The place of central administration of a subsidiary will not be where the parent administers its own business unless the parent is, unusually, administering business on behalf of the subsidiary: Vava and others v Anglo American South Africa Limited [2013] EWHC 2131.

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. In the Vava case the High Court considered the meaning of the place of central administration.

Decision

It was argued by the claimants that AASA, a company incorporated in South Africa, was in reality administered from London with its entrepreneurial decisions taken there by its parent. The claimants relied on a number of factors in support of this including that board meetings of AASA were infrequent, certain central committees were involved in setting policy, AASA’s assets comprised more than half of the group’s assets, it had no employees and conducted no business of its own and its role was to hold through wholly owned subsidiaries shares in companies incorporated in and operating in South Africa, including mining companies.

Mr Justice Andrew Smith considered that ‘administration’ connotes a company’s internal management, including decisions about entrepreneurial matters in which it might be involved and possibly dealings with bodies such as regulators, rather than its actual business dealings with third party customers and suppliers. In his view, an operating or trading company might have its central administration and its principal place of business in different jurisdictions, but it was difficult to envisage circumstances in which an intermediate holding company such as AASA might do so. He accepted that there were cases in which a parent has usurped the functions of a subsidiary and this could then affect where the central administration takes place. It was not sufficient however that the policies and strategies of a parent influenced or even strongly influenced the decisions taken by the subsidiary.

On the facts the judge considered AASA’s board meetings were sufficient for the limited business of the company and there was no evidence of more than influence from the parent. He declined to make a reference to the European court (CJEU) as he did not accept there was any real uncertainty about the meaning of ‘central administration’ within article 60.

Comment

The decision helpfully reviews the cases on central administration, including decisions in other EU countries.

Where a company has its central administration is ultimately a question of fact: it will depend upon where the company itself carries out its functions. As the judge commented, unless the company can properly be said to act through another person or entity because of agency or delegation or on some other legally recognised basis, the actions of others (such as the parent) do not determine the question.