Commercial Court judgment on state immunity, issue estoppel, and seat court judgments in arbitration

The Commercial Court (HHJ Pelling KC) has published the judgment in Yukos Capital Limited (formerly Yukos Capital SÀRL v Russian Federation) [2026] EWHC 1918 (Comm) following a hearing in July of this year. Mark Wassouf (leading), Cameron Miles and Maud Mullan acted for the successful defendant, the Russian Federation, instructed by David Goldberg, Konstantin Ksenefontov and Zoya Karpova at Pinna Goldberg.

The case originated in an application to enforce a Swiss-seated investment treaty award rendered under the terms of the Energy Charter Treaty. In order to overcome Russia’s ex facie immunity from adjudication under s 1(1) of the State Immunity Act 1978 (“SIA’”), the claimant invoked s 9(1) SIA, providing (in effect) that in circumstances where Russia agreed to arbitrate, it would not be immune with respect to proceedings to enforce the award.

Ordinarily, application of s 9(1) SIA would require a de novo determination by the Commercial Court of whether the tribunal had jurisdiction to render the award that it did. However, Russia had unsuccessfully challenged the jurisdiction of the tribunal before the Swiss courts when seeking set aside of the award under Article 190 of the Swiss Private International Law Act (“PILA”). The claimant therefore relied on that judgment as creating a cause of action estoppel and / or issue estoppel effectively precluding Russia from reopening the question of the tribunal’s jurisdiction under s 9(1) SIA in the UK – relying on the recent judgment of the Court of Appeal in Hulley Enterprises Ltd & Ors v Russian Federation [2026] KB 1 (in which Mark, Cameron, and Maud also appeared).  The claimant further claimed that the question of the tribunal’s jurisdiction constituted a single issue – such that the fact that Russia wished to challenge the tribunal’s jurisdiction on different or additional grounds than those which it raised before the Swiss courts on the same essential question was immaterial.

A trial of preliminary issues was therefore ordered to determine whether the Claimant was correct about the Swiss judgment giving rise to a cause of action estoppel and/or an issue estoppel the effect of which would be to determine the question of immunity against Russia without the need for further evidence or submissions.

On hearing the parties, the Commercial Court resolved the preliminary issues in favour of Russia, for the following reasons:

• Applying Thoday v Thoday [1964] P 181 and Cooperative Group Ltd v Birse Developments Ltd & Anor (2013) 148 ConLR 264: No cause of action estoppel arose from the Swiss judgment because the cause of action relied on by Russia in the Swiss set aside proceedings (Article 190 PILA) and the jurisdictional bar it relied on in the English enforcement proceedings (s 1(1) SIA) were not the same.
• Applying Carl Zeiss Siftung v Rayner & Keeler Ltd (No 2) [1967] 1 AC 853 and MAD Atelier International BV v Manès [2020] QB 971: No issue estoppel arose in any event because expert evidence on Swiss law (tested in cross examination at the hearing before HHJ Pelling KC) showed that Swiss law recognizes no doctrine of issue estoppel, nor any equivalent doctrine.
• Applying Hulley Enterprises Limited & Ors v Russian Federation [2024] KB 208 and Hulley Enterprises Limited & Ors v Russian Federation [2025] SGHC(I) 19: Even if issue estoppel could apply, the relevant ‘issue’, correctly analysed, was not whether the tribunal had or lacked jurisdiction, but whether the tribunal had or lacked jurisdiction by reference to specific grounds, each of which constituted its own issue. Issue estoppel could therefore not preclude Russia relying in the context of s 9(1) SIA on jurisdictional objections that it had not raised before the Swiss courts.
• Applying Skatteforvalningen v MCML Limited [2026] UKSC 19: Issue estoppel did not include within it a ‘could and should’ element that could preclude Russia from relying on grounds not raised in Switzerland in the context of s 9(1) SIA.

The claimant’s application for permission to appeal was denied by HHJ Pelling KC.

This decision will be of interest to scholars and practitioners of state immunity, as well as those more widely engaged in questions of the enforcement of arbitral awards against sovereigns.

Read the judgment in full here.