In a number of recent decisions, the courts of England, Switzerland and Singapore have considered the application of res judicata and issue estoppel in the context of arbitral awards. These decisions highlight the successful invocation of these doctrines as another tool to ensure parties are held to their agreement to resolve disputes by arbitration and to respect the enforcement regime that remains one of arbitration’s chief attractions.
In Diag Human SE v The Czech Republic  EWHC 1639 (Comm) (Diag Human), the claimant sought to enforce an arbitral award against the Czech Republic under the New York Convention. The question before the English Commercial Court was whether issue estoppel operated to prevent enforcement in England when an Austrian court had already refused to enforce the award in Austria. The English Court held that the claimant was estopped and refused enforcement.
Diag Human had originally obtained an arbitral award in its favour against the Czech Republic in 2008. However, the arbitration agreement between the parties provided for a review process, deemed permissible under Czech law, and which allowed a party to submit the arbitral tribunal’s decision to another separately constituted tribunal for review. The Czech Republic commenced the review process, but while that was underway, Diag Human commenced enforcement proceedings in various jurisdictions, including Austria, where it was unsuccessful. The Austrian Supreme Court found that that, since the review process had been properly instituted, there was no final and binding award to enforce within meaning of the New York Convention. The question before the English Commercial Court was whether this determination operated as issue estoppel preventing Diag Human from attempting to enforce the same award in the UK.
Diag Human argued that it could seek enforcement of the award in the English courts because different jurisdictions may have different methods of determining whether an arbitral award is considered “final” or “binding”. In response, the Czech Republic argued that Diag Human was estopped by reason of the Austrian Supreme Court ruling. The English court agreed, holding that where the issues before the two courts were the same and the decision in the other court could properly be said to be on the merits, an estoppel arose. The court saw no reason in principle why the decision by the Austrian Supreme Court should not give rise to an estoppel. The Austrian Supreme Court decision was giving effect to an
Austrian statutory provision enacting the New York Convention. Diag Human was also seeking enforcement under the New York Convention, albeit in the guise of its domestic enactment through the Arbitration Act.
In Switzerland, the effects of the doctrines of issue estoppel and res judicata in the context of arbitration were recently considered (see case no. 4A_508/2013, May 27 2014). In that case, the Swiss Supreme Court held that where an arbitral tribunal seated in Switzerland was seized of a claim which covered the same issues between the same parties as a judgment which had been finally resolved in a foreign court, the arbitral tribunal must refuse to hear the claim, failure to do so being a violation of Swiss public policy. The judgment reaffirms that parties cannot use arbitration as a device to re-litigate issues already determined.
Although not directly considered in Singapore, the recent decision of the High Court of PT Central Investindo v Franciscus Wongso  SGHC 190 recently showed willingness to invoke issue estoppel in an appropriate case to ensure that decisions affecting the smooth flow of the arbitral process are not improperly revisited. In that case, an arbitrator was challenged pursuant to Article 13 of the UNCITRAL Model Law on International Commercial Arbitration. The court held that “... a decision made under an Art 13 challenge is not appealable whether the challenge is allowed or dismissed... In the event that the challenge is dismissed, a setting aside application that is based on the same grounds raised in the Art 13 challenge will, at the very least, give rise to objections like issue estoppel and abuse of process.”
These decisions demonstrate that guerrilla tactics aimed at undermining the limited rights of recourse in arbitration both to substantive and procedural decisions in the course of a reference and the enforcement of awards can be effectively countered with pleas of issue estoppel and res judicata. In particular in the enforcement arena, the likelihood of a robust pro-arbitration decision by an enforcing court may play an important role in deciding where first to seek enforcement of an award as part of strategy to collect on an award across different jurisdictions.