AIR FOYLE LIMITED & ANR. v CENTER CAPITAL LIMITED [2002] EWHC 2535 (Comm)

IN THE HIGH COURT OF JUSTICE
QUEENS BENCH DIVISION
COMMERCIAL COURT
[2002] EWHC 2535 (Comm)Case No Case No: 2002/420Venue Royal Courts of Justice, Strand, London, WC2A 2LL
Between
AIR FOYLE LIMITED & ANR.ClaimantsCENTER CAPITAL LIMITEDDefendant
Before
Mr Justice GrossMr Bernard Eder QC & Mr Richard Millett (instructed by S J Berwin, and Richard Slowe (Solicitor-Advocate) of S J Berwin) for the ClaimantMr Philip Shepherd & Mr Bajul Shah (instructed by Hill Taylor Dickinson) for the DefendantHearing dates : 4 November 2002 – 6 November 2002Date 3 December 2002
[1]Mr Justice Gross : INTRODUCTION This case concerns an Antonov AN124-100 aircraft ("the aircraft"). The aircraft is presently at Manston in Kent, where it has been since October 2001. It is subject to a Consent Order made by Moore-Bick,J on 26 th April, 2002, which prevents its removal from the jurisdiction.[2]The First Claimant ("AF") claims ownership of the aircraft on the basis of a purchase at an auction held in The Netherlands ("Holland" or "the Dutch", as appropriate) on the 4 th December, 2000, pursuant to an order made by the Dutch Court, dated 7 th June, 2000. The aircraft was physically located in Holland, on the 7 th June and the 4 th December, 2000 and when the aircraft was subsequently delivered to AF. The role of the Second Claimant is immaterial and no more need be said of it.[3]The Defendant ("CC") claims ownership on the basis of having purchased the aircraft from its former owner, a Russian Federation ("Russia" or "the Russian", as appropriate) company called Ayaks Closed Joint Stock Company ("Ayaks"), pursuant to a contract of sale, governed by Russian law, dated 20 th October, 2000. It is to be noted that the aircraft is and was at all material times registered in Russia.[4]As will be appreciated, the fundamental issue between the parties is who, as between AF and CC, has valid title to the aircraft.[5]This is the trial of Preliminary Issues, originally ordered by Morison,J. on the 6 th August, 2002, in the following terms:
"1. There shall be tried as a preliminary issue…. the following question namely, on the assumption only for the purposes of the preliminary issues that the judgments of the Russian courts relied upon by the Defendant were obtained regularly, in accordance with due process and were not perverse, such that the enforcement and recognition of such judgments by this court does not offend against English public policy, "
Whether any of the claims and/or causes of action or defences advanced by or on behalf of the First Claimant have already been determined expressly or by necessary implication in previous legal proceedings between the First Claimant and the Defendant by the Courts of The Netherlands and/or the Courts of the Russian Federation." 2." If the answer to the question posed at 1 above is "yes", which are the issues and/or causes of action, what is the effect if any of such determination and does it make a difference whether the Dutch court would not have recognised and enforced the Russian judgments ?"[6]The trial in this Court began on Monday 4 th November. On the morning of Tuesday 5 th November, I was informed that certain of the Russian judgments hitherto relied on by CC had been, as it would appear, set aside by the Supreme Arbitrazh Court of the Russian Federation ("the SAC") and returned to be re-heard at first instance. Such re-hearing will not take place for some time. The written judgment of the SAC is not yet available. It is further possible (but not certain) that the judgment of the SAC will have ramifications for the other Russian judgments to which reference will be made. Understandably, the trial adjourned for a short time so that consideration could be given as to whether it should proceed. In the event, it was agreed that it should but on the basis of the assumption that the Russian judgments in question had not been set aside. Effect was given to this assumption by incorporating in the Preliminary Issues, the following wording "as existing as at 1 st November, 2002" in paragraph 1 thereof, so that that paragraph now reads as follows: "1. There shall be tried as a preliminary issue…. the following question namely, on the assumption only for the purposes of the preliminary issues that the judgments of the Russian courts, relied upon by the Defendant as existing as at 1 November 2002 were obtained regularly…." italics added; the paragraph then continues as set out above. By proceeding in this manner, the available "slot" has been utilised and it has been possible to determine whether AF is in any event entitled to succeed, even on the most favourable assumption for CC, namely the survival of all the Russian judgments in question.[7]It will further be apparent from the terms of the Preliminary Issues that this trial proceeds on the assumption that both the Dutch and the Russian proceedings were (procedurally) valid. I turn next to the factual history. THE CHRONOLOGY[8](I) Developments in Holland and a Russian contract of sale: On the 19 th May, 2000, the bailiff for the Cantonal Court of Maastricht (a Mr. Sinkiewicz) impounded or arrested the aircraft and appointed a Mr. Marinus as the "custodian" of the aircraft. The aircraft was arrested at the request of Bank Imperial Inc. ("BI" or "the arrestor"), a Russian Bank, in respect of a mortgage debt, unpaid by Ayaks (the then owner of the aircraft). The aircraft was then physically located at Maastricht airport.[9]The position and status of a "custodian" were described by the Dutch Law experts, as follows: (1) In his Affidavit, Mr. Van der Wiel, the Dutch Law expert, called by CC, said this:
" The task of a custodian is to look after the arrested object in the interest of the arrestor … to pay the expenses, caused by the arrest, like in this case the costs, charged by the airfield for the fact that the arrested plane was standing at the airfield. Dutch law then gives the custodian the right to sell the arrested object to recover those costs…." (2) In cross-examination, Prof. De Ly, the Dutch law expert called by AF, said that while the custodian was appointed at the behest of the arrestor, he was designated by the Court; he did not have the "public office" functions that notaries or bailiffs have in Holland; however: " ….. he is not a contractual custodian. He is a judicial custodian. He is appointed by a court and works primarily under the authority of a court."
[10]On the 25 th May, 2000, the custodian, Mr. Marinus, petitioned the Maastricht District Court under Art. 858 of the Dutch Civil Code to sell the aircraft, because of unpaid custody and other charges and because of safety considerations (the aircraft, where then situated, constituted an obstruction). As to the question of costs, the Petition said this:
" The petitioner-custodian does not have sufficient funds to pay the expenses accumulated to date, that is parking money and for other operations of the airport, or even to fund in the short-term the expenses […of relocation..] .. The distrainer [ie., BI] has not provided any money to the petitioner, or for that matter any guarantee in respect of the above-mentioned expenses. The distrainer has intimated that he is unable to do this. The embargo was laid on the aeroplane as security for the claim of the bank on the owner of the aeroplane on account of the funding provided prior to the purchase of the plane." "
It is important for all of the parties to achieve the sale of the plane soon. Numerous legal procedures are pending with respect to the aeroplane, which can go on for years for your court and for judicial instances in other countries (Russia, England). There is no prospect of the procedures being finalised within a reasonable period of time. And all the time the custody of the aeroplane, no matter where it is located, is clocking up. Selling the aircraft will cost money too, but these are one-off costs. The proceeds, after deduction of expenses, will be deposited in the … fund, and the parties may then arrange for the proceeds to be distributed. After this no further expenses will be incurred, which would reduce the value of the object, quite the contrary, the sum of money deposited in the … fund can earn interest."[11]Pausing there, Art. 858 of the Dutch Civil Code provided as follows: " 1. If the costs of sequestration are not paid to the sequestrator in good time, he may sell the sequestered property in a manner to be determined by the president of the District Court at his request; the proceeds shall take the place of the property sequestered and shall be paid into court for the benefit of the interested party after deduction of the costs of sequestration and of the sale. 2. If the sequestration is based on an attachment the president shall not grant the request until after the judgment debtor(*) has been called for a hearing. 3. There shall be no appeal from a positive award by virtue of this section." (*) Although the words "judgment debtor" appear in the translation of Art. 858 available to the Court, it became plain during the hearing that Art. 858 was applicable in situations (such as this) where there was no judgment or judgment debtor. Indeed, as Mr. Van der Wiel remarked, the Art. 858 procedure was akin (a matter to be considered further) to the procedure utilised in the English Admiralty Court when making an order for the sale, pendente lite , of a vessel under arrest. For present purposes, accordingly, it is preferable to read the words "judgment debtor" as "the owner" or "those interested in, the property under arrest".[13]Following various applications to the Dutch Court, the details of which are irrelevant for present purposes, the auction was first suspended and then postponed to a date not before the 1 st December, 2000.[14]By a contract of sale, governed by Russian Law, dated 20 th October, 2000, the aircraft was sold by Ayaks to Centre Capital ("the 20 th October contract"). It is averred by CC (and must be assumed for the purposes of this trial) that the purchase price was US$29 million and that this sum was effectively applied to discharge the mortgage debt owed by Ayaks to BI.[15]On the 27 th October, 2000, the Russian Federal Aviation Authority ("the Russian FAA") entered CC into the Russian Register as the owner of the aircraft.[16]On the 1 st December, 2000, CC applied to the Hertogenbosch District Court for an injunction, prohibiting the auction from proceeding, revoking the appointment of Mr. Marinus as custodian and ordering the surrender of the aircraft to CC. The basis for these applications was that BI's mortgage debt had been discharged, the arrrest was (therefore) lifted and CC was now the owner of the aircraft, pursuant to the 20 th October contract. The Court ruled that it was not competent to hear CC's applications to revoke the appointment of Mr. Marinus and to order the surrender of the aircraft; the Maastricht District Court was the competent court in respect of those applications. The (Hertogenbosch) Court rejected the CC application to injunct the auction from proceeding; in short, Mr. Marinus' costs remained unpaid and no security had been provided; in any event the sale proceeds would be held in a fund and CC was itself free to bid at the auction.[17]The auction took place on the 4 th December, 2000 ("the 4 th December auction"). On the available material, AF acquired the aircraft for a price of US$6,000,001.00.[18]On the 15 th December, 2000, CC petitioned the Maastricht District Court to impound and attach the aircraft. CC maintained that it was the owner of the aircraft pursuant to the 20 th October contract; in the light of the rejection at the 4 th December auction of a bid of US$15,000,000 from a Russian company, Central Selling Organisation ("CSO"), said to be a "branch" of CC, the auction sale was null and void; in any event, AF was not a "rightful purchaser in good faith". The petition was dismissed. The succinct ruling of the President of the Court, dated 22 nd December, 2000, speaks for itself ("the 22 nd December ruling"):
" CC has to provide concise evidence of the merits of its claim. This implies that CC should prove in the present case that CC is the owner of the aircraft … and not AF which purchased the aircraft as an admitted bidder at the auction of 4 December 2000. CC did not succeed in providing this evidence. By judicial order of the president of 7 June 2000, authorisation has been granted to the legal custodian of the aircraft, H.M.J.M. Marinus, to sell the aircraft at an auction. By judicial decision of 1 December 2000, the president of the court of Den Bosch dismissed the claim of CC against Marinus to prohibit the auction. The president upholds the grounds of this decision … It can therefore be assumed that the custodian of the plane was entitled and authorised to auction the aircraft. CC alleges that the aircraft was wrongfully awarded to AF during the auction and not to CSO which put in a higher bid than AF at the auction. This argument does not hold …the bid of CSO was not admitted as CSO used a bid number and bid form which were not allocated to [..it..] but to a different body corporate, to wit Ruslan 003 Ltd. The president deems it acceptable that CSO was rightly excluded from the bidding on the aforementioned grounds. Therefore it is deemed that the aircraft was legally sold and delivered to AF and that the former has become the legal owner thereof."
[19]Conclusions as to Dutch Law: As already foreshadowed, evidence was heard from two Dutch Law experts, Prof. De Ly, called by AF and Mr. Van der Wiel, called by CC. Prof. De Ly has a distinguished academic curriculum vitae; Mr. Van der Wiel has much practical experience. In the event, there was by the conclusion of their evidence and taking into account their very helpful Joint Report of 1 st November, 2002, relatively little, of substance, between them. Without more ado, it is convenient to set out here, the relevant conclusions as to Dutch Law which flow from their evidence:(1) The 7 th June order, giving the custodian authority to sell the aircraft pursuant to Art. 858 of the Dutch Civil Code, was a necessity for the custodian; it furnished his authority to sell the property under arrest. It did not, however, by itself transfer any property.(2) Property in the aircraft passed when sold and delivered pursuant to the 4 th December auction, always assuming (not an issue for the present trial) the propriety of the auction. As Prof. De Ly put it, this sale and delivery constituted the fulfilment of the critical "if and when" condition for the transfer of title.(3) Unlike English Law, Dutch Law has no concept of in rem proceedings or, for that matter, of contempt of court. That said, an arrest of property cannot be frustrated by a subsequent sale of that property by the arrestee, whether because the arrest "immunises" the property (Prof. De Ly) or because as a practical matter the arrestee, who cannot remove the property, will not be in a position to deliver it and therefore will not be able to transfer property (Mr. Van der Wiel). For present purposes, the agreed conclusion of the experts suffices and it is unnecessary to explore the difference in their reasoning further. At all events, it is clear, by virtue of Art. 453a of the Dutch Code of Civil Procedure that a transfer of property cannot be invoked against the arrestor after the arrest save in respect of third parties who have taken delivery in good faith. The experts were in any event agreed that CC knew of the arrest and therefore could not qualify as a third party taking delivery in good faith.(4) Moving from the arrest to the authority or order to sell and its consequences: (i) the 7 th June order was binding on the world ( erga omnes ) in that the authority to sell conferred by it could not be affected by any subsequent sale by the owner of the arrested property; (ii) the title passed under the auction likewise had effect erga omnes , in that it could not be frustrated by any third party claims coming into existence after the arrest; (iii) once the aircraft was sold, it was replaced by the proceeds and the existing creditors obtained rights against the proceeds in place of rights against the aircraft.(5) Russia not being a party to the Geneva Convention 1948, title to the aircraft would (probably) pass by sale and delivery as with any other movable situated in Holland.(6) The 22 nd December ruling did not give rise to any res judicata estoppel.(7) As to the 7 th June order, according to Prof. De Ly's evidence (which I accept), "this is not a res judicata issue; it is an erga omnes issue".(8) It followed from all the above, at least as a matter of probability (which is sufficient for present purposes) that AF had acquired good title to the aircraft under Dutch Law pursuant to what could properly be described as a judicial sale or judicial auction, always assuming the propriety of the 7 th June order and the 4 th December auction.(9) Again, at least as a matter of probability, the Dutch Court would not recognise or enforce an inconsistent Russian judgment.[20](II) Russian Court proceedings: There were four sets of Russian proceedings, which may conveniently be considered under the following headings:(1) The first Ayaks proceedings;(2) The principal case;(3) The registration proceedings;(4) The second Ayaks proceedings. I take them in turn.[21](1) The first Ayaks proceedings: These proceedings can be taken very shortly. Essentially, they involved CC, in proceedings commenced on the 4 th January, 2001, claiming specific performance against Ayaks of the 20 th October contract. It appears that Ayaks did not file a statement of defence and admitted the claim during the oral hearing. Judgment was given in CC's favour on 27 th February, 2001. For its part, AF filed an application to intervene on 28 th November, 2001. That application was rejected by reference to the decisions in the principal case ((2) below); it is therefore unnecessary to say more of the first Ayaks proceedings.[22](2) The principal case: These were proceedings commenced by CC, on the 19 th February, 2001, in the Arbitral Court of the City of Moscow, claiming against AF a declaration that it (CC) was the owner of the aircraft and an order that AF deliver up the aircraft to CC. An application by AF for an adjournment of the hearing was rejected, on the ground that it had been duly notified thereof. In the event, AF did not appear at the hearing on the 21 st March, 2001. By a judgment dated 27 th March, 2001 ("the principal judgment"), the Court held that CC had title to the aircraft and ordered AF to deliver it up. The Court's reasoning proceeded as follows: first, as to any decisions of the Dutch Courts:
" Pursuant to the Decree of the Presidium of the USSR Supreme Council of 21.06.1988 No. 9131-XI "
On recognition and enforcement in the USSR of the foreign judicial and arbitral decisions" foreign judgments shall be recognised in the USSR if it is provided by the international treaty of the USSR. There is no international treaty between the USSR or Russia and the Netherlands on the recognition of judgments, therefore the decision of the Dutch court dated June 7, 2000 allowing conduction of the auction for the sale of the above aircraft does not have legal effect on the territory of the Russian Federation." Secondly, with Dutch law, proceedings and judgments thus disregarded, the Court was satisfied that, in accordance with Russian law, CC had established its title to the aircraft. Inter alia , it may be noted that the Court treated the aircraft as an immovable, situate in Russia, on account of its Russian registration.[23]AF's appeal against the principal judgment was dismissed by a judgment dated 29 th October, 2001. The reasoning of the Appellate Court was essentially to the same effect as that contained in the principal judgment.[24]AF next sought, in effect, review or "cassation" of the principal judgment and the (above) appellate judgment. This application was dismissed by a ruling of the Federal Arbitral Court of Moscow District, dated 13 th December, 2001. This Court was satisfied that as the aircraft was registered in Russia, it had Russian nationality and therefore it could not be said that the lower courts had lacked subject-matter jurisdiction. AF's Protest against this ruling to the Presidium of the High Court of the Russian Federation was pending, prior to the 5 th November, 2002 decision of the SAC, already referred to, which set aside the principal judgment, the appellate judgment and the cassation ruling.[25](3) The registration proceedings: These were proceedings brought on 28 th November, 2001 by AF against the Russian Ministry of Transport, with CC joined as Third Party, to "recognise [the] invalidity of the registration" of the aircraft in the name of CC. By a judgment dated 28 th January, 2002, the Arbitral Court of the City of Moscow dismissed AF's claim. As is apparent from the judgment, the Court's reasoning is indistinguishable from that contained in the principal judgment.[26]By way of a complaint lodged on 27 th February, 2002, AF appealed this decision but the appeal was dismissed by a judgment dated 18 th April, 2002. The appellate court found no grounds for the "alteration or annulment" of the decision at first instance. It is furthermore plain and not, as I understood it, disputed by CC, that the reasoning of the appellate court was the same as that deployed by the court below; in short, the reasoning here too turned on the principal judgment. As I understand it, AF sought cassation of these judgments but that complaint was still pending at the time of the SAC decision of 5 th November, 2002.[27](4) The second Ayaks proceedings: In these proceedings, commenced on 3 rd December, 2001, AF was the Claimant and CC and Ayaks were the Defendants. The Russian Ministry of Transport was joined as Third Party. AF sought to have the 20 th October contract (between Ayaks and CC) annulled and, consequentially, to have the registration of the aircraft in CC's name annulled. By a judgment dated 1 st March, 2002, the Arbitral Court of the City of Moscow dismissed the claim, relying on the principal judgment. AF's appeal was dismissed, by a judgment dated 14 th August, 2002, for the same reasons.[28]Russian Court proceedings – summary: It may be helpful to draw some threads together on the Russian Court proceedings:(1) Insofar as it may matter, while AF was the Respondent in the principal case, it was the Claimant in both the registration proceedings and the second Ayaks proceedings.(2) Questions of Dutch law, the proceedings in the Dutch Courts and the judgment(s) of the Dutch Courts were not considered in the Russian Court proceedings, save to the extent that they were noted and disregarded on the ground of the absence of a treaty providing for the recognition of Dutch judgment(s) in Russia. This disregard of the Dutch judgment(s) was central to the reasoning of the Russian Courts, not only in the principal case but also in the registration and second Ayaks proceedings.(3) It was not in dispute that the only issue determined by the Russian Courts (other than to disregard the Dutch proceedings) could fairly be characterised as follows: as a matter of Russian law, CC has good title to the aircraft.(4) Again, insofar as it may matter, Russian law treats the aircraft as an immovable, situate in Russia by reason of its Russian registration, regardless of its physical location at any point in time.[29]A factual footnote: By way of factual footnote – the matter is otherwise at least largely irrelevant for the purposes of this trial – at some stage after the auction the aircraft had been taken by AF to the Ukraine. It was apparently entered on the Ukrainian Register, notwithstanding that it had not been de-registered from the Russian Register. In late 2001, the aircraft was flown from the Ukraine to Manston (where, as will be recollected, it remains), according to the AF pleaded case, so as:
" To bring the Aircraft into a jurisdiction where the judgments of the Russian court, which Air Foyle allege were subject to grave procedural irregularities, would not be automatically enforced but subject to further examination by the local court."
THE RIVAL CASES IN OUTLINE[30]The rival cases may be shortly summarised. For AF, Mr. Eder QC submitted that the Court should begin at the beginning and proceed chronologically. The matter began in Holland and, on AF's case, ended in Holland. Under English conflict of laws rules, the aircraft was a movable, situate at all material times in Holland. As a matter of Dutch law, it was plain that AF emerged with title to the aircraft. Dutch law was decisive or at least of the first importance:(1) because English law recognised the transfer of title to movable property valid and effective by the lex situs of the movable at the time of the transfer;(2) (if need be) because the Dutch "judicial sale" of the aircraft, gave AF a title, good erga omnes;(3) because, the jurisdiction of the Dutch Court as a "Brussels Convention" court could not be investigated by the English Court and judgments or orders thereof must be recognised under Art. 25 of that Convention. Accordingly, unless the outcome under Dutch law was "trumped" by a Russian judgment(s) giving rise to a res judicata estoppel, the fact that AF was entitled to the aircraft under Dutch law was an end to the matter. CC was unable to show, the burden being on it to do so, that the Russian proceedings gave rise to any res judicata estoppel, because: (i) there was no room for any such estoppel, which could here only serve to undermine a valid and effective transfer of title under Dutch law; (ii) there was no estoppel on the facts, given the true scope of the Russian judgments; the issue determined in the Russian proceedings (title under Russian law, in disregard of the Dutch judgments or orders) was not the same as the issue arising in the English proceedings; (iii) if AF was wrong so far, any judgment in the Russian proceedings which could otherwise have given rise to a res judicata estoppel was defeated by the earlier competing 7 th June order of the Dutch Court; (iv) if AF was wrong on everything else, the decision of the Russian Courts that CC had title to the aircraft was "perverse" as contrary to the general law of nations and would not therefore, in the English Court, give rise to a res judicata estoppel.[31]For CC, Mr. Shepherd underlined that the right starting point lay with the terms of the Preliminary Issue and that it was important that the discipline imposed by the Preliminary Issue should be respected. It was of course true in a pragmatic and realistic sense that the fundamental issue between the parties was which of AF or CC had title to the aircraft; that said, the terms of the Preliminary Issue served to emphasise that this trial was not concerned with the English Court seeking to re-try that issue. This trial was instead concerned with the question of whether issues had already been determined for or against the parties in final and binding judgments of a court of competent jurisdiction. As to that question, Mr. Shepherd contended that decisions of the Russian Courts had determined that CC not AF had title to the aircraft; those decisions were on the merits and given by a Court of competent jurisdiction. In this regard, Mr. Shepherd stressed the important role played by registration in the ownership and operation of aircraft. Moreover, while Mr. Shepherd relied on the principal judgment, the estoppel on which he relied was also to be found in the judgments (at first instance and on appeal) in the registration proceedings; it was to be recollected that AF was the Claimant in those proceedings. Having chosen to litigate in Russia, AF could not complain as to the reasoning of the Russian Court, nor as to the system of law applied by that court, nor as to the conclusion reached by it. It was not open to AF now to re-litigate the question of title in England; that would be forum shopping of an invidious kind. The estoppel created by the Russian judgments could be defeated by an earlier competing judgment of the Dutch Court but there were no such prior, competing, final judgments in proceedings involving the same parties. Accordingly, AF needed but could not point to a judgment in rem in Holland in order to defeat the estoppel. Finally, Mr. Shepherd submitted that even if there was no issue estoppel or cause of action estoppel, it was an abuse of process for AF to re-litigate issues here which had already been litigated in Russia.[32]I was grateful to both Mr. Eder QC and Mr. Shepherd for their arguments and, if I may say so, to their respective teams for the considerable background work that had obviously been undertaken. Before proceeding to a discussion of these arguments and to my conclusions, it is first necessary to record the existence and resolution of certain miscellaneous applications. MISCELLANEOUS APPLICATIONS[33]The application by AF to "debar" CC from being heard on the trial of the Preliminary Issue: This application relates to Orders made by Langley,J. on the 17 th and 29 th October, that the complete copy set of technical documents relating to the aircraft be provided by CC to agents for AF's solicitors and that, failing such compliance, AF be at liberty to apply to have CC debarred from being heard at this trial. At first blush, not least given evidence served by CC itself to the effect that it had provided such documentation as was in its possession (but not a complete set), it appeared that CC was in breach of those orders. Manifestly, the AF application to debar CC from being heard was capable of consuming much of the time available for the hearing of the Preliminary Issue. That seemed undesirable. Conversely, it was unacceptable that CC should fail to comply with Orders of the Court (if it has so failed) and that Court time should be wasted considering the Preliminary Issue should a subsequent application to debar prove successful. In the event the matter was resolved, at least for the purposes of this trial, pursuant to an Order dated 6 th November, agreed by counsel to the effect that:(1) CC undertook to apply to the Court as soon as possible to vary the above Orders of Langley,J.;(2) there would be no order on AF's application to debar CC from being heard on the trial of the Preliminary Issue, save that the costs of that application would be reserved to the hearing of CC's application to vary.[34]AF's application to apply to amend its Reply and Defence to Counterclaim: In the course of the trial AF applied for leave to amend its Reply and Defence to Counterclaim; the application was opposed by CC; I granted the leave sought. Certain "tidying up" amendments can be put to one side. The controversy was occasioned by those amendments which, to put it no higher, "upgraded" the importance attached by AF to the 7 th June order and asserted its in rem nature and (wihout warning) abandoned AF's case in respect of the 22 nd December ruling. It is fair to CC's objection to record that the amendment came late in the day, that the provisions of the CPR are there to be obeyed and that there was understandable disquiet in the CC "camp" as to the manner in which Dutch Law evidence came to be adduced in report form without the nature of the controversial amendments having been openly foreshadowed. That said, it was to be noted that(1) at least to an extent, the 7 th June order had always been a part of the AF case;(2) CC did not aver any prejudice resulting from the late development of AF's case in this regard, save possibly as to costs;(3) CC disclaimed any need for an adjournment to deal with this change in or development of AF's case. In all the circumstances, I was satisfied that it was just and consistent with the overriding objective of the CPR to give leave for the amendments. Naturally, all CC's points as to costs are reserved. DISCUSSION AND CONCLUSIONS[35]General considerations: I begin with a number of general considerations which it is right to take into account:(1) Mr. Shepherd submitted that it was wrong and would be futile to look for "angels" (as he put it). I agree. The Preliminary Issues are proceeding on the basis of assumptions as to the propriety of the proceedings and procedures in both Holland and Russia. Plainly, were those assumptions to be removed, serious questions might arise, not least given the vast discrepancy between the price allegedly paid for the aircraft in Russia (US$29 million) and Holland (US$6 million odd). In short, "merits" in a simplistic sense are excluded from the Preliminary Issues and there can be no pre-judging where they might lie in any subsequent trial.(2) By way of a point of a somewhat different nature, Mr. Shepherd submitted that AF was engaged in objectionable "forum shopping". I am prepared to assume (without deciding) that there was at least an element of force in this submission, arising from the circumstances of the aircraft's departure from the Ukraine and its flight to this country, to which reference has already been made. To the extent that it matters with regard to the Preliminary Issues, forum shopping is not to be encouraged.(3) Still further, Mr. Shepherd underlined the importance of the State of registry, in connection with aircraft. Such importance is plain from the Convention on International Civil Aviation, Signed at Chicago on 7 December 1944 ("the Chicago Convention"). Thus, by way of examples: aircraft have the nationality of the State in which they are registered (Art. 17); an aircraft cannot be validly registered in more than one State (Art. 18); the registration or transfer of registration of aircraft in any contracting State shall be made in accordance with its laws and regulations (Art. 19); every aircraft of a contracting State engaged in international navigation shall carry (inter alia) a certificate of airworthiness (Art. 29) issued or rendered valid by the State in which it is registered (Art. 31). As it seems to me, such considerations may properly be said both (i) to emphasise the importance of Russia in these proceedings, as the State of registry of the aircraft at all material times and (ii) to explain why it was that, as a practical matter, AF should have sought to participate in or even institute proceedings in Russia; this was not some frolic on the part of AF.(4) For his part, Mr. Eder placed considerable weight on the importance of court sales, whether of ships or, analogously, aircraft, conferring on purchasers a clean title (free of liens, charges and encumbrances), good against the world. In my view, he was right to do so. The underlying policy considerations emerge clearly from the judgment of Hewson,J. in The Acrux [1962] 1 Lloyd's Rep. 405, at p. 409:
" Were such a clean title as given by this Court to be challenged or disturbed, the innocent purchaser would be gravely prejudiced. Not only that, but as a general proposition the maritime interests of the world would suffer. Were it to become established, contrary to general maritime law, that a proper sale of ship by a competent Court did not give a clean title, those whose business it is to make advances of money in their various ways to enable ships to pursue their lawful occasions would be prejudiced in all cases where it became necessary to sell the ship under proper process of any competent Court. It would be prejudiced for this reason, that no innocent purchaser would be prepared to pay the full market price for the ship, and the resultant fund, if the ship were sold, would be minimised and not represent her true value…….. …. This Court recognises proper sales by competent Courts of Admiralty, or Prize, abroad – it is part of the comity of nations as well as a contribution to the general well-being of international maritime trade."
[36]Res Judicata Estoppel: I come next to res judicata estoppel. In the nature of the present case questions potentially arise concerning both cause of action and issue estoppel. There are of course differences between the two (see, for example, Arnold v National Westminster Bank plc [1991] 2 AC 93, esp. at pp.104 et seq ) but, as it appears to me, these do not matter for the purposes of this trial. I therefore proceed to summarise the features of res judicata estoppel relevant for present purposes but without pausing to explore differences between cause of action and issue estoppel: (1) The requirements of issue estoppel were authoritatively laid down by Lord Brandon in The Sennar (No.2) [1985] 1 WLR 490, at p.499, as follows:
" …. three requirements have to be satisfied. The first requirement is that the judgment in the earlier action relied on as creating an estoppel must be (a) of a court of competent jurisdiction, (b) final and conclusive and (c) on the merits. The second requirement is that the parties (or privies) in the earlier action relied on as creating an estoppel, and those in the later action in which that estoppel is raised as a bar, must be the same. The third requirement is that the issue in the later action, in which the estoppel is raised as a bar, must be the same issue as that decided by the judgment in the earlier action."
As to the requirements for cause of action estoppel, see Arnold (ibid) . (2) The principles upon which cause of action and issue estoppel are based have been recently and, again, authoritatively set out in Johnson v Gore Wood [2001] 2 WLR 72 (HL), esp. per Lord Bingham, at p.89 and Lord Millett, at pp. 117-118. Still more recently, in Specialist International Group v Deakin [2001] EWCA Civ 777 (unreported, transcript dated 23 rd May, 2001), Aldous, LJ said this (at para. 10):
" The principles upon which cause of action and issue estoppel are based are as stated by Lord Bingham: there must be finality in litigation and a litigant should not be twice vexed on the same matter…. They [i.e., cause of action and issue estoppel] are .. forms of abuse of process. That is misuse of the court's procedure in a way which would be manifestly unfair or otherwise bring the administration of justice into disrepute amongst right thinking people …. However it is important to bear in mind that the application of those principles involves the denial of the right of access to the courts conferred by common law and is a right protected by the European Convention for the Protection of Human Rights. Thus such principles should only be applied where the circumstances are such that their application is necessary to prevent misuse of the court's procedure amounting to an abuse of process."
In this regard it is to be recollected that, in Carl Zeiss Stiftung v Rayner & Keeler Ltd. (No.2) [1967] AC 853, Lord Upjohn observed (at p.947): " …. All estoppels are not odious but must be applied so as to work justice and not injustice …." (3) It is well-established that an issue estoppel can be created by a judgment of a foreign court, provided that the requirements set out in the passage of Lord Brandon's speech in The Sennar (No.2) (supra) are satisfied. Moreover, issue estoppel operates in such circumstances regardless of whether or not the English Court would regard the reasoning of the foreign judgment as open to criticism. That said, as underlined by Lord Reid in Carl Zeiss (supra) , at p.918, there is a need for proceeding with caution in any particular case when dealing with the possibility of an issue estoppel based on a foreign judgment, not least for reasons of lack of familiarity. (4) With regard to competing foreign judgments, the position was summarised in the headnote to Showlag v Mansour [1995] 1 AC 431 (PC), as follows: " …..the correct general rule was that where there were two competing foreign judgments, each pronounced by a court of competent jurisdiction and final and not open to impeachment on any ground, the earlier of them in time must be recognised and given effect to the exclusion of the later" (5) It is probably the case that a foreign judgment will not create an issue estoppel if it is (i) perverse, in the sense that it is at variance with generally accepted doctrines of private international law: see, Simpson v Fogo (1862) 1 H&M 195; Carl Zeiss (supra) , at pp. 917-8 and 922; and/or (ii) if the public policy to which it gives effect is contrary to English public policy: Vervaeke v Smith [1982] 2 All ER 144 (HL), at pp. 151-2 and 157-8. I state this proposition somewhat tentatively given the concerns which have been expressed that if (i) and (ii) are not carefully confined, they will undermine the now settled rule as to the conclusive effect of a foreign judgment (within the parameters already set out). For the purposes of this trial, I shall nonetheless proceed on the assumption that (i) and (ii) are and remain good law.[37]As clarified in Johnson v Gore Wood (supra) , a closely related doctrine is that of abuse of process, which may be traced back to the famous observations of Wigram VC in Henderson v Henderson (1843) 3 Hare 100 . Under this doctrine, the task of the Court is to inquire whether a party is misusing or abusing its process by seeking to raise before it an issue which could and should have been raised in earlier proceedings. CC contends that even if there is no cause of action or issue estoppel in this case, the question of abuse of process arises; whether that submission is well-founded will fall to be considered later.[38]The correct starting point: As already noted, the parties were in dispute as to the correct starting point and, hence, approach to this trial. As it seems to me, the right approach is this:(1) The starting point must necessarily lie with the terms of the Preliminary Issues. That is what I am here to try. To such extent, at least, Mr. Shepherd was right. Those terms plainly focus on AF and res judicata estoppel. It does not, however, follow that I should begin my analysis with the Russian proceedings which come later in time than the Dutch proceedings.(2) The reason for not doing so is that it would be quite wrong to ignore chronology, as some of Mr. Shepherd's more extreme submissions might appear to have suggested. First, the Preliminary Issues have not been devised as an academic exercise to generate a set of theoretical conclusions as to cause of action or issue estoppel. Instead, as para. 2 thereof itself makes clear, the Preliminary Issues were designed to assist the English Court to resolve the fundamental issue between the parties, namely, who as between AF and CC has valid title to the aircraft, in a situation where AF relies on Dutch law and Dutch proceedings and CC relies on Russian law and Russian proceedings. Viewed in this light, it is apparent that any sensible assessment of whether AF is impermissibly attempting to relitigate in this jurisdiction matters decided in Russia, cannot turn on a mechanistic or literal comparison between the English pleadings and the Russian proceedings. That is so, not least, because in order to understand the Russian proceedings and ascertain whether they create a res judicata estoppel, it is necessary to understand their proper context. Such an understanding in turn depends on what came before the Russian proceedings, namely the events, developments and proceedings in Holland. Secondly, if, in the event, very much a subsidiary point, it is necessary to have regard to chronology if only to rule on Mr. Eder's submission as to competing estoppels, given the authority of Showlag (supra) . I therefore see no or no realistic alternative but to approach the matter chronologically.(3) When proceeding chronologically, it would be artificial and wrong for the English Court not to engage in a process of characterisation, in accordance with its own rules of private international law: see, Macmillan Inc. v Bishopsgate Trust (No.3) [1996] 1 WLR 387 , esp. at pp. 391-2, 407 and 417. A conceptual framework is needed; how else is an English Court to understand the significance of the arguments which AF seeks to advance in the English action and which CC says are not open to it ? In plain language, before reaching the Russian proceedings it is inevitable that the Court will have formed at least some assessment of why, in English (private international) law terms, Holland matters. If Holland does not matter, then to such extent the task of this Court is simpler. If Holland does matter, because, absent a relevant estoppel arising from the Russian proceedings, the English Court will recognise or enforce the outcome of the Dutch proceedings, then there is an additional dimension to the argument before this Court. I should add that without a process of characterisation, para. 2 at least of the Preliminary Issues could not properly be addressed. For these reasons, I think that the English Court can and must engage in a process of characterisation. Mr. Shepherd is, however, right to urge that on this trial the Court is not simply engaged in an exercise of characterisation, thus overlooking the importance of the arguments as to res judicata ; that submission I accept (see (1) above). Where I part company from Mr. Shepherd's arguments, as I understood them, is that I am unable to accept that questions of res judicata can properly be considered in isolation without regard to the whole context, in Holland, Russia and this country, in which they are said to arise.(4) Pulling the threads together, the task of this Court is to do practical justice, taking into consideration: (i) the fact that the aircraft is here, together with the circumstances in which it came here; (ii) the Dutch proceedings, any estoppels arising therefrom, the importance attached to judicial sales of ships or aircraft and the relevance of Dutch proceedings in English conflict of laws terms; (iii) the Russian proceedings, the importance attached to the State of registry in matters concerning aircraft and any estoppels arising from those proceedings. In colloquial terms, something may have to give and one party will no doubt ultimately be disappointed as to the outcome produced by English Law. At least, however, by approaching the matter in this manner the English Court will ultimately give a decision taking into account everything that has gone before. The Preliminary Issues serve to dispose of certain issues which arise along that way, focussing in particular on questions of res judicata .[39]Holland: I have already recounted the history of the matter in Holland and the conclusions as to Dutch Law which flow from the evidence of the Dutch Law experts. I now proceed directly to my conclusions as to events in Holland relevant to this trial.[40]The situs of the aircraft is to be determined by English conflict of laws rules. Although there is a somewhat tentative and limited suggestion in Dicey & Morris, The Conflict of Laws ("Dicey"), 13 th ed., paras. 22E-060 – 061 that an aircraft "may at some times be deemed to be situate in its country of registration", there are overwhelming reasons for treating an aircraft as situate in the State where it physically is for the time being, at least unless it is either over the high seas or over or on territory which is not under the sovereignty of any State. Realistically, Mr. Shepherd did not (or not seriously) contend otherwise. At the time of its arrest, the 7 th June order, the 4 th December auction and its delivery to AF, the aircraft was physically located in Holland.[41]In English private international law, the law of a country where a thing is situate (the lex situs) determines whether the thing is to be considered a movable or an immovable: Dicey , Rule 111. As a matter of Dutch Law, it is plain that the aircraft is considered a movable.[42]As to the validity of a transfer of a tangible movable and its effect on property rights, the position in English conflict of laws is as set out in Dicey , Rule 116, as follows:
" The validity of a transfer of a tangible movable and its effect on the proprietary rights of the parties thereto and of those claiming under them in respect thereof are governed by the law of the country where the movable is at the time of the transfer (lex situs) . (1) A transfer of a tangible movable which is valid and effective by the law of the country where the movable is at the time of the transfer is valid and effective in England."
This Rule, long established beyond challenge, rests on a line of authority dating back to the leading case of Cammell v Sewell (1860) 5 H&N 728.[43]As a matter of Dutch Law (and always subject to the assumptions of procedural propriety on which the Preliminary Issues are based), AF acquired title to the aircraft pursuant to a judicial sale or auction. Moreover, insofar as it matters, the Dutch Court would probably not recognise or enforce an inconsistent Russian judgment.[44]If need be, AF sought to go further. Mr. Eder argued persuasively that the Dutch judicial sale was indistinguishable or at least closely akin to an Admiralty Court sale pendente lite in this country and therefore was to be accorded in rem status. Here, Mr. Eder relied on the observations of Blackburn,J. in Castrique v Imrie (1870) LR 4 HL 414, at pp. 427-429:
" When a tribunal, no matter whether in England or a foreign country, has to determine between two parties, and between them only, the decision of that tribunal, though in general binding between the parties and privies, does not affect the rights of third parties …. But when the tribunal has jurisdiction to determine not merely on the rights of the parties, but also on the disposition of the thing, and does in the exercise of that jurisdiction direct that the thing, and not merely the interest of any particular party in it, be sold or transferred, the case is very different. It is not essential that there should be an actual adjudication on the status of the thing. Our Courts of Admiralty, when property is attached and in their hands, on a proper case being shewn that it is perishable, order (for the benefit of all parties concerned) that it shall be sold and the proceeds paid into Court to abide the event of the litigation. It is almost essential to justice that such a power should exist in every case where property, at all events perishable property, is detained. …. In Story on the Conflict of Laws … it is said that the principle that the judgment is conclusive "is applied to all proceedings in rem as to moveable property within the jurisdiction of the Court pronouncing the judgment. Whatever it settles as to the right or title, or whatever disposition it makes of the property by sale, revendication, transfer, or other act, will be held valid in every other country where the question comes directly or indirectly in judgment before any other foreign tribunal. This is very familiarly known in the cases of proceedings in rem in foreign Courts of Admiralty …of which such Courts have a rightful jurisdiction founded in the actual or constructive possession of the subject matter."
We may observe that the words as to an action being in rem or in personam , and the common statement that the one is binding on third persons and the other not, are apt to be used by English lawyers without attaching any very definite meaning to those phrases. We apprehend the true principle to be that indicated in the last few words quoted from Story . We think the inquiry is, first, whether the subject matter was so situated as to be within the lawful control of the state under the authority of which the Court sits; and, secondly, whether the sovereign authority of that State has conferred on the Court jurisdiction to decide as to the disposition of the thing, and the Court has acted within its jurisdiction. If these conditions are fulfilled, the adjudication is conclusive against all the world. In the case of Cammell v Sewell … a more general principle was laid down ….it may very well be said that the rule commonly expressed by English lawyers, that a judgment in rem is binding everywhere, is in truth but a branch of that more general principle…." For my part, if viewed simply as a matter of English Law and approached in the manner suggested by Blackburn, J. in the passage just cited, I find it difficult to discern a distinction, at any rate a distinction with a difference, between the judicial sale in Holland and a sale in this country pendente lite which would attract in rem status; for completeness, I see much force in the argument that this case, viewed purely as a matter of English Law, comes on the in rem side of the dividing line suggested by Spencer Bower, Res Judicata , 3 rd ed., at para. 261 and based on Simpson v Fogo (supra) . The difficulty in Mr. Eder's way, however, lies in the fact that Dutch Law has (as already noted) no concept of in rem proceedings, although, by a different process of reasoning, the experts on Dutch Law concluded that AF acquired title to the aircraft erga omnes . In these circumstances, albeit with some reluctance, I do not think it would be right to treat the 7 th June order of the Dutch Court as enjoying in rem status in proceedings in this country when, for conceptual reasons of Dutch Law, it could not be accorded that status in Holland. It follows that AF must make do with reliance on the more general principle found in Cammell v Sewell (supra) .[45]For reasons which, in my judgment, are apparent from the conclusions of the experts on Dutch Law and require no further elaboration, the proceedings in Holland do not give rise to any or any relevant res judicata in respect of both the 7 th June order and the 22 nd December ruling.[46]Pausing here: on the assumptions as to validity of process on which this trial of Preliminary Issues has proceeded, the conclusions to which I have come in paragraphs 40 – 43 above are sufficient for AF's title to the aircraft under Dutch Law to be recognised in this country –unless "trumped" by a res judicata estoppel or barred by an abuse of process arising out of the Russian proceedings. In the circumstances, it is unnecessary to say more of Mr. Eder's "Brussels Convention" argument.[47]Russia: I come now to Mr. Shepherd's key argument in this trial. Reduced to its essence it is this: AF is estopped by cause of action estoppel or issue estoppel, created by judgments in the Russian proceedings, from alleging in the English proceedings that it acquired title to the aircraft by its purchase at the 4 th December auction pursuant to the 7 th June order, and subsequent delivery of the aircraft. In CC's submission the Russian court has already, expressly or impliedly determined these matters against AF. If wrong on there being a cause of action or issue estoppel, CC submits that it is an abuse of process for AF to litigate the issues here which it litigated in Russia.[48]With respect, I am unable to accept these submissions. To the contrary, I am satisfied that there is no relevant cause of action or issue estoppel and that it is not an abuse of process for AF to litigate such issues in this Court. The alternative is striking: AF would be estopped from litigating here a matter which the Russian Courts could not and did not determine, namely AF's title acquired under Dutch Law; as to abuse of process, were CC right, it would be an abuse for AF to litigate here that which it sought to litigate in Russia but which the Russian Courts were bound to disregard; that, with respect, is to stand Henderson v Henderson (supra) , on its head. Under whichever heading the matter is put, I do not see AF's pursuit of its claim here as (in Aldous,LJ's words, cited earlier) a "misuse of the court's procedure amounting to an abuse of process". Troubled as I confess I have been by the question of "forum shopping" (see above), my disquiet in that regard is outweighed by the unacceptable alternative which I have just outlined. For my part, I see no answer to Mr. Eder's "short answer" to the estoppel and abuse points, namely, that there is no identity of cause of action or issue between that which the Russian Courts decided and that which this Court is asked to decide. I turn to set out my reasons in a little more detail and also to address the other ways in which Mr. Eder put his case.[49](1) No room for any estoppel: It will be recollected that Mr. Eder's first submission was that there was no room for any cause of action or issue estoppel; AF had acquired title under Dutch Law; for reasons already canvassed, this Court will recognise title acquired under Dutch Law on the facts of this case; there was no room for an estoppel to undermine title thus acquired and recognised. I cannot agree. The mere fact that AF has (apparently) acquired title under a system of law with the result that, all other things being equal, such title will be recognised as valid in this country, does not itself mean that there is no room for a cause of action or an issue estoppel to arise. Between the acquisition of such title and the proceedings in this Court, there could be proceedings in Russia (or elsewhere) which might give rise to such an estoppel. The matter may be simply tested. Let it be supposed that in proceedings in Russia in which AF was the Claimant, the Russian Court had fully considered the arguments on Dutch Law and ruled adversely to AF's assertion of title under Dutch Law. As it seems to me, whether the conclusion reached by the Russian Court in such a case was right or wrong in the eyes of English Law, the case for a cause of action or issue estoppel in such circumstances would be a powerful one, to put it no higher. On no view could it be said that there was no room on such facts for an estoppel of the kind in question.[50](2) No estoppel on the facts, given the true scope of the Russian judgments: It is this submission which Mr. Eder described as his "short answer"; as already foreshadowed, in my judgment, this submission is well-founded.[51]The matter can most conveniently be addressed by reference to the terms of a helpful Note ("the Note") produced during the course of the hearing by Mr. Shepherd and Mr. Shah, counsel for CC; in the Note, the nature of the CC case here was succinctly summarised as follows: " 14. CC's case is simple:14.1 The cause of action .. raised by AF in the English action is identical to the cause of action raised by it in Russia.14.2 The cause of action is that it acquired a valid title to the Aircraft because it bought it at the auction on 4.12.00 which was held pursuant to a court order of 7.6.00.14.3 The Russian court expressly decided that AF did not have title to the Aircraft, basing its decision on the conclusion that it could not recognise the Dutch order of 7.6.00.14.4 Thus, the Russian court also necessarily, but impliedly, must have decided that AF did not acquire a valid title at the auction on 4.12.00.[15]Thus the Russian court has decided the critical issue in the case, i.e. that AF did not acquire valid title at the auction on 4.12.00. It decided the issue as a matter of Russian law, and it decided [it] by looking at the recognition of foreign judgments. But that is a matter of legal reasoning for the Russian court; each court will have .. its own way of reasoning and deciding an issue. But that is nonetheless a decision on the issue of whether AF acquired valid title at the auction of 4.12.00.[16]As Lord Diplock stated in The Sennar (No.2) at p493G:
"Issue estoppel operates regardless of whether or not an English Court would regard the reasoning of the foreign judgment as open to criticism. "
[52]In my judgment, this argument set out in the Note faces insuperable difficulties. First, what is omitted from the Note is the fact that AF asserts valid title under Dutch Law. Once this is made clear, it is readily apparent that the Russian Courts did not reach any conclusion on AF's title under Dutch Law – save to note the existence of the 7 th June order and to disregard it on the ground of the absence of a treaty providing for the recognition of Dutch judgments in Russia. But the issue before this Court is not whether the 7 th June order was recognisable by a Russian Court. Furthermore, given the English conflict of laws rules already discussed, an estoppel in favour of CC on the issue that under Russian Law it enjoys good title, will not assist it unless or until the question of AF's (apparent) good title under Dutch Law can first be disposed of. It follows, as it seems to me, that the (relevant) cause of action and issues in the English proceedings are not the same as those decided in the Russian proceedings. Secondly, I cannot regard the Russian Court's refusal or inability to recognise the Dutch judgment as a mere matter of "reasoning" within the context of The Sennar (No.2) , by which I am, of course, bound. The Russian Court's disregard of the 7 th June order meant, starkly, that the validity of AF's title under Dutch Law was never determined. It is one thing to say, for example, that the Russian Court's treatment of the aircraft as an immovable situate in Russia by reason of Russian registration, discloses a difference of reasoning from that which this Court would adopt and is immaterial for purposes of the estoppel here in question. It is quite another, as it seems to me, to assert an estoppel founded on the disregard of the Dutch judgment by reason of the absence of a treaty between Holland and Russia. For similar reasons, the present is not a case where the opposition to a cause of action or issue estoppel simply hinges on dissatisfaction with the conclusion of the foreign court. Further, assuming without deciding that Mr. Shepherd was right in submitting that AF could not complain of the "system of law" applied by the Russian Court, that is nothing to the point; the upshot of the Russian Court proceedings is that the Russian Courts have not determined the same cause of action or issue which this Court is asked by AF to decide.[53]There remains the argument pressed by Mr. Shepherd that AF, as he put it, chose to litigate and re-litigate in Russia (as exemplified, for instance, by the registration proceedings); AF cannot be allowed, said Mr. Shepherd, to go on litigating the same question until it found a forum which would give it a favourable answer. That would be to allow and encourage "one way bets". As it seems to me, there are a number of good answers to this submission. First, it fails to grapple with the fact that (as already concluded) it is not the same question which is being re-litigated. Secondly, AF's attempt to have the matter resolved in Russia is understandable and explicable. Russia was the State of registry of the aircraft, with all that that entails under the Chicago Convention. However, bearing in mind the underlying principles on which cause of action and issue estoppels are based (discussed above), I cannot view AF's subsequent recourse to this Court, in the circumstances already outlined, as an abuse of process. Thirdly, as a matter of reality, the aircraft is here and the question of valid title thereto must be dealt with by this Court; in all the circumstances, disquiet as to forum shopping is outweighed by the preceding considerations to which I have made reference.[54]Finally, it follows from the above, that on any view of the true ambit of Henderson v Henderson (supra) , it cannot be said, on the facts of this case, that CC is entitled to succeed under the doctrine of abuse of process if it has failed to make good a cause of action or an issue estoppel.[55](3) Competing foreign judgments: To the extent that Mr. Eder pressed this submission, with respect, I do not think it is sustainable. Its high point is the 7 th June order – the only candidate for a prior judgment if there would otherwise be a res judicata arising from the Russian proceedings. I have already concluded that the 7 th June order does not give rise any res judicata . No more need be said of this submission.[56](4) The decision of the Russian Court was "perverse": The argument here was that if AF was wrong on everything else, then nonetheless the decision of the Russian Courts did not give rise to any estoppel because it was "perverse". It is true that Mr. Eder used the term "perverse" in the particular meaning it carries in the present context: namely, a decision at variance with generally accepted doctrines of private international law. Even so, it is a strong thing to say of the decision of the Courts of a friendly State that it is "perverse". As it seems to me, such a topic is best left for an occasion when it is necessary for this Court's decision. Given the conclusion to which I have already come, a decision on this AF submission is unnecessary to resolve the Preliminary Issues; I therefore record that the submission was advanced but express no view on it.[57]I will be grateful for the assistance of Counsel in drawing up an appropriate order, formally answering the Preliminary Issues and on all questions of costs.

Cited in 1 later judgment