Kolden Holdings Ltd v Rodette Commerce Ltd & Anor

For the purposes of Article 27 of Council Regulation (EC) No. 44/2001, two legally distinct entities may be treated as the same parties where, in relation to the subject matter of the disputes, their interests are identical and indissociable. The question is determined autonomously under European Union law, by reference to the substance of the proceedings and the position when the later proceedings were commenced. A valid legal assignee may therefore be the same party as its assignors. Potential defences concerning the assignors’ continuing interest are disregarded when identifying the court first seised. Where the English court was first seised of the same cause of action between the same parties, a stay under Articles 27 or 28 is unavailable.

The defendants applied to stay proceedings in the Commercial Court under Articles 27 and 28 of Council Regulation (EC) No. 44/2001. The original claim concerned the construction of securities sale and purchase agreements and alleged obligations to transfer shares. The original claimants assigned their rights to Kolden Holdings Ltd, which was substituted as claimant in the English proceedings.

Meanwhile, the defendants commenced proceedings in Cyprus seeking declarations concerning the same contractual obligations and the validity of the assignment. The central questions were whether Kolden was the same party as the assignor companies for Article 27 purposes, whether the proceedings involved the same cause of action, and which court was first seised.

1. The applications for stays under Articles 27 and 28 of Council Regulation (EC) No. 44/2001 were dismissed.

2. The expression “the same parties” has an autonomous European Union meaning. Distinct legal entities may qualify as the same party where, having regard to the subject matter of the disputes, their interests are identical and indissociable. One indication is whether a judgment against one would have the force of res judicata against the other. The question is determined by the facts and substance of the particular case.

3. The relevant time was 14 February 2007, when the Cyprus proceedings were commenced and the situation of lis pendens arose. The court had to compare the proceedings as they then existed. Later substitution of Kolden in the English proceedings was immaterial.

4. Kolden had a good arguable case that the assignment was a valid legal assignment under section 136 of the Law of Property Act 1925. A legal assignment transferred the rights, remedies and power to give a good discharge. Kolden therefore held the same interest in the contractual causes of action as the assignor companies. The possible defence that the assignors had divested themselves of their rights was irrelevant when determining whether Article 27 was engaged.

5. The English and Cyprus proceedings concerned the same cause of action. The English court had been seised on 13 July 2006, before the Cyprus action began. It was therefore the court first seised between the same parties.

6. Article 28 could not assist the defendants because it applies only to a court other than the court first seised. Both applications were consequently dismissed.