Olympic Airlines SA v ACG Acquisition XX Llc

Factual and Procedural Background

The case concerns an appeal by Company A against an order made by Judge Teare in the Commercial Court on 1 June 2012, relating to a claim and counterclaim involving Company A and Company B, a foreign company in special liquidation. Company B was ordered to pay Company A over US$10 million plus interest, two-thirds of Company A's costs, and an interim payment of £500,000 on account of costs. Company B initially failed to pay the interim payment and sought a stay based on foreign insolvency law, which Company A opposed. The Court of Appeal made an order on 17 December 2012 requiring Company B to pay security for costs and the £500,000 interim payment into court as a condition for permission to appeal. Company B complied and pursued its appeal, which was dismissed on 17 April 2013. The appeal court’s order allowed Company B to apply for the release of the sums paid into court. Company B subsequently applied for release on the grounds that its liquidator could not lawfully pay these sums under foreign law. The court directed a preliminary hearing to determine whether Company B was issue estopped from arguing the foreign law point and, if not, whether the application should be dismissed.

Legal Issues Presented

1. Whether Company B is issue estopped from contending that it would be unlawful under foreign law for its liquidator to satisfy the English court’s order to pay Company A’s costs.
2. If there is no issue estoppel, whether Company B’s application for release of the sums paid into court should be dismissed on the basis that the payment would be unlawful under foreign law.

Arguments of the Parties

Appellant's (Company B’s) Arguments

• Company B argued that Company A was barred from raising the issue estoppel point due to delay, acquiescence, laches, waiver, and election, asserting that Company A’s conduct in engaging with the foreign law issue without raising estoppel amounted to estoppel against Company A.
• It was submitted that raising the issue estoppel at a late stage was unfair and amounted to an ambush, causing prejudice to Company B.
• Company B contended that it had changed its position by paying the sums into court based on an expectation of a full inquiry including the foreign law issue, and thus suffered detriment if estoppel were applied.
• It was argued that the foreign law made it unlawful for the liquidator to pay the sums to Company A, justifying dismissal of the application for release.

Respondent's (Company A’s) Arguments

• Company A contended that it was entitled to raise the issue estoppel point, as it was not barred by any representation, promise, or conduct that would give rise to estoppel against it.
• Company A argued that Company B’s prior conduct before Steel J, including paying the costs despite asserting unlawfulness under foreign law, undermined Company B’s position.
• It was submitted that Company B deliberately chose not to obtain expert evidence on foreign law at the earlier hearing for reasons of proportionality, and thus could not rely on the exception to issue estoppel allowing re-litigation based on new material.
• Company A maintained that the issue estoppel was properly raised in its skeleton argument and that Company B had adequate opportunity to respond.
• Company A argued that the foreign law issue was already decided by Steel J and that Company B was estopped from re-arguing it.

Table of Precedents Cited

Court's Reasoning and Analysis

The court carefully examined the factual and procedural history, focusing on prior orders and the conduct of the parties. It identified that Company B had previously raised the foreign law argument in opposing payment of costs but had failed to support it with independent expert evidence at the hearing before Judge Steel J. Company B paid the costs despite asserting unlawfulness, which undermined its current position.

The court applied the four conditions for issue estoppel and found they were met: a final judicial decision by a competent court had been made on the foreign law issue between the same parties. The foreign law determination was necessary and fundamental to the prior order.

The court rejected Company B’s arguments that Company A was estopped from raising issue estoppel due to delay, acquiescence, or waiver, finding no representation or promise by Company A that it would not raise the issue, and no detriment to Company B from the timing of the argument.

Considering the exception to issue estoppel from Arnold, the court held that Company B’s deliberate choice not to obtain expert evidence earlier meant it could not rely on the exception. No new material or change in law had arisen to justify reopening the issue.

The court also rejected arguments based on laches, acquiescence, or unconscionability, finding no special or exceptional circumstances to depart from the estoppel.

Accordingly, the court concluded that Company B was barred by issue estoppel from denying Company A’s entitlement to the sums paid into court and should not be allowed a second opportunity to challenge the foreign law point.

Holding and Implications

The court's final decision was to ORDER the sums paid into court to be released to Company A, holding that Company B is issue estopped from contesting the lawfulness of the payment under foreign law.

This decision directly affects the parties by confirming Company A’s entitlement to the funds and dismissing Company B’s application for their release. The court did not establish any new precedent but applied established principles of issue estoppel and procedural fairness to the facts.