Hulley Enterprises Limited & Ors v The Russian Federation

A foreign judgment may give rise to an issue estoppel against a state. The State Immunity Act 1978 does not disapply ordinary common-law rules of preclusion, and the Civil Jurisdiction and Judgments Act 1982 does not require formal recognition or enforcement before a foreign judgment may be relied on in that way. The court must still be satisfied that the foreign judgment is final and conclusive, concerns the same issue between the same parties, and was necessary to the foreign decision. Where those requirements are met, issue estoppel may determine whether the arbitration exception to state immunity applies. A pending, non-jurisdictional fraud challenge does not prevent finality on separately determined jurisdictional issues.

The claimants sought recognition and enforcement in England of arbitral awards exceeding US$50 billion arising from an arbitration under the Energy Charter Treaty. The Russian Federation challenged the English court’s jurisdiction on state-immunity grounds, including whether it had agreed in writing to submit the disputes to arbitration.

The Dutch courts had considered the same jurisdictional objections in set-aside proceedings. The Hague Court of Appeal rejected them, and the Dutch Supreme Court upheld those conclusions while referring the remaining fraud issue to the Amsterdam Court of Appeal. The court determined whether the Dutch judgments precluded the Russian Federation from re-arguing the arbitration-agreement issue and, if so, whether its jurisdiction application should be dismissed.

1. Issue 1 answered affirmatively. The Russian Federation was precluded by the Dutch judgments from re-arguing whether it had agreed in writing to submit the disputes to arbitration.
2. Foreign judgments may give rise to issue estoppel against a state. The relevant requirements were those stated in The Good Challenger Navegante SA v Metalexportimport SA: jurisdiction, finality and conclusiveness on the merits, identity of parties, identity of subject matter, and a decision necessary to the foreign judgment rather than collateral or obiter. Particular caution is required with a foreign judgment against a state, but caution does not prevent an estoppel where the relevant matters are clear.
3. The State Immunity Act 1978 contains no provision disapplying procedural or substantive rules that would otherwise apply. The common-law doctrine of issue estoppel could therefore be used in determining whether the arbitration exception in section 9 applied.
4. Section 31 of the Civil Jurisdiction and Judgments Act 1982 supplied the relevant safeguard where recognition in substance of a foreign judgment against a state was involved. The claimants did not seek formal recognition or enforcement, so the procedural requirements in section 31(4) were not prerequisites to relying on the judgments by way of issue estoppel.
5. The Dutch and English proceedings concerned the same central issue: whether there was a valid agreement to arbitrate. The jurisdictional grounds had been finally and conclusively determined under Dutch law. The remaining fraud issue was not a jurisdictional objection and could not affect those determinations.
6. The principle in Elchinov v Natsionalna Zdravnoosiguritelna Kasa did not permit the Amsterdam Court of Appeal to reopen issues outside its jurisdiction following the Dutch Supreme Court’s judgment. A reference under article 267 TFEU required a live EU-law question necessary for the referring court to give judgment.
7. No special circumstances made it unjust to apply issue estoppel. The jurisdiction application therefore fell within the arbitration exception to state immunity under section 9, and it was dismissed forthwith.

First-instance decision. The judgment records earlier decisions in the same English enforcement proceedings, including Henshaw J’s judgment at [2021] 1 WLR 3429 and Butcher J’s judgment at [2022] EWHC 2690 (Comm) .