In essence, the issue was whether it would be an abuse of process for a claimant to bring a claim in legal proceedings against a defendant on a basis which had already been decided in an earlier arbitration to which the claimant, but not the defendant, had been a party. At first instance, it was held that although this would not usually be an abuse of process, it was in this case because of certain "special circumstances" (namely, the defendant had been a witness in the arbitration and funded the defence).

The Court of Appeal has now upheld the appeal from that decision. It held as follows:

(1) Prior caselaw has established that there is no prima facie assumption that it is an abuse to re-litigate previously decided issues. Instead, the court's power is used only where justice requires it. A close "merits based" analysis of the facts is required. The fact that the parties are not the same in the two proceedings is not dispositive.

(2) A prior arbitral award can form the basis of an abuse of process, although the court should exercise caution. Simon LJ said that "that caution should not inhibit the duty to act in appropriate circumstances. I would also add my agreement with Teare J's observation … that it will probably be a rare case, and perhaps a very rare case, where court proceedings against a non-party to an arbitration can be said to be an abuse of process".

(3) Although factual findings in a case are inadmissible in subsequent proceedings, a court can still consider the contents of an earlier judgment or award in order to see if a later claim is an abuse of its process.

(4) The trial judge had been wrong to conclude on the facts that the claim was an abuse of process. A highly material, if not dispositive, factor here had been the fact that the defendant had been asked to join as a party to the arbitration, but had refused to do so. It was felt to be unfair that he now wished to rely on the award from that arbitration to claim an abuse of process. Furthermore, there is no general rule preventing a party asking a court to reach a decision which is inconsistent with that reached in another case. The facts that the defendant had been a witness in the arbitration and funded the defence did not bear any "material weight".

One further issue arose: The general rule is that a claimant which discontinues its claim is liable for costs incurred by the defendant up to the date on which the notice of discontinuance was served. In Safeway Stores v Trigger, Pill LJ considered that service of a notice of discontinuance has the legal consequences that costs orders already made in favour of the discontinuing party are automatically reversed without further order. The Court of Appeal noted that Longmore and Lloyd LJJ had disagreed with Pill LJ on that point (although they acknowledged that the discontinuance should have that effect in practice).

Although unnecessary to decide the point in this case, Simon LJ said that "I express my strong doubts that [the claimant] would have been entitled as of right to secure the reversing of the order for costs …two years after the date of the judgment under appeal and at a time when the appeal appeared not to be proceeding to a hearing".