Vol 5 (2008) - Issue 3

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The Centre of Main Interest: But Where Is It? I Know Not How to Find It

Insolvency law is probably one of the most sensitive areas in international law. The long and stony journey that Council Regulation No 1346/2000 (the European Insolvency Regulation or ‘Insolvency Regulation’) took till it finally came into force gives proof of those casualties. Thus it is not astonishing that some surprises lie buried within that piece of law, which of course is in the first line no more and no less than a compromise. One of these surprises is the Centre of Main Interest (‘COMI’), which sits in Article 3 of the regulatory framework. The COMI appears to be one of the most crucial points within the whole Insolvency Regulation as it determines applicable law and jurisdiction. Thus the Insolvency Regulation ought to be applied as homogenously as possible by the courts of member states in order to establish identical legal circumstances throughout the European Union. It is therefore the purpose of this essay to provide some theoretical underpinnings leading to the better applicability and greater efficiency regarding the Regulation’s objectives. The COMI has already been called an ‘ugly compromise,’ nevertheless as further amendments considering this point cannot be expected in the nearer future, at least some beauty ought to be found in it. A first step on that quest for beauty will be a look at the origin of Article 3, as its legal roots are likely to tell us more about its underlying intentions and purposes. Subsequently, the findings of state courts and the European Court of Justice will be examined. Within the scope of those criteria, this article will attempt to provide an interpretation of Article 3, which serves creditor-protection as well as debtor’s interests, especially when considering the concept of corporate rescue.

The legal background

It is not the intention of this article to highlight the Insolvency Regulation’s genesis starting with the insolvency big bang and ending with the final draft coming into force. Nevertheless, the legal background is of certain value, as it explains the current appearance of the statutes and thus provides interpretation guidelines. Regarding legal entities, European Union member states follow different doctrines for determining jurisdictions. Some states, like Denmark, Ireland and the United Kingdom, subscribe to the incorporation principle, in which the place of the registered office is used to allocate jurisdiction. Other states, such as France, Germany and Luxembourg, follow the realseat doctrine, which focuses primarily on the place where the company has its effective main centre of operations.

It does not take much fantasy to imagine that those different concepts of jurisdiction allocation governing a company’s life echo in some form at the company’s death. As this echo is likely to be found in the Insolvency Regulation’s wording a closer look at the text itself is of use.