‘Establishment’ in EU insolvency—a win for territorialists? (Olympic Airlines)

‘Establishment’ in EU insolvency—a win for territorialists? (Olympic Airlines)

Sebastian Prentis, a barrister at New Square Chambers, discusses the Supreme Court’s judgment in Olympic Airlines SA which examines the correct meaning of the concept of ‘establishment’ in relation to EU insolvency proceedings.

Original news

Trustees of the Olympic Airlines SA Pension and Life Assurance Scheme v Olympic Airlines SA [2015] UKSC 27, [2015] All ER (D) 224 (Apr)

The respondent company was a Greek state-owned airline that had gone into administration. The appellants were trustees of its pension scheme. The trustees presented a petition in England to wind-up the company on the ground that it was unable to meet its liabilities. The Chancery Division granted the petition, but it was overruled by the Court of Appeal. The Supreme Court dismissed the trustees’ appeal. On the proper construction of ‘economic activity’ in the definition of ‘establishment’ of Council Regulation (EC) 1346/2000, art 2(h) (the EU Insolvency Regulation), the company could not, at the date of the petition, be said to have had an ‘establishment’ in the United Kingdom.

What were the jurisdictional issues?

In Olympic Airlines SA the Supreme Court expounds on the meaning of ‘establishment’ in the EU Insolvency Regulation.

The EU Insolvency Regulation applies where a debtor has his or its ‘centre of main interests’ within an EU state (which for these purposes does not include Denmark). Only the courts of that state will have jurisdiction to open main insolvency proceedings. By art 3(2), courts of another member state can open proceedings (which will be ‘territorial’ or ‘secondary’ depending on whether they are opened before or after the main proceedings) only if the debtor has an ‘establishment’ in that state. It is therefore a pre-condition to the opening of secondary proceedings that the debtor possesses an establishment.

‘Establishment’ is defined by art 2(h) as ‘any place of operations where the debtor carries out a non-transitory economic activity with human means and goods’.


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