Instituto de Salud para el Bienestar v Viva Enterprises Limited & Anor

Summary disposal is inappropriate where the validity and legal character of a transfer of rights remain genuinely arguable and depend on contested expert evidence of foreign law. A contractual prohibition on assignment may not necessarily prevent a transfer by universal succession or another involuntary public-law mechanism; that issue ordinarily requires trial determination.

For substitution under CPR 19.2(4), it is sufficient that the proposed party has a real prospect of establishing that the relevant interest or liability has passed to it. The court need not conduct a mini-trial before substitution. Where substitution leaves the substance of the claim to be tried, an application seeking to strike out the claim has failed.

The claimant, INSABI, brought claims arising from an agreement for the supply of ventilators, principally seeking rescission and repayment following alleged fraudulent or negligent misstatements. The defendants applied to strike out the claim, arguing that INSABI had become defunct and that its claims could not validly be transferred because of a contractual prohibition on assignment.

Following Mexican governmental measures, IMSS applied to be substituted for INSABI. The Mexican-law experts disagreed about whether the relevant transfer was valid and whether it constituted an assignment. Miles J had dismissed the part of the strike-out application challenging the arguability of the fraud claims and adjourned the remaining issues: [2023] EWHC 3377 (Ch). The central issues were whether substitution was permissible before the transfer’s validity had been finally determined and whether the claim should be struck out.

1. Applications. The remainder of the strike-out application was dismissed. IMSS was substituted for INSABI as sole claimant under CPR 19.2(4).
2. Summary determination. The contractual prohibition on assignment did not provide a sufficient basis for summary disposal. There was a properly arguable case that the Mexican measures constituted a transfer by universal succession or a similar mechanism, rather than an assignment. There was also an arguable case that the transfer was not an assignment “by any party” to the agreement. Resolving the issue required determination of the proper characterisation of the Mexican measures under Mexican law, with competing experts giving evidence and being cross-examined. The claims therefore had a real prospect of succeeding and were not suitable for strike out or summary judgment.
3. Substitution. The versions of CPR 19.2(4) differed: the White Book treated its two limbs as alternatives, whereas the online version presented them cumulatively. The anomaly should be referred to the Civil Procedure Rules Committee, but it did not affect the result. If alternative, the desirability limb was satisfied because IMSS’s substitution would enable all matters in dispute, including the validity of the transfer, to be resolved. If cumulative, the interest-transfer limb was also satisfied. Final proof of transfer was unnecessary; requiring a mini-trial before substitution would produce inefficiency and absurdity. A real prospect of proving valid transfer was sufficient.
4. Terms of substitution. IMSS gave undertakings addressing costs, the existing cross-undertaking in damages and the defendants’ counterclaim. INSABI was removed rather than retained as a co-claimant, given the substantial uncertainty surrounding its continued existence and the clarification that questions concerning the scope and effect of the English-law contract remained governed by English law.
5. Strike out. The defendants’ application sought to terminate the claim on the basis that INSABI was defunct and that no valid transfer was possible. Although INSABI was removed, the substance of the claim remained in issue and would proceed to trial. It was therefore artificial to describe the claim as struck out.

• High Court (Business List): Miles J dismissed the challenge to the arguability of the fraud claims and adjourned the remaining strike-out and substitution issues: [2023] EWHC 3377 (Ch).
• High Court (Business List): the remainder of the strike-out application was dismissed and IMSS was substituted for INSABI as sole claimant.