The COMIngs and goings of COMI - Centre of Main Interests for Shipping Companies
In the latest decision on COMI (Northsea Base Investment Limited & ors  EWHC 121 (Ch)), the English Court had to determine the centre of main interest for a group of companies registered in Cyprus, but where the operations of the companies were managed by a shipping agent in London. This case (1) serves as a summary of the principles upon which the registered office presumption can be rebutted, (2) stresses that the factors upon which the presumption can be rebutted must be objectively ascertainable by third parties and (3) is a reminder that the registered office of each company within a group must be ascertained separately.
An interesting element of the case is that the administrators were appointed through the out of hours procedure so it would have been verified in the appointment documents that the COMI of the companies was in England and Wales – but the administrators issued an application after the event to get the position verified by the Court.
The eight companies within the group were incorporated in Cyprus at the same Cypriot registered office. Six of the companies each owned a single ship; the remaining two companies were holding companies. An English shipping agent with its registered office in London was appointed to deal with the operations and management of the ship-owning companies. The managing agent was linked to the companies’ ultimate shareholder and the group companies were their only clients.
The group holding company had two facilities with a syndicate of banks (both governed by English law and containing exclusive English jurisdiction clauses) and had granted security to the banks by way of guarantee and pledges over the shares of the ship-owning companies. Following appointment, the administrators applied to the English Court for an order that the COMI of the companies was based in London.
Mr Justice Birss followed the Eurofood (C-341/04  Ch 508) and Interedil ( EUECJ C-396/09) decisions of the CJEU, stating that the presumption that the COMI of a company is in the Member State where it has its registered office can only be rebutted if there are factors which are both objective and ascertainable by third parties which enable that third party to established that the COMI is different from the place of its registered office. The burden of proof is on the applicant to rebut the presumption and requires a comprehensive assessment of all the relevant factors.
On the basis of the evidence put forward by the administrators, Birss J held there was sufficient evidence to rebut the registered office presumption and made a declaration that the COMI for all eight companies was in England. The judge accepted that the agent’s role in London as the ship-owning companies’ agent was critical to their operations and that any third party with dealings with the companies through the agent would on balance be entitled to believe they were dealing with the companies in England, particularly as the agent was responsible for dealing with payment of invoices due to the companies and queries regarding operations were directed to the agent. Mr Justice Birss held that the fact the agent contracted certain management issues to an Indian company (Scorpio Group) did not alter the situation since Scorpio operated behind the scenes with most direct contact with third parties being with the agent.
As regards the management companies, the only relevant COMI factors arose in relation to the Bank Facilities, in relation to which the agent always arranged for interest payments to be made from the companies’ bank accounts, the agent’s address was that listed as the address for notices under the Facilities and the individuals dealt with by the Syndicate were directors of the agent who were both based in London.
In reaching his decision, in addition to the fact that the registered office was in Cyprus Birss J considered other factors which ran contrary to the premise that the COMI was in England, such as that none of the companies’ directors were based in England and that board meetings were not held in England. However, he held that such factors were not easily ascertainable by third parties.
Whilst not ground-breaking, this case (1) serves as a summary of the principles upon which the registered office presumption can be rebutted, (2) stresses that the factors upon which the presumption can be rebutted must be objectively ascertainable by third parties and (3) is a reminder that the registered office of each company within a group must be ascertained separately. The decision is also timely, given the forthcoming changes to the EC Insolvency Regulation regarding COMI, particularly the introduction of the principle that the registered office presumption will not apply where a company’s registered office has been moved in the 3 months prior to the onset of insolvency proceedings. COMI will return to the spotlight in the wake of the new rules as national courts have to decide whether they have jurisdiction and on what basis. Watch this space!