The Framework and Margins of Transnational Issue Estoppel: The SAL Law Reform Committee Report (2023)

I. Introduction
Generally, the doctrine of issue estoppel comes into play when an issue of law or fact is determined conclusively in a court. This prevents the same issue from being relitigated between the parties. This doctrine operates even in transnational proceedings, if the parties try to relitigate the same issue in a different jurisdiction (i.e. the “foreign” jurisdiction). This is known as transnational issue estoppel.

Internationally, courts around the world, including in Singapore, will be confronted with issues concerning the potential preclusive effects of foreign judgments in pending local proceedings. The SAL Law Reform Committee’s recent Report on The Framework and Margins of Transnational Issue Estoppel (the “Report”) explores the extrinsic and intrinsic elements of this doctrine in Singapore.^[1]

Further, the Report highlights seven key potential outer limits that one should consider when seeking to invoke the doctrine in an appropriate case. It also seeks to provide a basis of reference from which principles of the transnational issue estoppel can be developed by courts in the future.

This article summarises the key parts of the Report. The full Report can be accessed here.

II. Basic framework underpinning transnational issue estoppel
The Report highlights that four conditions are generally required for domestic (as opposed to transnational) issue estoppel to come into play:

The (domestic) judgment was rendered by a court of competent jurisdiction;
The judgment is final and conclusive on the merits;
There is identity of parties; and
There is identity of subject matter.^[2]

Further, transnational issue estoppel, which engages concerns of state sovereignty and international comity, introduces additional layers of considerations, such as:

Whether the foreign court had international jurisdiction over the party said to be bound by the estoppel; and
Whether there is any defence preventing the recognition of the foreign judgment in the local proceedings.^[3]

The Report also separates the above conditions for transnational issue estoppel into “extrinsic” and “intrinsic” elements.

A. The extrinsic element
The extrinsic element refers to recognition of the foreign judgment in question.^[4] Under Singapore common law, requirements for the recognition of foreign judgments are: a final and conclusive decision; on the merits; by a court of competent and international jurisdiction; and that no defences against recognition apply.^[5]

(1) Final and conclusive foreign judgment
The finality and conclusiveness of a foreign judgment is defined by the lex fori, i.e. the law of the court in which the later proceeding is brought. A judgment is final and conclusive if it cannot be varied, re-opened or set aside by the court that delivered it or a court of co-ordinate jurisdiction, although it may be subject to appeal to a higher court.^[6] The court addressed must also consider what the law of the “originating” court says about the nature of the foreign judgment.^[7]

(2) Foreign judgment on the merits
Transnational issue estoppel can, in principle, arise in respect of foreign decisions on interlocutory matters, such as a positive finding of jurisdiction.^[8] Thus, there is no relevant distinction between ‘final’ and ‘interlocutory’ decisions in this context.^[9] Instead, what matters is whether there has been “a declaration or determination of a party’s liability and/or his rights or obligations leaving nothing else to be judicially determined”.^[10]

(3) Originating court had competent and international jurisdiction
International jurisdiction is found if the party said to be bound by the estoppel: (i) was present or resident in the state or territory of the foreign court when foreign proceedings were commenced; or (ii) had submitted or agreed to submit to the foreign court’s jurisdiction. Competent jurisdiction is determined by the originating court’s internal laws regarding subject matter jurisdiction, personal jurisdiction, and temporal jurisdiction.

(4) No defences against recognition of foreign judgment exist
No defences against recognition apply when: (i) the foreign judgment is not procured by fraud; (ii) recognition would not contravene Singapore’s public policy; and (iii) the foreign judgment was not obtained in proceedings contrary to the principles of natural justice.^[11]

B. The intrinsic elements
Two elements are required here: the identity of parties; and the identity of subject matter.^[12]

(1) Identity of parties
The identity of the parties is determined by reference to the lex fori.^[13] The Singapore courts generally adopt a broad view, looking past form to consider whether, in substance, the parties involved in the two sets of proceedings are effectively the same.^[14] What is needed is only the “principal players” in both proceedings to be effectively identical,^[15] such as when parties are privies to each other.^[16]

(2) Identity of subject matter
In Merck, the Court of Appeal (“CA”) clarified that the identity of subject matter requires the specific issue in respect of which estoppel is said to be founded to be identical to the issue decided in the prior proceedings.^[17]

Furthermore, the decision on the specific issue must be final and conclusive under the law of the originating court.^[18] Thus, the court addressed must also be satisfied that the foreign legal system recognises a doctrine of issue estoppel or a doctrine with the same underlying basis and operation which prohibits the re-opening of the issue.^[19]

III. The outer limits of transnational issue estoppel
The Report also explores seven potential outer limits to the doctrine, as explained below.

A. Territoriality of the foreign judgment
Transnational issue estoppel “should be applied with due consideration of whether the foreign judgment in question is territorially limited in its application”.^[20] If a foreign judgment lacked transnational impact, transnational issue estoppel would not arise before another national court.

B. Forum mandatory rules (also known as international mandatory rules)
The application of transnational issue estoppel is subject to forum mandatory rules (i.e. rules which apply “irrespective of the foreign elements of the case and irrespective of any choice of law rule”).^[21] Whether a particular provision is a forum mandatory rule is largely a question of statutory interpretation.^[22]

C. Issues that are procedural for the purpose of the conflict of laws
The CA in Merck accepted that transnational issue estoppel may fail to arise in respect of issues considered “procedural for the purpose of the conflict of laws”.^[23] First, a distinction must be drawn between substantive and procedural issues. One way is to distinguish whether the matter involves “the essential validity of a right” or “its enforceability”.^[24] Another possible view is to consider whether the matter in question cuts so closely to the root of the “recognition” court’s machinery of administration of justice such that it would be inappropriate to disregard the lex fori.^[25] Second, the issue must not merely be procedural, but procedural for the purpose of the conflict of laws.^[26]

The Report notes that in Lakshmi Anil Salgaocar, the CA held that where a foreign court had declined to stay its proceedings on forum non conveniens grounds, issue estoppel did not operate in subsequent Singapore proceedings involving an anti-suit injunction application between the same parties.^[27] The CA reasoned that identity of subject matter was not satisfied because “the test for anti-suit injunctions differs from that for stay applications on forum non conveniens grounds”.^[28] While Lakshmi Anil Salgaocar remains good law, a slightly different way to rationalise the decision is that the question of forum non conveniens is generally procedural for the purpose of the conflict of laws, and therefore incapable of giving rise to transnational issue estoppel. This approach has the benefit of putting to rest the question of whether Lakshmi Anil Salgaocar suggests that identity of subject matter must invariably fail the moment there exists any kind of difference between the legal tests applied by the originating and recognition court – and if so, whether this view is too narrow and technical.^[29]

D. Public policy
If an issue before the court addressed engages the fundamental public policy of the forum, transnational issue estoppel may not arise. There are two possible views: public policy engaged by being embedded as an essential test or analysis that the court must undertake (“the basic angle”); and public policy engaged for the court to fulfil its constitutional role in overseeing the administration of justice and safeguarding the rule of law (“the extended angle”).^[30] The Report also considers the situation where the foreign judgment contains errors in the application of law.^[31]

(1) The basic angle and the extended angle
An obvious example falling under the basic angle is where forum public policy considerations are or appear to be reflected in a forum mandatory rule (see, e.g. section 5(2) of the Civil Law Act 1909). On the other hand, the extended angle should call for greater caution, because of the wide range of situations where forum public policy can be sought to be invoked in practice. Some possible examples include:

Where the originating court is considered to have acted with “perversity in the ordinary sense of obstinately or dishonestly shutting one’s eyes to what one knows to be right”.^[32] Extreme examples of such conduct could include corruption or partiality.
Where the foreign judgment is found to have been “obtained by fraud”.^[33]
Where a more benign understanding of what constitutes “perversity” applies, in the sense that the “law of the foreign country applied in the foreign judgment is at variance with generally accepted doctrines of private international law”.^[34] However, it may be difficult to define “accepted doctrines of private international law” in practice. Additionally, different civilised countries may take different views on international law,^[35] and considerations of international comity may call for a cautious approach.^[36]

(2) Where the foreign judgment contains errors in application of law
A point which remains unsettled is whether a foreign judgment that is found to contain errors in the application of law – both non-Singapore and Singapore law – can give rise to transnational issue estoppel.^[37]

(i) Error in application of non-Singapore law
The CA in Merck left it an open question as to whether an error in the application of non-Singapore law would prevent transnational issue estoppel from arising. However, it gave a provisional indication that this could be “incompatible with our role as custodian of the rule of law within this jurisdiction to readily yield to a foreign judgment that appears to have been wrongly decided”.^[38] This is understandable when viewed through the lens of a judicial system that aspires towards the pursuit of justice and the upholding of the rule of law within its jurisdiction as categorical imperatives.^[39] It could also engender the application of the English Arnold exception^[40] in full force in respect of foreign judgments and domestic judgments alike.^[41]

However, this approach runs contrary to the traditional rule in Godard v Gray^[42] that a foreign judgment “is conclusive as to any matter thereby adjudicated upon and cannot be impeached for any error, whether of fact or of law”.^[43] It also appears to suggest a ground shift on a fundamental point of judicial policy as articulated by the CA in Hong Pian Tee that competent tribunals could very well come to different conclusions on the same facts, and seeking to evaluate which is more correct would be an “invidious exercise” which could lead to “judicial chauvinism”.^[44]

Additionally, where the originating court’s jurisdiction was undergirded by parties’ consent (e.g. by a choice of forum clause), this raises the question of why foreign court judgments should, if at all, be any more susceptible to review on the substantive merits than private arbitral awards where the principle of minimal curial intervention is axiomatic.^[45] Finally, doubts may also arise as to how a policy of common law curial intervention coheres with other leading common law jurisdictions’ jurisprudence, and modern trends and developments in private international treaty law.^[46]

(ii) Error in application of Singapore law
The Report notes that special consideration may nevertheless be warranted where the foreign judgment contains sufficiently serious and material errors in the application of Singapore law.^[47]

In Merck, the CA suggested that “existent” errors (i.e. where the foreign court clearly erred to begin with) and “retrospective” errors (i.e. where the foreign court adopted a view which subsequently turned out to be wrong as Singapore law developed) may be treated differently.^[48] However, the Report observes that the distinction between “existent” and “retrospective” errors may not be material in the context in which transnational issue estoppel is argued to arise, as opposed to enforcement proceedings.^[49]

In enforcement, a foreign judgment with a “retrospective” error may be enforceable because such an error may be regarded as a finding of Singapore law that could not have been faulted at the point when parties’ rights and liabilities were crystallised into a judgment debt, and not an error of substantive Singapore law.^[50]

On the other hand, transnational issue estoppel is typically raised in the course of live local proceedings where the merits of an underlying substantive dispute is to be determined by the Singapore court. In such cases, whether the error is “existent” or “retrospective” may not matter, since it is rightfully within the Singapore court’s competent jurisdiction to determine parties’ rights and liabilities as staked in the substantive live local dispute by interpreting substantive Singapore law as at the time of local proceedings.^[51]

Regardless, caution must be taken in assessing whether an operative error exists to begin with. The error cannot be a pure question of law with no impact on the outcome of the dispute.^[52] Additionally, errors in interpreting Singapore law should be distinguished from errors in applying Singapore law to the facts in a way that the court addressed would not have done – only the former type would qualify.^[53]

E. Timing of the foreign judgment
In Merck, the CA observed that the timing of the foreign judgment could limit the application of transnational issue estoppel in at least two ways:

Where there are multiple competing foreign judgments, the foreign judgment that is the first in time should be recognised for the purposes of creating an estoppel.^[54]
Where there is an inconsistent prior or subsequent Singapore judgment between the same parties, the foreign judgment should not be recognised.^[55]

However, the CA left open the question of the appropriate approach where a foreign judgment is handed down when Singapore proceedings on the same or substantially the same subject matter are pending.^[56] In such cases, a rule of non-recognition may incentivise the strategic initiation of pre-emptive Singapore proceedings to prevent the recognition of an impending foreign judgment.^[57] The CA observed in obiter that the Singapore courts should “[have] due regard to all the circumstances, including how the foreign judgment came to be issued within the particular time frame in question and whether there was undue haste or any action by a party that is suggestive of a deliberate attempt to pre-empt the recognition of the foreign judgment in Singapore”.^[58]

F. Party asymmetry
The CA in Merck highlighted that additional caution may be necessary in applying transnational issue estoppel against a party who was a defendant in the foreign proceedings, as opposed to a claimant.^[59] This was “[i]n view of the practical difficulties faced by a defendant in deciding whether to deploy full resources to defend a point in a relatively trivial case”.^[60] If proof of the point is expensive and troublesome, but the defendant foresees that the same point could potentially be raised later in a more important claim, it may be overly onerous to expect him to go to great trouble to forestall a possible plea of issue estoppel, since the second case may never be brought.^[61] Thus, transnational issue estoppel should not apply where a defendant can demonstrate bona fide reasons for deciding not to contest or fully contest the issue in the foreign proceedings.^[62]

The Report notes that while one can be sympathetic towards practical difficulties faced by defendants, courts should generally approach concerns with such “party asymmetry” with great care.^[63] For instance, it may be difficult to formulate a sufficiently stable and objective test to decide whether the claimant’s case in the foreign proceedings was indeed “trivial” or of “trifling importance”, such that the defendant’s subjective choice to defend it parsimoniously (if at all) was justified. In any event, the defendant should bear the burden of satisfying the court of the existence of such bona fide reasons.^[64]

G. Reciprocity from the jurisdiction of origin on the recognition of judgments
The CA in Merck also left it open as to whether reciprocity from the “originating” jurisdiction should be a precondition to Singapore’s recognition of foreign judgments at common law.^[65]

The CA observed that, on one hand, requiring reciprocity was “entirely consonant” with the rationale of comity, and the legislative stance taken in the Choice of Court Agreements Act 2016, the Reciprocal Enforcement of Foreign Judgments Act 1959 and the Maintenance Order (Reciprocal Enforcement) Act 1975.^[66] Conversely, the philosophy underlying the common law approach differs from that of the legislature – the former focuses on personal obligations and the conduct of the party sought to be bound by the foreign judgment, while the latter has broader considerations including international relations.^[67] On this basis, the common law does not typically require reciprocity.^[68]

The CA concluded with the provisional view that “the absence of reciprocity would, in practice, rarely be an obstacle to the recognition of a foreign judgment”, noting it appeared overall relatively uncommon for jurisdictions to bar according recognition to foreign judgments substantially.^[69]

The Report observes that there seems to be little reason to depart from the seemingly entrenched paradigm at common law that reciprocity is generally not required. If reform becomes necessary, these should be implemented through legislation rather than at common law.^[70]

IV. Conclusion
The Report concludes that the common law conflict of laws, and, by extension, the doctrine of transnational issue estoppel is complex and challenging. This Report hopefully serves as a starting resource for any development of the common law doctrine of transnational issue estoppel in appropriates case in the future.

– – – For a PDF version of this article, click here – – –

Written by: Isabelle Lau Xin Qi, 3^rd-Year LLB student, Singapore Management University Yong Pung How School of Law.

^[1] The Report will make references to the Court of Appeal’s decision in Merck Sharp & Dohme Corp (formerly known as Merck & Co, Inc) v Merck KGaA (formerly known as E Merck) [2021] 1 SLR 1102 (“Merck”), and the General Division of the High Court’s decision in EFG Bank AG, Singapore Branch v Surewin Worldwide Ltd and others [2022] 5 SLR 915 (“EFG Bank v Surewin”) (citing Merck), as well as other relevant caselaw.

^[2] Report at [5].

^[3] Report at [5].

^[4] While a necessary condition for transnational issue estoppel to apply, principles of recognition are of general application and not within the exclusive province of the doctrine.

^[5]See, e.g. Merck at [35].

^[6] Report at [10(a)], citing DSV Silo-Und Verwaltungsgesellschaft mbH v Owners of The Sennar [1985] 1 WLR 490 (“The Sennar (No 2)”) at 494, followed in The “Bunga Melati 5” [2012] 4 SLR 546 at [81].

^[7] Report at [10(b)], citing The “Bunga Melati 5” at [86].

^[8] Report at [11], citing Lakshmi Anil Salgaocar v Jhaveri Darsan Jitendra [2019] 2 SLR 372 (“Lakshmi Anil Salgaocar”) at [101].

^[9] Report at [11], citing Goh Nellie v Goh Lian Teck and others (“Goh Nellie”) [2007] 1 SLR(R) 453 at [28].

^[10] Report at [11], citing Goh Nellie at [28].

^[11] Report at [13], citing Poh Soon Kiat v Desert Palace Inc (trading as Caesars Palace) [2010] 1 SLR 1129 at [14].

^[12]The requirements of an identity of parties and subject matter are specific to – and thus ‘intrinsic’ – to the doctrine of transnational issue estoppel.

^[13] Report at [15], citing EFG Bank v Surewin at [53].

^[14] Report at [15], citing Koh Sin Chong Freddie v Singapore Swimming Club [2015] 1 SLR 1240 at [110].

^[15] Report at [16], citing EFG Bank v Surewin at [58]; Goh Nellie at [33].

^[16] Report at [17], citing Hunter v Chief Constable of the West Midlands Police [1982] AC 529 at [32].

^[17] Report at [18], citing Merck at [43].

^[18] Report at [19], citing Merck at [43].

^[19]Report at [20], citing Carl Zeiss Stiftung v Rayner & Keeler Ltd [1967] 1 AC 853 (“Carl Zeiss”) at 919.

^[20] Report at [23], citing Merck at [56].

^[21] Report at [26], citing Merck at [55].

^[22] Report at [27] states that examples of forum mandatory rules in Singapore include “penal, revenue and other public laws” (including certain laws of a “regulatory nature” such as the Securities and Futures Act 2001): Goldilocks Investment Co Ltd v Noble Group Ltd [2018] 5 SLR 425 at [10] and [13]; and section 5(2) of the Civil Law Act 1909 (which in simple terms provides that no action premised on a wager shall be brought or maintained in the Singapore courts for monetary remedies or otherwise).

^[23] Report at [29], citing Merck at [55].

^[24] Report at [30(a)], citing Star City Pty Ltd (formerly known as Sydney Harbour Casino Pty Ltd) v Tan Hong Woon (“Star City”) [2002] 1 SLR(R) 306 at [12].

^[25] Report at [30(a)], citing Goh Suan Hee v Teo Cher Teck [2010] 1 SLR 367 at [20]–[21].

^[26] Report at [32] states that questions of foreign limitations are not procedural for the purpose of the conflict of laws, as provided for in section 5 of the Foreign Limitation Periods Act 2012. The Foreign Limitation Periods Act 2012 (2020 Rev Ed) (Singapore) implemented the recommendations made by SAL’s Law Reform Committee in January 2011 in Yeo Tiong Min, Limitation Periods in Private International Law (Law Reform Committee of the Singapore Academy of Law, January 2011).

^[27] Report at [33].

^[28] Report at [33], citing Lakshmi Anil Salgaocar at [99].

^[29] Report at [38], citing Richard Garnett, “Recognition of jurisdictional determinations by foreign courts” (2019) 15(3) Journal of Private International Law 490 at 508–513.

^[30] Report at [36], citing Merck at [33].

^[31] Report at [40]–[47].

^[32] Report at [38(a)], citing Carl Zeiss at 917–918.

^[33] Report at [38(b)], citing Section 5(1)(a)(iv) of the Reciprocal Enforcement of Foreign Judgments Act 1959; section 14(b) of the Choice of Court Agreements Act 2016.

^[34] Report at [38(c)], citing Carl Zeiss at 922.

^[35] Report at [38(c)], citing Carl Zeiss at 922.

^[36] Report at [38(c)].

^[37] Report at [39], citing Merck at [58].

^[38] Report at [40], citing Merck at [63(a)].

^[39] Report at [40].

^[40] Arnold v National Westminster Bank plc [1991] 2 AC 93.

^[41] Report at [40], citing Merck at [63].

^[42] Godard v Gray (1870) LR 6 QB 139.

^[43] Report at [41], citing Hong Pian Tee v Les Placements Germain Gauthier Inc (“Hong Pian Tee”) [2002] 1 SLR(R) 515 at [12] and [14].

^[44] Report at [41], citing Hong Pian Tee at [28].

^[45] Report at [42], citing the example of Soh Beng Tee & Co Pte Ltd v Fairmount Development Pte Ltd [2007] 3 SLR(R) 86 at [59] and [65(c)].

^[46] Report at [42], referring to the examples of The Convention of 30 June 2005 on Choice of Court Agreements, and the Convention of 2 July 2019 on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters.

The Framework and Margins of Transnational Issue Estoppel: The SAL Law Reform Committee Report (2023)

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