Mad Atelier International BV v Manes

A foreign judgment creates an issue estoppel only if the foreign legal system gives the particular issue preclusive effect. The judgment must also determine that issue clearly and conclusively, and bind the same parties or their privies.

Corporate control and a commercial interest do not alone establish privity. Proceedings under an exclusive English jurisdiction clause will only rarely be abusive because related foreign litigation exists. A case management stay requires exceptionally strong grounds where it would delay the contractually chosen English proceedings.

The claimant alleged breaches of an English-law joint venture agreement following the transfer of shares in a French restaurant company. It had previously failed before the Paris Commercial Court to annul the transfer for fraud, although its French appeal remained pending.

The defendant applied to strike out the English proceedings or for summary judgment. He relied principally on issue estoppel and abuse of process arising from the Paris judgment. Alternatively, he sought a stay pending the final determination of the French proceedings.

The central questions were whether the Paris judgment precluded litigation of overlapping factual allegations, whether the English claims were abusive or lacked a real prospect of success, and whether the proceedings should be stayed.

1. All applications dismissed. The Paris judgment created no issue estoppel. The English claims were not an abuse of process, had a real prospect of success and would not be stayed.

2. A foreign judgment can create an issue estoppel only where the foreign legal system treats the particular issue as conclusively determined. It would be wrong to give a foreign finding greater preclusive force in England than it has in its country of origin. Under French law, res judicata attached to the operative part of the judgment, not factual observations in its reasons. The relevant findings were therefore not final and conclusive: [2020] EWHC 1014 (Comm), paras 50–61 and 89–103.

3. The defendant was not privy to the French corporate defendants. Ownership and control, a financial interest, knowledge of the relevant events and limited participation in the foreign hearing did not provide the required identification. It was particularly important that he could not have been joined to the French proceedings concerning rescission of a contract to which he was not a party: paras 104–109.

4. The Paris court had decided only that fraud had not been proved to the requisite French standard. It had not conclusively determined the underlying facts. Its observations about later events were collateral. Moreover, the English contractual issues were significantly broader than the French fraud claim. Each defect independently defeated issue estoppel: paras 110–124.

5. The English proceedings were not abusive. Abuse without issue estoppel is possible but rare, especially where the later claim is brought in the forum selected by an exclusive jurisdiction agreement. The claimant could not have brought its contractual claims in France, and permitting the overlapping issues to be tried in England was neither manifestly unfair nor damaging to the administration of justice: paras 125–144.

6. The claims had a realistic prospect of success. The pleaded contractual duties and causation cases did not depend exclusively on proving that the claimant's representative misunderstood the transfer documents. The remaining contractual claims could also proceed because loss is not an essential element of a cause of action in contract and nominal damages remain available: paras 145–154.

7. No exceptionally strong grounds justified a stay. The foreign proceedings would not bind the parties or resolve all English issues; delay could be prolonged; double recovery could be prevented when assessing or enforcing damages; and a stay would undermine the exclusive English jurisdiction clause and the scheme of the Brussels I Regulation Recast: paras 163–175.

The judgment determined first-instance applications within the English proceedings. The claimant's separate appeal from the Paris Commercial Court judgment remained pending, but that foreign decision was not a lower-court stage of this litigation.