In Skatteforvaltningen v MCML Ltd [2026] UKSC 19 the Supreme Court has unanimously allowed an appeal which concerns the scope of issue estoppel.
The appeal concerned whether a 2022 claim (relating to applications for refunds of Danish withholding tax) was barred by issue estoppel. The 2022 claim was for fraudulent misrepresentation. An earlier 2018 claim for negligent misrepresentation on the same facts had previously been dismissed on the basis of the revenue rule, that the English courts have no jurisdiction to enforce foreign revenue laws.
Issue estoppel is a legal mechanism which operates to stop a second claim arising from the same facts if the issue has been previously litigated. It is however applied very narrowly and it does not definitively disbar further proceedings.
In 2022, SKAT brought fresh claims against EDFM alleging fraud in relation to tax vouchers. Of the 286 tax vouchers 281 had been relied on in the 2018 proceedings. The Court of Appeal held that the 2022 claim was barred by issue estoppel. SKAT appealed to the Supreme Court.
Applying established principles, the Supreme Court stated that an issue estoppel has a very narrow focus and only arises where the issue decided was necessary and fundamental to the prior decision, being its “immediate foundation” rather than being an element of the prior court’s reasoning leading up to the decision. In deciding that issue, a critical consideration is whether the matter has been pleaded.
The Court of Appeal’s formulation of the issue was inconsistent with these principles. The Supreme Court held that the factual and legal bases of the 2022 claim had not been pleaded or in issue in the 2018 proceedings. They were not necessary for, or fundamental to, the 2018 proceedings and did not constitute the immediate foundation of the judgment. The doctrine of issue estoppel did not apply.
We deal with issue estoppel where our clients may have potential claims in a number of different legal venues. For example, most commonly where there is crossover between a disability discrimination claim and a personal injury claim or Fatal Accidents Act claim. It is really important to give due consideration to the best claim in the most appropriate forum when commencing litigation because starting a case in one tribunal or court may preclude a claim on similar facts in another. Claims founded on the same facts cannot be brought at the same time in two different courts or tribunals. One set of proceedings must be stayed if it is necessary to issue urgently.
