In the recent case of Meters Group Ltd v East-West Logistics LLP  EWHC 1523 (Ch) the High Court considered an appeal from a winding-up order made by Deputy ICC Judge Baister, who had concluded that the centre of main interest (COMI) of Melers Group Ltd (the Company) was in England and Wales rather than in Malta where its registered office was located.
This decision provides a helpful summary of factors the court will take into account when assessing a company's COMI. Post-Brexit, the issue of COMI remains relevant under the Retained Recast Regulation.
On 14 December 2011, East-West Logistics LLP (the Petitioner) entered into a contract with the Company under which the Petitioner was to ship cargo to Turkmenistan. The Petitioner later claimed that the Company was in breach of contract and commenced arbitration proceedings London and later issued proceedings in the BVI.
The Company's registered office had been located in the BVI until 10 December 2015, when it was moved to Malta, some two months after service of the BVI claim and after it had acknowledged service.
The Petitioner obtained judgment in default on 1 March 2016 in the total sum of $657,839.18. It presented a winding-up petition in England on 19 July 2016 and a winding-up order was ultimately made on 4 August 2020.
Grounds of appeal
The Company appealed the winding-up order on five grounds, namely that the Deputy ICC judge erred in:
- his approach to the determination of COMI and the relevance of the statutory presumption;
- failing to draw a distinction between administrative connections and operational connections;
- reaching a decision that the Company's COMI was established in England;
- discounting a number of factors that ought to have been taken into account; and
- reaching a decision which no reasonable tribunal could have reached in the circumstances.
The Company also applied to rely on a new evidence from its director.
The matter came before Mr Justice Miles on 28 May 2021.
The appeal judge firstly refused to allow the director’s new evidence, noting that the court has a power to admit such evidence under CPR 52.21(2)(b) but pointing out that the evidence sought to be relied upon was available at the time of the trial, and no explanation had been provided as to why it had not been put forward sooner, particularly given that the witness statement referred to events going back to 2011.
The appeal judge then moved on to consider the parties' respective positions and various authorities noting the parties' failure to refer the Deputy ICC judge to the decision in Re Stanford, going on to identify seven key points to consider when determining a company's COMI:
- COMI should be capable of ascertainment by reference to publicly available objective features from perspective of third parties (i.e. creditors);
- the statutory presumption is that COMI is where the registered office is located unless there are factors to the contrary;
- the above presumption still applies in case of a letterbox office (unless there are factors to the contrary) although it may be easier to rebut;
- in the spirit of the principles of certainty and foreseeability, the burden to prove that COMI is not at the place of registered office is on a party seeking to rebut the presumption;
- the interests of the debtor are being administered should be considered rather where it operates commercially, although the latter might be of relevance to the former;
- the debtor's position should be considered as at the date of the petition, although the position before or after might be helpful insofar as it assists with determining that; and
- the concept of COMI suggests a certain degree of permanence and although in certain circumstances it can be changed, this cannot be done too easily.
Mr Justice Miles decided that the Petitioner failed to rebut the statutory presumption that the COMI was in Malta, where the Company had its registered office, particularly taking into account matters ascertainable to a typical third-party creditor. The appeal was allowed and the winding-up order was set aside accordingly.
The decision provides a very helpful reminder of the all the factors that are taken into account when there is a dispute as to a company’s COMI, highlighting the importance of the perspective of a typical third-party creditor.
Discussion around this topic will still be relevant post-Brexit and should be kept in mind by companies and their professional advisers as . confusion over COMI can lead to court documents being served at the wrong place and being missed, or additional costs having to be incurred.