The Trustees of the Olympic Airlines SA Pension and Life Assurance Scheme v Olympic Airlines SA

An “establishment” under article 2(h) of EU Regulation 1346/2000 on Insolvency Proceedings requires a fixed place from which the debtor conducts non-transitory economic activity through human agents and assets. The definition must be read as a whole.

Economic activity ordinarily entails subsisting business dealings with third parties. Pure internal administration of a company’s winding up does not suffice. A liquidator may nevertheless conduct qualifying activity by continuing the business for disposal or selling stock in trade on the market.

Premises, employees and administrative outgoings do not themselves establish jurisdiction to open secondary insolvency proceedings.

Olympic Airlines SA entered liquidation in Greece, where its centre of main interests was situated. Its pension scheme had a substantial deficit, and the trustees petitioned for its winding up in England so that the scheme could qualify for the Pension Protection Fund.

The Chancellor held that the activities of three retained workers at Olympic’s former London head office constituted non-transitory economic activity and made a winding-up order. The Court of Appeal allowed Olympic’s appeal in [2013] EWCA Civ 643, reported at [2014] 1 WLR 1401.

The issue before the Supreme Court was whether the residual activities at the London office amounted to an “establishment” under article 2(h) of EU Regulation 1346/2000 on Insolvency Proceedings, thereby permitting secondary insolvency proceedings under article 3(2).

1. Appeal dismissed unanimously. Lord Sumption delivered the judgment, with which Lord Neuberger, Lord Mance, Lord Reed and Lord Toulson agreed. Olympic had no “establishment” in the United Kingdom when the winding-up petition was presented. The English court therefore lacked jurisdiction under article 3(2) of EU Regulation 1346/2000 on Insolvency Proceedings to open secondary insolvency proceedings.

2. The definition in article 2(h) must be read as a whole because each element colours the others. The debtor must conduct activity which is economic and non-transitory, from a place of operations, through its human agents and assets. Taken together, those requirements contemplate a fixed place of business with a minimum level of organisation and stability: paras 13–14.

3. Economic activity in this context ordinarily consists of business dealings with third parties. The activity must be exercised externally on the market and be objectively ascertainable by third parties. Merely retaining premises, employees and assets, or conducting internal administration, does not satisfy the definition: paras 13–14.

4. Activities undertaken during liquidation are not invariably excluded. The definition may be satisfied where a liquidator continues the business with a view to its disposal or sells stock in trade on the market. It is not satisfied where a company has ceased business and its remaining personnel merely administer the final disposal of the means by which the former business was conducted: paras 14–15.

5. Olympic’s commercial operations had ceased before the relevant date. The retained workers paid routine outgoings, dealt with communications and accounts, and supervised the disposal of assets of little value. Those were internal winding-up functions, not subsisting business dealings with third parties. The London office was therefore not an “establishment”: para 15.

6. The need for at least some subsisting business with third parties was acte clair. Because no external business was conducted from the London premises, no question of principle required a reference under article 267 TFEU: para 16.

1. United Kingdom Supreme Court: Dismissed the trustees’ appeal and upheld the Court of Appeal’s conclusion that Olympic had no establishment in the United Kingdom.
2. Court of Appeal: In [2013] EWCA Civ 643, reported at [2014] 1 WLR 1401, allowed Olympic’s appeal. It held that the remaining employees were doing no more than winding up the company’s affairs and that this did not constitute the required economic activity.
3. High Court: The Chancellor held that economic activity need not amount to external market activity. He found a non-transitory economic activity at the London office and made the winding-up order: [2013] 1 BCLC 415.