Issue estoppel: findings made against the claimant

Even if the foreign court has not dismissed the whole of the claimant’s claim, it may have resolved certain factual or legal issues against him.^[1] If so, the principles of estoppel are, as with cause of action estoppel, liable to lead to the result that, if litigation is subsequently commenced in England, those issues determined against the claimant are also treated as res judicata. This time the principles are those of issue estoppel.

Issue estoppel is not always easy to tell apart from cause of action estoppel; but the principles are much the same. The court will have been competent in English eyes to make the finding against the claimant because, in choosing to sue there, he has submitted to or accepted its jurisdiction. Unless the conduct of the defendant or the court can be complained about, so as to disentitle the judgment to recognition against the claimant as res judicata, findings made by the court will, in principle at least, be capable of founding an estoppel. Even so, considerable care is needed. First, the proposition that the decision of the foreign court on the particular issue need be final and conclusive is difficult to apply when one is dealing with observations or findings made by the court, but which did not actually form part of its order. Second, it may not be easy to be sure what the court has decided. Third, the court may have recited the considerations on which its judgment was formally based, but without intending them to have the status of decisions on the particular points. On the other hand, the specific reasons for caution before applying issue estoppel against a defendant, discussed in the next paragraph, are inapplicable as against the party who selected the foreign court in the first place.

Issue estoppel: findings made against the defendant

Just as it is true that a finding made against the claimant may give rise to an issue estoppel, the same is, in principle, true where a foreign court has made a finding against a defendant. In principle, issue estoppel may arise against him as well; and, also in principle, matters of defence which he could and should have raised, but did not, may be shut out by the principle in Henderson v Henderson.

The need for caution in the application of the principles of issue estoppel to a foreign judgment, clearly expressed in Carl Zeiss Stiftung v Rayner & Keeler Ltd (No 2)^[2] deserves more than lip-service. A defendant may have acted prudently in allowing a claim in a faraway court to be lost or to go by default: it may have been a claim too small to be worth the expense of fighting. In such a case, it may be inappropriate to hold that he is now estopped, in relation to a much larger claim in England, by issues apparently or actually decided by the foreign court. It would be wrong to hold that a defendant who allows judgment to go against him by default in respect of a particular claim, or who defends it on the basis of limited expenditure, is nevertheless to be treated as being bound, for all time and in all future contexts, by decisions made by the judge in the foreign court.

• [1] In such a case. Section 34 of the 1982 Act may present an obstacle to his proceeding in England. 2 See Thoday v Thoday [1964] P 181; Carl Zeiss Stiftung v Rayner <8 Keeler Ltd (No 2) [1967] 1 AC 853; The Sennar (No 2) [1985] 1 WLR 490; The Indian Grace [1993] AC 410; Desert Sun Loan Corp v Hill [1996] 2 All ER 847. 3 Carl Zeiss-, see also Berkeley Administration Inc v McClelland [1996] ILPr 772; HJ Heinz Co Ltd v EFL Inc [2010] EWHC 1203, [2010] 2 Lloyd’s Rep 727; Abdel Hadi Abdullah Al Qahtani & Sons Beverage Industry Co v Antliff [2010] EWHC 1735 (Comm) (no issue estoppel from decision of Saudi Primary Commission); MAD Atelier International BV v Manes [2020] EWHC 1014 (Comm), [2020] QB 971. 4 MAD Atelier International BV v Manes [2020] EWHC 1014 (Comm), [2020] QB 971. For refusal to impose estoppel where the issues before the foreign court were collateral, not central, to those before the English court, see Good Challenger Navegante SA v Metalexportimport SA [2003] EWCA Civ 1668, [2004] 1 Lloyd's Rep 67, which adopts a rather conservative stance, but which was approved in Sun Life Assurance Co of Canada v Lincoln National Life Insurance Co [2004] EWCA Civ 1660, [2005] 1 Lloyd's Rep 606. 5 But only in favour of the other party to the proceedings: it is not open to a non-party in subsequent litigation against a party who lost on an issue determined in separate proceedings, to contend that the latter is bound by the decision, not least because estoppels are mutual, and the non-party could not be regarded as being bound by any matter decided adverse to him in proceedings to which he was a stranger:
• [2] [1967] 1 AC853. The principle was reaffirmed in Diag Human SE v Czech Republic [2014] EWHC 1639 (Comm), [2014] 2 Lloyd's Rep 283, applying it in the context of a foreign judgment on the enforceability of an arbitral award; also Eastern Europe Engineering Ltd v Vijay Construction Pty Ltd [2018] EWHC 2713 (Comm), [2019] 1 Lloyd’s Rep 1; Carpatsky Petroleum Corp v PJSC Ukrnafta [2020] EWHC 769 (Comm), [2020] 1 Lloyd's Rep 566 (suggesting that issue estoppel designed to prevent enforcement of an arbitral award which is regarded as unimpeachable by English law and the courts at the seat would not be in accordance with the requirements of justice). 2 [1943] KB 587; Secretary of State for Trade and Industry v Bairstow [2004] Ch 1; Calyon v Michailidis [2009] UKPC 34, [2007-2009] Gib LR 321. 3 The Duchess of Kingston's Case (1776) 2 Smith's LC, 13th edn, 644. 4 Calyon v Michailidis [2009] UKPC 34, [2007-2009] Gib LR 321. 5 For example, Sabbagh v Khoury [2014] EWHC 3233 (Comm), [202]—[207]. 6 [2009] UKPC 34, [2007-2009] Gib LR 321. 7 [2014] EWCA Civ 257, [2015] QB 265.