2.4.4. Independent Interests in (Re)Distribution

As far as redistribution independent of value maximisation is concerned, the protection

of the employee, the consumer and environment are all recognised as mandatory

requirements of the public interest on which Member States may rely in order

to justify obstacles to trade.1 ' " The protection of employees and (some) consumers

in cases of the insolvency of their debtor is subject to specific secondary Community

legislation. Directive 9 0 / 3 1 4 and Directive 8 0 / 9 8 7 protect the package-travel consumer

and the employee respectively in situations of insolvency.1 1 Admittedly, these Directives

do not confer any priority on the claims of those creditors, but rather socialise

the insolvency risk through compensation out of collective funds. However, as far as

the regulatory interest is concerned, they do show that the protection of these categories

of creditors is to be considered public interests of an overriding nature.

However, the priorities accorded to fiscal and social security claims are problematic.

The Court has indeed recognised the effectiveness of a Member State's fiscal supervision

as a mandatory requirement in the sense of the rule of reason.1 ' More recently,

in Decker the Court held that the risk of 'seriously undermining the financial balance

of a social security system' may constitute an overriding reason in the general interest

capable of justifying a barrier to trade.1 ' The Court gave no indication of how serious

the threat must be. However, while a Member State is a particularly diversified creditor

and the default on any particular public claim will generally have a negligible impact

on the over-all revenues, it cannot be excluded that a Member State will be able to

show that a priority for public claims may be necessary tor safeguarding its fiscal

integrity and the financial soundness of its social security system.1 ''

On the o t h e r hand, it has been argued that (super)priorities for public debts must be

deemed disproportionate. Revenue authorities do not need protection against other

creditors in distribution. Like private creditors, they can secure payment of public

debts by demanding payment in advance or otherwise by obtaining security in rein

or in personam. According (high) priorities, such as was the case in Krantz, reduces

or eliminates any incentive for the tax authorities to monitor debtor's payback ability

in their decision to extend credit and thus prolong the life of inefficient and economically

harmful f i r m s . 1"

Recent case law of the Court offers support for this view. In Centros Denmark relusec!

to register the branch of Centros Ltd., registered in the United Kingdom but intending

to do business only in Denmark, as it would allow companies to escape its national

rules on, inter alia, the provision for and the paying-up of a minimum capital.

According to Denmark, the resulting obstacle to the freedom of establishment was

in part justified as its rules aimed

to reinforce the financial soundness of those companies in order to protect public

creditors against the risk of seeing the public debts owing to them become

irrecoverable since, unlike private creditors, they cannot secure those debts by

means of guarantees.1

I lowever, the Court rejected this argument observing that

contrary to the arguments ot the Danish authorities, it is possible to adopt measures

which are less restrictive, or which interfere less with fundamental freedoms,

by, tor example, making it possible in law for public creditors to obtain the necessary

guarantees.1'

If one accepts the validity of this reasoning beyond the confines of t he facts o\'('entros,

then it is unlikely that the Court would accept a statutory priority in distribution as

a necessary and proportionate measure for the protection of public creditors.