Case Summaries

Merck Sharp & Dohme Corp (formerly known as Merck & Co, Inc) v Merck KGaA (formerly known as E Merck)

SUPREME COURT OF SINGAPORE

26 February 2021

Case summary

Merck Sharp & Dohme Corp (formerly known as Merck & Co, Inc) v Merck KGaA (formerly known as E Merck) [2021] SGCA 14
Civil Appeal No 223 of 2019

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Decision of the Court of Appeal (delivered by Chief Justice Sundaresh Menon):

Outcome: CoA dismisses the appeal and upholds the High Court’s decision that issue estoppel applies such that the appellant is bound by an earlier English decision interpreting an agreement between the parties’ predecessors.

Pertinent and significant points of the judgment:

  • Foreign judgments are capable of giving rise to issue estoppel. Where there are multiple competing foreign judgments, the foreign judgment that is the first in time should be recognised for the purposes of creating an estoppel. On the other hand, where there is an inconsistent prior or subsequent local judgment between the same parties, the foreign judgment should not be recognised (at [25] and [36]).
  • In order for a foreign judgment to give rise to issue estoppel, not only the foreign judgment as a whole, but also the decision on the specific issue that is said to be the subject matter of the estoppel must be final and conclusive under the law of the foreign judgment’s originating jurisdiction (at [43]).
  • Issue estoppel does not apply to a foreign (or even local) judgment on a “pure” question of law that does not directly affect the parties’ rights, liabilities or legal relationship (at [51]).

 

Background to the appeal

1 In the 1970s, the predecessors of the appellant and the respondent entered into a co‑existence agreement to govern the use of the name “Merck” in various jurisdictions around the world. This agreement was contained in two documents (the “1970 Agreement” and the “1975 Letter” respectively).

2 Subsequently, the appellant and the respondent became embroiled in litigation in several jurisdictions, including England, over the use of the name “Merck”. Three decisions were handed down by the English courts before proceedings were commenced in Singapore. These decisions (collectively, “the English Decisions”) comprised:  

  1. a preliminary decision by the High Court of England and Wales (“HCEW”) on the governing law of the 1970 Agreement and the 1975 Letter (“the English Preliminary Decision”);
  2. a decision by the HCEW essentially interpreting various clauses of the 1970 Agreement, including cl 7, and finding a breach of the agreement by the appellant (“the HCEW Decision”); and
  3. a decision by the English Court of Appeal (“ECA”) affirming the HCEW Decision (“the ECA Decision”).

3 In the Singapore proceedings, the respondent and Merck Pte Ltd sued the appellant and three other defendants for trade mark infringement, passing off and breach of contract. Before the High Court judge (“the Judge”), the respondent applied for:

  1. summary judgment against the appellant for breach of the co-existence agreement between the parties’ predecessors (as comprised in the 1970 Agreement and the 1975 Letter); and
  2. preliminary determinations under O 14 r 12 of the Rules of Court (Cap 322, R 5, 2014 Rev Ed) (“O 14 r 12”) as to: (i) whether the appellant was bound by the English Preliminary Decision on the governing law of the 1970 Agreement and the 1975 Letter (the “Governing Law Preliminary Determination”); and (ii) whether the appellant was bound by the ECA Decision on the interpretation of cl 7 of the 1970 Agreement (the “Interpretation Preliminary Determination”).

4 The Judge dismissed the summary judgment application but allowed the O 14 r 12 application on the basis that the two issues raised by the respondent were “pure questions of law” that would lead to substantial savings of time and expenditure if they were resolved without a full trial. He also held that issue estoppel applied such that the appellant was bound by the English Decisions.

5 The appellant appealed against only the Judge’s decision on the Interpretation Preliminary Determination. It contended that issue estoppel did not arise from the ECA Decision, and that the Interpretation Preliminary Determination was not suitable for determination under O 14 r 12. For its part, the respondent contended that the Judge’s decision was correct, and also argued that the appellant’s conduct of the appeal constituted an abuse of process because the appellant had appealed against only the Judge’s decision on the Interpretation Preliminary Determination, while accepting his decision and reasoning in respect of the Governing Law Preliminary Determination, even though the same issue estoppel reasoning underlay both decisions.

6 There were three issues which the Court of Appeal (“the Court”) had to determine, namely:

  1. as a preliminary matter, whether the appellant was prevented by the abuse of process doctrine from mounting the appeal in the manner that it did;
  2. substantively, whether the Judge was correct to find that the appellant was estopped from disputing the ECA’s interpretation of cl 7 of the 1970 Agreement; and
  3. whether the Judge correctly found that the Interpretation Preliminary Determination was suitable for determination under O 14 r 12.

The decision of the Court

7 The Court considered that the appellant was indeed taking inconsistent positions in its conduct of the appeal in so far as it argued that the Judge had erred in finding, in relation to the Interpretation Preliminary Determination, that there was identity of parties to found an estoppel in respect of the ECA’s interpretation of cl 7 of the 1970 Agreement, whilst declining to take issue with his finding, in relation to the Governing Law Preliminary Determination, that the English Preliminary Decision likewise gave rise to an estoppel, even though the latter finding shared the same foundation of identity of parties. However, this inconsistency did not amount to an abuse of process, and warranted at most that the Court disregard the appellant’s arguments on the lack of identity of parties in relation to the interpretation of cl 7. In any case, these arguments were unpersuasive for the reasons given by the Judge (at [21]).

8 The appellant’s conduct of the appeal did not offend the doctrine of approbation and reprobation, which extended to the assertion of inconsistent positions against different parties in different proceedings, so long as the party against whom the doctrine was invoked had received an actual benefit arising from an earlier inconsistent position. This was because the appellant had not received any actual benefit as a result of the inconsistent positions it had taken (at [22]).

9 Foreign judgments were capable of giving rise to issue estoppel (“transnational issue estoppel”). The first element of transnational issue estoppel was the existence of a foreign judgment that was capable of being recognised in the jurisdiction in which issue estoppel was invoked. Under the common law, the foreign judgment in question had to be a final and conclusive decision on the merits by a court of competent jurisdiction that had transnational jurisdiction over the party sought to be bound, and there had to be no defences to the recognition of the judgment. No special procedure was required for the recognition of foreign judgments under the common law beyond normal pleading rules (at [25] and [35]).

10 Where there were multiple competing foreign judgments, the foreign judgment that was the first in time should be recognised for the purposes of creating an estoppel. On the other hand, where there was an inconsistent prior or subsequent local judgment between the same parties, the foreign judgment should not be recognised (at [36]).

11 The Court left open for future consideration the approach to be taken where a foreign judgment was handed down when local proceedings on the same or substantially the same subject matter had been commenced and were pending, as well as the question whether reciprocity should be a precondition to the recognition of foreign judgments at common law (at [38] and [39]).

12 Turning to the second and third elements of transnational issue estoppel – namely, identity of issues and identity of parties – the Court held that as a general rule, there was no distinction between local and foreign judgments as far as the legal principles on the need for these two elements were concerned. However, when considering the element of identity of issues, and in defining the issues that were dealt with in the earlier decision and those that were presented in the case before the court, caution should be exercised when interpreting judgments from foreign legal systems (at [40]).

13 In order for a foreign judgment to give rise to issue estoppel, not only the foreign judgment as a whole, but also the decision on the specific issue that was said to be the subject matter of the estoppel had to be final and conclusive under the law of the foreign judgment’s originating jurisdiction. In this regard, there was a need to be alive to inter-jurisdictional differences, and to consider the expert evidence, if available, on what precisely the position was under the law of the foreign jurisdiction in question (at [43]).

14 In the present case, the appellant accepted, subject to two points, that issue estoppel would apply to the ECA’s interpretation of cl 7 of the 1970 Agreement as set out at [139] of the ECA Decision. The first point was that the issues in the English and the Singapore proceedings were not identical because the respondent had relied on cl 7 alone in the English proceedings, but had pleaded cll 5, 6 and 7 collectively in the Singapore proceedings. The Court rejected this argument on the grounds that: (a) the additional provisions were ultimately relevant to only the question of breach, but not the question of interpretation; and (b) in any case, under the abuse of process doctrine laid down in Henderson v Henderson (1843) 67 ER 313, any arguments pertaining to the relevance of additional clauses that, in the appellant’s view, would detract from the interpretation of cl 7 arrived at by the HCEW and affirmed by the ECA could and should have been raised by the appellant in the English proceedings. The appellant’s second point was that the ECA Decision could not give rise to an issue estoppel in the Singapore proceedings because it was territorially confined to acts committed in the UK. This contention was likewise rejected by the Court on the basis that those portions of the ECA Decision that the appellant relied on in this regard pertained to the question of breach, rather than the interpretation of cl 7 (at [46] to [48]).

15 As the two aforesaid points by the appellant had been rejected, what was left was its concession that issue estoppel would apply to the interpretation of cl 7 set out at [139] of the ECA Decision. The parties were substantially in agreement with each other on this point, and there was then no further controversy for the Court to resolve since it was evident that the Judge did not err in substance in his understanding of the ECA Decision. The Court therefore dismissed the appeal and affirmed the Judge’s decision on the Interpretation Preliminary Determination as well as his decision that this issue was suitable for determination under O 14 r 12 (at [49] and [50]).

16 The Court additionally noted that issue estoppel did not apply to a foreign (or even local) judgment on a “pure” question of law that did not directly affect the parties’ rights, liabilities or legal relationship, but pointed out that this did not have any bearing on the present appeal as the ECA Decision was not a decision on a “pure” question of law (at [51]).

The Court’s further observations on transnational issue estoppel

17 Having explained its reasons for dismissing the appeal, the Court went on to outline its views on some of the further considerations that were relevant to transnational issue estoppel. As regards the outer boundaries of transnational issue estoppel, the Court opined that (at [54] to [58]):

  1. transnational issue estoppel should not arise in relation to any issue that the court of the forum ought to determine for itself under its own law;
  2. transnational issue estoppel should be applied with due consideration of whether the foreign judgment in question was territorially limited in its application;
  3. additional caution might be necessary in applying the doctrine of transnational issue estoppel against a defendant in foreign proceedings, as opposed to against a plaintiff, as the latter had the prerogative to choose the forum; and
  4. where a foreign judgment conflicted with the public policy of the jurisdiction in which issue estoppel was invoked, issue estoppel might be denied to the judgment.

18 The Court also considered the applicability to transnational issue estoppel of the narrow exception to issue estoppel derived from Arnold and Others v National Westminster Bank plc [1991] 2 AC 93 and endorsed in The Royal Bank of Scotland NV (formerly known as ABN Amro Bank NV) and others v TT International Ltd (nTan Corporate Advisory Pte Ltd and others, other parties) and another appeal [2015] 5 SLR 1104 in the context of domestic issue estoppel (that is to say, issue estoppel arising from a prior local judgment), but did not come to a concluded view as it was unnecessary to do so for the purposes of the appeal (at [62] to [65]).

 

This summary is provided to assist in the understanding of the Court’s grounds of decision. It is not intended to be a substitute for the reasons of the Court. All numbers in bold font and square brackets refer to the corresponding paragraph numbers in the Court’s grounds of decision.

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