Ubbink Isolatie BV v. Dak- en Wandtechniek BV

Dak- en Wandtechniek BV (Wandtechniek) (plaintiff) contracted with an entity that called itself Ubbink Isolatie BV (the Ubbink entity) (defendant). The contract did not state that the Ubbink entity was in formation. At the time, a partnership named Ubbink Isolatie BV io (meaning an in-formation, private limited-liability company) was listed in the commercial register, but the register did not list a formed, private limited-liability company with the name Ubbink Isolatie BV. Wandtechniek subsequently sued the Ubbink entity under the Ubbink Isolatie BV name, seeking to terminate the contract and to establish Ubbink Isolatie BV’s liability thereunder. The Ubbink entity responded to the suit under the Ubbink Isolatie BV name. However, during the proceedings, the Ubbink entity argued that Wandtechniek’s suit was void because Ubbink Isolatie BV did not exist. The lower court ruled that even if Ubbink Isolatie BV was not properly formed, it existed until it was wound up or judicially declared to be a nullity under § 182(1) of Book 2 of the Netherlands Civil Code. The Ubbink entity appealed to the court of appeals, which affirmed. The Ubbink entity appealed again to the Netherlands Supreme Court (the Hoge Raad). The Netherlands Supreme Court stayed the proceedings and sought a preliminary ruling from the European Communities Court of Justice regarding the interplay between Articles 11 and 12 of the European Council’s First Directive and § 182. Specifically, the Netherlands Supreme Court inquired whether the First Directive’s rules governing a private limited-liability company’s nullity applied if an entity acted in the name of a private limited-liability company despite failing to comply with the requisite national-law formation requirements. The advocate general opined that the First Directive empowered each European Economic Community (EEC) member state to establish its own rules regarding the nullity of in-formation companies provided that the member state complied with First Directive Article 7, which required the imposition of joint and several liability on persons who acted in the entity’s name.