Kolden Holdings Ltd v Rodette Commerce Ltd & Anor

Factual and Procedural Background

This case concerns a dispute over jurisdiction between parties involved in share sale agreements and related proceedings in England and Cyprus. The claimant, originally three assignor companies incorporated in Cyprus (Amherst Capital Investments Limited, Hensher Enterprises Limited, and Conway Holdings Limited), sold shares in a Russian company to two defendant Cypriot companies (Rodette and Taplow) under four Securities Sale and Purchase Agreements (SPAs), governed by English law and jurisdiction clauses. The claimant alleges the defendants breached contractual obligations to transfer shares to a joint venture company (JV).

The claimant commenced proceedings in the English Commercial Court in July 2006 seeking declarations and rectification related to the SPAs ("the English Action"). Subsequently, in August 2006, related parties initiated proceedings in Cyprus alleging conspiracy and inducement to breach the SPAs ("the Cyprus conspiracy action").

In November 2006, the three assignor companies assigned their rights under the SPAs to a fourth company, Kolden Holdings Limited ("Kolden"). Kolden applied to be substituted as the sole claimant in the English Action, which was permitted in February 2007. Meanwhile, the defendants started proceedings in Cyprus in February 2007 ("the Cyprus Action"), seeking declarations contrary to the English Action and challenging the validity of the assignment.

The defendants applied to the English court to stay the English Action under Articles 27 or 28 of Council Regulation (EC) No. 44/2001 ("the Regulation"), asserting that the disputes should be determined by the Cyprus courts.

Legal Issues Presented

1. What are the principles of European Community law for determining whether one legal entity is to be regarded as "the same party" as another legal entity for the purposes of Article 27 of the Regulation?
2. Is Kolden to be regarded as "the same party" as the three assignor companies for the purposes of Article 27 of the Regulation?
3. If so, as at 14 February 2007, is the English court the court "first seised" of the contract cause of action between "the same parties"?

Arguments of the Parties

Defendants' Arguments

• Accepted, for argument's sake, that the assignment to Kolden might be valid but noted the English claim form was not amended to reflect Kolden's status, which could be fatal to Kolden's claim.
• Asserted the Cyprus Action is the "mirror image" of the English contract cause of action and that the Cyprus court was first seised as between Kolden and the defendants.
• Argued Kolden is a different legal entity from the assignors and thus not "the same party" for Article 27 purposes; the English court is therefore second seised and must stay proceedings.
• Relied on ECJ cases (The Tatry and Druout) supporting a strict interpretation of "the same party" and distinctions between legal and equitable assignees.
• Contended the assignment might be champertous or contrary to public policy and that confidentiality clauses prohibit assignment.
• Also sought to rely on Article 28, arguing related actions in Cyprus justify a stay of the English proceedings.

Claimant (Kolden)'s Arguments

• Submitted that the English court was first seised of the contract cause of action since July 2006 and the substitution of Kolden as claimant does not change the identity of the parties for Article 27.
• Argued that "the same parties" under Article 27 can include different legal entities if there is an identity of interest, supported by ECJ decisions and national law principles.
• Asserted that Kolden, as legal assignee, has identical and indissociable interests with the assignor companies regarding the SPAs and claims.
• Maintained that any judgment against the assignors would bind Kolden and vice versa, demonstrating identity of interest.
• Contended that Article 28 is irrelevant since the English court is the court first seised.

Table of Precedents Cited

Court's Reasoning and Analysis

The court began by identifying the key legal question: whether Kolden and the assignor companies are "the same party" for the purposes of Article 27 of the Regulation, which governs lis pendens and jurisdiction in concurrent proceedings across Member States.

The court analysed relevant ECJ case law, particularly The Tatry and Druout cases, which clarified that "the same parties" must be interpreted autonomously under EC law and that two legal entities can be regarded as the same party if their interests in the subject matter are "identical and indissociable". The court noted that this determination is fact-specific and must consider whether a judgment against one entity would have res judicata effect against the other.

Applying these principles, the court found that the English and Cyprus proceedings involve the same cause of action and the same subject matter: alleged breaches of clause 6.2(d) of the SPAs by the purchaser companies. Although Kolden is a different legal entity from the assignors, it is the legal assignee of their rights under the SPAs, having been assigned all rights, claims, and causes of action without limitation.

The court accepted that Kolden has a good arguable case that the assignment is valid under English law and that the interests of Kolden and the assignors are identical and indissociable. This is because Kolden holds no more and no less than the assignors' rights, and a judgment binding one would bind the other. The court rejected the defendants' argument that distinctions between legal and equitable assignees or possible defences affect this analysis at the lis pendens stage.

Consequently, at the date the Cyprus proceedings were commenced (14 February 2007), the English court was already seised of the same cause of action between the same parties (including Kolden by substitution). Therefore, the English court was the court first seised under Article 27.

Given that the English court is first seised, the defendants' application for a stay under Article 27 must fail. The court further held that Article 28, which applies only to courts other than the court first seised, is irrelevant and also does not support a stay.

Holding and Implications

The court dismissed the defendants' application to stay the English proceedings under Articles 27 and 28 of Council Regulation (EC) No. 44/2001.

The direct effect of this decision is that the English Action will proceed in the English courts despite the concurrent proceedings in Cyprus. The ruling clarifies that, for the purposes of Article 27, a legal assignee can be regarded as "the same party" as the assignor companies if there is an identity of interest, and that substitution of parties in ongoing proceedings does not alter the court first seised status retrospectively.

No new precedent beyond the application of existing ECJ jurisprudence and principles of English law was established. The decision emphasises the autonomous interpretation of "the same parties" under the Regulation and confirms the importance of the date of lis pendens in determining jurisdictional priority.