Hydrodec: A comparative pointer for COMI determination.

As I seem to be in a comparative mood today, consider Hydrodec Group Plc [2021] NSWSC 755, in which a suggestion of COMI in the UK, of a company incorporated there, was dismissed in favour of COMI in the US. Cooper Grace Ward have the relevant background here. The result of the order is that the company will be wound up under Australian law.

Hydrodec Group Plc is the parent company for a corporate group comprised of: subsidiaries located in the UK, Australia and Japan that were not trading; and a sole trading subsidiary located in the United States of America, which owns valuable assets. As CGW report, Hydrodec contended that its COMI was in the UK because, among other things: it has an address in the UK; its affairs are administered in the UK by directors that reside in the UK; its main asset was its shareholding in a subsidiary, in the UK; and the majority of its creditors are in the UK. 

The judge however reportedly (see the CGW overview; I have not been able to locate judgment at this stage) disagreed on the following grounds. COMI must be identified by reference to criteria that are objective and ascertainable by third parties (ditto in the EU under the EIR). The A16(3) UNCITRAL Model Law presumption of COMI in the place of registered office does not apply seeing as the corporation has two of these. The only trading entity within the corporate group controlled by Hydrodec was in the USA.  Hydrodec described the USA as its ‘key market’ and the focus of Hydrodec’s plans for growth. The principal creditor of the corporate group controlled by Hydrodec was in the USA. The administration of the affairs of Hydrodec involved, in substance, the administration of the operations of the USA subsidiary. Finally, Hydrodec’s primary focus was the re-financing of its operations in the USA.

The judgment shows the specificity of determining COMI in the case of a corporation which itself does not have a market focus.

European Private International law, 3rd ed. 2021, 5.65 ff.

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