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Can We Try That Again? Examining The Doctrine Of Transnational Issue Estoppel







The doctrine of issue estoppel prevents a party from re-litigating a specific issue that has already been decided in an earlier legal proceeding. Essentially, if a particular issue was decided in a previous case, and that issue arises again in a subsequent case involving the same parties or their privies, the party is estopped (prevented) from re-litigating that issue.

The then Supreme Court in Asia Commercial Finance (M) Bhd v Kawal Teliti Sdn Bhd [1995] 3 MLJ 189 explained that issue estoppel is one limb of the broader doctrine of res judicata, with the other limb being cause of action estoppel. The existence of the doctrine of issue estoppel is rooted in public interest, specifically aimed at achieving two important legal principles – (1) upholding finality in litigation and (2) protection against unfair double vexation.

Transnational Issue Estoppel

While the concept of issue estoppel is generally applied within the legal jurisdiction of a single country, the doctrine of transnational issue estoppel extends its application to cross-border scenarios (both in the context of litigation and arbitration). This would mean that a decision on a particular issue in one jurisdiction could be recognised and given effect in another foreign jurisdiction, preventing the re-litigation of that issue.

This interesting point of law was recently examined by the Singapore Court of Appeal (SGCA) in The Republic of India v Deutsche Telekom AG [2023] SGCA(I) 10.


Facts

Deutsche Telekom AG (DT), a German company, initiated arbitration against the Republic of India (India), alleging a breach of the India-Germany Bilateral Investment Treaty (BIT). The dispute arose from India's annulment of a satellite agreement awarded to DT's subsidiary. The arbitration was seated in Geneva, Switzerland.

The arbitration tribunal rendered an interim award in favour of DT, notwithstanding India's objections to the tribunal’s jurisdiction. Subsequently, India sought recourse by applying to the seat court, namely the Federal Supreme Court of Switzerland (FSCS), to set aside the interim award. The primary contention in this application was that the tribunal lacked jurisdiction over the dispute. However, the application was dismissed by the FSCS.

Ultimately, the tribunal issued a final award in favour of DT and the same was certified by the Civil Court of Geneva to be legally binding and enforceable. Following this, DT successfully sought leave to enforce the foreign final award in Singapore, securing a corresponding leave order. In response, India sought to resist enforcement by filing an application to set aside the leave order. Once again, the primary argument advanced by India was that the tribunal lacked jurisdiction over the matter.


Issue

One of the issues before the SGCA is that whether the doctrine of transnational issue estoppel applies in the context of international commercial arbitration so as to preclude the re-litigation of issues before the enforcement court that have previously been dealt with by the seat court.

In essence, the central issue is whether India is barred from presenting arguments before the Singapore court which have already undergone scrutiny and determination by the FSCS.

Decision

The Singapore apex court rejected India's appeal and ruled that the doctrine of transnational issue estoppel can and should be invoked by a Singapore enforcement court in the context of international commercial arbitration, at least in relation to a prior decision of a seat court regarding the validity of an award. In short, India was barred from relying on grounds to resist enforcement by the Singapore courts when the same grounds were previously raised by India and determined by the seat court.

The SGCA adopted the test, as established in Merck Sharp & Dohme Corp (Formerly Known As Merck & Co, Inc) v Merck Kgaa (Formerly Known As E Merck) [2021] SGCA 14 that follows the House of Lords case of Carl Zeiss Stiftung v Rayner & Keeler Ltd (No 2) [1967] 1 AC 853, that for transnational issue estoppel to apply, there must be three elements:

(a)There was a final and conclusive decision on the merits by a court of competent jurisdiction that has transnational jurisdiction over the party sought to be bound and not be subject to any defences to recognition. 

(b)There must be commonality of the parties to the prior proceedings and to the proceedings in which the estoppel is raised.

(c)The subject matter of the estoppel must be the same as what has been decided in the prior judgment.

The SGCA further justified its decision by providing the following reasons, amongst other:

(a)An enforcement court should ordinarily give effect to the prior decision of the seat court, as it was the parties who made the choice of the arbitral seat.

(b)Courts as part of an international legal order should respect each other's decisions and avoid duplication.

(c)The doctrine of transnational issue estoppel is part of the established doctrines of private international law in common law jurisdictions.

(d)Transnational issue estoppel is a flexible tool, sensitive to over-riding considerations of justice, and applicable to the context of a seat court's decision.

(e)The sensible application of the doctrine of transnational issue estoppel can avoid the problem of inconsistent judicial outcomes and limits the extent to which matters determined by a court of competent jurisdiction can be re-litigated, thus reducing the wastage of time, effort and resources.

Commentary

The SGCA decision mandates that parties are prevented from re-litigating issues in the Singapore enforcing court that have already been determined by a seat court of competent jurisdiction. The decision also upholds the principle of finality, aiming to prevent uncertainty and duplicity across different jurisdictions concerning the same issues.

Given that the decision originates from the Singapore apex court, its implications for a Malaysian entity are significant, particularly when dealing with a Singaporean entity or an entity with assets in Singapore. When parties, including a Malaysian entity, negotiate an arbitration agreement, heightened diligence is essential in determining the seat of arbitration. This diligence at the negotiation stage can aid parties in navigating potential challenges more effectively and contributing to the overall success and enforceability of the arbitration process, especially when there is a potential to enforce an award in Singapore.

In Malaysia, the doctrine of transnational issue estoppel has been the subject of several cases. A close examination of these cases will reveal that there is no unity of opinion (nor a detailed analysis of the law) with regard to the acceptance of transnational issue estoppel in the Malaysian courts:

  • Kasi s/o Arunachalam Chettiar v Ar Kaveri Achi [1998] 2 MLJ 751

  • Loo Chooi Ting v United Overseas Bank Ltd [2015] 8 CLJ 287

  • Ikumi Terada v Jemix Co. Ltd & Ors and other appeal [2019] MLJU 561

A leave question concerning the doctrine of transnational issue estoppel was once brought before the Federal Court but unfortunately, leave to appeal was not granted (see Federal Court Civil Application Nos. 08(f)-83-03/2021(W) & 08(f)-84-03/2021(W)).

The question of whether transnational issue estoppel can be raised premised on a foreign decision, remains a novel question of law that has to be clarified and answered by the Federal Court.

15 January 2024

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