Under English law, the doctrine of issue estoppel is treated as a sub-species of res judicata. The recent English Court of Appeal decision in Hulley Enterprises illustrates how the doctrine operates in the context of a plea of state immunity being raised in multi-jurisdictional proceedings for enforcing arbitral awards.  

In Hulley Enterprises, the Court of Appeal affirmed the English High Court’s ruling rejecting Russia’s sovereign immunity claim on the grounds of issue estoppel, thus paving the way for the enforcement in England of arbitral awards issued in the Yukos cases[1]. 

What is Issue Estoppel?

As Lord Justice Diplock explained in Mills v Cooper, the doctrine of issue estoppel operates to ensure that ‘a party to civil proceedings is not entitled to make, as against the other party, an assertion, whether of fact or of the legal consequences of facts, the correctness of which is an essential element in his cause of action or defence, if the same assertion was an essential element in his previous cause of action or defence in previous civil proceedings between the same parties or their predecessors in title and was found by a court of competent jurisdiction in such previous civil proceedings to be incorrect [...]’[2]. 

The requirements for an issue estoppel to apply were summarised by the English courts in The Good Challenger, namely that, (1) the judgment must be given by a foreign court of competent jurisdiction; (2) the judgment must be final and conclusive and on the merits; (3) there must be identity of parties; and (4) there must be identity of subject matter, which means that the issue decided by the foreign court must be the same as that arising in the English proceedings[3]. 

The Background 

On 18 July 2014, an arbitral tribunal issued three awards ordering Russia to pay damages exceeding a total of US $50 billion plus interest[4] to Yukos’ former majority shareholders for breaching its obligations under Article 13(1) of the Energy Charter Treaty. 

Russia brought proceedings to set aside these awards at the arbitral seat, i.e., the Netherlands. In those proceedings, Russia argued that (1) the tribunal lacked jurisdiction because there was no binding arbitration agreement between the claimants and Russia (the “no agreement issue”), and (2) the awards were vitiated by fraud as a result of the claimants having effectively bribed a witness to give evidence in their favour and failed to disclose key documents (the “procedural fraud issue”). Consequent to ensuing appeals on these issues, on 5 November 2021, the Dutch Supreme Court affirmed the Hague Court of Appeal's[5] ruling on the no agreement issue, i.e., that there was a binding arbitration agreement, while quashing the lower court's decision and referring the case to the Amsterdam Court of Appeal on the procedural fraud issue[6]. 

The English High Court proceedings

The claimants (i.e., the award creditors) brought enforcement proceedings before the English High Court shortly after Russia's setting aside applications were commenced in the Netherlands. In these English proceedings, Russia brought a jurisdictional challenge arguing that it was immune from the English court's jurisdiction pursuant to section 1 of the English State Immunity Act 1978. Thereafter, Russia also successfully resisted an application brought by the claimants to lift a stay on the English enforcement proceedings on grounds that the pending Dutch appeal proceedings dealt substantially with the same Issues as the English jurisdictional challenge. 

However, following the handing down of the decision of the Dutch Supreme Court, the claimants applied again to lift the stay of enforcement proceedings before the English High Court. In October 2022, the court acceded to that application in part, lifting the stay for the resolution of the issue whether Russia is, by reason of the Dutch court judgments, precluded from rearguing the no agreement issue before English courts. 

In her judgment of 1 November 2023, Mrs Justice Cockerill answered that issue in the affirmative[7]. 

In rejecting Russia's claim of sovereign immunity, Mrs. Justice Cockerill ruled that the Dutch court's decision gave rise to an issue estoppel precluding Russia from rearguing the no agreement issue. 

The grounds of appeal 

Russia appealed Mrs. Justice Cockerill’s decision on various grounds which encapsulated the following arguments: 

• that issue estoppel does not apply to the matters being considered under the State Immunity Act 1978, since the English courts are obligated to independently assess and determine whether any exceptions to state immunity are applicable (the “State Immunity Act ground”); 

•  that ‘special circumstances’ exist that militate against the application of issue estoppel, including Russia's claim regarding the procedural fraud issue which was pending before the Dutch courts and the potential for that matter to be referred to the Court of Justice of the European Union (the “’special circumstances’ ground”); and 

• that both state immunity and issue estoppel are matters of public policy, arguing that issue estoppel should yield to state immunity due to the latter's greater significance, as it reflects the UK’s international obligations (the “public policy ground”). 

The Court of Appeal's decision 

In the judgment handed down on 15 February 2025, Lord Justice Males rejected these arguments.  

The State Immunity Act ground 

Russia argued that the English court is required, under Section 1 of the State Immunity Act, to uphold a state’s immunity from jurisdiction unless it determines that one of the exceptions outlined in Sections 2 to 11 applies. A conclusion based on an issue estoppel from a foreign judgment, it argued, amounted to no determination at all[9].  

Lord Justice Males did not deny that the English court has such an obligation, as it is what Section 1 of the State Immunity Act says. However, he stated that, when the court below found that Russia was not immune, it did not refuse to determine whether Russia had agreed in writing to submit the dispute to arbitration, (and, consequently, whether Russia met the requirement of the arbitration exception under Section 9 of the State Immunity Act). Instead, the High Court concluded that Russia had indeed so agreed, by applying the substantive principle of English law that, when the criteria for an issue estoppel are met— as they were in this case— the prior decision of a court with competent jurisdiction is binding on the issue at hand[10].  

Furthermore, Lord Justice Males ruled that the State Immunity Act does not specify how the court should determine whether an exception applies. Therefore, the court must apply English law to this question, which includes the principle of issue estoppel. There was no basis in the Act to support a conclusion that the question whether an exception applies has to be determined according to English law but excluding the English law principle of issue estoppel [11]. 

Lord Justice Males thus concluded that the Dutch court's decision, which determined that Russia had agreed in writing to submit the dispute to arbitration, established an issue estoppel that is enforceable by the claimants. The High Court was correct in giving effect to this issue estoppel when determining whether the exception to state immunity outlined in Section 9 of the Act[12] applied in this case[13]. 

The “special circumstances” ground 

Russia contended that issue estoppel arising from the decision of a foreign court should not apply to the determination of whether an exception to state immunity is applicable, arguing that the exceptional nature of state immunity constitutes “special circumstances.” In addition, it argued that the unresolved procedural fraud issue in the Dutch courts, as well as the possibility that the matter may be referred to the Court of Justice of the European Union would also amount to such "special circumstances" [14]. 

On this point, Lord Justice Males found that the nature of state immunity did not amount to special circumstances. 

He noted that although the conditions for establishing an issue estoppel laid down in The Good Challenger[15], were subject to the qualification that such principle will not apply if ‘special circumstances’ are established[16], this may simply be another way of saying that issue estoppel must work justice and not injustice[17]. 

Lord Justice Males found that at the time the judge addressed these issues, the Dutch Supreme Court had remitted them back to the Amsterdam Court of Appeal. In the meantime, the Amsterdam Court of Appeal had now rejected Russia's submissions on these matters. He added that given that the only remaining issue in the Dutch proceedings concerns procedural fraud in the conduct of the arbitration, he found it difficult to see how any issue requiring a reference to the Court of Justice of the European Union (CJEU) could arise, and that in any event Russia failed to explain how it might. 

Additionally, Lord Justice Males noted that the procedural fraud issue is unrelated to the question of whether Russia agreed in writing to submit the dispute to arbitration, which has been finally and conclusively determined by the Dutch courts, a point that was not challenged by Russia in its appeal. Therefore, the argument put forward by Russia cannot affect the determination by way of issue estoppel of Russia’s challenge to the jurisdiction of the English courts[18]. 

The Public Policy ground 

Finally, Lord Justice Males rejected Russia's public policy argument, explaining that when deciding whether an exception to immunity applied because of an issue estoppel from a foreign court's decision, the English Court was simply applying English law, and there was no question of choosing between immunity and estoppel principles. 

Russia also contended that both state immunity and issue estoppel are principles of public policy, and that the principle of issue estoppel should yield to state immunity, as the latter holds greater importance due to its relation to the United Kingdom’s international obligations. This was argued to lead to the conclusion that issue estoppel does not apply when the court is determining whether an exception to immunity is relevant, meaning the court must consider this question without regard to the decision of the foreign court[19].  

However, Lord Justice Males ruled that the public policy of the United Kingdom regarding state immunity is reflected in the provisions of the State Immunity Act. When a question of state immunity arises, the court is bound to apply those provisions, no more, no less. This means that the court must decide whether an exception to immunity applies, following the ordinary rules of English law. Although issue estoppel is based on the public policy principle of finality in litigation, it remains a rule of substantive law. Therefore, when a court determines that an exception to immunity applies due to an issue estoppel arising from a foreign court's decision, it is simply applying that rule as part of English law, and there is no need to choose between competing public policies[20]. 

[1] See  Hulley Enterprises Limited (Cyprus) v. The Russian Federation, PCA Case No. 2005-04/AA226; Yukos Universal Limited (Isle of Man) v. The Russian Federation, PCA Case No. 2005-04/AA227; Veteran Petroleum Limited (Cyprus) v. The Russian Federation, PCA Case No. 2005-04/AA228. 

[2] Mills v Cooper [1967] 2 QB 459, 468-9. 

[3] The Good Challenger [2003] EWCA Civ 1668, [2004] 1 Lloyd’s Rep 67. 

[4] See [1] above.  

[5] The Hague Court of Appeal, Hulley and others v Russian Federation (ECLI:NL:GHDHA:2020:234) (18 February 2020). 

[6] Dutch Supreme Court, Hulley and others v Russian Federation (ECLI:NL:HR:2021:1879) (5 November 2021). 

[7] Hulley Enterprises Ltd & Ors v The Russian Federation [2023] EWHC 2704 (Comm) (1 November 2023). 

[8] Section 1 SIA: ‘General immunity from jurisdiction. 

(1)A State is immune from the jurisdiction of the courts of the United Kingdom except as provided in the following provisions of this Part of this Act. 

(2)A court shall give effect to the immunity conferred by this section even though the State does not appear in the proceedings in question. 

[9] Hulley Enterprises Ltd & Ors v The Russian Federation [2025] EWCA Civ 108, [2025], ¶53.  

[10] Hulley Enterprises Ltd & Ors v The Russian Federation [2025] EWCA Civ 108, [2025], ¶56. 

[11] Hulley Enterprises Ltd & Ors v The Russian Federation [2025] EWCA Civ 108, [2025], ¶57. 

[12] Section 9, State Immunity Act 1978: ‘Arbitrations. 

(1) Where a State has agreed in writing to submit a dispute which has arisen, or may arise, to arbitration, the State is not immune as respects proceedings in the courts of the United Kingdom which relate to the arbitration. 

(2) This section has effect subject to any contrary provision in the arbitration agreement and does not apply to any arbitration agreement between States.’ 

[13] Hulley Enterprises Ltd & Ors v The Russian Federation [2025] EWCA Civ 108, [2025], ¶77. 

[14] Hulley Enterprises Ltd & Ors v The Russian Federation [2025] EWCA Civ 108, [2025], ¶80. 

[15] See [3] above. 

[16] Hulley Enterprises Ltd & Ors v The Russian Federation [2025] EWCA Civ 108, [2025], ¶41, citing Arnold v National Westminster Bank Plc [1991] AC 93. 

[17] Ibid. 

[18] Hulley Enterprises Ltd & Ors v The Russian Federation [2025] EWCA Civ 108, [2025], ¶¶67-68. 

[19] Hulley Enterprises Ltd & Ors v The Russian Federation [2025] EWCA Civ 108, [2025], ¶66. 

[20] Hulley Enterprises Ltd & Ors v The Russian Federation [2025] EWCA Civ 108, [2025], ¶67. 

Clément Bonnechère is currently working at Ciarb as an International Arbitration Professional Practice Intern. He holds a Masters’ degree from the University of Paris 1 Panthéon-Sorbonne and an LLM from the University of Exeter. He has a strong interest in the theoretical aspects of international disputes resolution.