Hulley Enterprises Limited & Ors v The Russian Federation

When determining whether an exception to state immunity applies, an English court applies ordinary English substantive and procedural law unless the State Immunity Act 1978 provides otherwise. That law includes issue estoppel. A final and conclusive foreign judgment may therefore preclude a state from disputing that it agreed in writing to arbitrate for the purpose of section 9.

Giving effect to issue estoppel is itself a determination of the immunity issue. It does not enlarge statutory jurisdiction. Section 31 of the Civil Jurisdiction and Judgments Act 1982 is not a direct route to enforcement, but its requirements must be met before a foreign judgment against a state can found an issue estoppel. State immunity alone, pending unrelated proceedings, and speculative treaty-interpretation issues are not special circumstances displacing an otherwise valid estoppel.

Three former majority shareholders of Yukos obtained arbitral awards against the Russian Federation. They sought recognition and enforcement in England. Russia relied on state immunity and disputed that it had agreed in writing to submit the disputes to arbitration.

The Hague Court of Appeal had reinstated the awards and determined the arbitration-agreement issue against Russia. Dutch proceedings concerning an alleged procedural fraud remained pending. The High Court held that the Dutch decision created an issue estoppel and dismissed Russia’s jurisdiction challenge: [2023] EWHC 2704 (Comm).

Russia appealed. The central question was whether an English court may give effect to an issue estoppel arising from a foreign judgment when deciding whether the arbitration exception to state immunity applies.

1. Appeal dismissed. The court unanimously upheld the judge’s conclusion that Russia was precluded from re-arguing whether it had agreed in writing to arbitrate.

2. The State Immunity Act 1978 is comprehensive as to the circumstances in which a state has, or lacks, immunity. It does not prescribe the legal principles by which the court determines whether an exception applies. The court must therefore apply ordinary English law, including issue estoppel. The requirement under section 1 to give effect to immunity does not require a de novo determination uninformed by an estoppel.

3. Issue estoppel is a substantive legal right based on finality in litigation. It makes contradictory evidence legally irrelevant; it does not mean that the court makes no determination. Applying it to decide whether a state agreed in writing to arbitrate under section 9 neither creates nor enlarges jurisdiction. The rule concerning estoppel and statutory jurisdiction, illustrated by Republic of Yemen v Aziz, concerned ostensible authority and did not govern issue estoppel.

4. Section 31 of the Civil Jurisdiction and Judgments Act 1982 did not directly apply because the proceedings sought enforcement of arbitral awards, not recognition or enforcement of the Dutch judgment. Nevertheless, a foreign judgment against a state cannot found an issue estoppel unless it would qualify for recognition and enforcement under that section. Those requirements were satisfied because Russia had initiated the Dutch proceedings.

5. No special circumstances justified withholding effect from the estoppel. The foreign court had finally and conclusively decided the fully contested arbitration-agreement issue. The pending procedural-fraud issue and a speculative reference concerning the Energy Charter Treaty did not affect that determination. Giving effect to the estoppel worked justice rather than injustice.

6. Accordingly, the section 9 arbitration exception applied. Russia was not immune from the adjudicative jurisdiction of the English court, and its jurisdiction challenge remained dismissed.

• Court of Appeal (Civil Division). Dismissed Russia’s appeal and upheld the issue estoppel: [2025] EWCA Civ 108 .

• High Court, Commercial Court. Held that the Dutch judgments precluded Russia from re-arguing whether it had agreed to arbitrate, and dismissed its state-immunity jurisdiction challenge: [2023] EWHC 2704 (Comm) .