of Law, University of Exeter The author gratefilly acknowledges lic awNard of a grant by tie British Academy that made possible thc US research upon which much of this article is based. The author also wishes to express his gratitude to Prole'ssor Richard Buxbaum of the Unix-sily of Calil rnia, Berkeley and ProfiIssor Wtnnr Ebkc now of the University of Heidelberg for the invaluable assistance that they have given and the patient kindness that timy have shown. Lonis A'LwoPtt C2 Lee, 288 US 517 (1933), 58-47. April 2005

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