On 6 June 2013, the Court of Appeal reversed the High Court’s decision in The Trustees of the Olympic Airlines SA Pension & Life Insurance Scheme v Olympic Airlines SA from May 2012.
The Greek state-owned airline entered into insolvency in Greece (an EU member state). This meant that under the EU Insolvency Regulation no insolvency process could be started in England unless the airline had an establishment in England. The airline’s UK pension scheme trustees wanted to place the airline in an English liquidation so that the scheme would be eligible to enter the Pension protection Fund (PPF) – the Greek liquidation did not count as a ‘qualifying insolvency event’ under section 127 of the Pensions Act 2004.
The Court of Appeal found that:
- the Greek state-owned airline did not at the time of the application in England for a liquidation have an establishment in England within the meaning of the Insolvency Regulation. This was because, by this time, the company only retained two ad hoc members of staff at its London office;
- the winding-up activities of the airline in England did not amount to ‘economic activity’ within the Insolvency Regulation
Therefore, in practice the scheme is barred from entering the PPF.
This is a glaring hole in the protective net of PPF coverage and is likely to cause concerns to trustees where one or more of the scheme employers has an EU or EEA connection (a connection with a non-EU or EEA state – eg the US – does not have the same issues as the EU Regulation will not apply).