Court of Appeal finds foreign subsidiary not domiciled in England under Brussels Regulation

The Court of Appeal has held that the South African subsidiary of an English parent did not have its central administration in England and was therefore not domiciled in England under the Brussels Regulation: Young v Anglo American South Africa Limited & Ors [2014] EWCA Civ 1130.

The court found that the test for the place of central administration is "the place where the company concerned, through its relevant organs according to its own constitutional provisions, takes the decisions that are essential for the company's operations". In this case that was South Africa, where the board meetings took place. It was irrelevant that key decision makers were based outside South Africa and  that the English parent guided and heavily influenced the decisions made.

The decision is important as it means that, save in exceptional circumstances, foreign subsidiaries are not at  risk of being sued before the English courts as of right under the domicile provisions in the Brussels Regulation.

Background

Domicile is the primary ground for jurisdiction under the Brussels Regulation (Regulation EC 44/2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters). In the case of a company, it is domiciled under article 60 where it has its statutory seat (registered office for UK purposes), where it has its central administration and where it has its principal place of business. It is sufficient if any one of the three limbs is satisfied.  At first instance in this case (Vava and others v Anglo American South Africa Limited [2013] EWHC 2131) Andrew Smith J held that there was no good arguable case that the place of central administration of  AASA, a south African company, was England (see post). One of the claimants appealed that decision to the Court of Appeal.

Decision

Lord Justice Aikens, giving the decision of the Court of Appeal, considered commentaries on the Regulation, the Lugano Convention and Article 48 of the EC Treaty, all of which use "central administration" as a connecting factor to a particular country. He  also considered English, German and CJEU cases on the phrase. He rejected the suggestion in some of the English case law that "central administration" is the place where those with the responsibility for running the company worked. The correct interpretation of 'central administration' was that it was the place where the company concerned, through its relevant organs according to its own constitutional provisions, took the decisions that are essential for that company's operations. That was the same thing in his view as saying it is the place where the company through its relevant organs conducted its entrepreneurial management, for that management must involve making decisions that were essential for that company's operation. There was no need for a reference to the CJEU as there was no doubt as to the correct interpretation of the test.

On the facts, he agreed with the judge that none of the evidence indicated that AASA carried out any function in England. It did all its business in South Africa. The parent based in London "plainly guided and even heavily influenced the decisions taken by the board of AASA" but that did not alter the position, not did the fact that the Executive Director of AASA also had a group role. There might be cases in which a company in a group took over or "usurped" the functions of another company, but that was not the case here. Not only was there no good arguable case that AASA had its central administration in England at the relevant time, there was no case at all.