IP Briefing: English Company with Scottish COMI

Background

Lord Docherty’s judgement in the case of a lender’s proposed administration order of Screw Conveyor Limited is a brief but welcome reminder of an important point for all practitioners. Screw Conveyor Limited’s secured lender lodged a petition for an administration order. Submissions were then made to the competence of the Court of Session granting an administration order given that Screw Conveyor Limited was incorporated in England and Wales and had a registered office in Birmingham. Senior Counsel for the secured lender sought to argue that Article 3.1 of the EU Insolvency Regulation was incorporated into domestic law and consequently the Courts where the company’s centre of main interest was, had jurisdiction to deal with the winding up of the company.

Decision

Lord Docherty held that the submissions for the secured lender were “untenable”. He held:

“…part of the legislative context of those provisions [Insolvency Act 1986, s120] is that the EU regulation only applies to establish international jurisdiction. The position was the same under the EC regulations. The Member State the courts of which may open insolvency proceedings is designated, but territorial jurisdiction within that Member State is established by the Member State’s national law…”

He went on to hold that Section 120 of the Insolvency Act 1986 conferred jurisdiction on the Court of Session in the case of companies registered in Scotland and that the Court of Session did not have jurisdiction to make an administration order in relation to an English company.

Advice

The leading text books support Lord Docherty’s analysis. The position is as most practitioners have always considered it is. In summary, while the EU regulation (at present) deals with international jurisdiction, the law is that within the UK the government are entitled to make arrangements for jurisdiction domestically. In practical terms that means that Scottish registered companies will be wound up or be subject to Administration in Scotland and English registered companies wound up in England. 

BBM Solicitors specialise in advising IP’s in both contentious and non-contentious matters (including transactional work). Contact: Eric Baijal (emb [AT] bbmsolicitors [DOT] co [DOT] uk).This briefing note is current as at 9th November 2017 and is our understanding of the position described at that date. Legal advice ought to be taken before relying on its terms (particularly to ensure the law has not changed).