The Russian Federation (Appellant) v Hulley Enterprises Limited (a company Incorporated in the Isle of Man) and others (Respondents)

Case summary

Case ID

UKSC/2025/0061

Parties

Appellant(s)

The Russian Federation

Respondent(s)

Hulley Enterprises Limited, Yukos Universal Limited, Veteran Petroleum Limited

Issue

Did the Court of Appeal err in holding that an exception to a foreign state’s right to adjudicative immunity under s 1 of the State Immunity Act 1978 can be established by an issue estoppel arising from a decision of a foreign court.

Facts

This case is about whether a foreign court’s findings that a State is not immune from the enforcement of an arbitral award should prevent the State from arguing the same point in the United Kingdom. On 18th July 2014 an arbitral tribunal issued three materially identical awards declaring that Russia had breached its obligations under Article 13(1) of the Energy Charter Treaty and ordering it to pay damages exceeding a total of US $50 billion plus interest to the claimants (the respondents to this appeal). On 10th November 2014 Russia commenced proceedings to set aside the awards in the courts of the Netherlands, the arbitral seat. It did so on various grounds, including challenges relating to the jurisdiction of the tribunal and the conduct of the arbitration. One such challenge was that the tribunal did not have jurisdiction because there was no binding arbitration agreement between the claimants and Russia (‘the no agreement issue’). In the meantime, on 30th January 2015 the claimants issued proceedings in England seeking the recognition and enforcement of the awards. The Russian Federation challenged this, arguing that it was immune from such jurisdiction pursuant to section 1 of the State Immunity Act 1978. The proceedings were stayed whilst Dutch proceedings continued. On 20th April 2016 the awards were set aside by the District Court of the Hague. The claimants appealed from that decision to the Hague Court of Appeal. In February 2020 the Hague Court of Appeal allowed the claimants’ appeal and reinstated the awards. Among other things, it rejected Russia’s challenge to the awards on the basis that there was no binding arbitration agreement between the claimants and Russia, holding there was such an agreement. This is the decision which is said by the claimants and was found by the judge to give rise to an issue estoppel. The Russian Federation appeal this decision to the Dutch Supreme Court. The judgment of the Dutch Supreme Court was delivered on 5th November 2021. The court upheld the Hague Court of Appeal’s rulings on the no agreement issue, though quashed the decision on other grounds. Following the handing down of the Dutch Supreme Court judgment, the claimants applied again to lift the stay of the English enforcement proceedings. In October 2022, Mr Justice Butcher acceded to that application in part, lifting the stay solely for the purpose and to the extent necessary for the resolution of the Defendant’s “no agreement” issue. On 1st November 2023 Mrs Justice Cokerill handed down the judgment finding that the Russian Federation was estopped from rearguing this point. On 12 February 2025 the Court of Appeal upheld this decision.

Date of issue

11 April 2025

Case origin

PTA

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