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I. THE ‘CAUTIOUS LEX FORI’ APPROACH TO FOREIGN JUDGMENTS AND PRECLUSION

Published online by Cambridge University Press:  06 June 2012

Jacob van de Velden
Jacob van de Velden
Affiliation:
Assistant Professor of European Law, University of Groningen; Member of the Advisory Panel on Private International Law, British Institute of International and Comparative Law; Rapporteur of the International Civil Litigation Committee & the Interest of the Public, International Law Association. Former Research Fellow, British Institute of International and Comparative Law. Professor Andrew Dickinson and Edward Ho kindly commented on an earlier draft of this note. Email: [email protected]
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Extract

If from the imperfect evidence of foreign law produced before it, or its misapprehension of the effect of that evidence, a mistake is made by an English court, it is much to be lamented, but the tribunal is free from blame.1 The mistake to be lamented presently is the High Court decision in Yukos Capital Sarl v OJSC Rosneft Oil Co2 that a Dutch judgment3 gave rise to an issue estoppel in English proceedings, precluding a party from disputing as a fact the partiality and dependence of the Russian judiciary.4 The decision was a mistake because on a proper construction of Dutch law the significance of the Dutch judgment was—if anything—evidential, not preclusive.5 The outcome is lamentable, because a party was unduly shut out from litigation by the application of English preclusion law to a foreign judgment that was not preclusive in the jurisdiction where it was originally given.6

Type
Current Developments: Private International Law
Information
International & Comparative Law Quarterly , Volume 61 , Issue 2 , April 2012 , pp. 519 - 530
Copyright
Copyright © British Institute of International and Comparative Law 2012

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References

1 Castrique v Imrie (1869–70) LR 4 HL 414, 427 (Blackburn J), adding that ‘all that can be required of a tribunal adjudicating on a question of foreign law is to receive and consider all the evidence as to it which is available, and bona fide to determine on that, as well as it can, what the foreign law is.’

2 [2011] EWHC 1461 (Comm), [2011] 2 Lloyd's Rep 443, [2011] 2 CLC 129, (2011) 108(26) LSG 17 (Hamblen J) (‘Yukos EN’). For the background of the dispute see text (n 12–15).

3 Hof (Court of Appeal) Amsterdam 28 April 2009, LJN: BI2451 (Yukos Capital Sarl/OAO Rosneft).

4 [2011] EWHC 1461 (Comm), [2011] 2 Lloyd's Rep 443, [2011] 2 CLC 129, (2011) 108(26) LSG 17.

5 In the High Court the judgment would be inadmissible as an irrelevant statement of the Dutch court's opinion. Hollington v F Hewthorn & Co Ltd [1943] KB 587. A Dutch court would freely assess the judgment's evidential value (see Article 152(2) of the Dutch Code of Civil Procedure (‘Rv’)), which would be limited (at best) as it was based on indirect evidence. See Yukos NL (n 3) [3.9.4] on which critically van den Berg, A, ‘Enforcement of Arbitral Awards Annulled in Russia: Case Comment on Court of Appeal of Amsterdam, 28 April, 2009’ (2010) 27(2) Journal of International Arbitration 179, 180–1Google Scholar. In fact, the ECHR in OAO Neftyanaya Kompaniya Yukos v Russia (Application no 14902/04) ECHR 20 September 2011 rejected allegations of corruption in Yukos' insolvency-related litigation.

6 At least not in the circumstances pertaining in the English proceedings where in the eyes of Dutch law the relevant issue was different, though the question of fact was the same. See the text (n 68–72).

7 See text (n 45–47).

8 Yukos EN (n 2) [50]ff. Hamblen J emphasised that ‘[t]he issue must be necessary for the decision’ for it to found an estoppel. But this is the wrong test. It is respectfully submitted that English law differentiates, not between various categories of issues (some necessary, others collateral), but between questions that qualify as ‘issue’ and those that do not. The proper test then involves asking, not whether the question of partiality and dependence addressed by the Amsterdam Court of Appeal was a ‘necessary issue’, but whether it was an ‘issue’ at all, since only findings on issues can give rise to an issue estoppel. This slip is not discussed in detail here, since it did not directly cause the court's mistake. Nonetheless, the point should be noted, as it goes to the heart of the English estoppel per rem judicatam doctrine. See Thoday v Thoday [1964] P 181, 198, [1964] 2 WLR 371, [1964] 1 All ER 341, (1964) 108 SJ 15 (Diplock LJ); and Fidelitas Shipping Co Ltd v V/O Exportchleb [1966] 1 QB 630, [1966] 1 QB 630, [1965] 2 All ER 4, [1965] 1 Lloyd's Rep 223, [1965] 2 WLR 1059, (1965) 109 SJ 191 (Diplock LJ).

9 Yukos EN (n 2) [108]ff, in particular [131]–[135]. See AK Investment CJSC v Kyrgyz Mobil Tel Ltd [2011] 1 CLC 205, [2011] UKPC 7; Berezovsky v Abramovich [2011] 1 WLR 2290, [2011] EWCA Civ 153; and Kuwait Airways Corp v Iraqi Airways Co (No 6) [2002] UKHL 19, [2002] 2 AC 883, [2002] 2 WLR 1353, [2002] 3 All ER 209, [2002] 1 All ER (Comm) 843, [2003] 1 CLC 183. At [136]ff the court suggests that an English court's decision to refuse a foreign judgment recognition in England and Wales is an exception to the Act of State principle. Is this correct? A logical distinction applies between questions on the validity of a foreign judgment as a matter of (a) the legal order of the judgment-rendering State, (b) the legal order of the judgment-recognizing State and, finally, (c) the international legal order. The Act of State principle then concerns (only) validity in sense (a), whereas an English court's refusal to recognize a foreign judgment pertains (only) to its validity in sense (b), not (a).

10 Yukos EN [42]ff. See Carl Zeiss Stiftung v Rayner & Keeler Ltd [1967] 1 AC 853, [1966] 3 WLR 125, [1966] 2 All ER 536, [1967] RPC 497, (1966) 110 SJ 425; and DSV Silo und Verwaltungsgesellschaft mbH v Owners of the Sennar (The Sennar) [1985] 2 All ER 104, [1985] 1 Lloyd's Rep 521, (1985) 82 LSG 1863, (1985) 135 NLJ 316, (1985) 129 SJ 248, [1985] 1 WLR 490. Also see Desert Sun Loan Corp v Hill [1996] 2 All ER 847, [1996] 5 Bank LR 98, [1996] CLC 1132, [1996] ILPr 406, (1996) 140 SJLB 64; and Good Challenger Navegante SA v Metalexportimport SA [2003] EWCA Civ 1668. See already Harris v Quine (1868–69) LR 4 QB 653 (Blackburn J). See (especially) Briggs, A and Rees, P, Civil jurisdiction and judgments (5th edn, Lloyd's Commercial Law Library, London, 2009)Google Scholar [7.75]ff; and A Dickinson, ‘The Effect in the European Community of Judgments in Civil and Commercial Matters: Recognition, Res Judicata and Abuse of Process: Report for England and Wales’ (2008) British Institute of International and Comparative Law available at <http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1537154>. Also Lord Collins of Mapesbury (ed), Dicey, Morris & Collins: The Conflict of Laws (‘Dicey, Morris & Collins’) (14th edn, 2006) Rule 35(2) and the comment at [14-027]ff; Barnett, P, ‘The Prevention of Abusive Cross-Border Re-Litigation’ (2002) 51 ICLQ 943CrossRefGoogle Scholarff; by the same author, Res Judicata, Estoppel, and Foreign Judgments (OUP, Oxford, 2001) [5.01]ff; and Rogerson, P, ‘Issue Estoppel and Abuse of Process in Foreign Judgments’ (1998) 17 CJQ 91Google Scholarff.

11 On the loan agreements see Rb (District Court) Amsterdam 28 February 2008, LJN: BC8150 (Yukos Capital SARL/OAO Rosneft).

12 See OAO Neftyanaya Kompaniya Yukos v Russia (n 5) for more background.

13 At the International Commercial Arbitration Court at the Chamber of Trade and Industry of the Russian Federation.

14 Nos 143/2005, 144/2005, 145/2005 and 146/2005.

15 Convention on the Recognition and Enforcement of Foreign Arbitral Awards (signed in New York on 10 June 1958, entered into force on 7 June 1959) 330 UNTS 4739, Article III.

16 On appeal these decisions were confirmed on 13 August 2007 by the Federal Arbitration Court of Moscow. Yukos Capital entered an appeal in cassation which by June 2011 had not been determined.

17 On the forced auctioning of Yuganskneftegaz see OAO Neftyanaya Kompaniya Yukos v Russia (n 5) [223]ff.

18 See Article 1075 Dutch Code of Civil Procedure (‘Rv’).

19 1958 New York Convention (n 15) (‘Recognition and enforcement of the award may be refused, at the request of the party against whom it is invoked, only if that party furnishes to the competent authority where the recognition and enforcement is sought, proof that: … (e) The award … has been set aside … by a competent authority of the country in which … that award was made.’).

20 Yukos Capital SARL/OAO Rosneft (n 11).

21 Yukos NL (n 3).

22 ibid [3.10].

23 HR (Supreme Court) 25 June 2010 LJN: BM1679 (OAO Rosneft/Yukos Capital SARL). The ground for rejecting the appeal was jurisdictional, because in cases of enforcement of an award under the New York Convention, Dutch law does not permit an appeal against the grant of exequatur. See Article 1062(4) in conjunction with 1064(1) Rv and Article III 1958 New York Convention.

24 On 16 April 2010, Steel J rejected Rosneft's application to discharge or vary those freezing orders. See Yukos Capital Sarl v OJSC Rosneft Oil Co [2010] WL 1368769.

25 Pemberton v Hughes [1899] 1 Ch 781, 790 (Lord Lindley). cf Adams v Cape Industries Plc [1990] 1 Ch 433. See Dicey, Morris & Collins (n 10) Rule 45.

26 Yukos EN (n 2) [16].

27 ibid [105].

28 Shaw v Gould (1868) LR 3 HL 55, 81 (Lord Westbury). cf Dallal v Bank Mellat (n 45) 462; and Deutsche Schachtbau- und Tiefbohrgesellschaft mbH v Ras Al-Khaimah National Oil Co [1990] 1 AC 295, [1988] 3 WLR 230, 347 (Lord Goff of Chieveley).

29 Another example is at [66]ff where the judge considers the ‘[i]rrelevance of criticism of the foreign judgment or procedure’. Whether the foreign procedure offends against English principles of substantial justice is a question of recognition, not estoppel.

30 Yukos EN (n 2) [49].

31 (n 10).

32 Ibid.

33 Council Regulation (EC) No 44/2001 of 22 December 2000 on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters [2001] OJ L12/1 (as amended) Article 1(2)(d).

34 See Case 145/86 Hoffmann v Krieg [1988] ECR 645 [11]. Some continental courts regard this decision as mandating the application of the preclusion law of the judgment-rendering State. For instance, see HR 12 March 2004, NJ 2004, 284 [3.6] (IDAT/BJG). However, as More-Bick LJ correctly emphasised in National Navigation Co v Endesa Generacion SA (The Wadi Sudr) [2009] 2 CLC 1004, [2009] EWCA Civ 1397 [114], ‘[t]here was no discussion [in Hoffmann v Krieg] of the effect of recognition as giving rise to estoppel by record, which is the question that we have to decide, and the judgment does not contain any clear indication of how that question should be decided.’ More recent CJEU decisions seem more pervasive. For example, see Case C-444/07 Probud [2010] ECR I-417 [26] (Insolvency Regulation); and Case C-420/07 Apostolides v Orams [2009] ECR I-3571 [66].

35 23 and 24 Geo 5 C 13. See the Reciprocal Enforcement of Foreign Judgments (the Netherlands) Order 1969 No 1063 (as amended) adopted pursuant to the 1967 Convention between United Kingdom and The Kingdom of the Netherlands on the reciprocal recognition and enforcement of judgments in civil matters (signed at The Hague on 17 November 1967, entered into force on 21 September 1969) 699 UNTS 10022.

36 Ricardo v Garcias (1845) XII Clark & Finnelly 368. On enforcement see in Russell v Smyth (1842) 9 Meeson and Welsby 810, 819, 152 ER 343; Godard v Gray (1870–71) LR 6 QB 139; and Schibsby v Westenholz (1870–71) LR 6 QB 155. See generally Briggs, A, ‘Which Foreign Judgments Should We Recognise Today?’ (1987) 36 ICLQ 240CrossRefGoogle Scholar. On the older authorities see Piggott, F, Foreign judgments: their effects in the English Court (Stevens and Sons, London 1879) 3Google Scholarff.

37 Consistent with the 1967 convention, the 1933 Act does not exclude from its scope Dutch judgments in arbitration matters, nor specifically judgments granting leave to the enforcement of arbitral awards. See the 1933 Act, section 8(1) in conjunction with section 1(2A), which excludes various types of judgment, but not judgments granting leave to enforcement of arbitral awards. cf 1967 Convention, Article II(2).

38 1933 Act, section 8(1).

39 1933 Act, section 8(1) in conjunction with section 1, in particular section 1(2)(a), which requires that the judgment is final and conclusive. For an accurate explanation of the meaning of these requirements see Nouvion v Freeman (1890) LR 15 App Cas 1, 8–10 (Lord Herschell).

40 1933 Act, section 8(2) in conjunction with section 4(1)(a).

41 Black Clawson International Ltd v Papierwerke Waldhof-Aschaffenburg AG [1975] AC 591 [1975] 2 WLR 513, [1975] 1 All ER 810, [1975] 2 Lloyd's Rep 11, 15 (1975) 119 SJ 221.

42 ibid 618E-F, 626C-D, 634A-B, 650D-E.

43 (1868–69) LR 4 QB 653.

44 ibid 658.

45 See Carl Zeiss (n 9) 919 (Lord Reid); and Vervaeke v Smith [1983] 1 AC 145, 162, [1982] 2 WLR 855 (Lord Simon of Glaisdale). See generally on the procedural question exception Harding v Wealands [2006] UKHL 32, [2007] 2 AC 1, [2006] 3 WLR 83, [2006] 4 All ER 1; [2006] 2 CLC 193, [2006] RTR 35, (2006) 156 NLJ 1136, (2006) 150 SJLB 917, Times, July 6, 2006. cf already Castrique v Imrie (1869–70) L.R. 4 H.L. 414, 427 (Blackburn J); and further Dallal v Bank Mellat [1986] QB 441 (Hobhouse J). On this approach see Szaszy, S, ‘The Basic Connecting Factor in International Cases in the Domain of Civil Procedure’ (1966) 15 ICLQ 436CrossRefGoogle Scholarff.

46 (n 10) 918.

47 Yukos EN [42]ff.

48 See (n 8).

49 English courts do not consider foreign law of their own motion and will refer exclusively to English law, assuming foreign preclusion law is the same, if the relevance and difference of foreign preclusion law is not explicitly pleaded and, if contested, proved. See Carl Zeiss (n 10) 919 (Lord Reid). On the approach of an English court to a question of foreign law, see Hilal Abdul Razzaq Ali Al Jedda v The Secretary of State for Defence [2010] EWCA Civ 758 [54] (Arden LJ) with further references.

50 Yukos EN [77]ff.

51 ibid. Due to a lack of access to the expert evidence the expert evidence cited in the judgment—including the Joint Memorandum, supplementary reports and witness statements (see [77]–[78])—it will be assumed here that the court's conclusion accurately reflects it.

52 Professor Bartels for Yukos Capital and Professor Jongbloed for Rosneft.

53 Yukos EN [77]ff.

54 ibid. A better translation refers to gezag van gewijsde as the ‘preclusive effect’ of a judgment denoting that the judicial findings of the court are conclusive of litigation, have ‘bindende kracht’, as distinguished from the rechtskracht (ie force of law) of the court's order.

55 ibid [77].

56 ibid.

57 ibid.

58 HR 17 November 1995, NJ 1996, 283.

59 Yukos EN [77].

60 ibid [79].

61 On this provision see (especially) van Schaick, A, Asser Procesrecht Deel 2, Eerste aanleg (Kluwer, Deventer 2011) [101]–[158]Google Scholar; Beukers, Y, Eenmaal andermaal? : beschouwingen over gezag van gewijsde en ne bis in idem in het burgerlijk procesrecht (Tjeenk Willink, Zwolle 1994)Google Scholar; and Veegens, D, Het gezag van gewijsde (Tjeenk Willink, Zwolle 1972)Google Scholar.

62 ibid [77].

63 See HR 15 May 1987, NJ 1988, 164 [3.4] (Van Huffel/Van den Hoek).

64 HR 14 oktober 1988, NJ 1989, 413 [3.2] (Wijnberg v Westland/Utrecht Hypotheekbank NV). cf, for instance, Advocate General De Vries Lentsch-Kostense in HR 6 Februari 2004, LJN: AN8908 [3.1.1].

65 ‘Beslissingen die de rechtsbetrekking in geschil betreffen en zijn vervat in een in kracht van gewijsde gegaan vonnis, hebben in een ander geding tussen dezelfde partijen bindende kracht’.

66 Yukos NL [3.5]. On a more general note, the judgment of the Court of Appeal illustrates that, contrary to popular belief, Article 431 of the Dutch Code of Civil Procedure, the infamous provision of Dutch law, is no bar to the recognition and enforcement of foreign judgments in The Netherlands.

67 (n 58) [3.4].

68 HR 18 September 1992, NJ 1992, 747 [3.3] (Keizer v Van Andel). cf Hof Amsterdam 28 October 1977, NJ 1978, 350 (Massoud/Van Os).

69 (n 63).

70 ibid [3.4].

71 (n 58) [2.14].

72 Hamblen J at [105] clearly acknowledged this discrepancy of the issues.

73 (n 58) [2.9].

74 See the text to (n 45).

75 c 27. See Dicey, Morris & Collins (n 10) Rule 35(3) and the comment at [14-034]ff.

76 Republic of India v India Steamship Co, The Indian Grace [1993] AC 410, [1993] 1 All ER 998, [1994] ILPr 498, [1993] 1 Lloyd's Rep 387, [1993] 2 WLR 461.

77 See Briggs, A, ‘Foreign judgments and res judicata: Republic of India v. India Steamship Co. Ltd. (The Indian Grace and The Indian Endurance) (No.2)’ (1997) 68 BYBIL 355Google Scholarff. cf Barnett, P, Res Judicata, Estoppel, and Foreign Judgments (OUP, Oxford, 2001) [4.33]Google Scholarff.

78 Yukos EN [70]ff.

79 For further recent examples see National Navigation (n 34); Merchant International Co Ltd v Natsionalna Aktsionerna Kompaniya Naftogaz Ukrayiny [2011] EWHC 1820 (Comm) (Steel J); and Naraji v Shelbourne [2011] EWHC 3298 (QB) (Popplewell J) [124]ff.

80 It is unclear, for instance, how an English court would be able to take proper account of the law of certain US States allowing for non-mutual preclusion in certain well-defined circumstances. See H Erichson, ‘Interjurisdictional preclusion’ (1998) 96 Michigan Law Review 945, 965 with further references.

81 It is suggested that an English court might seek to reach an equivalent result though its inherent power to prevent an abuse of process. On the so-called ‘functional equivalence’ approach see nothing short of brilliantly von Mehren, A and Trautman, D, ‘Recognition of Foreign Adjudications: A Survey and A Suggested Approach’ (1968) 81 Harvard Law Review 1601, 1680CrossRefGoogle Scholarff.

82 Al-Jedda v Secretary of State for Defence [2011] QB 773, [2010] EWCA Civ 758 [191] (Elias LJ).

83 [2005] 1 WLR 1539, [2004] EWCA Civ 1735 [52].

84 (n 45).

85 Raiffeisen Zentralbank Osterreich AG v Five Star General Trading LLC (The Mount I) [2001] QB 825, 840, [2001] EWCA CIV 68, [2001] 2 WLR 1344 (‘(1) characterisation of the relevant issue; (2) selection of the rule of conflict of laws which lays down a connecting factor for that issue; and (3) identification of the system of law which is tied by that connecting factor to that issue … .’).

86 ibid (emphasis added).

87 ibid.