Vol 12 (2015) - Issue 6

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Olympic Airlines SA Pension and Life Assurance Scheme Trustees v Olympic Airlines SA [2015] UKSC 27

Introduction
The determination of a person’s centre of main interest ('COMI'), for the purpose of Council Regulation (EC) No 1346/2000 (the 'Regulation'), has been before the Courts on various occasions in the context of both corporate and personal insolvency.
The position is different, however, in relation to the determination of whether a company or person has an 'establishment' in England for the purpose of the Regulation. It is this determination that was the focus of the appeal in the present case before the Supreme Court. In particular, the Supreme Court focused on the meaning of 'economic activity' which forms part of the definition of 'establishment' for the purposes of the Regulation.
The clarity provided by the Supreme Court is extremely helpful given the increased number of crossborder insolvency cases involving companies with their
COMI in another member state but with operations in England.

Factual background
Olympic Airlines SA (the 'Company') was a Greek Company with an office in London where the majority of its employees were members of the Company’s pension scheme. The pension scheme was called Olympic Airlines SA Pension and Life Assurance Scheme and was operated by trustees (the 'Scheme' and the 'Trustees').
On 2 October 2009, the Company was wound up in Greece and the main liquidation has been in progress there since. According to the rules of the Scheme it must be wound up upon the liquidation of the Company.
Upon the winding up of the Scheme it was ascertained that a deficit of GBP 16 million existed which the Company was bound to make good pursuant to s.75 of the Pensions Act 1995. Due to the size of the deficit it was understood that the Scheme was unlikely to recover much. However, if a winding up order was made against the Company in England, the Scheme would qualify for entry into the Pension Protection Fund under s.127 of the Pensions Act 2004.
As a result of this, on 20 July 2010, the Trustees presented a winding up petition against the Company in England on the ground that it was unable to meet the liability to the Scheme.
The following five facts were identified by the lower courts and are of importance to the issues before the Supreme Court:
On 28 September 2008, prior to the winding up of the Company, the area manager of the Company was instructed that the Company would cease all commercial operations as of 00.01 on 29 September 2009.
On 17 June 2010, the Greek Liquidator informed the Trustees that the employment of the 27 staff in the UK would be terminated with effect from 14 July 2010.
Following that date only the General Manager, Finance and Purchasing Manager and an accounts clerk were retained on short term ad hoc contracts.
The General Manager attended the Company’s office three or four times a week to deal generally with anything requiring attention (this principally involved instructions and requests from the Greek liquidator).
The Finance and Purchasing Manager arranged the payment of the remaining salaries and general disbursements of the office for example electricity, cleaning etc. He also assisted the Greek liquidators where necessary with financial information about the Company.
The clerk was retained to assist both managers and took instructions from them.

Legal framework
Pursuant to s.221 of the Insolvency Act 1986 ('IA86'), the English Court has jurisdiction under its domestic law to wind up a foreign company. In circumstances where a company has its centre of main interest ('COMI') in another member state of the EU, the exercise of this power is constrained by the Regulation.