Mad Atelier International BV v Manes

The parties appear before the Court on the hearing of the application of the Defendant (“Mr Manès”). He applies to strike out, and/or for summary judgment in respect of, all of or part of the claims of the Claimant (“MAD International”) against him; alternatively, he applies for a case management stay (collectively the “Applications”).

The underlying dispute relates to the breakdown of a joint venture to develop a new brand and restaurant. In the English proceedings, MAD International alleges that Mr Manès breached a 2015 Joint Venture Agreement (the “JVA”). MAD International previously issued proceedings before the Paris Commercial Court to overturn a Share Transfer Contract in connection with this venture against two companies: the first company was owned wholly by Mr Manès, and the second company owned wholly by the first company.

In July 2018, the Paris Commercial Court gave judgment (the “Paris Judgment”) dismissing MAD International’s claim, which MAD International has appealed. The appeal is currently pending and a decision is expected in October 2020 (the “French Civil Proceedings”). In April 2019, MAD International issued English proceedings against Mr Manès for breach of the JVA, pursuant to an English jurisdiction clause (the “English Proceedings”).

Mr Manès seeks the following orders:

I deal first with the background facts (A.2) and the law (B.1-B.6) before turning to address the Applications themselves.

Mr Manès was, in 2015, the executive chef at the “L’Atelier de Joël Robuchon” restaurant in Paris (the “Paris Restaurant”), which had previously been owned and controlled by the French chef, Joël Robuchon. In 2015, the Paris Restaurant was owned by MAD Atelier S.A.S. (“MAD Atelier”), which in turn was owned by MA Développement S.A.S. (“MA Développement”). At all material times, Mr Manès was the owner and chairman of MA Développement.

Dream International Cooperatief U.A. (“Dream”) is ultimately owned and controlled by Dogus Holding A.S., which is the ultimate parent of a multinational group of companies with interests in the hotel and restaurant industries (the “Dogus Group”).

The Joint Venture

In 2015, Mr Manès and the Dogus Group entered into a joint venture to develop an international franchise of restaurants under the “L’Atelier de Joël Robuchon” brand (the “Joint Venture”).

The Joint Venture was implemented in two stages. The first stage was as follows.

The second stage was as follows:

The overall effect of the Joint Venture was to move MAD Atelier from the control of Mr Manès (through MA Développement), to the full ownership of MAD International, in which Dream held 60% of the shares.

There is a factual dispute as to what happened next:

On 15 June 2016, Mr Manès wrote to MAD International, in his capacity as Chairman of MAD Atelier, giving notice of an annual general meeting of MAD Atelier (the “AGM”) and enclosing various documents including MAD Atelier’s annual accounts for the year ending 31 December 2015 (“2015 Annual Accounts”). In early July 2016, Mr Padberg received copies of a document purporting to be the minutes of this AGM signed by Mr Manès. Mr Padberg signed and returned them as requested on 7 July 2016.

The 3 August 2016 Meeting

On 3 August 2016, there was a meeting in Paris (the “3 August Meeting”) attended by Mr Padberg and Mr Manès.

Mr Padberg signed various documents (the “Share Transfer Documents”) which had the effect of transferring MAD International’s shares in MAD Atelier (the “Shares”) to MA Développement for €3,096,698. It is not disputed that the following documents were signed:

There is a factual dispute as to how this meeting came about:

MAD International says that, at the end of the 3 August Meeting, Mr Padberg asked for copies of the documents he had signed but Mr Manès refused saying copies would be sent to him later. In fact, the documents were sent to him 4 months later (which is not contested by Mr Manès).

MAD International’s case is that the share transfer represented a sale at a significant undervalue, on the basis that:

On 29 September 2016, MAD International received a transfer of €4,963,572 from MA Développement. A few hours later Mr Manès sent an email to Mr Padberg stating that this payment had been made “according to the share transfer agreement” and included €3,086,698 “for the share price”. Later the same day, Mr Manès sent a further email setting out a list of purported breaches of the JVA by MAD International.

On 5 October 2016, Rob Schmidt, management controller of MAD International, emailed Mr Manès confirming receipt of the funds on 29 September 2016 and asking for confirmation of how the sums had been calculated. Subsequently during October 2016, there were various emails between Mr Manès and executives within the Dogus Group, including an email dated 11 October 2016 in which Mr Akdag of the Dogus Group disputed the allegations of breach of the JVA and stated that the Dogus Group had no intention of discussing any potential sale of the Shares.

On 15 November 2016, the Dogus Group’s solicitors, Clifford Chance, wrote to MAD Atelier and MA Développement asking for an explanation of the payment of €4,963.572 and stating that MAD International had not at any point consented to a sale of the Shares. On 24 November 2016, Lantourne & Associés replied on behalf of MA Développement and MAD Atelier refusing to provide the information requested. This was on the grounds that the Dogus Group was not a party to the Share Transfer Documents or the JVA, so was not in a position to request copies of those documents.

On 1 December 2016, Mr Padberg wrote to Mr Manès stating that MAD International had not consented to any sale of the Shares and requesting copies of documents evidencing such consent. Mr Manès replied on 12 December 2016 enclosing copies of the share transfer agreement and share transfer order. On 20 December 2016, Mr Padberg wrote to Mr Manès stating that he had never intended to sign the Share Transfer Documents, on the grounds that the sale price of the Shares had never been negotiated or agreed; and that MAD International would never have agreed to sell the Shares for only €3,086,698 in all the circumstances.

The French Civil Proceedings

On 17 March 2017, MAD International issued the French Civil Proceedings against MA Développement and MAD Atelier in the Paris Commercial Court. The exact subject-matter of those proceedings is in dispute.

MAD International alleged that Mr Padberg had not given valid consent to the entry by MAD International into the Share Transfer documents, because pursuant to Article 1109 of the French Civil Code, his consent was “given only in error, extorted by violence, or obtained by fraud”. I understand that this required MAD International to prove the following: (1) “fraudulent manoeuvres” on the part of MA Développement; or, in the alternative, fraudulent non-disclosure; (2) an intent to deceive on the part of MA Développement; and (3) that in the absence of such fraudulent manoeuvres, MAD International would not have entered into the Share Transfer Documents.

MAD International’s case in the French Civil Proceedings was that Mr Manès, as the representative of MA Développement and MAD Atelier, misled Mr Padberg as to two matters:

It is agreed by the French law experts that the Paris Commercial Court produced a judgment in three parts: (1) commémoratif (setting out the uncontested background facts underlying the dispute, the parties’ claims and the grounds for those claims); (2) motifs (setting out the court’s conclusions in relation to the contested facts and legal principles and the court’s reasons for arriving at those conclusions); and (3) dispositif (“dispositive section”) (setting out the court’s decision in relation to the parties’ claims).

The dispositive part of the judgment provides, amongst other matters:

“The court ruling […] denies [MAD International] its request for the annulment of the Share Purchase Agreement, with regard to the sales of the shares of MAD Atelier of 3 August 2016 […]

Denies the parties their other, broader or contrary requests […] Dismisses the other, broader or contrary, requests of the parties”

According to Professor Lagarde (MAD International’s French law expert), the Paris Commercial Court reached the following conclusions in the motifs section (amongst others):

Both of the parties have served expert reports in relation to French law which explain the meaning and effect of the Paris Judgment. Professor Lagarde for MAD International: “Lagarde-1” dated 8 October 2019, and “Lagarde-2”, a supplementary expert report served on 31 January 2020. Professor Boucobza for Mr Manès: “Boucobza-1” dated 19 December 2020.

On 15 May 2017, Mr Padberg filed a criminal complaint for fraud against Mr

On 12 July 2018, the Paris Commercial Court handed down the Paris Judgment dismissing MAD International’s claim. MAD International is seeking to appeal the Paris Judgment and the appeal is pending, with a decision expected in October 2020.

The English Proceedings

MAD International sent a Letter of Claim to Mr Manès dated 8 November 2018 and a response letter was sent on behalf of Mr Manès dated 23 January 2019 (the “Response Letter”).

On 11 April 2019, MAD International issued these proceedings against Mr Manès pursuant to the English law and exclusive jurisdiction clause in the JVA, with Particulars of Claim (“PoC”). On 1 May 2019, Mr Manès made a request for further information under CPR Part 18. On 23 May 2019, MAD International served its Part 18 responses (the “Part 18 Responses”). On 7 June 2019, Mr Manès issued the Applications.

MAD International’s pleadings set out several alternative allegations of breach of the JVA against Mr Manès claiming damages in the sum of the undervalue of the shares sold to MA Développement. Additionally, MAD International claims that Mr Manès acted in repudiatory breach of the JVA, causing it further loss in the form of a lost business development opportunity.

MAD International’s allegations of breach of the JVA include the following:

“J. MAD International’s Claims

37.

In breach of clause 2.8 of the JVA, Mr Manès failed to use his reasonable endeavours to promote and develop the business of the JV Group to [its] best advantage by: […]

37.2

Causing , directly or indirectly, Mad International to agree to sell the Shares to MA Développement for only €3,086,698 in the circumstances described at paragraph 37.1 above [where Mr Manès knew or ought reasonably to have known that it was not in MAD International’s or the JV Group’s best interests or advantage to sell the shares at that price, which represented a substantial undervalue] and without any or any meaningful prior negotiation regarding the price of the Shares or the terms of the sale […]

37.4

Failing to give the Board and/or Supervisory Committee of MAD International any or any adequate opportunity to be involved in any negotiations in order to increase the proposed sale price of the Shares and/or to obtain their own independent valuation of the Shares prior to the meeting on 3 August 2016.

38.

Further or alternatively, in breach of clause 5.1 and/or Schedule 3 of the JVA, Mr Manès failed to procure or take all reasonable steps to ensure that the approval of the Board was sought and obtained prior to the approval and/or implementation by MAD International of a Reserved Matter, namely the sale of the Shares to MA Développement.

39.

Further or alternatively, in breach of clause 5.3 and/or Schedule 3 of the JVA, Mr Manès failed to share details of a proposed matter or action which constituted a Reserved Matter, namely the sale of the Shares to MA Développement, of which he became aware promptly with the Supervisory Committee.

40.

Further or alternatively, in breach of the Implied Term [that Mr Manès and the other parties to the JVA would at all times act in good faith in relation to the Joint Venture and co-operate with each other in the best interests of MAD International and the JV Group], Mr Manès failed to act in good faith in relation to the JVA and/or to cooperate with Dream in the best interests of MAD International by:

MAD International pleads that they suffered loss and damage as a result of the aforementioned breaches, to the extent of the undervalue of the shares as set out in paragraphs 44 to 45 of the PoC:

“44.

MAD International is entitled to be put back in the position it would have been in if Mr Manès had complied with his obligations under the JVA. If Mr Manès had informed Dream and/or the Board and/or the Supervisory Committee and/or Mr Padberg of the true purpose of the meeting on 3 August 2016, Mr Padberg would not have attended the meeting and/or would not have signed the Share Transfer Documents; or alternatively, he would not have done so without first notifying Dream and/or the Supervisory Committee, and obtaining approval from the Board for his attendance. MAD International will rely, inter alia, on the contents of Mr Padberg’s letter dated 20 December 2016 in this regard.

45.

Further or alternatively, if Mr Manès had complied with his obligations under the JVA, Dream and/or the Supervisory Committee and/or the Board would have been notified of the proposed transfer of the Shares; the Board would not have approved the sale of the Shares to MA Développement for €3,086,986 or at all, and Mr Padberg would have acted in accordance with the Board’s wishes […] Alternatively, if the Board would have agreed to a sale of the Shares to MA Développement, [they] would have been able to obtain their own independent valuation of the Shares and ensured that any sale of the Shares was for their full market value.”

MAD International additionally contends at paragraph 47 of the PoC that the above breaches of the JVA caused the JVA to be contractually terminated. Alternatively, it contends that even if no contractual termination occurred, Mr Manès after 3 August 2016 failed to devote all his time and attention to the business in breach of clause 7.3 JVA, thereby repudiating the contract (which was accepted when MAD International issued the French Civil Proceedings). MAD International therefore additionally claims its losses flowing from this termination/repudiation, in the sum of its lost opportunity to develop the JVA business.

MAD International acknowledges (by its Part 18 Response, witness statements served in relation to the Applications and in its oral submissions) that it seeks to rely on the following (alleged) factual matters in the English Proceedings:

Mr Manès contends that the core allegations in relation to MAD International’s claims as to breach of clauses 2.8, 5.1, 5.3 of the JVA, and the Implied Term remain the same in substance as those advanced and dismissed in the French Civil

Mr Manès accepts that some of MAD International’s claims in the English Proceedings do not overlap at all with the issues in the French Civil Proceedings. These consist of the claims that Mr Manès breached clauses 9.1 and/or 14.2 of the JVA. I will refer to these claims as the “Remaining Claims”. Mr Manès contends that these claims do not have a real prospect of success, whereas MAD International contends that they do.

In order for it to be appropriate to strike out MAD International’s claim or part of its claim on a summary judgment basis, it must be shown that MAD International has no real prospect of succeeding on the claim, and there is no other compelling reason why the case should be disposed of at trial. The burden of proving this is upon Mr Manès, as the applicant.

The principles applicable to determining whether a party has a real prospect of success are well-established, and not in dispute. They were summarised in JSC VTB Bank v Skurikhin [2014] EWHC 271 (Comm) at [15]:

“(1)

The Court must consider whether the defendant has a 'realistic' as opposed to a 'fanciful' prospect of success, see Swain v Hillman [2001] 2 All ER 91, 92. A claim is 'fanciful' if it is entirely without substance, see Lord Hope in Three Rivers District Council v Bank of England [2001] UKHL 16 at [95].

(2)

A 'realistic' prospect of success is one that carries some degree of conviction and not one that is merely arguable, see ED & F Man Liquid Products v. Patel [2003] EWCA Civ 472.

(3)

The court must avoid conducting a 'mini-trial' without disclosure and oral evidence: Swain v Hillman (above) at p.95. As Lord Hope observed in the Three Rivers case, the object of the rule is to deal with cases that are not fit for trial at all.

(4)

This does not mean that the Court must take everything that a party says in his witness statement at face value and without analysis. In some cases, it may be clear that there is no real substance in factual assertions which are made, particularly if they are contradicted by contemporaneous documents, see ED & F Man Liquid Products v. Patel (above) at [10]. Contemporary activity or lack of activity may similarly cast doubt on the substance of factual assertions.

(5)

However, the Court should avoid being drawn into an attempt to resolve those conflicts of fact which are normally resolved by a trial process, see Doncaster Pharmaceuticals Group Ltd v. Bolton Pharmaceutical Co 100 Ltd [2006] EWCA Civ 661, Mummery LJ at [17].

(6)

In reaching its conclusion, the court must take into account not only the evidence actually placed before it on the application for summary judgment, but the evidence that can reasonably be expected to be available at trial: Royal Brompton Hospital NHS Trust v Hammond (No. 5) [2001] EWCA Civ 550,

[19].

(7)

Allegations of fraud may pose particular problems in summary disposal, since they often depend, not simply on facts, but inferences which can properly be drawn from the relevant facts, the surrounding circumstances and a view of the state of mind of the participants, see for example JD Wetherspoon v Harris [2013] EWHC 1088, Sir Terence Etherton Ch at [14].

(8)

Some disputes on the law or the construction of a document are suitable for summary determination, since (if it is bad in law) the sooner it is determined the better, see the Easyair case. On the other hand, the Court should heed the warning of Lord Collins in AK Investment CJSC v Kyrgyz Mobil Tel Ltd [2012] 1 WLR 1804 at [84] that it may not be appropriate to decide difficult questions of law on an interlocutory application where the facts may determine how those legal issues will present themselves for determination and/or the legal issues are in an area that requires detailed argument and mature consideration, see also at [116].

[…]

(10)

So far as Part 24.2(b) is concerned, there will be a compelling reason for trial where 'there are circumstances that ought to be investigated', see Miles v Bull [1969] 1 QB 258 at 266A. In that case Megarry J was satisfied that there were reasons for scrutinising what appeared on its face to be a legitimate transaction; see also Global Marine Drillships Limited v Landmark Solicitors LLP [2011] EWHC 2685 (Ch), Henderson J at [55]-[56].”

In some cases, the disputed issues are such that their conclusion largely depends upon the expert evidence relied on by each side. In such cases, an application for summary judgment will usually be inappropriate unless it is made after the exchange of the experts’ reports and even then, in most cases, until after the experts have discussed the case and produced a joint statement (Hewes v West Hertfordshire Hospitals NHS Trust [2018] EWHC 2715 (QB), a clinical negligence claim, at [45]).

The court has the power to strike out a statement of case pursuant to CPR r.3.4(2)(b):

“(2)

The court may strike out a statement of case if it appears to the court—

(b)

that the statement of case is an abuse of the court’s process or is otherwise likely to obstruct the just disposal of the proceedings;”

Further, the court must consider that striking out is a proportionate response. Striking out must be supportive of the overriding objective. If the abuse of process can be addressed by a less draconian course, it should be (WB, 3.4.3): it is a remedy of last resort.

The doctrine of res judicata has various strands, two of which are relevant for present purposes: (1) issue estoppel; and (2) abuse of process. As was stated in Virgin Atlantic Airways v. Zodiac Seats UK [2014] A.C. 160, at [17]:

“res judicata is a portmanteau term which is used to describe a number of different legal principles […] Fourth, there is the principle that even where the cause of action is not the same in the later action as it was in the earlier one, some issue which is necessarily common to both was decided on the earlier occasion and is binding on the parties […] "Issue estoppel" was the expression devised to describe this principle […] adopted by Diplock LJ in Thoday v Thoday [1964] P 181, 197-198”

A foreign judgment can give rise to issue estoppel: Carl Zeiss Stiftung v. Rayner & Keeler Ltd (No. 2) [1967] 1 A.C. 853, 918B, 927G, 967B (Lords Reid, Hodson and Wilberforce). The conditions which must be satisfied in such a case are: (1) the judgment relied on as creating the estoppel must be (a) by a court of competent jurisdiction; (b) final and conclusive; and (c) on the merits; (2) the parties (or their privies) must be the same in both sets of proceedings; (3) there must be a clear determination of the issue by the judgment – it must not be merely collateral or obiter comment; (4) the issue in the later action must be the same as the issue decided by the judgment in the earlier proceedings: see The Sennar (No. 2) [1985] 1 W.L.R. 490, 499 (H.L.).

Final and Conclusive / On the Merits

A foreign ruling is “final and conclusive” if the party asserting the estoppel can establish that the ruling cannot be relitigated in the foreign country in any new action between the parties, or their privies. The fact that a judgment or decision can be appealed does not prevent it from being final.

There was a dispute between the parties as to the precise criteria that must be met for a ruling to be final and conclusive. In this regard:

I consider that MAD International correctly states the position, for the following reasons.

Firstly, dicta in Carl Zeiss (itself the genesis of issue estoppel’s application to foreign decisions) indicate that the foreign country must treat the individual issues decided in each judgment as precluding reconsideration:

Counsel for Mr Manès contended that Lord Guest was of the view that the judgment relied upon in an estoppel must be res judicata in the country in which it was made, relying upon the following passages at 935C to 936A:

“The requirements of issue estoppel still remain (1) that the same question has been decided; (2) that the judicial decision which is said to create the estoppel was final and (3) the proceedings in which the estoppel is raised or their privies. I have for the moment postponed the question whether issue estoppel, if valid in relation to an English judgment, applies to a foreign judgment. There is little doubt that the same question was incidentally decided in the West German action as arises in the present summons, namely, whether the Council of Gera have authority to raise the action in the name of the Carl-Zeiss-Stiftung.

I turn, therefore, at once to the question of finality. This is understood to mean " final and conclusive on the merits " of the cause (Dicey, Conflict of Laws, 7th ed., r. 196, p. 1052). The decision upon which the issue estoppel arises must itself be final in this sense. In other words, the cause of action must be extinguished by the decision which is said to create the estoppel (see Nouvion v. Freeman, Lord

Herschell: " It puts an end to and absolutely concludes that particular action." […]

Another aspect of finality relates to the requirement that the decision relied upon as estoppel must itself be res judicata in the country in which it is made. This is made clear in Nouvion v.Freeman (See also Cheshire, Private International Law, 7th ed (1965) p. 562; Dicey' Conflict of Laws 7th ed. p.1036) It would, indeed, be illogical if the decision were to be res judicata in England, if it were not also res judicata in the foreign jurisdiction. I am not satisfied that the respondents have discharged the burden of proof upon them of establishing that the West German judgment is res judicata in West Germany. I would, accordingly, hold that the West German judgment is not final and conclusive and for these reasons does not create an estoppel.”

I consider that, read in context, Lord Guest was not intending to disagree with what was stated by Lord Wilberforce and Lord Reid. In this regard, Lord Guest understands finality to have two “aspects”. The first aspect is set out at 935C – that the cause of action is extinguished by the decision which is said to create the estoppel, putting an end to and absolutely concluding the action. This is more commonly known as the “on the merits” criterion. It is in relation to the merits criterion that Lord Guest makes reference to the cause of action being extinguished and the entire West German judgment. The second aspect is set out at 936A (“another aspect of finality […]”). This second aspect must mean something different to a judgment on the merits. Lord Guest sets out the principle animating the possibility of foreign judgment issue estoppel in a way that is very similar to Lord Reid: “It would, indeed, be illogical if the decision were to be res judicata in England, if it were not also res judicata in the foreign jurisdiction”.

Secondly, it was submitted to me in oral submissions by Graham Chapman QC, on behalf of Mr Manès, that Lord Diplock in The Sennar No. 2 confirmed that English law on issue estoppel only requires the judgment to be final and binding as a matter of the foreign law, and does not require that law to have a doctrine of issue estoppel. He refers to the following passage in the judgment of Lord Diplock at pp 493-494:

“To make available an issue estoppel to a defendant to an action brought against him in an English court upon a cause of action to which the plaintiff alleges a particular set of facts give rise, the defendant must be able to show: (1) that the same set of facts has previously been relied upon as constituting a cause of action in proceedings brought by that plaintiff against that defendant in a foreign court of competent Jurisdiction; and (2) that a final judgment has been given by that foreign court in those proceedings.

It is often said that the final judgment of the foreign court must be “on the merits.” The moral overtones which this expression tends to conjure up may make it misleading. What it means in the context of judgments delivered by courts of justice is that the court has held that it has Jurisdiction to adjudicate upon an issue raised in the cause of action to which the particular set of facts give rise; and that its judgment on that cause of action is one that cannot be varied, re-opened or set aside by the court that delivered it or any other court of co-ordinate Jurisdiction although it may be subject to appeal to a court of higher Jurisdiction.”

It was submitted by Mr Chapman that this passage suggests that there does not need to be a mirroring of issue estoppel in the foreign jurisdiction: only that the determination of the foreign court on the cause of action must be one that satisfies the test. However, in this passage Lord Diplock is clearly referring to the “on the merits” aspect of the test, rather than finality per se. That this is so, is supported by the speech of Lord Brandon, in which he explicitly cited “all three of the requirements for the existence of such an estoppel laid down in the Carl Zeiss case” as being “fully satisfied” (The Sennar No 2, 500D). Nowhere in Lord Brandon’s speech is it suggested that the majority in Carl Zeiss were wrong in their exposition of the requirements for issue estoppel.

Thirdly, Mr Chapman submitted that issue estoppel is a matter for the lex fori, and is concerned with protecting the processes of the English court system - why, as a matter of principle, should a party holding a foreign judgment be worse off than a party holding an English judgment when seeking to enforce an issue estoppel?

I reject this submission. It is irrational to distinguish between finality in the judgment and finality in each issue for litigation. If it veers on absurd to recognise estoppel as arising from a foreign judgment if the foreign law would not regard such a judgment as being final, it must be equally absurd to estop an English court from hearing a particular issue where a foreign court would not consider that issue

The court would be applying an English procedural rule (issue estoppel) to a foreign judgment. This also raises several practical issues. Such an approach would place preclusive reliance on parts of judgments which were never supposed to bear that weight in their home jurisdictions – there might be multiple judgments from the same foreign jurisdiction that determine an “issue” in different ways, because that country has no doctrine of issue estoppel. It may not be possible to determine whether a finding is the basis for the relevant foreign judgment or “collateral or obiter”, in isolation from the preclusive effect that the country does or does not give to each issue.

Fourthly, my conclusion is supported by the reasoning of Sales J (as he then was) in Seven Arts Entertainment Ltd v. Content Media Corporation plc [2013] EWHC 588 (Ch):

Fifthly, Lord Reid’s dictum in Carl Zeiss was applied by Stephen Furst QC (sitting as a Deputy Judge of the High Court) in ZVI Construction Co LLP v. University of Notre Dame (USA) [2016] Bus. L.R. 1311:

Further the judge in the ZVI case (rightly in my view) confirms that the precise question which must be answered for the “final and binding” criterion is whether the foreign court would, as a matter of its own law and formally, treat the determination in the earlier judgment as precluding further consideration of the issues. The fact that the foreign court would as a matter of practice refuse to hear the second case on case management grounds does not suffice.

Privity of Interest

The parties to the original proceedings and the current proceedings must be the same for issue estoppel to operate as a defence, unless one of the parties to the previous proceedings has “privity of interest” with a party to the current proceedings. Most of the applicable principles are uncontroversial, although one area of dispute remains between the parties.

In terms of what is uncontroversial:

There was a dispute between the parties as to the circumstances in which a controlling shareholder (in this case, Mr Manès) could be the privy to proceedings against his wholly-owned companies. In this regard Mr Manès relied on Johnson v

The facts of Johnson v Gore-Wood were as follows. Mr Johnson wished to bring an action in negligence against solicitors, in connection with an improperlyexercised option to purchase land by the W Company (a subsidiary which was almost wholly owned by Mr Johnson). The W Company had previously sued the solicitors in connection with the same negligence, and had settled the suit. One of the issues that the court had to determine was whether Mr Johnson’s claim was an abuse of process.

Lord Bingham endorsed the test in Gleeson, and concluded that it was satisfied at p.32D:

“The first [argument] was that the rule in Henderson v Henderson did not apply to Mr Johnson since he had not been the plaintiff in the first action against GW. In my judgment this argument was rightly rejected. A formulaic approach to application of the rule would be mistaken. WWH was the corporate embodiment of Mr Johnson. He made decisions and gave instructions on its behalf. If he had wished to include his personal claim in the company's action, or to issue proceedings in tandem with those of the company, he had power to do so.”

I do not consider that the mere fact that someone is a 100% shareholder of a company makes them the company’s privy. The conclusion that Johnson and W were privies was a concession, and was obiter. Its correctness was doubted by Lord Millett, and later by Lord Sumption in Virgin Atlantic. Lord Millett at p. 39 highlighted some of the problems with finding “privity” between a shareholder and his company:

“But Mr Johnson and the company are different legal persons, each with its own creditors, and that is a fact of critical significance. Mr Johnson's personal claims raised difficult issues not present in the company's action […] It was not in the company's interest for his personal claims to be joined with its own much simpler claim, or for its case to be delayed until Mr Johnson's own case was ready for trial”

In Virgin Atlantic, supra, Lord Sumption noted at [25] that:

“[25] […] The focus in Johnson v Gore-Wood was inevitably on abuse of process because the parties to the two actions were different, and neither issue estoppel nor cause of action estoppel could therefore run (Mr Johnson's counsel conceded that he and his company were privies, but Lord Millett seems to have doubted the correctness of the concession at p 60D–E, and so do I).”

Further, in subsequent cases controller-subsidiary relationships have been found not to be, by themselves, sufficient to establish privity:

In Johnson, and in SCB, the court placed considerable importance on the fact that the company in the subsequent proceedings could have been joined to the original proceedings. Even if a shareholder’s control could establish a relevant common interest in proceedings, it does not lead to the conclusion that the parties to the proceeding were in reality the same, unless the shareholder or company could have been joined to the earlier proceedings. In this regard:

Finally, Lord Millett in Johnson v Gore-Wood called for the courts to exercise caution where the claimant in the second action is not the same as the first but is his privy (again, in the context of abuse of process):

“Particular care, however, needs to be taken where the plaintiff in the second action is not the same as the plaintiff in the first, but his privy. Such situations are many and various, and it would be unwise to lay down any general rule. The principle is, no doubt, capable in theory of applying to a privy; but it is likely in practice to be easier for him to rebut the charge that his proceedings are oppressive or constitute an abuse of process than it would be for the original plaintiff to do so.”

Clear Determination of the Issues by the Foreign Court

There must be a clear decision on the issue in question by the foreign court: Good Challenger Navegante SA v. Mineralexportimport SA [2004] 1 Lloyds Rep. 67, at [54] (C.A.). The English court must be cautious before deciding that the foreign court made a clear decision on the relevant issue because English courts are unfamiliar with modes of procedure in many foreign countries, and it may be difficult to see whether a particular issue has been decided or that a decision was a basis of a foreign judgment and not merely collateral or obiter: Carl Zeiss (No. 2), supra, at 918; Good Challenger, supra, at [54].

Same Issues Determined in both courts

The issue decided in the foreign court must be the same as the issue raised in the English proceedings – see Privy Council decision of Rajah of Pittapur v Sri Rajah Garu (1884) LR 12 Ind App 16 (and see ZVI Construction v Notre Dame at [89]).

The English court has an inherent power to strike out any claim which constitutes an abuse of process. There are two aspects to the doctrine of abuse of process: collateral attack abuse and Henderson v. Henderson abuse (though ultimately the same broad, merits-based analysis is adopted in deciding whether there is an abuse of process).

Collateral Attack

An abuse of process may arise where an allegation or claim is advanced in proceedings for the purpose of mounting a collateral attack upon a determination made in earlier proceedings by a court of competent jurisdiction, in the absence of issue estoppel. This was recognised in Hunter v. Chief Constable of the West Midlands [1982] A.C. 529. In this regard:

In order to determine whether there has been an abuse of process, the court must engage in a close, merits-based analysis of the facts, taking into account the relevant private and public interests: Michael Wilson, supra, at [48]. A summary of the factors taken into account by the court can be found in Gazprom Export LLC v. DDI Holdings Ltd [2020] EWHC 303 (Comm) at [37(vi)]:

“A number of considerations may be taken into account in order to determine whether there is such manifest unfairness or the allowance of the case to be run would bring the administration of justice into disrepute. Such considerations are not closed and include: a) Whether the person wishing to advance the allegation had a reasonable opportunity to deal with the allegation in the earlier proceedings (Hunter; Bragg v Oceanus; In re Norris, para. 26; St Vincent v Robinson; Ablyazov, para. 48, 51). This consideration will arise especially if the person wishing to advance the allegation again was a party to the earlier proceedings (Laing v Taylor Walton; Arts & Antiques v Richards; St Vincent v Robinson). b) Whether the party advancing the allegation in the later proceedings was also the party advancing the allegation in the earlier proceedings (Laing v Taylor v Walton; Arts & Antiques v Richards; cf. Conlon v Simms, para. 146). … e) Whether the earlier proceedings were before the most appropriate tribunal or between the most appropriate parties for the determination of the issue (Bragg v Oceanus). f) Whether the purpose of the party wishing to have the matter determined afresh was not the genuine purpose of obtaining the relief sought in the second action, but some collateral purpose (Hunter; Bragg v Oceanus). … h) Whether the party now making the relevant allegation provided assistance, or funding, to one of the parties to the earlier proceedings.”

The fact that proceedings in England were commenced pursuant to a jurisdiction clause (particularly an exclusive one) means that it should be very rare for it to be an abuse of process to bring such proceedings, absent issue estoppel: SCB Flaux J at [164].

Henderson v Henderson

An abuse of process may also arise where, in all the circumstances, a party is misusing or abusing the process of the court by bringing a claim or raising a defence in later proceedings which should have been raised in earlier proceedings: Johnson v. Gore-Wood at p 31.

This form of abuse of process, like the collateral attack doctrine, involves a broad, merits-based judgment which takes into account the public interest (that there should be finality in litigation, that a party should not be vexed twice in the same matter, and economy and efficiency in the conduct of litigation), the private interests of the parties, and also takes account of all the facts of the case.

It is not generally a bar to the operation of the abuse of process principle if the defendants in the later proceedings are different: Aldi Stores Ltd. v. WSP Group [2008] 1 WLR 748 at [6], [10] (C.A.). However, the fact that the defendants to the original action and to the present action are different makes it much less likely that there will be an abuse of process than if the parties (or their privies) are the same in both sets of proceedings: Aldi Stores Ltd., supra, at [6], [10].

Abuse of Process in the absence of issue estoppel

There was a dispute between the parties as to whether abuse of process could exist, by reason of a collateral attack on a foreign judgment, in the absence of issue estoppel arising out of that foreign judgment. MAD International submitted that it could not, whilst Mr Manès submitted that abuse of process was a broad enough concept so that it could arise on the facts of a particular case even where there was no issue estoppel. As appears below, it is clear from the judgment of the Court of Appeal in SCB that there can be abuse even where there is no issue estoppel, but such cases will, in general, be rare, and any decision that a litigant is not entitled to have its dispute in the courts of the country permitted by the terms of the contract will be rarer still. In this regard:

The Court has a discretion to order a stay to await the outcome of foreign proceedings in the exercise of its case management powers pursuant to s.49(3) of the Senior Courts Act 1981 and/or CPR r.3.1(2)(f). The principles relevant to the exercise of this discretion can be summarised as follows:

Articles 29 and 30 of the BIR provide as follows:

Without prejudice to Article 31(2), where proceedings involving the same cause of action and between the same parties are brought in the courts of different Member States, any court other than the court first seised shall of its own motion stay its proceedings until such time as the jurisdiction of the court first seised is established.

Where related actions are pending in the courts of different Member States, any court other than the court first seised may stay its proceedings.

Where the action in the court first seised is pending at first instance, any other court may also, on the application of one of the parties, decline jurisdiction if the court first seised has jurisdiction over the actions in question and its law permits the consolidation thereof.

For the purposes of this Article, actions are deemed to be related where they are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings.”

Pursuant to Article 30, in order for two sets of proceedings to be “related”, they must be capable of being heard and determined together in the same court in the same country Euroeco Fuels (Poland) Limited v. Sczezin and Swinoujscie Seaports [2019] EWCA Civ 1932 at [46]-[53].

Mr Manès has not made any application to have the English Proceedings stayed on the basis that either Article 29 or Article 30 of the Judgments Regulation is applicable.

In this section of the judgment, I address matters relating to the claims that Mr Manès contends constitute an “overlap” between the English and French Civil Proceedings (which I will refer to as the “Allegedly Overlapping Claims”). More specifically, I address:

Mr Manès contends, in essence, that the Paris Judgment gives rise to an issue estoppel in relation to the following three issues:

For the reasons I have identified below, I do not consider that the French Civil Proceedings result in an issue estoppel in respect of any of the aforementioned issues, because they do not meet any of the conditions set out in the Sennar No.2. Specifically:

Finality of the Paris Commercial Court Judgment

It is clear that the reasoning of the Paris Commercial Court is not “final and conclusive” for the purposes of issue estoppel. First, I understand it to be common ground that there is no equivalent doctrine to issue estoppel as a matter of French law. Secondly, therefore, under French law, where a fact is found by the Paris Commercial Court and it does not appear in the dispositif, the re-litigation of that fact is not prevented by the preclusive effect of that judgment. Thirdly, the existence of French courts’ practice in exercising the discretion to stay proceedings (as advanced in the evidence of Professor Boucobza) does not render the decision final and conclusive. Fourthly, I do not consider that the French courts would always exercise a discretion to stay proceedings and fifthly, I do not consider that the English court lacks jurisdiction to hear any issues regarding the Share Transfer Contract (a view expressed by Professor Boucobza).

The relevant articles of the French Civil Code and the Code of Civil Procedure are as follows:

“Article 1355 (formerly Article 1351) of the French Civil Code:

“The authority of res judicata applies only with respect to the what was the object of a judgment. It is necessary that the thing claimed must be the same; that the claim be based on the same cause; that the claim be between the same parties and brought by them and against them acting in the same qualities.” Article 480 Code of Civil Procedure:

“The judgment which decides in its operative part the whole or part of the main issue, or one which rules upon the procedural plea, a plea seeking a plea of non-admissibility or any other interlocutory application, will, from the time of its pronouncement, become res judicata with regard to the dispute which it determines”

First, I understand it to be common ground between the experts on French law that there is no doctrine of “issue estoppel” in France, and that there is no mirrorimage doctrine in which a finding of fact in issue on the critical path by one judge will have preclusive effect on future judges’ ability to rehear the issue, where that fact is not contained in the dispositif of the judgment.

Secondly, I consider that for foreign findings on a particular issue to be “final and conclusive” for the purposes of issue estoppel in English law, that foreign legal system must view further consideration of the issues identified as being precluded by virtue of the decision in the foreign judgment. In French law, the particular findings of fact relied upon by Mr Manès are found in the motifs section of the judgment, which does not give rise to res judicata as a matter of French law.

I was also presented with evidence by MAD International that the relevant issues are not final or binding as a matter of French law because French law does not recognise res judicata as arising between different parties. Professor Lagarde’s evidence at [55]-[58] of his first report is that Mr Manès would not be regarded under French law as being in privity with MAD Développement and MAD Atelier for the purposes of the French res judicata principle. This is supported by an extract from a global study of the case-law of the Court of Cassation. This does not appear to be disputed by Professor Boucobza (see, for example, at [74], [93] and [94]): he agreed that “the established principle of the identity of the parties adopted by French case-law may be applied strictly in this case, particularly since it is he who claims the benefit of res judicata”. This is another, independent reason why the French judgment is not “final and binding” as a matter of French law.

Thirdly, I consider that even if a mirror-image doctrine to issue estoppel in the foreign jurisdiction is not required by English law, the relevant French legal provisions on declining jurisdiction are insufficient, even on Professor Boucobza’s characterisation, to meet the criteria required for issue estoppel. In any event, I do not consider that Mr Boucobza’s views accurately reflect the position as a matter of French law.

The applicable provision of the Civil Procedure Code (“CPC”) is Article 101 which provides:

“Article 101

If there is such a connection between cases brought before two separate courts that it is in the interests of good justice to have them heard and judged together, one of the courts may be asked to decline jurisdiction and to transfer knowledge of the case to the other court as it stands.”

Professor Boucobza was of the opinion that, in practice, a French court would never re-hear the factual allegations under a different remedy because it would always exercise its right to decline jurisdiction and transfer the case to the original court, because there would be a strong connection with the first case, pursuant to Article 101 of the CPC. Professor Lagarde accepted that the court had power to decline jurisdiction, but he rejected the suggestion that the French court would always decline jurisdiction or that that would be the “only option” - in particular where the two disputes did not have the same remedy.

I do not consider that the application of Article 101 CPC gives rise to an issue estoppel. This is for the following reasons:

Fourthly, and in any event, based on the evidence before me I do not consider that even in fact or as a matter of practice, the court second seised in France would always stay proceedings in the way described by Professor Boucobza. I prefer the view expressed by Professor Lagarde in Lagarde-2 in relation to Article 101 CPC, namely that declining jurisdiction under this Article is always merely an option for the courts: they have a broad discretion as to whether to stay a case, and this discretion is rarely interfered with by superior courts (see [38] of Lagarde-2).

In this regard, and to the extent that it is necessary to prefer the opinion of one expert on French law over the other, I consider that Professor Lagarde has the more relevant experience in pronouncing on matters of French evidence and procedure which are in point in relation to the issues under consideration. He specialises in civil procedure and evidence, he is a partner in a law firm, and he has been admitted to the Paris Bar. In contrast, Professor Boucobza is not a member of the French Bar or a practitioner, nor does he profess to have particular expertise in French procedural law: his specialisation is a different one, namely international commercial litigation and arbitration. In such circumstances I consider that the views expressed by Professor Lagarde should be given greater weight having regard to his specialisation and practical experience, and that where their views differ (as in relation to this aspect of French law), his evidence is to be preferred. Further, again, the relevant parts of Lagarde-2 are supported by relevant French law decisions, and domestic legal works.

Further, I consider that the reasoning of Professor Boucobza’s report on connectedness is flawed. Professor Boucobza concludes at [111] of his report that “the only option in France that will be available to the second court would be to stay the proceedings pending the outcome of the first set of proceedings because res judicata would prevent the second court from hearing the arguments on deceit and fraud that have already been heard by the first court”. This conclusion clearly relies on “res judicata” applying to these proceedings under French law, so is inconsistent with his earlier admissions that res judicata does not apply in a different-party situation. This inconsistency arises again in [110]: “there is identity of cause in the factual sense between the claims, and it is only artificially that a difference of purpose (remedy sought) would be established by MAD

Fifthly, Professor Boucobza suggests that another issue facing the “court second seised” is that it would lack jurisdiction to hear the relevant factual disputes in determining whether there was a breach of the JVA. Specifically, he posits that the English court “does not have jurisdiction to hear questions relating to the Share Transfer Contract submitted to the Paris Commercial Court […] this Share Transfer Contract […] does not include any clause conferring jurisdiction or applicable law”. This expression of opinion is beyond his expertise as a French law expert. For this reason, Professor Lagarde did not comment on it in his supplemental report ([34]). Professor Boucobza’s conclusion is also wrong. By virtue of the jurisdiction agreement in Clause 38 of the JVA, the English court may deal with disputes which arise out of or in connection with the JVA’s “subject-matter”. This subject-matter includes the operation of the Paris Restaurant (defined as “the business” in Clause 1.1 of the JVA). The Share

Finally, I would also add that a stay on the grounds that the court second seised has no jurisdiction is quite clearly not the same thing as a judgment having a preclusive effect: no issue estoppel can arise from this.

For the reasons identified above (both individually and cumulatively) I am satisfied that the decision of the Paris Commercial Court is not final or conclusive.

Privity of Parties

Mr Manès relies upon four matters in support of his contention that he is a privy to MAD Atelier and MA Développement: that he was the controlling shareholder of the companies involved in the French Civil Proceedings; that the dishonesty alleged in those proceedings was his dishonesty and fraud; that he was facing the same allegations in French criminal proceedings; and that he gave written witness evidence and made representations at the French Civil Proceedings.

I am satisfied that Mr Manès was not privy to the action against MA Développement and MAD Atelier in France. This is an independent reason for rejecting the contention that an issue estoppel arises in this case. I set out my reasons below.

Firstly, the fact that Mr Manès is 100% shareholder of MA Développement, which in turn owns MAD Atelier, does not give him a sufficient interest in the French Civil Proceedings against those companies for the purposes of Gleeson. It gives him a mere financial and commercial interest in the outcome of the French Civil Proceedings, which is not sufficient (or particularly persuasive, in the absence of other factors) in establishing privity for the reasons I have set out above at [62] to [71] above.

Secondly, and importantly, Mr Manès could not have been joined to the French Civil Proceedings. Those proceedings were concerned with the reversal of the Share Transfer Agreement, to which he was not a party. This is an important factor in relation to privity, where the main contention relied on is control over a party to the original proceedings: the fact that in Johnson v Gore-Wood, Mr Johnson could have been joined to the earlier proceedings through his connection with W appeared to be the main reason why Lord Bingham considered Mr Johnson’s control over that company to be important (32D). The company and Mr Johnson both had similar tortious causes of action against the defendant solicitors. In SCB, both Flaux J (at [146]) and Longmore LJ (at [31]) placed considerable emphasis on the fact that there was “no jurisdiction” to join SCBHK as a defendant to the New York proceedings. Further, even if Mr Manès could have been joined to the French Civil Proceedings, the fact is that he was not so joined by the Claimants (SCB at [31]). The Paris Commercial Court noted that there was no tort claim brought by MAD International against Mr Manès (p.18 of the Paris Judgment).

Thirdly, MA Développement and MAD Atelier’s involvement before the Paris Commercial Court was involuntary (as defendants). Therefore, the note of caution raised by Lord Millett in Johnson v Gore-Wood with regards to privity applies to an even greater extent here. In SCB, Flaux J drew attention to this at [147] “In my judgment, that need for caution is all the greater where the claimant in the second action, here SCBHK, is not only a different party to SCB but SCB was involuntarily involved in the first action in New York as a defendant, not as a claimant.”

Fourthly, Mr Manès contended that his involvement in the French Civil Proceedings, and the allegations made against him, was sufficient to give him a relevant interest in those proceedings, and make him in reality party to those proceedings. That contention does not bear examination and I reject it for the following reasons:

Matters relied upon were not the subject of a clear decision on the relevant factual issues

On a consideration of the expert evidence before me as applied to the judgment of the Paris Commercial Court, I do not consider that the Paris Commercial Court made any conclusive findings of fact as to whether Mr Manès misled Mr Padberg as to the purpose of the 3 August Meeting, or to the effect that Mr Padberg failed to understand the meaning of the documents he was signing. Therefore, there are no clear decisions on the relevant factual issues: only collateral comments. This is an independent reason to find that there was no issue estoppel.

It is MAD International’s case that the Paris Commercial Court only reached certain conclusions in the “motifs” section of its judgment on whether MAD International had established to the requisite standard that Mr Manès committed a fraud on Mr Padberg. Professor Lagarde’s evidence is that the French Court’s conclusion only amounts to MAD International having failed to prove its case - it does not mean that the French Court accepted the French defendants’ factual case that MAD International had freely consented to the transfer of its shares. He explains that this stems from the fact that (at Lagarde-1, [23]), “in French law there is no concept of making findings of fact on the balance of probabilities and when faced with two contrary assertions, the judge cannot simply accept which one he considers to be the most likely one […] he must express certainty on the findings of fact which form the basis of his decision”. This is referred to as a “system of quasi-certainty”. The burden of proof is essentially the “risk of evidence” - who fails to obtain their remedy if there is uncertainty at the end of proceedings, or doubt about the contested facts (quoting Professor Lardeux).

Professor Boucobza suggests that the reasoning followed in the Paris Judgment leads to the conclusion that there were no fraudulent manoeuvres prior to the signing of the Share Transfer Contract. In law, the burden was on the claimant (MAD International) to prove the elements of fraud or deceit that it alleged. The court did not have to rule on anything other than the question of whether the fraud/deceit was well-grounded or not established. This means that “legally” the fraud or deceit is not recognised – there was no need for the Paris Court to state expressly in a positive way that there was no fraud or deceit ([33] Boucobza-1 at [33]).

I am satisfied that Professor Lagarde’s evidence accurately states the position in French law. This is for four main reasons:

First, Professor Lagarde’s views are well-supported by French legal materials: Professor Lagarde’s view of the “system of quasi-certainty” is supported by references to the work of a French professor (Professor Lardeux), and two cases of the Court of Cassation (at [23] and [24]). In Lagarde-2, he also refers to the supportive views of Professor Goubeaux and Roland and Boyer. The relevant extracts are provided in the report in English translation. There is little engagement by Professor Boucobza with these sources other than to question the premises of Professor Lagarde’s argument as a matter of logic.

Secondly, when expressing a contrary view, Professor Boucobza cites little by way of authority in support of his view. First, he cites a Court of Cassation case for the proposition that “since a judge cannot refuse to rule on the basis of the inadequacy of the evidence provided to him by the parties without committing a denial of justice”, he concludes that “the judge must instead dismiss the case of the party who bears the burden of proof, after having possibly ordered the appropriate investigative measures or having invited the parties to produce useful evidence.” By “case”, Professor Boucobza appears to mean the entirety of the factual allegations proposed by the party with the burden of proof. However, a finding that the burden of proof was not met is no more than that – it justifies a finding that the burden of proof was not met. It does not lead to the conclusion as to what the particular facts were. A judge may decline to make factual conclusions because they lack sufficient evidence to be certain.

The second case cited by Professor Boucobza supports the proposition that the Court of Cassation has consistently ruled out the making of a new application on the same claim based solely on new evidence, which he claims tends to undermine Professor Lagarde’s views, which “suggest that a claim dismissed for insufficient evidence could later return to the judge with new evidence since their opponent’s hypothesis was not established” ([47] Boucobza-1). I do not consider that this is a

Further, I do not consider that Professor Boucobza’s reliance on the maxim “idem est non esse aut non probari” (the right claimed does not exist, because not being able to prove that right amounts to not having that right) is apt or in point. I prefer the evidence of Professor Lagarde at [10] that a legal matter (the nullity of the share transfer) cannot be upheld if the factual issue on which the claim is based (the alleged fraud) is insufficiently proved. This does not mean that when a particular fact is not proved, the court must conclude that the fact does not exist and the opposite fact has been established.

Thirdly, there is a difference between the experts in relation to the relevance of the fact that the Paris Commercial Court refused to grant MAD Atelier’s claim. In his first report Professor Lagarde considers that his view of what the French court determined is supported by the fact that “the Paris Commercial Court expressly refused to grant MAD Atelier’s claim” to the effect that the 3 August 2016 agreement was valid ([31] and [34]). This is based on the court’s recital at pages 8-9:

“MAD Atelier SAS requested the court in its latest iteration of its claims to:

On the merits of the claims

-

FINDING that the sale of the shares in MAD Atelier SAS on 3 August 2016 took place in full observation of provisions of the Articles of Association of MAD Atelier SAS

-

FINDING that MAD Atelier International BV has given its consent to the sale of the shares in MAD Atelier SAS on 3 August 2016.

Therefore,

-

DENY all claims, objectives and assumptions of MAD Atelier International BV […]”

In the operative part of the judgment the French Court merely dismissed MAD International’s claim on the nullity of the transfer of the shares and its claim for compensation; it did not grant MAD Atelier’s “claim” for a declaration or “finding” that MAD International had validly given its consent. Further, the French Court stated that it “denies the parties their other, broader or contrary requests” (emphasis added) which were not referred to in the operative part of the judgment.

I am not convinced that this point takes MAD International’s case much further. Professor Boucobza’s view (Boucobza-1 at [50] ff) is that it is not possible to draw any inference from this denial, because MAD Atelier did not make a substantive counterclaim, and because such a counterclaim would serve no practical purpose: the Share Transfer Agreement was valid and binding until it was overturned under French law. Professor Lagarde accepts that the French court may have thought MAD Atelier’s request, in the form of a declaration, was unnecessary because the transfer of the shares was prima facie valid.

Fourthly, and without prejudice to the above conclusion that the Paris Judgment only found that MAD International had not met the standard of proof in its case on fraud, some of the conclusions reached by the French court were not on the critical path of any relevant conclusions. In this regard:

Finally, I note that MAD International relies in its skeleton argument on the case of Berkeley Administration Inc. McClelland [1995] I.L.Pr. 201, as being a case in which Hobhouse LJ also reached the obiter conclusion that findings in the motifs section of a Paris commercial court judgment were no more than collateral comments. In my view, this case does not assist in the determination of this issue. In this regard:

There is some overlap between the factual allegations in the French Civil Proceedings and the allegations contained within the Particulars of Claim before this Court. This aspect is dealt with in greater detail in the context of abuse of process in Section C.2 below. For the reasons there identified I am satisfied that the issues in these proceedings are not the same issues as in the French Civil Proceedings and, indeed, are significantly broader.

In relation to the issues in respect of which Mr Manès contends that the Paris Judgment gives rise to an issue estoppel I am satisfied that the French Civil Proceedings does not give rise to any issue estoppel because, for the reasons that I have given: (1) The decision of the Paris Commercial Court on such issues is not final or conclusive; (2) The parties to both proceedings are not privies; (3) The issues identified by Mr Manès were not issues concluded by the court, but rather comments on the state of the evidence, and (4) The issues in the English Proceedings are significantly broader than the issues in the French Civil Proceedings. Each of these is, in and of itself, fatal to the contention that an issue estoppel arises from the Paris Judgment, and I find that no issue estoppel arises.

Parties’ Contentions

Mr Manès’ primary case was that I should strike out the claim for abuse of process on the basis that MAD International is issue-estopped from bringing the majority of its claims. I have already rejected that contention in Section C.1 above. Mr Manès submitted, in the alternative, that even if MAD International is not issue-estopped, nevertheless the Court can and should find that the proceedings are abusive in what are said to be the following cumulative circumstances:

Mr Manès’ counsel did not make separate submissions on collateral attack and Henderson v Henderson abuse of process – he pointed out that abuse of process is a broad merits-based enquiry as to all of the circumstances, and this applies to each form of abuse of process. He also did not contend that all the allegations contained in MAD International’s statement of case were an abuse of process. He acknowledged that the particulars relating to clause 9.1 and clause 14.2 were not abusive as they contained allegations which were not traversed in the French Civil Proceedings. However, he submitted that the allegations in those paragraphs had no real prospect of success and as such they should be struck out.

For its part, MAD International submits that its statement of case is not abusive for the following reasons:

In the sections that follow I have noted where a point is of particular relevance to collateral attack or Henderson v Henderson type abuse; where a point is relevant to both, I have referred to “abuse of process” generally.

The French Civil Proceedings Do Not Give Rise to Issue Estoppel

I have already concluded that the French Civil Proceedings do not give rise to any issue estoppel. This is a powerful factor against a finding of abuse of process:

Issues in English Proceedings Broader than French Civil Proceedings

As addressed below, the issues that arise for determination by the English court in these proceedings are markedly wider than the issues which were before the Paris Commercial Court. As a preliminary point, however, it is important to bear in mind my earlier conclusion above that the Paris Judgment did not actually make any binding conclusions on factual issues (which are all located in the motifs section, not in the dispositif section): they only made collateral comments. This is, in of itself, a strong reason why the English proceedings do not amount to an abuse – indeed it is artificial to talk of issues which were not determined as being “re-litigated”. However, even if there were determinations on those issues, for the reasons set out below there are only two issues in common between the French and English Proceedings: and those issues are not appropriately characterised as the “core allegations”. I will identify the parties’ respective contentions, followed by my conclusions on the matter.

Mr Manès contends that the core allegations remain the same in substance as those advanced and dismissed in the French Civil Proceedings, for two reasons. Firstly, MAD International’s claim is purportedly premised on an allegation that Mr Padberg was misled by Mr Manès as to the purpose of the 3 August Meeting. Secondly, MAD International’s case on causation is purportedly premised on the fact that Mr Padberg did not understand the documents he was signing. MAD International accepts that these allegations are relevant to some of its particulars of breach. However, it contends that those allegations are not the “core” of the English Proceedings not least because there are several alleged breaches which are independent of any such matters.

I am satisfied that the factual allegations covered in the English proceedings are significantly broader than in the French Civil Proceedings.

First, there are a number of independent claims which do not require MAD International to establish that Mr Manès allegedly misled Mr Padberg as to the purpose of the 3 August Meeting, or that Mr Padberg did not understand the documents. In this regard:

Secondly, it was submitted by Mr Chapman, on behalf of Mr Manès, that it is not possible to divorce the allegation that Mr Manès failed to inform the Board, the Supervisory Committee, or Dream as to the true purpose of the meeting from the allegation that Mr Manès misled Mr Padberg as to the true purpose of the meeting - it is said that the failure to inform only goes anywhere if those parties had already been materially misled about the meeting’s purpose. I disagree with Mr Chapman’s reading of the PoC alongside the Part 18 Response. If Mr Manès had failed to tell Dream, the Board, or the Supervisory Committee anything about the meeting (not just misleading them about its purpose), that would still have been a breach, because the need to inform them of a share transfer under Clause 5.1 and/or 5.3 and/or Schedule 3 of the JVA was a positive obligation. Misleading Mr Padberg is a separate breach, and is one of the allegations of how Mr Manès “caused” MAD International to enter into the transaction (breach at [37.2] PoC; Part 18 Request at 3.1). However, the failures to tell Dream, the Board and the Supervisory Committee are also independent breaches and independent causes of the transfer – had they been informed then on MAD International’s case the transfer would not have occurred (indeed the 3 August Meeting would never even have taken place).

Thirdly, it is not necessary for MAD International to establish that Mr Padberg failed to understand the transfer documents in order to establish that the above breaches caused loss in the English proceedings.

Fourthly, the conclusion that the English Proceedings are significantly broader than the French Civil Proceedings is significant because (in the absence of privity), abuse of process by collateral attack will only arise in rare cases. Such a rare case arises where it would be manifestly unfair to a party in the later proceedings that the same issues should be re-litigated, or this re-litigation would bring the administration of justice into disrepute (Bairstow at [38] and Michael Wilson at [48(3)], cited above). That is not this case.

Even if there is any “re-litigation” of issues (despite my observations on that above), it is not right to characterise matters as a re-litigation of the same core issues, as such issues are not the core issues in the English proceedings for the reasons that I have identified, and the issues in the English proceedings are also significantly broader than those in the French Civil Proceedings. In such circumstances it is not manifestly unfair to a party in the later proceedings that the issues litigated in the French Civil Proceedings should also be litigated in these proceedings, nor would such litigation here bring the administration of justice into disrepute (Bairstow at [38] and Michael Wilson at [48(3)], cited above). Nor would it be appropriate to strike out those matters which overlap as they are relevant to other unrelated allegations which lead to breach of the same contract. Similarly, Mr Padberg not understanding the documents is just one of several ways in which MAD International could establish causation.

The majority of the claim does not fall away on the resolution of the appeal in the French Civil Proceedings

It is also not accurate to say that the majority of the claim “falls away” after the resolution of the appeal in the French Civil Proceedings.

Further, Mr Manès contended that MAD International had failed to set out in correspondence how both the French and the English proceedings could go along simultaneously with such overlapping issues. In my view, this contention takes Mr Manès nowhere - MAD International is not obliged to set out a plan for casemanaging both proceedings, particularly in circumstances where no issue estoppel arises from the French proceedings. In any event proceedings involving (some) of the same parties in more than one jurisdiction with some overlapping issues is not uncommon, and not inherently abusive.

Mr Manès is not privy to the French Civil Proceedings

For the reasons I have already set out above in Section C.1, Mr Manès is not privy to the earlier French Civil Proceedings. In circumstances where there is neither privity nor issue estoppel there is very limited scope for establishing that the English Proceedings are an abuse of process: see SCB Flaux J at [161].

The JVA pursuant to which the English Proceedings are brought contains an exclusive jurisdiction clause in favour of England. In SCB this was a strong indication that there was no “manifest unfairness” in relitigating particular issues in later proceedings. This is because the claimants were effectively being “held to their contractual bargain as regards jurisdiction” – (SCB at [162]). In the present case, there is an exclusive jurisdiction agreement in favour of England in the JVA:

No prima facie presumption that proceedings with overlapping factual issues are an abuse

I also bear in mind that there is no prima facie presumption that new proceedings which cover issues that have been decided in prior proceedings are an abuse: Michael Wilson at [48(2)] and accordingly it is necessary to look at whether factors exist which would lead to the conclusion that the proceedings are an abuse. For the reasons I have set out above, I am satisfied that there are no compelling factors in this case which would justify a conclusion that MAD International’s English proceedings are an abuse of process.

No Henderson v Henderson Abuse of Process

Nor do I consider that there was any Henderson v Henderson type abuse of process in the present case. Whilst this was not the main basis for Mr Chapman’s abuse of process arguments, I heard submissions from Mr Dhillon on behalf of MAD International in relation to the same. For reasons I have set out above, Mr Manès is not privy to the earlier proceedings against MAD Atelier and MA Développement. Absence of identity of interest is not in itself a bar to Henderson v Henderson abuse of process – however, it is a powerful factor against the existence of such an abuse. Furthermore, the gravamen of the wrong in Henderson v Henderson abuse of process is bringing a claim in later proceedings which could and should be been brought in the earlier proceedings. That is simply not the case here - MAD International could not have brought any claims against Mr Manès pursuant to the JVA in France due to the existence of the exclusive jurisdiction agreement.

In the above circumstances I am satisfied, and find, that the English Proceedings are not an abuse of process. Specifically, (1) there is no collateral attack on the Paris Judgment, because there was no issue estoppel from that foreign judgment in relation to the claims advanced in in MAD International’s Particulars of Claim; (2) the issues contained in the Particulars of Claim are much broader than the issues before or determined by the Paris Commercial Court; (3) most of the claims for breach of contract would not fall away if the appeal in the French Civil Proceedings succeeds; (4) Mr Manès is not privy to the French Civil Proceedings (which is a strong factor militating against any finding of abuse of process); (5) there is no general rule against apparently inconsistent judgments on the facts as amounting to an abuse of process (Michael Wilson at [42]); and (6) the exclusive jurisdiction agreement in favour of England means that proceedings in this country were clearly contemplated (and as such were not abusive). Taking such factors individually and collectively the English proceedings are not an abuse. It is not manifestly unfair to Mr Manès that issues litigated in the French Civil Proceedings should also be litigated in these proceedings, nor would such litigation here bring the administration of justice into disrepute. Equally, and for the reasons I have given, there is no Henderson v Henderson type of abuse in the present case.

Mr Manès applies for summary judgment in respect of the claims on two grounds:

Further, Mr Manès in oral submissions referred to a third possible ground (as identified below), the substance of which was not properly explained in the skeleton argument, the Application Notice, or any of the Witness Statements served in evidence.

I consider that each of the claims have a real, that is more than merely fanciful, prospect of success in the circumstances, and for the reasons, set out below. Accordingly Mr Manès’ application for summary judgment/strike out also fails.

The Allegedly Overlapping Claims

I am satisfied that the Allegedly Overlapping Claims have a real prospect of success.

First, for the reasons I have set out above, I have concluded that the French Civil Proceedings do not give rise to an issue estoppel. Even had it not been possible to reach that conclusion at this stage, for the purpose of his summary judgment application, Mr Manès would have to establish that the estoppel’s existence was so clear and certain that there was no serious issue to be tried regarding an estoppel between the parties. It is readily apparent, having regard to the expert evidence as to French law that I have considered above, that this is not the case, and that there would have been (had it not been appropriate to reach a conclusion on issue estoppel), on any view, at least a serious issue to be tried.

Secondly, I am also satisfied that the Allegedly Overlapping Claims stand a real prospect of success in the context of the issues that arise in relation to causation:

The Remaining Claims

Mr Manès contended that the PoC in the English Proceedings failed to plead that MAD International suffered any particular separate loss as a result of the clause 9 / clause 14.2 breaches, and that those breaches only exist to further evidence Mr Manès’ breach of the implied term of good faith. Further or alternatively, it is contended that to the extent that the Remaining Claims are maintainable, they stand or fall with the Allegedly Overlapping Claims.

MAD International contended that these breaches do have a real prospect of success, proof of loss is not required to establish a breach of contract, and it was not accepted that no loss flowed from such breaches.

I am satisfied that the Remaining Claims do have a real prospect of success. First there are pleaded losses attached to the breach of clauses 9 and 14.2 which are the same as the losses which allegedly stem from breach of clause 2.8, and/or the implied term of good faith. In this regard:-

Secondly, even if it could be demonstrated that there was no specific loss flowing from the breach of clauses 9.1 and 14.2, this is not a reason to strike out a claim for breach of contract / grant summary judgment in respect of the same. In this regard:

Other Alleged Grounds for Summary Judgment

In his oral submissions Mr Chapman stated that his client maintained a case “in full” for summary judgment on the merits, aside from the case set out above in relation to causation, and that his client maintained his case on summary judgment on the merits by reference to the matters set out in Mr Watts’ first witness statement. This case was not referred to at all in Mr Manès’ Skeleton Argument.

What was stated at paragraph 43 of Mr Watts’ first witness statement was that “Mr Manès will contend that such claims [the Remaining Claims] are not reasonably arguable or stand no real prospect of success because: (a) there is no real prospect of showing that Mr Manès has breached the terms of the JVA as alleged and/or […]. I refer in this regard to the Response Letter.”

The Response Letter does not set out any grounds on which the Remaining Claims, or the Allegedly Overlapping Claims stand no real prospect of success. Instead, it lists around seventeen alleged independent defences on the merits in relation to each of the alleged breaches of contract. Further, none of these grounds are set out in detail in the Application Notice, which only mentions that any claims not found to be abusive have no reasonable prospects of success because they do not “amount to breaches of the JVA”. Mr Chapman did not attempt to argue before me all seventeen alleged defences – rather he referred only to a point of construction in relation to breaches of clauses 5.1 and 5.3 of the JVA.

The reality is that the approach adopted by Mr Manès meant that MAD International had little opportunity to respond to the summary judgment grounds which Mr Chapman raised in oral submissions, because it was wholly unclear from the Application Notice, the supporting witness statements or the skeleton argument why it was argued that the pleaded matters did not disclose a breach of contract. In particular, it would not have been possible to know that the aforementioned “construction point”, out of all seventeen alleged substantive defences in the Response Letter, would be the matter pursued at the hearing. Rather it might well have been thought that an initial “scatter-gun approach” had been narrowed down by the time of the hearing (a not uncommon occurrence).

Paragraph 2(3) of PD 24 provides that:-

“(3)

The application notice or the evidence contained or referred to in it or served with it must –

(a)

identify concisely any point of law or provision in a document on which the applicant relies, and/or

(b)

state that it is made because the applicant believes that on the evidence the respondent has no real prospect of succeeding on the claim or issue or (as the case may be) of successfully defending the claim or issue to which the application relates”

The purpose of this provision is to ensure that it is clear as to each basis on which the application is made. I do not consider that the approach adopted by Mr Manès complied with paragraph 2(3) of PD 24 in relation to the seventeen alleged defences including the point of construction in relation to breaches of clauses 5.1 and 5.3 of the JVA.

In circumstances where MAD International has not had a fair opportunity to address the same, I did not consider it appropriate to determine such point of construction on the current summary judgment application of Mr Manès, and dismiss the current application. I do so in circumstances where MAD International undertook, in its oral submissions, not to take any point that Mr Manès could not in future renew this part of his application for summary judgment, and Mr Manès was ultimately content for this to be the position, in the event that MAD International’s claims survived strike-out or summary judgment based on issue estoppel and/or strike-out for abuse of process.

For the reasons set out above, I am satisfied that the French Civil Proceedings do not create any issue estoppel against issues raised in the English Proceedings and that the English Proceedings are not an abuse of process. Accordingly, Mr Manès’ Applications that the proceedings brought by MAD International should be struck out as an abuse of process are dismissed. Equally I am also satisfied, for the reasons that I have identified, that MAD International’s claims have a real prospect of success and accordingly Mr Manès’ Applications for strike out/summary judgment on the basis that they disclose no real prospect of success and/or are an abuse, also fail and are dismissed.

Mr Manès’ final application is for a case management stay pending final determination of the French Civil Proceedings.

I have already identified the applicable legal principles, which were largely common ground, at Section B.5 above. A case management stay should only be granted in rare and compelling circumstances; exceptionally strong grounds are required to justify such a stay where the parties confer exclusive jurisdiction on the English court, and such exceptional circumstances normally do not include the danger of inconsistent judgments. More specifically (but again in summary), the court has a discretion to stay an action pending the resolution of a claim pending in another forum, but a stay should only be granted in “rare and compelling circumstances”: Reichhold Norway ASA v. Goldman Sachs, supra at 186. “Exceptionally strong grounds” are required to justify a stay on case management grounds where the parties have conferred exclusive jurisdiction on the English court: Mazur Media Ltd v. Mazur Media GmbH [2004] 1 W.L.R. 2966 at [69]-[70] (Lawrence Collins J); Jefferies International Ltd v Landsbanki Islands HF [2009]

Mr Manès submits that the following amount to exceptionally strong grounds that, it is said, justify a case management stay: a purported substantial overlap between the issues and factual enquiry in the two sets of proceedings; that part of the claims in the English proceedings are affected by the outcome of the French Civil Proceedings; and that Mr Manès must otherwise defend himself against in substance the same allegations in two different jurisdictions. Mr Manès also contends that MAD International has failed to explain in correspondence how, as a matter of case management, the English and the French Civil Proceedings could be pursued simultaneously.

MAD International submits that such matters (even if made out) do not amount to exceptionally strong grounds (or indeed strong grounds) and that a case management stay is not appropriate on established principles as applied to the actual facts of the case. They draw attention to the fact that the JVA contained an exclusive jurisdiction clause in favour of England with the result that a case management stay would detract from the bargain made by the parties. They also rely upon the following further matters: factors which are in the nature of forum non conveniens do not establish the exceptional circumstances needed for a case management stay; a case management stay would subvert Articles 29 and 30 of the BIR; the proceedings in France and England concern different claims with different parties, and a stay would cause significant delay to the English proceedings.

In considering whether or not to grant a stay, I proceed upon the assumption that Mr Manès has failed to establish his case on abuse of process and summary judgment (as is indeed the case).

Mr Manès has not demonstrated that there are exceptionally strong grounds for a stay, and I do not consider that the present case is an appropriate case for a case management stay. I have reached this conclusion for six reasons.

Firstly, MAD International’s claims in the English proceedings are brought pursuant to the JVA, which contains an exclusive jurisdiction clause in favour of England. In such circumstances exceptionally strong grounds are required justifying a case management stay. This is for two reasons:

Secondly, I consider that the granting of a case management stay in the present case would subvert the operation of Articles 29 and 30 BIR. Those Articles provide for the circumstances in which claims within the EU must be stayed (because they are the same cause of action with the same parties), or may be stayed (because they are related actions). Mr Manès has not made any applications under those Articles to stay proceedings no doubt because the requirements of Article 29 are not satisfied (the parties are not the same); and those of Article 30 are not satisfied (because the claims under the JVA cannot be heard and consolidated with proceedings in France due to the exclusive English jurisdiction clause).

Thirdly, neither Mr Manès nor MAD International will be bound, in the English Proceedings, by the conclusions in the French Civil Proceedings as a matter of issue estoppel: the French Civil Proceedings will not finally resolve the issues between the parties to the English Proceedings for the reasons set out above and the claims in the English proceedings are significantly broader than the claims brought in the French Civil Proceedings. Both of these are powerful reasons militating against the grant of a case management stay – see Gloster J in Klöckner

Fourthly, there is no risk of double recovery by MAD International in practice. If the French appeal courts were first to uphold the appeal and reverse the Share Transfer Agreement, and the English Court decides later to award damages against Mr Manès, then the English Court would no doubt take into account the fact that the shares had been returned to MAD International in calculating damages. Alternatively, if the English court were first to decide to award damages for the undervalue, and French appeal courts (including the Court of Cassation) later decided to uphold the appeal and reverse the Share Transfer Agreement, I understand that MAD Atelier and MA Développement would be able to put forward, on enforcement, the contention that MAD International had already recovered some of its losses from Mr Manès directly in the English Proceedings.

Fifthly, the length of any stay of the English Proceedings would be uncertain. The outcome of the Paris Appeal Court’s decision is likely to be known by around October 2020, but both parties have an appeal as of right to the French Court of Cassation in relation to any points of law. Such an appeal could take up to three years. The availability of the appeal and the time estimates were not substantively contested by Mr Manès either in his skeleton argument or in the course of oral submissions. Therefore, staying proceedings would not be in keeping with the overriding objective to deal with cases “expeditiously and fairly” (CPR r.1.1(2)(d)). I consider this to be a factor of particular importance in circumstances where England is the only forum in which MAD International can obtain relief for purported breaches of the JVA. In circumstances where the parties agreed to an exclusive jurisdiction clause, the objective common intention of the parties must also have been that the English court would progress claims under the JVA expeditiously rather than staying such proceedings for a lengthy period of time pending any possible outcome of foreign proceedings.

In the above circumstances, this is not one of those cases where there are “rare and compelling circumstances” justifying a stay, and Mr Manès has not discharged the burden that is upon him to demonstrate that there are “exceptionally strong grounds” justifying a stay on case management grounds set against the backdrop of the parties having conferred exclusive jurisdiction on the English court. Accordingly, the application for a case management stay is refused.

In the above circumstances, and for the reasons that I have given, Mr Manès’ Applications fail, and are dismissed.

I trust that the parties will be able to agree the terms of the Order to reflect the outcome of the Applications before me, and any consequential matters including as to costs.