Parties may struggle to establish issue estoppel based on a foreign judgment, even when they agreed exclusive jurisdiction of English courts.
By Oliver Browne, Yasmina Vaziri, and Tom Watret
MAD Atelier International BV v. Manès  EWHC 1014 (Comm) considers key aspects of the law of issue estoppel and abuse of process in relation to foreign judgments. The decision highlights that even when parties have chosen exclusive jurisdiction clauses in favour of the English courts in their transaction documentation, they could unexpectedly find themselves re-litigating issues in multiple courts. It also shows that whether issue estoppel will be available, or whether another party can be prevented from “abusively” re-litigating, in England, issues that have already been determined by a foreign court, may depend on the foreign court’s view as to the binding and preclusive effect of its own decisions. This introduces an element of uncertainty into the finality of international litigation, which is why parties in multi-jurisdictional disputes should always take advice early.
Mr. Axel Manès, executive chef of L’Atelier de Joël Robuchon in Paris (the Restaurant), holds beneficial ownership of the Restaurant via MA Développement S.A.S. and its subsidiaries (together, MAD Atelier). In 2015, Mr. Manès and a multinational chain of companies, the Dogus Group, entered into a joint venture known as MAD Atelier International BV (MAD International) – later the claimant in the English litigation. As part of the joint venture, ownership of the Restaurant was transferred to MAD International, in which the Dogus Group had a 60% stake.
The relationship between the parties broke down and the Restaurant was transferred back to MAD Atelier. MAD International (still under control of the Dogus Group) later alleged this transfer was fraudulent and issued proceedings in the Paris Commercial Court against MAD Atelier (but not against Mr. Manès), seeking, among other claims, a declaration that the transfer was void. In July 2018, the Paris Commercial Court dismissed MAD International’s claim. An appeal is pending.
In April 2019, MAD International issued proceedings against Mr. Manès in the English Commercial Court claiming damages for breach of the joint venture agreement pursuant to an exclusive English jurisdiction clause. Mr. Manès applied to strike out the claim on the basis that the same core factual issues had already been determined in the French judgment, which (a) gave rise to an issue estoppel preventing MAD International from re-litigating in the English courts, or (b) made the claim an abuse of process.
The decision of the English Commercial Court
A. Issue Estoppel
Under the principle of issue estoppel, an issue that has already been decided by a court or tribunal is binding on the parties and cannot be re-litigated. For a foreign judgment to create an issue estoppel, the following criteria must be satisfied: (1) the judgment relied on as creating the estoppel must be (a) by a court of competent jurisdiction; (b) final and conclusive; and (c) on the merits; (2) the parties (or, in some circumstances, a closely related party with whom the party had the same interest) must be the same in both sets of proceedings; (3) there must be a clear determination of the issue by the judgment; and (4) the issue in the later action must be the same as the issue decided by the judgment in the earlier proceeding.
The English Commercial Court considered a number of these criteria in detail.
Was the French judgment “final and conclusive” for these purposes?
The first key issue was whether English or French law applied to whether the French judgment was “final and conclusive”. Mr Manès argued that it was enough that the French judgment itself was final and conclusive as a matter of French law, and that English law should then govern whether the particular issues the foreign court decided ought to bind the parties. MAD International argued that French law should determine if the particular issues decided by the French court had preclusive effect. The question of which law applied mattered because French law does not have a doctrine of issue estoppel, such that only the operative parts of French judgments in which the court sets out its decision have binding preclusive effect, not those setting out the court’s conclusions on the facts and its application of the relevant legal principles.
With reference to the leading House of Lords decisions in Carl Zeiss Stiftung v. Rayner & Keeler Ltd (No. 2)  1 AC 853 and The Sennar (No. 2)  1 WLR 490, the judge held that it would be “absurd” for an English court to give a determination by a foreign court on a particular issue a binding preclusive effect when the foreign court would not itself consider that determination to be binding on the parties. The foreign court had to, as a matter of its own law, formally treat the determination in the earlier proceeding as precluding further consideration of the issues, and the French judgment did not have these qualities.
Were the parties the same in both proceedings?
In the French proceedings, the claimant was MAD International and the defendants were MAD Atelier, whereas Mr. Manes was defendant in the English proceedings. The “same parties” doctrine could operate if Mr. Manès had a “privity of interest” with his wholly-owned subsidiaries.
In Johnson v. Gore Wood  AC 1 it was suggested that privity of interest for the purposes of issue estoppel may arise between a company and its controlling shareholder. However, the judge rejected that argument, noting that this was a concession, was only mentioned obiter, and had been called into question in subsequent cases. The judge held that privity was only established if a controlling shareholder could have been joined to the original proceedings. Mr. Manès could not have been joined to the French proceedings because they concerned the validity of the share transfer between MAD International and MAD Atelier, to which Mr. Manès was not a party. The fact that Mr Manès had a financial interest in the outcome and had given evidence in the French proceedings was not sufficient.
The French judgment therefore did not create an issue estoppel preventing MAD International from pursuing its claim in England.
B. Abuse of Process
The judge also considered whether the claim constituted an abuse of process either on the grounds that it was a collateral attack on the French judgment or that the claim should have been raised in the French proceedings.
While the judge recognised that abuse of process could exist as an independent reason to dismiss a claim, even in the absence of issue estoppel, he considered that MAD International’s claim was not abusive because it did not give rise to a re-litigation of issues. He also observed that it would be rare for abuse to be established if an issue had been litigated between different parties, particularly if proceedings were commenced pursuant to an exclusive jurisdiction clause.
This decision underscores the difficulties in establishing issue estoppel based on a foreign judgment, even when the parties have agreed to the exclusive jurisdiction of the English courts. There is no uniform approach across the courts of foreign jurisdictions as to the binding preclusive effect of decisions. As this case highlights, an English court’s finding of issue estoppel will necessarily depend upon the foreign court’s own formal view on the binding and final nature of its decision, which introduces an element of uncertainty to the availability of issue estoppel.
Parties must think outside the proverbial box when deciding upon choice of forum in their commercial agreements. If the scope of an exclusive jurisdiction clause in favour of the English courts does not cover all of the parties’ dealings, they may find themselves in multi-jurisdictional proceedings with some degree of overlap, and without recourse to arguments of issue estoppel.
This post was prepared with the assistance of Jacopo Zonouzi in the London office of Latham & Watkins.
 MAD International v. Manes, paragraph 47.
 See paras 26, 49(3), 89.
 See paras 51(1), 57.
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