Introduction1
The concept of transnational issue estoppel is well established under English law.2 Until recently, English courts had not yet had occasion to consider whether transnational issue estoppel could apply in the context of the enforcement of an arbitral award where the issue before the English court is one of English statutory law – specifically, whether an exception to state immunity under the State Immunity Act 1978 applies. This issue has now been settled by the recent English Court of Appeal decision in Hulley Enterprises Ltd and others v. The Russian Federation [2025] EWCA Civ 108, which confirmed that transnational issue estoppel is applicable in this context.
Hulley arose out of an investor-state arbitration award against the Russian Federation (“Russia”) obtained by the former majority shareholders of the OAO Yukos Oil Company (“Investors”). Russia resisted the enforcement of the award in England, arguing that it was immune to the adjudicative jurisdiction of the English courts. In response, the Investors relied on the arbitration exception to immunity in Section 9 of the State Immunity Act 1978, under which state immunity is disapplied if a State has agreed to an arbitration agreement in writing. In particular, the Investors relied on a prior decision of the Hague Court of Appeal that found that Russia had validly submitted to a written arbitration agreement to argue that Russia was estopped from contending otherwise. The High Court agreed that Russia was “estopped” by the Hague Court of Appeal judgment from arguing that it had not agreed to arbitrate, and consequently found that the arbitration exception to state immunity applied.
By unanimous judgment, the Court of Appeal upheld the High Court’s determination that the Hague Court of Appeal judgment gave rise to an issue estoppel and satisfied the requirements of the arbitration exception. This is the first appellate confirmation in the UK that transnational issue estoppel can apply to determinations of state immunity under the State Immunity Act.
Background of the dispute
Hulley is the latest chapter in a long-running dispute between Russia and the Investors over Russia’s unlawful expropriation of Yukos in violation of the Energy Charter Treaty.3 In July 2014, a Permanent Court of Arbitration (“PCA”) tribunal issued three materially identical awards ordering Russia to pay damages exceeding US$50 billion to the Investors.4 Since then, Russia has been resisting enforcement of the awards across multiple jurisdictions.
In November 2014, Russia commenced proceedings to set aside the awards in the Netherlands, the arbitral seat. Russia asserted that the arbitral tribunal lacked jurisdiction as there was no binding arbitration agreement between itself and the Investors. It also accused the Investors of bribing a witness such that the awards were vitiated by fraud.
In January 2015, the Investors sought recognition and enforcement of the awards in England. Russia challenged the jurisdiction of the English courts, contending that it was immune from such jurisdiction pursuant to Section 1 of the State Immunity Act.5 In the Netherlands, the District Court of the Hague initially ordered the awards to be set aside.6 While an appeal against that decision was pending, the English enforcement proceedings were stayed by consent.
In February 2020, the Hague Court of Appeal reinstated the awards, rejecting Russia’s challenge that there was no binding arbitration agreement between the Investors and Russia.7 The Dutch Court found that Russia had agreed in writing to submit the dispute to arbitration. It is this decision that the Investors relied on for its argument on transnational issue estoppel before the English courts in Hulley.
Proceedings in the Netherlands remain ongoing.8 Nevertheless, the stay on English enforcement proceedings was lifted on application by the Investors in October 2022 for the sole purpose of determining the matter of the English courts’ adjudicative jurisdiction over Russia.9
In the High Court, the question of the English courts’ jurisdiction was argued before Mrs Justice Cockerill, who held that issue estoppel could arise in respect of a determination relevant to the question of exceptions to state immunity as there is nothing in the State Immunity Act that disapplied substantive or procedural rules of English law, including issue estoppel. As the Hague Court of Appeal’s judgment satisfied the elements of transnational issue estoppel, Russia was precluded from arguing that it had not agreed to arbitration. Consequently, in Cockerill J’s judgment, the arbitration exception in Section 9 of the State Immunity Act was applicable,10 and Russia’s challenge based on state immunity was dismissed.11
Russia’s appeal against Cockerill J’s judgment was determined by the Court of Appeal in this latest decision on February 12, 2025.
The Court of Appeal decision in Hulley
Before the Court of Appeal, Russia argued that state immunity must be determined without reference to issue estoppel. It advanced the central argument that, pursuant to Section 1 of the State Immunity Act, English courts are obliged to determine questions of state immunity on their own analysis without deference to any issue estoppel arising from a foreign judgment. Moreover, state immunity and issue estoppel are important questions of public policy in England but, when in tension, state immunity must be given priority because state immunity is a public policy of higher importance, being concerned with the UK’s international obligations. Alternatively, state immunity may be considered a “special circumstance” militating against the application of issue estoppel.
Lord Justice Males LJ, with whom Lord Justices Zacaroli and Lewison concurred, rejected Russia’s arguments, making six key rulings on the effect of issue estoppel and its interaction with statutory law governing state immunity.
First, Males LJ rejected Russia’s argument that if the English court gives effect to an issue estoppel arising from a foreign judgment, it would be neglecting its obligation to make a “determination” on the issue of state immunity required by the State Immunity Act as it would be simply adopting the judgment of the foreign court. Instead, Males LJ clarified that the effect of issue estoppel is that “evidence to contradict the previous judgment is not relevant,” which is consistent with the ordinary principle that substantive law will determine what evidence is relevant to decide an issue.12 Accordingly, the High Court had made a determination that Russia had agreed in writing to submit its dispute with the Investors to arbitration, thereby activating the arbitration exception, applying the substantive principle of English law estoppel that a previous decision of a court of competent jurisdiction was conclusive on that issue.13
Second, all aspects of English procedural and substantive law apply to determine whether an exception to state immunity applies. In particular, Males LJ noted that nothing in the State Immunity Act prescribes how a court should determine whether an exception to state immunity applies. Thus, the court must simply apply English law to the question – and that includes the law relating to issue estoppel in addition to English law principles on the burden and standard of proof.14
Third, Males LJ confirmed the general rule that an estoppel cannot enlarge the jurisdiction of the court or create jurisdiction where none exists. However, Males LJ disagreed with Russia’s argument that applying issue estoppel would violate this rule. Drawing on existing English jurisprudence, Males LJ emphasized that issue estoppel is a “convenient label” for the legal principle that a previous decision of a court of competent jurisdiction creates an enforceable legal right in English law, which is, in turn, based on the important public policy of finality in litigation.15 As the court was enforcing a substantive legal right under English law, applying issue estoppel in the circumstances of the case did not offend against the rule that a court’s jurisdiction cannot be enlarged or created by an estoppel.
Fourth, Males LJ did not accept Russia’s argument that issue estoppel should give way to state immunity, as the latter is a public policy of higher importance. Although issue estoppel is linked to the public policy of finality in litigation, when an English court decides that an exception to state immunity applies as a result of an issue estoppel arising from a foreign judgment, it is simply applying that rule as part of English law and “there is no question of making a choice between competing public policies.”16
Fifth, Males LJ highlighted that in order for a foreign judgment to give rise to an issue estoppel, the foreign judgment must be entitled to recognition and enforcement in England. In the case of a foreign judgment against a State, this required satisfaction of both the common law rules on recognition and enforcement as well as Section 31(1) of the Civil Jurisdiction and Judgments Act 1982.17 Here, the requirements of Section 31 were satisfied as the Hague Court of Appeal judgment would (a) have been recognized and enforced if it had not been given against a State and (b) the Hague Court of Appeal had jurisdiction over Russia as Russia had waived its immunity by initiating setting aside proceedings before the Dutch courts (and thereby submitting to the Dutch courts’ jurisdiction).
Sixth, Males LJ held that giving effect to issue estoppel was in accordance with the demands of justice and with the public policy of the New York Convention to honor international arbitral awards without delay.18 Russia had contended that state immunity amounted to a “special circumstance” justifying the disapplication of issue estoppel.19 Males LJ dismissed this argument, seeing more force in giving effect to issue estoppel arising from such a judgment, rather than putting the award creditor to the trouble and expense of re-litigating the issue.20 Males LJ observed that this policy “applies with particular force in the arbitration context when the judgment of the foreign court is given in the arbitration seat, as in this case.”21
Ultimately, the Court of Appeal concluded that Cockerill J was right to decide, applying the principle of issue estoppel, that Russia had agreed in writing to submit the dispute to arbitration, and that the arbitration exception in Section 9 of the State Immunity Act therefore applied. On this basis, the Court dismissed the appeal.
Takeaways
The English Court of Appeal’s judgment is significant as it is the first authoritative statement that transnational issue estoppel can apply to determinations of state immunity under English law. It advances a line of decisions on transnational issue estoppel under English law, in which the English courts have held that transnational issue estoppel on factual issues that affect the enforceability of an arbitral award can arise from judgments of both the seat court and the enforcement court.22 In doing so, the English Court of Appeal has strengthened the concept of transnational issue estoppel as a tool to reduce the scope of re-litigation on issues concerning the recognition and enforcement of arbitral awards across multiple jurisdictions.
As noted above, in determining that the Hague Court of Appeal judgment gave rise to transnational issue estoppel on the factual issue of whether Russia had entered into a binding arbitration agreement (which in turn activated the arbitration exception to state immunity under English law), Males LJ was influenced by the fact that the foreign judgment in question was a judgment of the seat court. This leaves open the question as to whether judgments of an enforcement court can also give rise to an estoppel on issues of state immunity. Given that English courts have previously recognized transnational issue estoppel based on decisions of another enforcement court,23 it seems likely that English courts may not distinguish between decisions of a seat court and an enforcement court, even on issues pertaining to state immunity.
It remains to be seen whether the English approach of recognizing estoppel in respect of both seat and enforcement court judgments will be adopted in other jurisdictions. For example, although Singapore recognizes that transnational issue estoppel applies in the context of judgments by seat courts, it remains an open question under Singapore law whether transnational issue estoppel would apply to decisions of another enforcement court.24
It appears clear, however, that there is at least an emerging consensus among common law jurisdictions that enforcement courts should accord significance to seat court judgments. Indeed, the cross-pollination between common law jurisdictions is illustrated in Hulley where Males LJ cited the Singapore Court of Appeal’s judgment in Republic of India v. Deutsche Telekom AG25 as further confirmation of his holding that a finding by a foreign court that a State has agreed to a binding arbitration clause could give rise to an issue estoppel for state immunity purposes in another jurisdiction.
These developments have significant implications for parties that seek to enforce (or resist enforcement of) arbitral awards across multiple jurisdictions, and highlight the need for such parties to develop a coherent and effective multi-jurisdictional litigation strategy. Parties to proceedings involving States should also be mindful of the effect that a foreign judgment could have in England on the issue of state immunity and any applicable exceptions.
More generally, the broader effect of the Court of Appeal’s judgment is that factual determinations by foreign courts of competent jurisdiction may preclude parties from raising contrary evidence in English court proceedings on these factual issues, even if they relate to matters of English statutory law, if the English proceedings are between the same parties and in respect of the same subject matter. Parties must therefore be alert to the implications of raising a particular issue for decision in a foreign jurisdiction and how a decision of the foreign jurisdiction might affect their rights to make certain arguments in England (and, indeed, in other jurisdictions that recognize transnational issue estoppel such as Singapore).
Finally, it is crucial to bear in mind that where transnational issue estoppel applies, it is irrelevant that the English court may form the view that the decision of the foreign court was wrong on the facts or as a matter of English law.26 Particularly in the context of enforcement of an arbitral award, where there may be multiple courts seized with enforcement jurisdiction, this may encourage attempts to obtain a favorable factual ruling in a foreign court to preclude reconsideration of the issue before the English courts. This is a risk that parties and courts should be aware of, and that can potentially be addressed by guardrails against abuse of process in appropriate cases.
