Federal Treasury Enterprise (FKP) Sojuzplodoimport v Spirits International B.V.

1. The parties confer and provide a short minute of order giving effect to these reasons within 7 days.
2. The costs of this hearing are reserved. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

PERRAM J: 1 On 31 October 2019, I concluded that these proceedings should be permanently stayed on the basis that the Russian Federation had failed to give proper discovery in a manner such that the pursuit by the Cross-Claimants, Federal Treasury Enterprise (FKP) Sojuzplodoimport and Federal Public Unitary Enterprise External Economic Union Sojuzplodoimport (FGUP VO) (together, 'FKP'), of their cross-claim had become an abuse of process (FKP being an emanation of the Russian Government): Federal Treasury Enterprise (FKP) Sojuzplodoimport v Spirits International B.V. [2019] FCA 1772. 2 The Full Court agreed that some form of permanent stay of aspects of the cross-claim was warranted but concluded that my discretion had miscarried in ordering a stay of the entire cross-claim: Federal Treasury Enterprise (FKP) Sojuzplodoimport v Spirits International B.V. [2021] FCAFC 77; 389 ALR 612 ('FCJ1') at [18]. I ought 'to have permitted the cross-claim to be litigated to the extent of permitting a consideration of the issues estoppel allegedly raised by the Dutch decisions and their operative effect, and to allow a consideration of the viability of Spirits' discretionary defences': FCJ1 at [18]. Their Honours declined to exercise the discretion themselves but thought it 'more appropriate for the primary judge to re-consider the matter in light of our reasons': FCJ1 at [19]. It was more appropriate because remitting it to me would 'provide the necessary flexibility for his Honour to properly consider how best to deal with the issues estoppel and the discretionary defences in light of the material which would be before him on a re-hearing': FCJ1 at [19]. 3 There is perhaps a tension between the Full Court's statement at [18] that I ought to have permitted 'the cross-claim to be litigated' in relation to the issues estoppel and the discretionary defences and the statement at [19] that I am to conduct a rehearing of the permanent stay application. If those matters are to be litigated, how can the cross-claim be stayed? Nevertheless, the Full Court was clear that on remitter I was to consider the question of the permanent stay. If their Honours had intended that I should dismiss the stay application they could easily have done it themselves. 4 At first instance, I had concluded that the trial of the issue estoppel and res judicata issues was caught up in the deficiencies of the Russian Federation's discovery because of the House of Lords' decision in Arnold v National Westminster Bank plc [1991] 2 AC 93 ('Arnold'). The Full Court concluded that Arnold was not good law and that the discovered documents were not relevant to any trial of the issue estoppel and res judicata issues: FCJ1 at [339] and at [380] ('the primary judge should have concluded that further documents would be unlikely to change the transformation issue finding'). 5 I had also concluded that the Russian Federation's failure to give adequate discovery impacted upon the ability of Spirits to rely upon its discretionary defences. These were laches, estoppel and a contention that relief should be refused on discretionary grounds under s 88 of the Trade Marks Act 1995 (Cth). The Full Court concluded that in reaching that conclusion I had misdirected myself as to the appropriate test: FCJ1 at [391]. The Full Court did not say what the result of the application of the correct standard to the discretionary defences would be, only that I had erred in applying the incorrect standard. It would appear to follow, although the Full Court did not in terms say, that on any reconsideration of the permanent stay application I will need to determine whether the impact of the inadequate discovery on Spirits' discretionary defences is such as to warrant a permanent stay of the cross-claim applying the standard enunciated by the Full Court. 6 On the other hand, the Full Court appeared to be attracted to the idea that the question of whether the foreign proceedings gave rise to res judicata or issues estoppel was something that might be determined on an application for judgment: FCJ1 at [247]-[248]. How I might enter judgment without considering the discretionary defences was not something the Full Court explored. 7 Whatever it was that the Full Court intended upon my reconsideration of the permanent stay application, it appears clear that it anticipated that further 'material' might be placed before me: FCJ1 at [19] and Federal Treasury Enterprise (FKP) Sojuzplodoimport v Spirits International B.V. (No 2) [2021] FCAFC 120 at [15]. At this stage, it is unclear to me what this further material might be and the Full Court's reasons give no guidance. 8 At some point it will therefore be necessary to determine that question. 9 Once it is known what the material is, there would seem to be three options from a practical perspective. First, I could now determine on the correct standard, whether the deficient discovery given by the Russian Federation is such that I should grant the permanent stay that Spirits seeks of the cross-claim. 10 Secondly, I could invite FKP to apply for summary judgment on the basis of the foreign decisions. As part of that process, assuming the estoppels are effective, it would be necessary to determine whether the discretionary defences remained available. If they did not remain available, then summary judgment would follow. If they did remain available, then it would be necessary to determine whether Spirits was entitled to a permanent stay on the basis of the deficient discovery. 11 Thirdly, I could stand over the reconsideration of the permanent stay application to the trial of the cross-claim. 12 It is possible that the first and second options will result in a single hearing. But it is also possible that they will result in two hearings. As to the first, if I refuse the stay it will then be necessary to consider the impact of the foreign decisions. As to the second, if I conclude that summary judgment cannot be entered without a trial of the discretionary defences, I will then need to determine whether there should be a permanent stay because of those discretionary defences. 13 It seems to me therefore that conducting a full trial of the cross-claim but hearing at the same time the remitted permanent stay application is the most efficient path forward in the sense that it will certainly bring this matter to finality in a single hearing. 14 There is then a complexity. Spirits has sought to amend its defence and FKP for its part has sought to strike out part of the defence. The preparations for the trial of the cross-claim cannot proceed any further without certainty in the pleadings. There is presently a stay of the proceedings in place arising from my first decision: Federal Treasury Enterprise (FKP) Sojuzplodoimport v Spirits International B.V. (No 4) [2017] FCA 1345. That stay will need to be lifted for the third option to be pursued. 15 Consequently, what I will do is this: (a) lift the temporary stay; (b) grant a permanent stay of the cross-claim to the extent that it does not rely upon res judicata or issue estoppels arising from the foreign proceedings; and (c) schedule the hearing of the two pleading debates and the issue of what the Full Court meant by its reference to 'material'. Upon the resolution of those debates, and depending perhaps on their outcome, I will then: (d) provide for a timetable for Spirits and FKP to put on the further material (whatever that material is); (e) provide for a timetable for the parties to put on their evidence on the substantive cross-claim; and (f) try the cross-claim and the remitted permanent stay application together. Subsequent to the trial I will determine all questions of costs. 16 The parties should bring in a short minute of order giving effect to (a)-(c). Costs of this hearing are reserved. I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Perram.