CHAPTER THREE – JURISDICTION
Introduction
This chapter is concerned with the territorial jurisdiction of the courts of England and Wales to hear a bankruptcy petition against a debtor. Jurisdiction is an issue that can be relevant both in relation to a debtor’s own bankruptcy application, and also a creditor’s bankruptcy petition. The law is stated in s. 236I (debtor’s own application) and s. 265 (creditor’s petition). The two sections are virtually identical. For convenience, this chapter refers to s. 265 in preference to s. 263I since s. 265 is encountered far more frequently in practice.
Overview
In order to establish that the courts of England and Wales have jurisdiction, it is necessary for the applicant or petitioner to demonstrate that one of the several jurisdictional “anchors” is made out. The “anchors” are alternative to each other. Strictly speaking, it is only necessary to demonstrate that one is made out, although strategically, a petitioner may wish to contend that more than one is made out. It is the applicant or petitioner that bears the burden of proof, as appropriate.
Where the issue of jurisdiction arises for example on an application to serve a bankruptcy petition out of the jurisdiction, the standard of proof that the petitioner must meet is that of a good arguable case.[1] A good arguable case means that one side has a better argument than the other on the material available.[2]
Each of the “anchors” is addressed in turn below. Two of them (a debtor’s centre of main interests or a debtor’s establishment) are hang overs from the European regime for insolvency of which the United Kingdom was part until Brexit.
The sections are organised so that if a debtor’s centre of main interest is either in England and Wales or in another member state of the European Union (other than Denmark) (and, in the case of the latter, the debtor also has an establishment in England Wales) then the courts of England and Wales have jurisdiction and it is not necessary to go any further. If, by contrast, the debtor has neither his centre of main interests, nor an establishment in England and Wales, then the other jurisdictional anchors come into play.
From a practical point of view, this means that a creditor is well advised to consider, first, whether it can be demonstrated that a debtor’s centre of main interest is in England and Wales or in a European Union member state (other than Denmark).
Centre of Main Interests & Establishment
The concepts of centre of main interests (often referred to as COMI) and establishment are derived from EU law, first the Insolvency Regulation 2000 (EC) 1346/2000, and then the Recast Insolvency Regulation (EU) 2015/848.
The United Kingdom left the EU on ‘exit day’: 31 January 2020 at 11.00pm.[3] This was followed by a transition period that lasted until 31 December 2020.[4] The law set out in this Chapter is the law as it applies following the end of the transition period. Moreover, the law set out in this Chapter is the law that will apply to petitions or applications presented after 31 December 2020, and where there are no insolvency proceedings against the debtor at that time in an EU member state.[5]
Both the original and the recast EU insolvency regulations were transplanted into the law of England and Wales at the end of the transition period. The Insolvency (Amendment) (EU Exit) Regulations 2019 / 146 made significant amendments to the Recast Insolvency Regulation (EU) 2015/848 as retained in the law of England and Wales. The regulation, as so amended, is referred to as the “Retained Insolvency Regulation”.
A debtor’s COMI is defined by the Retained Insolvency Regulation as “… the place where the debtor conducts the administration of its interest on a regular basis and which is ascertainable by third parties”.[6] There are some presumptions which can be applied to assist in determining the COMI. Relevantly to bankruptcy, if the debtor is an individual that exercised an independent business or professional activity, their COMI is presumed to be the debtor’s principal place of business in the absence of proof to the contrary (provided that the debtor’s principal place of business has not moved in the three month period prior to the presentation of the application or petition). If the debtor is not such an individual, then the presumption is that a debtor’s COMI is their habitual residence (provided that there has been on move of the habitual residence in the six-month period prior to the presentation of the application or petition).
According to the Retained Insolvency Regulation, a debtor has an establishment if they have “any place of operations where a debtor carries out or has carried out in the 3-month period prior to the request to open insolvency proceedings a non-transitory economic activity with human means and assets.”[7]
In order for the court to have jurisdiction on the basis of a debtor’s COMI, it is necessary to demonstrate that the COMI was in England and Wales at the date of the presentation of the petition or application, rather than the date of the hearing.[8]
The court will consider a variety of factors when deciding whether a debtor’s COMI is in England and Wales (or, for that matter, in another EU member state other than Denmark). It is perfectly permissible for a debtor to move their COMI, but their COMI must be ascertainable by third parties – in that sense, the search is for objective factors: for example, where is the place that a debtor can be contacted. A debtor’s ‘habitual residence’ for these purposes is equated with their settled permanent home, the place where a debtor lives with family and return to from business trips. The word ‘interests’ as used in the definition is apt to encapsulate of course economic interests (commercial, financial and professional, but also consumer activity). Conducting the administration of one affairs normally connotes management and control of a debtor’s affairs. The reference in the definition to a ‘regular basis’ imports some continuity or normality. A court can look at what the debtor did before and after the presentation of the petition or application.[9] A debtor can only ever have one COMI.
In the authors’ experience, the sort of evidence that is normally assembled and presented to the court includes evidence obtained from a debtor’s social media accounts (for example showing where the debtor lives or is professionally based), documents tending to show a debtor’s immigration status or residency rights (for example council tax bills or voter registrations or property ownership or tenancy documents). It is also common for a debtor to have to disclose their bank account statements, since this will show, in the case of habitual residence, where a debtor undertakes normal day-to-day spending.
If a debtor’s COMI is an EU Member State (other than Denmark), then the courts of England and Wales will have jurisdiction if the debtor has an establishment in England and Wales. As with proving a debtor’s COMI, proving that a debtor has an establishment is also a matter to be proved on the basis of objective factors that are ascertainable by third parties. According to the Supreme Court the search is for a fixed place of business, from which business activities which consist in dealings with third parties (rather than internal administration) take place. A brass name on a door is not likely to be sufficient.[10]
Domicile
A debtor’s domicile is a matter that must be proved to the ordinary civil balance of probabilities standard. In Henwood v Barlow Clowes International Ltd (In Liquidation)[11] the Court of Appeal summarised the relevant legal principles in relation to a person’s domicile (at [8]). They include that a person can only ever have one domicile (and that each person has a domicile): this is either a domicile of origin or a domicile of choice. A person’s domicile is in the country where they have their permanent home, or, as it has been put, the place where the person would want to spend their last days. In order to acquire a domicile of choice, a debtor would need to demonstrate a combination of residence along with proving that their intentions were to have a domicile in another country.
In order to determine a person’s domicile, a court can have regard to any circumstance that is evidence of a person’ residence or their intention to reside permanently or indefinitely in a particular country. This will include questions of motive, whether residence was freely chosen, and also whether a person’s residence is precarious. In practice, a court will be wary of accepting self-serving statements by a debtor, particularly where they are contradicted by other evidence or not corroborated by the debtor’s own actions. It is not necessary to prove that a person is a citizen of the country in which they claim to be domiciled.
Ordinarily resident or place of residence
A person’s ‘ordinary residence’ is a question of fact and degree, it is not a legal term of art. A person can have more than one ordinary residence. The residence at the relevant place must have some degree of permanence. It is not sufficient to make occasional or casual visits. It must be occupied as a residence (not for a business). For a place to be an ordinary residence, the debtor must reside there for a substantial period of time. For example, staying in a hotel room is unlikely to qualify as a person’s ordinary residence, by contrast, where a person pays for exclusive use and does reside in a place, that may count as that person’s ordinary residence. It is not a pre-condition that the person should be the landlord or tenant of the relevant space, nor that it is place in which a person lives with their family. On the other hand, the fact that a person possesses keys to a specific residence may be indicative that it is an ordinary residence.[12]
In deciding whether a person has a ‘place of residence’, the court is looking at a ‘de facto’ situation.[13] Some cases in the insolvency context borrow from tax law on the concept of a place of residence; in particular, by reference to the definition of ‘reside’, which includes to live in or at a particular place, and the need for the residence to have a degree of permanence and continuity.[14] Conversely, it is not necessary to establish that the debtor had a legal right to occupy the particular place of residence (it is thus not necessary to show that a debtor was a tenant or a licensee – a moral claim is sufficient). Indeed, having a legal right to occupy a particular place (but then not occupying it) is unlikely to qualify as a place of residence.[15]
Lastly, it is important to emphasise that the concepts of ‘ordinarily resident’ and ‘place of residence’ are different. Although as case law makes clear, that is not to say that factors which are relevant to one, might not also be relevant to the other, although it should not be assumed that all factors relevant to one are relevant to the other.[16]
Carried on business
The first point to make in relation to this head of jurisdiction is that it is necessary to prove that it was the debtor that was carrying on the business, not a company or LLP of which the debtor is a shareholder, director, or member[17] (for example, a debtor that is running his company’s business is not running his own business, but rather they are running the company’s business). That is not to say, however, that an individual that is involved in a number of companies may be treated by the court as themselves carrying on business as a promoter of companies.[18] The distinction is not an easy one to draw: for example, in Anglo Irish Bank Corporation Ltd v Flannery,[19] the court concluded that the debtor in that case was not carrying on business in England and Wales. He was a property developer, albeit living in Andorra, with international business interests, including some in England and Wales. Although he was a shareholder in various companies, he was not running them, and there was no evidence that he had promoted companies.
In Darren Neil Masters v Barclays Bank Plc[20] Norris J explained that whether a debtor is carrying on a business is a mixed question of fact and law[21]. A judge will first need to decide – as a matter of fact (and considering the totality of the evidence) – what acts the debtor undertook. Then, second, the judge will need to decide whether those acts amount to carrying on a business.[22] The burden is on the person asserting that the debtor was carrying on a business; if it is a creditor’s petition, then the burden is on the creditor[23]. A single transaction by an individual can constitute the carrying on of business[24], although it is necessary to consider carefully what activities the debtor has undertaken in the jurisdiction, and to contrast that with the activities undertaken outside the jurisdiction. In Gate Gourmet Luxembourg IV Sarl v Morby,[25] the court accepted that a transaction which amounted to selling shares in a group could amount to carrying on business.[26] Another way of looking at the matter may be to ask if the acts of the debtor do not amount to carrying on business, are they instead charitable work, or a pastime or hobby.
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[1] See the judgment of Deputy ICC Judge Kurl KC in Mobile Telecommunications Co KSCP v Al Saud [2023] EWHC 312 (Ch), [2023] BPIR 1179 at [22]–[34].
[2] Canada Trust Co v Stolzenberg (No 2) [1998] 1 W.L.R. 547.
[3] s. 20(1) of the European Union (Withdrawal) Act 2018.
[4] s. 39 of the European Union (Withdrawal Agreement) Act 2020.
[5] If there were such proceedings (and provided that they are ‘main proceedings’), then the effect of Article 67(3) of the Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community is that the Recast Insolvency Regulation will apply to those proceedings.
[6] Article 3 of the Retained Insolvency Regulation.
[7] Article 2(10) of the Retained Insolvency Regulation.
[8] See [42]-[43] of the decision of ICC Judge Greenwood in Portrait & Burns v Minai [2023] EWHC 1605 (Ch) [2023] B.P.I.R. 1205.
[9] See [44] of Minai, and also Shierson v Vlieland-Boddy [2005] EWCA Civ 974, [2005] 1 WLR 3966.
[10] The Trustees of the Olympic Airlines SA Pension and Life Assurance Scheme v Olympic Airlines SA [2015] UKSC 27 [2015] 1 W.L.R. 2399 at [13] as applied in Chen Yung Ngai Kenneth v Li Shu Chung [2021] EWHC 3346 (Ch) [2022] B.P.I.R 507. See also Trillium (Nelson) Properties Ltd v Office Metro Ltd [2012] EWHC 1191 (Ch) [2012] B.P.I.R. 1049 at [35]-[36].
[11] [2008] EWCA Civ 577; [2008] B.P.I.R. 778
[12] Reynolds Porter Chamberlain LLP v Khan [2016] B.P.I.R. 722, in particular at [25].
[13] [2016] B.P.I.R 722 at [26], and Lakatamia Shipping Company Ltd v Su [2021] EWHC 1866 (Ch) [2021] Bus L.R. 1285.
[14] [2021] EWHC 1866 (Ch) [34].
[15] Mobile Telecommunications Company KSCP v Hrh Prince Hussam Bin Saud Bin Abdulaziz Al Saud [2025] EWHC 85 (Ch) [2025] B.P.I.R. 518 at [148].
[16] [2016] B.P.I.R 722 [27].
[17] Re Brauch (A debtor) [1978) Ch. 316. In this case, the debtor was involved in some 90 companies, and the court found that he was carrying on personally the business of promoting companies.
[18] Re Clark [1914] 3 K.B. 1095.
[19] [2013] B.P.I.R. 1
[20] [2013] EWHC 2166 (Ch) [2013] BPIR 1058,
[21] [2013] EWHC 2166 (Ch) [2013] BPIR 1058 [16]
[22] See [43]-[44] of Jones v Aston Risk Management Ltd [2024] EWHC 2553 (Ch) [2025] B.P.I.R. 280 and Durkan v. Jones [2023] BPIR 1074.
[23] [2013] EWHC 2166 (Ch); [2013] BPIR 1058 [16(d)]
[24] [2013] EWHC 2166 (Ch) [2013] BPIR 1058 [20]
[25] [2015] EWHC 1203 (Ch); [2015] B.P.I.R. 787.
[26] An incomplete transaction would not, however, amount to carrying on business: Charlton v Funding Circle Trustee Limited [2019] EWHC 2701 (Ch); [2019] EWHC 2701 (Ch) [22]. In Charlton, the transaction was a potential share sale which did not complete.