Aviator LLC & Ors v Stribe Oü & Ors

For claims governed by foreign law, the preclusive effect of a prior foreign judgment is ordinarily determined by the law applicable to the underlying non-contractual obligation, rather than by the lex fori. Under Rome II, rules determining whether a party is prevented from disputing an element of an intellectual property infringement claim form part of the applicable law under Articles 8 and 15. The exclusion for evidence and procedure is interpreted narrowly. The forum’s overriding-mandatory-provisions and public-policy exceptions are exceptional and do not ordinarily preserve the forum’s issue-estoppel rules. A preliminary issue should not be tried where it involves substantial factual and foreign-law disputes, is only one of several issues, and may become unnecessary if another issue is resolved first.

The claim concerned alleged copyright infringement involving crash-game imagery, related trade marks and passing off. The claimants sought a determination that the preclusive effect of judgments from Georgian proceedings was governed by English law as the lex fori, including in relation to claims governed by foreign law. The defendant disputed that contention.

The claimants also sought a preliminary trial of whether the first claimant owned copyright in the relevant works. The court determined the choice-of-law issue as a preliminary issue and considered whether ownership should be tried separately.

1. Issue estoppel and applicable law. Issue estoppel is a rule of substantive law, not merely a rule of evidence or procedure. The characterisation of issue estoppel as substantive does not itself resolve the choice-of-law question.
2. Rome II. The claims were non-contractual obligations arising from alleged infringement of intellectual property rights. Under Articles 8 and 15 of Rome II, the law of the country for which protection is claimed governs the matters identified in those provisions. That includes a rule determining whether a party is precluded from disputing an element of liability. The Article 1(3) exclusion for evidence and procedure must be construed narrowly. Issue estoppel is not an integral and indispensable feature of the forum’s procedural framework and is therefore not excluded.
3. Forum exceptions. Article 16 did not apply. English issue estoppel was subject to a special-circumstances exception and required pleading, so it was not an overriding mandatory rule whose observance was crucial to safeguarding public interests. Article 26 likewise did not ordinarily require application of English issue-estoppel rules. A foreign rule lacking equivalent preclusive effect would not, without more, infringe a fundamental principle of the English legal order. The possibility that an exceptional foreign rule might engage Article 26 was left open.
4. The court therefore held that the preclusive effect of the Georgian judgments, in relation to claims governed by foreign law, was governed by the relevant foreign law.
5. The application for a preliminary trial of copyright ownership was refused. Ownership involved agreements, Georgian law and likely factual disputes; it was only one of several issues necessary to the infringement claims; and an issue estoppel might make a trial of ownership unnecessary. The question of whether to order a preliminary trial concerning the Georgian judgments was adjourned.