Kolden Holdings Ltd v Rodette Commerce Ltd & Anor

For Article 27 of the Judgments Regulation, the decisive question is whether, when the later proceedings are begun, the proceedings concern the same cause of action and parties who are substantively the same. A party’s later formal substitution in the first action does not alter that question.

An effective legal assignment may make assignor and assignee the same party for this purpose. They have successive ownership of a single assigned right. Their interests are identical and indissociable where a judgment concerning that right binds each through privity of interest. The inquiry concerns the claims advanced, not defences which might later be raised.

The flexible good-arguable-case standard may be used for factual jurisdictional requirements. It does not require a mini-trial where the validity of an assignment is not put in issue for determination.

The respondent, Kolden Holdings Ltd, was the assignee of contractual rights arising from four English-law share sale agreements. The agreements contained a non-exclusive English jurisdiction clause. The original sellers began the English Commercial Court action in July 2006, seeking declarations, rectification and damages concerning the purchasers’ alleged obligation to transfer shares to a Russian company.

After notice of the assignment, the purchasers began proceedings in Cyprus in February 2007. They sought, among other relief, declarations of non-liability under the same agreements. Kolden was then substituted for the original sellers in the English action.

Aikens J dismissed the purchasers’ applications to stay the English action under Articles 27 and 28 of the Judgments Regulation. The appeal concerned whether Kolden and the original sellers were the same parties for Article 27 and whether England was therefore the court first seised.

1. Appeal dismissed. The English court was first seised of proceedings involving the same contractual cause of action and the same parties for Article 27 of the Judgments Regulation. Article 28 could not assist the appellants because it applies to a court other than the court first seised.

2. The critical date was the commencement of the Cyprus action on 14 February 2007. The issue was whether two proceedings then existed concerning the same cause of action and parties who were the same in the autonomous Article 27 sense. It was immaterial that Kolden formally became a party to the English action only when substituted. The authorities on a newly added claimant or new third-party claims did not govern this case, because Kolden had acquired the existing contractual claim.

3. The court could proceed on the accepted basis that there was an arguable case that the assignment was valid. The good-arguable-case standard is sufficiently flexible for jurisdictional issues and avoids a mini-trial. A different approach may be required where the issue turns on the construction of a legal provision rather than an unresolved factual jurisdictional requirement.

4. The expression “the same parties” is autonomous and substantive. It aims to prevent parallel proceedings and irreconcilable judgments. Separate legal entities may nonetheless be identical for Article 27 where their interests in the subject matter are identical and indissociable, and a judgment against one would bind the other.

5. Under section 136(1) of the Law of Property Act 1925, a valid legal assignment, once notice is given, transfers the assigned right, its remedies and the power to give a discharge. The assignee becomes owner of the chose in action and the assignor has no remaining interest in it. Here there was one contractual right with successive owners. The assignors and Kolden therefore had identical and indivisible interests in the claim against the appellants, and the required privity for res judicata.

6. That an assignment transfers benefit rather than contractual burden did not alter the result. Nor could possible later defences, or a possible future joinder of the assignors, determine whether the parties were the same. The Article 27 inquiry looks to the claims in the two actions.

• Court of Appeal (Civil Division): By [2008] EWCA Civ 10, dismissed the appellants’ appeal and upheld the refusal to stay the English action under Articles 27 and 28 of the Judgments Regulation.

• High Court, Commercial Court (Aikens J): In July 2007, dismissed the applications for a stay. He held that Kolden, as legal assignee, was the same party as the original claimants for Article 27 purposes and that the English court was first seised.