Federal Treasury Enterprise (FKP) Sojuzplodoimport v Spirits International B.V. - [2021] FCAFC 77

FEDERAL COURT OF AUSTRALIA
Federal Treasury Enterprise (FKP) Sojuzplodoimport v Spirits International B.V. [2021] FCAFC 77

Appeal from:
Federal Treasury Enterprise (FKP) Sojuzplodoimport v Spirits International B.V. (Permanent Stay) [2019] FCA 802

Federal Treasury Enterprise (FKP) Sojuzplodoimport v Spirits International B.V. (Form of Orders) [2019] FCA 1772

File number(s): NSD 1974 of 2019

Judgment of: KATZMANN, BEACH AND MARKOVIC JJ

Date of judgment: 21 May 2021

Catchwords: TRADE MARKS – ownership of trade marks – vodka products – competing claims to ownership of trade marks between Russian Federation entities and Dutch company – permanent stay of cross-claim – failure to give proper discovery – extent of permanent stay – whether issues estoppel arising from Dutch litigation should have been permitted to be further litigated – relevance and application under Australian law of the principle in Arnold v National Westminster Bank plc [1991] 2 AC 93 – whether discretionary defences of laches, equitable estoppel and rectification under s 88 of the Trade Marks Act 1995 (Cth) should have been permitted to be further litigated – relevance of the discovery given in the US proceeding to the discharge of Australian discovery obligations – leave to adduce new evidence concerning US proceeding – leave refused – principles to apply in permanently staying a proceeding for want of discovery – exercise of discretion – discussion of Clifton (Liquidator) v Kerry J Investment Pty Ltd (2020) 379 ALR 593 – whether discretion miscarried – appeal allowed – limited remitter

Legislation:
Evidence Act 1995 (Cth) ss 91, 190

Federal Court of Australia Act 1976 (Cth) s 27, 37M

Trade Marks Act 1995 (Cth) s 88

Cases cited:
Aetna Pacific Securities Ltd v Hong Kong Bank of Australia Ltd (Supreme Court of New South Wales, 29 April 1993, unreported)

Ainsworth v Burden [2005] NSWCA 174

Anchorage Capital Partners Pty Ltd v ACPA Pty Ltd (2018) 259 FCR 514

Arnold v National Westminster Bank plc [1991] 2 AC 93

Australian Coal & Shale Employees’ Federation v The Commonwealth (1953) 94 CLR 621

Australian National Airlines Commission v The Commonwealth (1975) 132 CLR 582

Clifton (Liquidator) v Kerry J Investment Pty Ltd (2020) 379 ALR 593

Commonwealth of Australia v Cockatoo Dockyard Pty Ltd [2006] NSWCA 322

Commonwealth of Australia v Verwayen (1990) 170 CLR 394

Federal Treasury Enterprise (FKP) Sojuzplodoimport v Spirits International N.V. (2007) 157 FCR 558

Federal Treasury Enterprise (FKP) Sojuzplodoimport v Spirits International BV [2010] FCA 1293

Federal Treasury Enterprise (FKP) Sojuzplodoimport v Spirits International B.V. (No 4) [2017] FCA 1345

Federal Treasury Enterprise (FKP) Sojuzplodoimport v Spirits International B.V. (Permanent Stay) [2019] FCA 802

Federal Treasury Enterprise (FKP) Sojuzplodoimport v Spirits International B.V. (Form of Orders) [2019] FCA 1772

Foran v Wight (1989) 168 CLR 385

House v The King (1936) 55 CLR 499

Johnson v Gore Wood & Co [2002] 2 AC 1

Mango Boulevard Pty Ltd v Spencer [2008] QCA 274

Michael Wilson & Partners Ltd v Nicholls (2011) 244 CLR 427

Mills v Cooper [1967] 2 QB 459

Minister for Immigration and Ethnic Affairs v Kurtovic (1990) 21 FCR 193

National Mutual Life Association of Australasia Ltd v Grosvenor Hill (Queensland) (2001) 183 ALR 700

Palavi v Radio 2UE Sydney Pty Ltd [2011] NSWCA 264

Re HIH Insurance Ltd (in liq) [2015] NSWSC 790

Rogers v The Queen (1994) 181 CLR 251

Rozenblit v Vainer (2018) 262 CLR 478

Spirits International BV v Federal Treasury Enterprise (FKP) Sojuzplodoimport (2011) 91 IPR 438

SPI Spirits (Cyprus) Ltd v Diageo Australia Ltd (No 2) (2006) 155 FCR 150

UBS AG v Tyne (2018) 360 ALR 184

Victoria International Container Terminal Limited v Lunt [2021] HCA 11

Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387

Division: General Division

Registry: New South Wales

National Practice Area: Intellectual Property

Sub-area: Trade Marks

Number of paragraphs: 395

Date of hearing: 17 to 19 August 2020

Counsel for the Appellants: Mr D Shavin QC and Ms C Cochrane

Solicitor for the Appellants: Quinn Emanuel Urquhart & Sullivan

Counsel for the Respondent: Mr M Darke SC and Mr D Larish

Solicitor for the Respondent: King & Wood Mallesons

ORDERS

NSD 1974 of 2019

BETWEEN:
FEDERAL TREASURY ENTERPRISE (FKP) SOJUZPLODOIMPORT

First Appellant

FEDERAL PUBLIC UNITARY ENTERPRISE EXTERNAL ECONOMIC UNION SOJUZPLODOIMPORT (FGUP VO)

Second Appellant

AND:
SPIRITS INTERNATIONAL B.V.

Respondent

ORDER MADE BY:

KATZMANN, BEACH AND MARKOVIC JJ

DATE OF ORDER:

21 MAY 2021

THE COURT ORDERS THAT:
1.The appeal be allowed.
2.Orders 1 and 3 of the orders made by the primary judge on 31 October 2019 be set aside.
3.Within 14 days of the date of these orders, the appellants file and serve proposed minutes of orders and submissions (limited to 3 pages) as to consequential orders and on the question of costs.
4.Within 14 days of the receipt of the appellants’ proposed minutes and submissions, the respondent file and serve responding proposed minutes and submissions (limited to 3 pages) on such topics.
5.Liberty to apply.

Note:   Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT
Table of Contents

(a)    Background

[20]

The temporary stay decision

[21]

Permanent stay decision

[55]

The form of orders decision

[68]

(b)   Leave to tender new evidence

[74]

(c)    Some general principles

[114]

(d)   The permanent stay reasons

[123]

FKP’s efforts to obtain documents from the Federation entities

[128]

The Federation entities – General

[140]

The first to fourth, seventh to ninth and 12th Federation entities (the Brodsky Federation entities)

[147]

The fifth, sixth, 10th, 11th and 13th Federation entities (the non-Brodsky Federation entities)

[171]

FKP or the Federation?

[212]

Notice of contention

[234]

(e)    The form of orders reasons

[240]

FKP’s principal points

[249]

The pleaded issue estoppel

[273]

The Dutch and European Union decisions

[276]

The Dutch proceedings

[277]

The EU proceedings

[302]

The Austrian proceedings

[309]

The discretionary defences

[311]

Problematic features of the reasons

[322]

Arguments and analysis

[361]

(f)    Conclusion

[393]

THE COURT:

This appeal arises from a long-running dispute over the ownership of the trade marks STOLICHNAYA and MOSCOVSKAYA. The litigation in this Court commenced in December 2004. Most of the proceeding settled some years ago. All that remains is a cross-claim brought by two Russian entities, Federal Treasury Enterprise (FKP) Sojuzplodoimport and Federal Public Unitary Enterprise External Economic Union Sojuzplodoimport (FGUP VO). On 31 October 2019 the primary judge ordered that any further proceeding on the cross-claim be permanently stayed. This is an appeal from that order. Leave to appeal had earlier been granted by the primary judge. For convenience we will refer to the appellants collectively as FKP unless it is necessary to distinguish between them.
The basis for the permanent stay order was the failure of the Russian Federation, which stands behind FKP, to comply with an invitation to give discovery over “an unreasonably extensive period of time” ([2019] FCA 1772 at [2]). In those circumstances his Honour decided that the cross-claim had become an abuse of process.
The permanent stay order gave effect to three sets of reasons previously delivered by the primary judge. His first set of reasons was delivered on 20 November 2017 (Federal Treasury Enterprise (FKP) Sojuzplodoimport v Spirits International B.V. (No 4) [2017] FCA 1345) and explained the basis for his temporary stay order (the temporary stay reasons). His second set of reasons was delivered on 30 May 2019 (Federal Treasury Enterprise (FKP) Sojuzplodoimport v Spirits International B.V. (Permanent Stay) [2019] FCA 802) which discussed the basis of a proposed permanent stay but otherwise made no final orders (the permanent stay reasons). His third set of reasons was delivered on 31 October 2019 (Federal Treasury Enterprise (FKP) Sojuzplodoimport v Spirits International B.V. (Form of Orders) [2019] FCA 1772) culminating in his order permanently staying the cross-claim (the form of orders reasons).
Before proceeding further, it is convenient to say something about the cross-claim.
In February 2005, FKP commenced their cross-claim against the respondent to the present appeal, Spirits International B.V. (Spirits), a company registered in the Netherlands. This is the only part of the larger main proceeding that is still on foot.
The cross-claim alleges that FKP are the true owners of certain trade marks, including the STOLICHNAYA and MOSCOVSKAYA trade marks. We will refer to these trade marks as the Australian trade marks to distinguish them from the equivalent trade marks that are the subject of cognate litigation being conducted by FKP, including in Russia, the US and the Netherlands.
In contrast, Spirits asserts that it is the owner of the Australian trade marks; it is presently the registered owner.
The principal relief FKP seek is rectification of the Register of Trade Marks pursuant to s 88 of the Trade Marks Act 1995 (Cth) to record the second appellant (FGUP) as the registered owner of the Australian trade marks or otherwise to cancel them.
The cross-claim alleges that the Australian trade marks were misappropriated shortly after the collapse of the former Soviet Union.
It is common ground that before 20 January 1992 an entity called VVO was the registered trade mark owner.
A key issue is whether VVO was transformed on 20 January 1992 into a new entity, VAO. We will refer to this issue as the transformation issue throughout our reasons.
In the cross-claim, FKP allege that the transformation did not occur, with the result, it is said, that VVO remained in existence and was the true owner of the Australian trade marks until it was re-named and re-organised as FGUP in 2001. It is said that since then, FGUP has been the Australian trade marks’ true owner.
In its defence to the cross-claim, Spirits says that on 20 January 1992 VVO was transformed into VAO, which acceded to all of VVO’s property. It is said that in 1998 the Australian trade marks were then transferred from VAO to another entity, ZAO, which in 1999 assigned them to Spirits.
Further, Spirits says that even if the transformation of VVO into VAO did not occur, the Register should not be rectified for three reasons. First, it says that FKP delayed in bringing the cross-claim and Spirits is therefore entitled to assert laches to defeat such rectification. Second, it says that VAO was long held out as the successor entity to VVO by the Russian Federation (the Federation). Accordingly, it says that the Federation’s emanations, FKP, cannot now be heard to say otherwise. That is to say, Spirits pleads and relies upon a form of estoppel by conduct or equitable estoppel. Third, it says that relief should be refused under s 88 as a matter of discretion for reasons not dissimilar to those upon which the laches and estoppel defences rest. We will refer to these defences collectively as the discretionary defences.
In their reply, FKP say that they are entitled to rely upon various issues estoppel arising from decisions in the Netherlands (the Dutch decisions) in relation to the transformation issue and the discretionary defences. In its rejoinder, Spirits relevantly denies the issues estoppel, denies that the Dutch decisions answer the discretionary defences, and says that the Court should not recognise the Dutch decisions. On this latter point Spirits has sought to invoke the principle in Arnold v National Westminster Bank plc [1991] 2 AC 93 at 108 and 109 (the Arnold principle), suggesting that special circumstances exist such as should deny the operation of any issue estoppel. We will return to discuss the problematic invocation of this questionable principle later.
The primary judge permanently stayed the cross-claim on 31 October 2019. He did so on the basis that the Federation had failed unreasonably to give discovery and that its continuing inaction or delay had reached a point where the proceeding had become an abuse of process.
With respect, we have reached a different conclusion.
We agree with the primary judge that some form of permanent stay of aspects of the cross-claim was warranted. But in our view, his Honour’s discretion miscarried in ordering a permanent stay of all of the cross-claim. His Honour 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.
Given that the form of orders reasons are affected by House v The King (1936) 55 CLR 499 error, the permanent stay order should be set aside. We considered whether we should re-exercise the relevant discretion for ourselves. On balance, however, it seems more appropriate for the primary judge to re-consider the matter in light of our reasons. This will 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.
(a) Background
Before analysing the arguments on appeal in detail, it is necessary to give further background concerning the three decisions and the three sets of reasons.
The temporary stay decision
On 23 November 2005, Spirits filed a notice of motion seeking discovery from the Federation, having indicated in correspondence that the categories it sought went to both the transformation issue and the discretionary defences. Schedule B to the notice of motion listed 12 entities that it was said that the Federation “includes, but is not limited to”. During the course of this proceeding it has come to be accepted that this list should be treated as containing 13 entities, which we will refer to as the Federation entities. We set out a table of these Federation entities later in our reasons.
The hearing of the motion was fixed for 3 March 2006. But prior to the hearing, the notice of motion was amended including to abandon the list of Federation entities. A potential consequence of the removal of the Federation entities from the amended notice of motion was that every agency of the Federation would need to be searched. Accordingly, on 5 July 2006, Edmonds J, who concluded that the Federation was the real principal cross-claimant, declined to order discovery against it in the form sought in the amended notice of motion. He indicated that he would hear the parties on the categories of discovery that might be given by the Federation before formulating the precise terms of any order (SPI Spirits (Cyprus) Ltd v Diageo Australia Ltd (No 2) (2006) 155 FCR 150 (the 2006 reasons)).
On 5 September 2006, Edmonds J ordered that unless the Federation provided discovery of categories to be agreed or determined, the cross-claim would be stayed pending further order. His Honour granted FKP leave to appeal from this order.
On 28 March 2007, the Full Court allowed an appeal from Edmond J’s order (Federal Treasury Enterprise (FKP) Sojuzplodoimport v Spirits International N.V. (2007) 157 FCR 558 (the 2007 Full Court reasons)).
The Full Court proceeded on the basis that the Federation had appointed FKP as its representative in the proceeding and that the Federation was the real cross-claimant. It did not cast doubt on the necessity for the Federation to provide discovery. But it said that Edmonds J’s decision was subject to an error, which was that it was not necessary for the fair conduct of the proceeding for an order to be made effectively requiring the Federation to undertake the process of discovery without first giving the Federation the opportunity to do so voluntarily and in co-operation with FKP (at [20]–[22] and [24]).
The Full Court noted there was power to make an order of the kind Edmonds J had made even if the Federation was not “the real plaintiff”, because, as FKP accepted (at [10]):
[R]elevant and potentially significant documents are held by the Russian Federation or its various instrumentalities which FKP and FGUP do not themselves hold or have power to obtain, and where FKP, at least, is acting in the interests of the Russian Federation and ultimately for its benefit …
The Full Court observed that “the only sanction for non-compliance [with such an order] would have been a stay of the main proceedings” (at [15]). Further, it stated (at [23]) that:
The Court would expect the parties and the Russian Federation to cooperate in undertaking the necessary discovery process. Of course, if such an expectation is not met, then the Court has power to ensure that justice is done between the parties …
Some years later, on 4 December 2013, Edmonds J ordered by consent that FKP provide discovery of documents within the categories specified in Annexure B to those orders (the discovery categories).
The 4 December 2013 orders did not deal with the Federation and were confined in their operation to FKP, presumably because the parties understood that the Federation first had to be invited to give discovery voluntarily.
In that regard, on 27 August 2014, FKP’s solicitors, Agility Legal, wrote to Spirits’ solicitors, King & Wood Mallesons, and said:
[Our] clients have prepared requests to be sent to each of the Russian Federation State bodies named in schedule B of your client’s motion dated 23 November 2005 for documents in their possession, custody or power that fall within the agreed categories of documents for discovery by the cross-claimants. All of the requests will be delivered by the end of this week, at the very latest. We have been instructed that it may take between two and six months to receive a response from each state body.
On 16 October 2014, FKP’s solicitors wrote to Spirits’ solicitors and said:
[I]t would appear that the relevant State bodies are voluntarily, and in co-operation with your client, undertaking the discovery process. We can see no prejudice being caused to the parties as a result of the delay in obtaining responses from the remaining State bodies, who have indicated that a response will be forthcoming in the coming weeks. Therefore, our view/position is that it would be premature for your client to file an interlocutory application in relation to the production of these documents by the Russian Federation.
Accordingly, by no later than October 2014, the Federation had been invited to give and was said to be undertaking discovery in accordance with the same discovery categories as FKP.
By November 2015, however, only around 110 documents had been discovered and only by some of the Federation entities.
On 18 November 2015, Spirits’ solicitors wrote to both the Federation’s Ambassador and the Federation’s Trade Mission, both in Australia, asking them to request that each of the Federation entities provide documents in their possession, custody or control which fell within the discovery categories. We need not linger on this correspondence or reflect on how fruitful (or otherwise) these communications turned out to be.
On 19 August 2016, Spirits applied for a stay of the cross-claim on the basis that the Federation had failed to give discovery, notwithstanding that it had been invited to do so.
At the hearing of the stay application on 2 November 2016, FKP submitted that they were “taking this application on at the factual level” on the basis that the Federation’s discovery had been adequate.Importantly, FKP, according to Spirits, did not argue that the Federation was not required to give discovery relating to the discovery categories because no order had been made for it to do so. Spirits submitted that it is not now open to FKP to adopt a different position on the present appeal. We discuss this matter later.

On 20 November 2017, his Honour ordered a stay of the cross-claim until further order.
In staying the proceeding on a temporary basis, the primary judge found that the Federation had not made a reasonable attempt to give discovery and held that the failure to do so constituted an abuse of process (see at [17], [60]–[62] and [65] of the temporary stay reasons).
In particular, the primary judge found that certain documents had not been discovered by FKP, namely documents which had been seized from the premises of VAO and ZAO between 1999 and 2002 and in 2007 (at [19]–[38]) and six particular kinds of documents that were said to be responsive to the discovery categories (at [39]–[59]). He found that the documents which had not been discovered were relevant to the transformation issue. There seems to have been a debate between the parties before us as to whether his Honour also found such documents to be directly relevant to the discretionary defences. We will return to this later.
In the temporary stay reasons, his Honour said (at [7]):
So the critical question in the case is whether VVO was transformed on 20 January 1992 into VAO, as Spirits contends, or not, as FKP/FGUP contends. There are some other issues too, such as the effect for res judicata purposes of some related proceedings before the Dutch courts and other issues such as estoppel and laches. But these are not relevant to the disposition of Spirits’ application for a stay.
The primary judge, after observing that the Federation had failed to respond to the invitation to give discovery, concluded that it was necessary to stay the proceeding until further order. In doing so, he considered (at [65]) whether he should instead make the order originally made by Edmonds J on 5 September 2006, that is, an order that unless the Federation gave proper discovery by a given date, the proceeding would be stayed. But he held that that had, “in effect, already happened once” as the “invitation had been sent but not really responded to” and that it was “difficult to justify putting Spirits to the inconvenience and expense of making this application a second time” (see at [64] and [65]). Accordingly, he stayed the proceeding until further order, “fully cognisant of the gravity of that exceptional step”, but seeing “no other way of ensuring that these proceedings are conducted fairly” (at [65]).
The primary judge also ordered that, if proper discovery had not been given by 30 November 2018, Spirits could apply to dismiss the proceeding (see at [65] and [66(4)]).
Before moving on, it is necessary to make some brief observations concerning the temporary stay reasons.
The orders made as part of the temporary stay reasons were:
1.        The proceeding be stayed until further order.
2.The Cross-Claimants pay the Cross-Respondent’s costs of the application for the stay.
3.        The stay in Order 1 does not prevent the Cross-Claimants from applying to lift    the stay on the basis that they have caused proper discovery to be given by the Russian Federation.
4.        In the event that proper discovery has not been given by 30 November 2018,      the Cross-Respondent be granted leave to file an interlocutory application seeking the dismissal of the Cross-Claim.
What was meant by “proper discovery” was unclear in the absence of discovery orders being made against the Federation. But it would seem that what was intended was the discovery categories stipulated by Edmonds J on 4 December 2013 and embracing the 13 Federation entities.
Further, at [15]–[17] in the temporary stay reasons, it was said:
The present application for a stay represents the end-point of the drawn-out process commenced by the Full Court’s decision. On 4 December 2013, the parties were able to agree what the relevant categories for this discovery process should be and, on that day, Edmonds J made further orders giving effect to that agreement. As I understood it, there was no substantive complaint about FKP/FGUP’s own compliance with those orders. The difficulty instead lay in FKP/FGUP’s efforts to have the Russian Federation give discovery of the same matters.
Those efforts were as follows. In the second half of 2014, the solicitors for FKP/FGUP wrote in similar terms to 11 entities of the Russian Federation. Some of these entities produced small numbers of documents but some produced no documents at all. In all, approximately 110 documents were obtained as a result of these requests.
For the reasons which now follow, I do not think the Russian Federation has made a reasonable attempt to give discovery in terms of the categories specified by Edmonds J on 4 December 2013. The cross-claim will be stayed until further order. If proper discovery is not given by 30 November 2018, I will entertain an application, at that time, to dismiss the cross-claim as an abuse of process and/or for want of prosecution.
Aspects of this reasoning are problematic. On 4 December 2013, it was the parties that agreed the discovery categories, not the Federation or the Federation entities. Further, no order had been made against the Federation or the Federation entities.
Let us return to the chronology.
Subsequently, FKP did not seek or obtain leave to appeal the temporary stay decision.
Spirits said that in the circumstances it is not open to FKP to argue on the appeal before us that it was wrongly decided. That is an accurate statement insofar as the temporary stay order is concerned. But if part of the temporary stay reasons is problematic and has influenced his Honour’s later consideration in the permanent stay reasons or the form of orders reasons, then it cannot be so quarantined.
No discovery at all, let alone “proper discovery”, was given by 30 November 2018.
Accordingly, on 7 December 2018, Spirits applied to dismiss the proceeding. Spirits later sought an order that the proceeding be permanently stayed, an order which his Honour ultimately granted.
On 7 March 2019, FKP discovered 7,427 pages of documents. Many of these documents were in Russian and/or redacted.
On 8 March 2019, FKP filed an interlocutory application seeking to lift the temporary stay of the cross-claim. Both Spirits’ application and FKP’s application were heard on 14 March 2019.
Permanent stay decision
On 30 May 2019, the primary judge published his permanent stay reasons, but made no final orders.
As his Honour recorded in his reasons, FKP submitted that they had undertaken “reasonable searches” and given proper discovery.
There is cognate litigation underway in the US District Court for the Southern District of New York between the same parties. A discovery master, Discovery Master Brodsky, has been appointed by that Court to manage issues related to discovery in that proceeding.
FKP said that they had given Spirits various documents produced pursuant to an order of Discovery Master Brodsky on 9 November 2017 (the first Brodsky order). These documents were discovered by the Federation entities listed at [104] of the permanent stay reasons, together with the State Archive and subsidiary agencies of the Ministry of Finance and the Ministry of Economic Development and Trade (the Brodsky Federation entities).
Further, FKP said that insofar as the first Brodsky order did not cover the Federation entities listed at [68] (the non-Brodsky Federation entities), they had made further and reasonable inquiries of those entities.
We discuss the 13 Federation entities and their Brodsky or non-Brodsky status later in our reasons.
The primary judge held that FKP’s approach involved asking the wrong question. He said that the correct question was whether the Federation, not FKP, had given proper discovery (at [61] and [62]–[65]).
His Honour held that the evidence did not establish that the Federation had given proper discovery (at [61]). Indeed, the primary judge concluded that the Federation had “not made reasonable efforts to give discovery and that this failure [was] on-going” (at [133]). His Honour also made specific findings about the Federation’s failure to give proper discovery in relation to various Federation entities (see at [80], [85], [88]–[90], [93]–[94], [101]–[102], [130] and [133]–[134]).
He concluded that subject to a “carve-out”, it was appropriate to permanently stay the cross-claim as an abuse of process insofar as the allegations made in it were related to the topics in respect of which the Federation had failed to give discovery (see at [157] and [160]–[162]).
His Honour considered this appropriate because the proceeding had been brought on the Federation’s behalf, but the Federation had not to any extent co-operated in providing discovery, despite being given more than a fair opportunity to do so (at [153]). Further, it was unfair that the litigation should be conducted in such a fashion where the Federation used FKP in effect “as its cat’s paw” (at [154]). Further, Spirits had been prejudiced by the Federation’s failure to give discovery because access to the documents held by the Federation was significant to ensuring its ability to fairly propound its defence and the non-production of those documents had occasioned unjustifiable oppression to Spirits’ ability to do that (at [155] and [157]). Further, he said that the delay to the proceeding that had been caused by the Federation’s failure to give discovery since 2015 was itself a substantial species of prejudice to Spirits (at [155]).
But the primary judge also held (at [160]) that FKP ought to be permitted to pursue so much of the proceeding as was unaffected by the failure of the Federation to voluntarily give discovery.
In this context, it is to be noted that the primary judge referred at [159] to what was said by Edmonds J in Federal Treasury Enterprise (FKP) Sojuzplodoimport v Spirits International BV [2010] FCA 1293. In ordering a trial of separate questions, which was not ultimately pursued, as to whether certain foreign judgments established, inter alia, issues estoppel binding on Spirits, Edmonds J noted (at [95]) that a resolution of those questions may resolve the chain of title issues. Further, Buchanan J in the Full Court (Spirits International BV v Federal Treasury Enterprise (FKP) Sojuzplodoimport (2011) 91 IPR 438 (the 2011 Full Court reasons)), refusing leave to appeal from that decision, recorded Spirits’ concession that an affirmative answer to each of the separate questions would all but eliminate Spirits’ prospects of resisting the cross-claim (at [129]).
As is apparent, his Honour envisaged that a further hearing would take place as to the nature of the final orders to be made concerning the ambit of the permanent stay.
The form of orders decision
On 14 October 2019, his Honour heard further argument concerning the form of orders to be made.
On 31 October 2019, he determined and ordered that there be a permanent stay as to the whole of the cross-claim.
The primary judge in his form of orders reasons considered but rejected FKP’s application to pursue their contention that Spirits was bound by adverse issues estoppel. For the purposes of that hearing, FKP relied only on those issues estoppel arising from the Dutch decisions.
It is to be noted that at the time of his Honour’s form of orders reasons, the Dutch decisions in one sense were not final. But on 24 January 2020, the Supreme Court of the Netherlands dismissed Spirits’ appeal. We discuss this Supreme Court decision and the Dutch proceedings in more detail later in our reasons.
FKP submitted that in determining FKP’s application for a carve-out from the permanent stay, the primary judge did not consider, properly or at all:
(a)what impact any non-provision of documents in the control of the Federation would have upon Spirits’ ability to propound the discretionary defences, especially as most of the discovery categories were framed by reference to the transformation issue;
(b)given the facts upon which the Dutch decisions found that VVO was not transformed into VAO, what documents could change that conclusion; and
(c)whether the needs of justice as between the parties to the proceeding warranted FKP from being locked out from making an application for judgment on the grounds that Spirits was precluded by the Dutch issues estoppel from relying on its pleaded defences.
We discuss these criticisms later. But first we should address FKP’s application to adduce new evidence.
(b) Leave to tender new evidence
FKP seek leave under s 27 of the Federal Court of Australia Act 1976 (Cth) (FCA Act) to rely upon the affidavit of their solicitor, Ms Michelle Fox, affirmed on 27 April 2020. They also seek leave to tender the final judgment of the Supreme Court of the Netherlands on 24 January 2020 and two decisions in the US proceeding in which Discovery Master Brodsky held that FKP’s discovery is now complete (the second and third Brodsky orders).
The discretion under s 27 must be exercised judicially, although it is not at large, despite the absence of any express limitations. In particular, like any power conferred by the FCA Act, it must be exercised in the way that best promotes the overarching purpose of the civil practice and procedure provisions, namely to facilitate the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible (s 37M).
The power is not limited to fresh evidence, being evidence of which an applicant was unaware at the time of the original hearing, but this circumstance is not irrelevant. In many cases, although not the present, it will be material to consider whether the evidence could have been called at trial and, if it could have been, the reasons for why it was not so called.
Further, an important consideration is whether the further evidence would have produced, or at least would be likely to have produced, a different result had it been available at the trial. In other words, the evidence must at least be probative of an issue.
We have no difficulty receiving the final judgment of the Supreme Court of the Netherlands together with the English translation. Indeed, this was not objected to. But we do have difficulty receiving the second and third Brodsky orders. In one sense they are truly new evidence. But this does not assist FKP.
In relation to the Brodsky orders, Ms Fox made reference to the following.
First, she explained that the primary judge had referred to the first Brodsky order in his permanent stay reasons (at [57] and [150]). The first Brodsky order had been made by Discovery Master Brodsky on 9 November 2017 and contained what we will refer to as the US discovery categories, albeit that it is not necessary for our purposes to delve into the detail of that order.
Second, it was pointed out that on 22 August 2019 the Discovery Master published the second Brodsky order in the US proceeding. The application which resulted in the second Brodsky order concerned an application by FKP to lift the stay ordered under the first Brodsky order. The Discovery Master under the second Brodsky order denied, without prejudice to renew, the motion to lift the stay.
Third, it was said that on 21 February 2020, the Discovery Master published the third Brodsky order in the US proceeding regarding the motion to lift the discovery stay. Under the third Brodsky order, the stay under the first Brodsky order was lifted. Under the first Brodsky order, the Discovery Master had granted Spirits’ motion to compel FKP to produce certain documents in the custody of the Federation, and granted Spirits’ motion to stay all discovery pending such production.
Each of these orders has been challenged in the US proceeding. FKP have challenged the first Brodsky order and Spirits has challenged the second and third Brodsky orders.
At the time of the hearing of the appeal before us, each of the challenges remained pending.
The second and third Brodsky orders concern discovery in the US proceeding, which the primary judge addressed in his permanent stay reasons at [57] and [150] by reference to the first Brodsky order. The primary judge handed down these reasons on 30 May 2019. As Ms Fox pointed out, the second and third Brodsky orders post-date those reasons, having been handed down on 22 August 2019 and 21 February 2020, and accordingly could not have been tendered before the primary judge.
The second and third Brodsky orders relate to grounds 1, 2 and 3 in FKP’s notice of appeal, which we will set out in a moment. It is FKP’s submission that, if the primary judge had not made the errors of principle that he made in his permanent stay reasons, the second and third Brodsky orders would have produced a different result, being one in favour of FKP.
FKP said that the primary judge assessed the substantial discovery they provided on their own behalf and as a result of obtaining documents from the Federation entities and that he did so in part by reference to compliance with the first Brodsky order (see [104]–[129]).
FKP submitted that the second and third Brodsky orders are contrary to the primary judge’s finding in his permanent stay reasons at [56] that “[t]here has been extensive debate about discovery in [the US] proceeding which remains ongoing”. In the permanent stay reasons at [123]–[129] the primary judge made a series of remarks to the effect that production in the US proceeding was not complete. The order and reasons constituting the second and third Brodsky orders were that FKP’s production was as complete a production of responsive documents as it was reasonable to expect. The Discovery Master in the second and third Brodsky orders rejected Spirits’ arguments as largely grounded in speculation juxtaposed against the credible proof that FKP had conducted a reasonable search for relevant documents from the Brodsky Federation entities (at [67]) (see the third Brodsky order, pages 2 to 3). The US discovery was provided to Spirits ([58]).
In the permanent stay reasons at [105] the primary judge said that “[the question of whether] the searches done in the pursuit of the US Proceeding are complete” was a relevant consideration in the Australian proceeding, subject to him finding, which he did not, that the Australian discovery categories were necessarily encompassed by the US discovery categories. FKP submitted that the primary judge ought to have found that the US discovery categories are relevantly commensurate with the Australian discovery categories, with the result, so it is said, that it is a relevant consideration on appeal that the Discovery Master considered the matter and held that searches in the US proceeding are complete.
FKP submitted that, when consideration is given to the reasonable efforts by FKP in obtaining documents from the Federation entities, the proceeding ought not to have been stayed, and the injustice of the stay is heightened by the second and third Brodsky orders, where the Discovery Master held, on 21 February 2020, that FKP’s discovery was complete and dismissed Spirits’ arguments as speculative.
FKP accepted that one important consideration in determining whether the s 27 discretion should be exercised is whether the further evidence would have produced, or at least would be likely to have produced, a different result had it been available at the trial. And the focus of this consideration is the likely impact of the new evidence upon the trial judgment, as opposed to foreseeing the likely impact of the further evidence upon the appeal judgment.
FKP submitted that the second and third Brodsky orders are likely to have produced a different result had they been available at the trial.
First, FKP said that the primary judge in his permanent stay reasons found that the US discovery was provided to Spirits ([58]) and assessed the substantial discovery provided by FKP, on their own behalf and on behalf of the Federation, in part by reference to compliance with the US discovery orders (at [104]–[129]).
Second, FKP said that it was Spirits that tendered the first Brodsky order before the primary judge.

Third, FKP said that the primary judge’s findings in his permanent stay reasons at [56]–[57] and [123]–[129] concerning the US discovery, including that “[t]here has been extensive debate about discovery in [the US] proceeding which remains ongoing”, were clearly based upon findings in the first Brodsky order (see pp 33 and 39).
FKP said that the primary judge did not regard himself as prohibited by s 91 of the Evidence Act 1995 (Cth) from relying upon these findings, and submitted that he would not be so prohibited in relation to findings in the second and third Brodsky orders. FKP asserted that the scope of s 91 was unresolved, with some judges taking a restrictive approach. So, in Re HIH Insurance Ltd (in liq) [2015] NSWSC 790 at [58] Brereton J observed that:
[W]hat s 91 is addressing is the formal record of conviction, the formal record of acquittal or the formal judgment or order disposing of a case in a civil case. It is not addressing the reasons for judgment, the findings of fact made by a judge in the course of coming to the final conclusion, nor the remarks on sentence, all of which remain no more than the opinion of the judge.
In contrast, FKP pointed to National Mutual Life Association of Australasia Ltd v Grosvenor Hill (Queensland) (2001) 183 ALR 700 at [48] where it was said that “relaxation of the general rule” in s 91 may occur, including in the absence of injustice. It was said that Spirits points to no injustice. Moreover, it was said that under s 190(3), the court may dispense with the application of s 91.
Similarly, FKP said that the primary judge did not regard himself as precluded from relying on the findings in the first Brodsky order by the fact that they were not final and submitted that he would not be so precluded in relation to findings in the second and third Brodsky orders. All three sets of orders are under appeal.
Fourth, FKP said that the further evidence is contrary to the primary judge’s finding identified above. They argued that the Discovery Master rejected Spirits’ arguments against the proposition that FKP had given proper discovery as largely grounded in speculation juxtaposed against the credible proof that FKP had conducted a reasonable search for relevant documents from the Brodsky Federation entities.
Fifth, FKP submitted that the primary judge ought to have found that the US discovery categories were relevantly commensurate with the Australian discovery categories.
We reject the tender of the second and third Brodsky orders.
The second and third Brodsky orders are not probative of any issue on appeal and do not affect the disposition of the appeal.
First, the issue of whether the Federation and, for that matter, FKP have given proper discovery is to be determined based on discovery given in the Australian proceeding, not discovery given in the US proceeding. That was the approach that the primary judge followed in his permanent stay reasons.
Discovery in the Australian proceeding involves Federation entities that are not subject to the US discovery orders; as we have said we will discuss these non-Brodsky Federation entities in further detail later in our reasons. And as his Honour said at [56], “[t]he fact is that the Australian Discovery Categories and the entities to be interrogated were settled before the US Proceeding was even commenced”.
Further, the fact that the non-Brodsky Federation entities were not subject to the first Brodsky order entails that discovery in the Australian proceeding of documents located as a result of searches carried out for the US discovery, even if this occurred in full, would not be adequate (see the permanent stay reasons at [70]).
Second, in the permanent stay reasons, the primary judge did not relevantly rely on the decision of the Discovery Master by which the first Brodsky order was made. That is, his Honour did not rely on any facts found or conclusion reached in the first Brodsky order as to compliance with discovery.
Indeed, in the permanent stay reasons the primary judge only referred to the content of the first Brodsky order twice.
At [57] the primary judge noted that the first Brodsky order had been made and was subject to review. His Honour did not expand or expound upon, let alone rely upon, the findings or reasoning in the first Brodsky order as to compliance with discovery.
And having already rejected FKP’s attempt to re-ventilate the “real plaintiff” issue at [140]–[149], at [150] in obiter his Honour noted “for completeness” that a similar argument had also been rejected in the first Brodsky order.
Third, FKP’s attempt to rely on factual findings made in the second and third Brodsky orders is, in any event, precluded by s 91 of the Evidence Act. We agree with what Brereton J said in Re HIH Insurance at [58] and Hunt AJA in Ainsworth v Burden [2005] NSWCA 174 at [94] and [109]. The second and third Brodsky orders cannot be tendered so as to use the findings of fact stated therein as proof of the existence of those facts. And there was no other legitimate basis or purpose for their tender advanced by FKP. Further, we reject the bootstraps argument advanced under s 190(3). The conditions for the exercise of our power under s 190(3) have not been enlivened. And even if they were, we would not exercise our discretion in favour of FKP.
Fourth, the second and third Brodsky orders are not final. Spirits has challenged their adoption by the US District Court appointing the Discovery Master. The challenge proceeds as a de novo hearing concerning objections to findings of fact and to conclusions of law (see rules 53(f)(3) and (4) of the Federal Rules of Civil Procedure (US)).
Fifth, not all of the US discovery was provided to Spirits in the Australian proceeding. FKP’s position was that approximately 13,000 documents had been discovered in the US proceeding (see the permanent stay reasons at [51]). In contrast, a tranche of 7,427 pages of documents was given to Spirits’ Australian solicitors on 7 March 2019, a week before the hearing of the permanent stay application. Many of those documents were in Russian and/or redacted (see at [52]).
For these reasons, leave is refused and the tender of the second and third Brodsky orders is accordingly rejected.
(c) Some general principles
It is necessary at the outset to say something about the relevant principles governing the grant of a permanent stay for a failure to give proper discovery and an appeal from a decision granting such a stay.
It is uncontroversial that the primary judge had the power to stay the proceeding to prevent an abuse of the process of this Court. But as Gummow ACJ, Hayne, Crennan and Bell JJ explained, “the term ‘abuse of the process of the court’ may be used in different senses” (Michael Wilson & Partners Ltd v Nicholls (2011) 244 CLR 427 at [88]).
Resonating harmoniously with that theme, McHugh J in Rogers v The Queen (1994) 181 CLR 251 at 286 said that although the categories of abuse of process are not closed, cases usually fall into one of three categories:
(1) the court’s procedures are invoked for an illegitimate purpose; (2) the use of the court’s procedures is unjustifiably oppressive to one of the parties; or (3) the use of the court’s procedures would bring the administration of justice into disrepute.
In UBS AG v Tyne (2018) 360 ALR 184, Kiefel CJ, Bell and Keane JJ said (at [1]) that either of two conditions enliven a court’s power to stay proceedings for an abuse of process, namely where the use of the court’s procedures occasions unjustifiable oppression to a party or where such use serves to bring the administration of justice into disrepute. Both conditions are relevant to the present context.
In determining whether either condition is satisfied, a consideration of all the relevant circumstances is required, which necessitates “a broad, merits-based judgment which takes account of the public and private interests involved and also takes account of all the facts of the case” (see Johnson v Gore Wood & Co [2002] 2 AC 1 at 31 per Lord Bingham of Cornhill).
In determining whether the bringing or continuance of a proceeding is an abuse of process, relevant civil procedure statutory provisions such as s 37M of the FCA Act must also be considered. As Kiefel CJ, Bell and Keane JJ said in UBS AG (at [38]):
The timely, cost effective and efficient conduct of modern civil litigation takes into account wider public interests than those of the parties to the dispute. These wider interests are reflected in s 37M(2) of the FCA. As the joint reasons in Aon Risk Services Australia Ltd v Australian National University explain, the “just resolution” of a dispute is to be understood in light of the purposes and objectives of provisions such as s 37M of the FCA. Integral to a “just resolution” is the minimisation of delay and expense.
(Citations omitted.)
Further, in dealing with one condition justifying a stay, being unjustifiable oppression or vexation, and asking whether there is no other fair and practical way of ensuring justice other than a stay, it is relevant to consider whether one can ultimately address any oppression, vexation or injustice short of a stay in determining the relief one might ultimately grant (Rozenblit v Vainer (2018) 262 CLR 478 at [34] per Kiefel CJ and Bell J, at [47] and [48] per Keane J and at [66], [100] and [111] per Gordon and Edelman JJ). And as was said by the plurality in Victoria International Container Terminal Limited v Lunt [2021] HCA 11 at [20], if a less draconian means than a stay can cure any prejudice, then those means should be used. We will return to this question later.
Further, failure to give proper discovery is inimical to the conduct of a fair trial and protection of the Court’s processes (Australian National Airlines Commission v The Commonwealth (1975) 132 CLR 582 at 593). In some circumstances it may warrant a stay. Clifton (Liquidator) v Kerry J Investment Pty Ltd [2020] FCAFC 5; 379 ALR 593 discussed such a scenario.
One other general point should be made. As the decision to grant a stay is discretionary, the principles of restraint applicable to appellate review stated in House v The King, and elaborated in later cases, apply. As Kitto J said in Australian Coal & Shale Employees’ Federation v The Commonwealth (1953) 94 CLR 621 at 627, the principle as to appeals from discretionary decisions “is that there is a strong presumption in favour of the correctness of the decision appealed from, and that that decision should therefore be affirmed unless the court of appeal is satisfied that it is clearly wrong”.
(d) The permanent stay reasons
FKP raised three grounds of appeal concerning the permanent stay reasons (grounds 1 to 3 of the notice of appeal). Unless otherwise indicated, references to the primary judge’s reasons in this section are references to the permanent stay reasons.
Ground 1 is to the effect that the primary judge erred in finding that the Federation and FKP had failed unreasonably to give discovery and that their continuing inaction or delay had reached a point where the cross-claim had become an abuse of process (see at [61], [133], [153] and [160], the form of orders reasons at [17], and the temporary stay reasons at [62]).
Ground 2 is to the effect that the primary judge ought to have found that the cross-claim was not an abuse of process, given the primary judge’s findings that:
(a)FKP were the emanation of the Federation charged with the task of returning to the Federation ownership of the trade marks (see at [9]);
(b)FKP had been and were making reasonable efforts to obtain documents within the discovery categories in the control of the Federation and to provide them to Spirits (see at [134], [137], [139] and [151]);
(c)FKP had complied with their own discovery obligations as ordered by Edmonds J on 4 December 2013 (see at [151]); and
(d)it was a serious thing to do to seek to persuade a foreign state, not otherwise amenable to this Court’s processes, by the imposition of pressure on the parties before it, to produce documents, such that the circumstances in which this might occur were rare (see the temporary stay reasons at [64]).
Ground 3 is to the effect that the primary judge erred in finding that there remained substantial searches for documents in the control of the Federation which had not been conducted and which would not be conducted in the foreseeable future (see at [61] and [130]). In essence, it is said that the primary judge:
(a)erred in finding that neither the Federation nor FKP had conducted the searches necessary for the Ministry of Internal Affairs on the basis that reasonable searches of the Investigation Committee were not complete (at [94]);
(b)erred in finding that FKP had not discovered the criminal case against Mr Sorochkin in full (at [100]);
(c)erred in finding that the 8,000 pages located in the Federal Agency for the State Property Management had not yet been provided to Spirits (at [124]);
(d)erred in finding that FKP were continuing searches of the electronic database of the Apparatus (see at [128]), and that the primary judge ought to have found that such searches were complete; and
(e)ought to have found that FKP’s searches of the Federal Service on Intellectual Property, Patents and Trademarks (Rospatent) were complete.
At the outset we should say that we reject grounds 1 and 2. But as to ground 3, and with respect to the experienced primary judge, there are some inaccuracies and infelicities in the expression of his reasons concerning the searches for documents of some of the Federation entities. But those imperfections do not materially alter or affect his Honour’s ultimate conclusions in the permanent stay reasons, save as to the scope of any permanent stay order which we discuss in detail below in the context of the form of orders reasons.
FKP’s efforts to obtain documents from the Federation entities
FKP contended that they had engaged in a reasonable search for documents held by the Federation entities falling within the discovery categories. They pointed to the following matters in support of that general proposition.
First, the primary judge found that FKP had complied with their own discovery obligations as ordered by Edmonds J on 4 December 2013 (see at [151]).
Second, the primary judge found that FKP had been and were making reasonable efforts to obtain documents within the discovery categories in the control of the Federation entities and to provide them to Spirits (see at [134], [137], [139] and [151]).
Third, FKP submitted that the primary judge erred in rejecting Ms Natalie Semenova’s 2019 evidence as to the breadth and unexpected nature of the discovery requirement (at [39]). Ms Semenova, an in-house lawyer for FKP, has been responsible for the administration of the US and Australian proceedings since September 2009. It is said that contrary to the primary judge’s analysis at [39] and [40], FKP’s solicitors’ 27 August 2014 letter was no basis for rejecting her evidence. Further, it is said that the primary judge erred at [42] in construing FKP’s solicitors’ 16 October 2014 letter as suggesting that a process of discovery by the Federation would soon be finished.
Fourth, FKP submitted that the primary judge erred in finding that there remained substantial searches for documents in the control of the Federation which had not been conducted and which would not be conducted in the foreseeable future. It is said that the primary judge ought to have found that discovery was substantially and relevantly complete.
Fifth, FKP submitted that in considering the nature and extent of the discovery given, the primary judge erred by assuming, without any evidence, that discovery across each of the categories from each of the Federation entities was critical, even if the issues were confined to the discretionary defences.
Sixth, notwithstanding the absence of orders against the Federation, in particular orders that set out explicitly the steps required to satisfy the discovery requirement, FKP submitted that the primary judge penalised the Federation for not performing specific discovery tasks (see at [80]).
Seventh, FKP submitted that the effect of the primary judge’s decisions was to require the Federation to give discovery of any documents that fell within the discovery categories, without any express order having been made requiring the Federation to do so. In this respect, FKP argued that the primary judge appears to have segued from concluding that the Federation was the real cross-claimant (at [140]–[149]) to treating an invitation that it provide discovery (temporary stay reasons at [4]) into an obligation requiring it to do so (at [62]–[65]), notwithstanding that the Court had declined to make such an order.
Eighth, FKP submitted that the primary judge asked himself the wrong question at [61] and [65]. The true question was whether FKP complied with the order that they provide discovery, rather than whether the Federation, which was not the subject of any order, had taken reasonable steps to give discovery (at [34]–[38]).
Ninth, FKP submitted that the primary judge imposed on FKP and the Federation a task incapable of being fulfilled, given the breadth of both the discovery categories and the entities from which documents were to be obtained. And in this respect there was a lack of specificity as to what was required to establish that they had satisfied the task. Indeed, the primary judge acknowledged in his permanent stay reasons (at [88] and [135]) the lack of clarity and proceeded on the basis that the Federation did not have to produce affidavits of discovery.
Tenth, FKP submitted that the primary judge, in considering whether the Federation had discharged the discovery requirement, erroneously did not have regard to activities undertaken by FKP to obtain discovery from the Federation entities; see at [61], [62], [65], [66], [118] and [153]. Further, it is said that although [61] and [130] contain bare conclusions to the effect that even if FKP’s efforts are taken into account they are insufficient, it stands in contrast to the primary judge’s findings at [134], [137], [139] and [151] that FKP had been and was making reasonable efforts to obtain documents within the discovery categories in the control of the Federation and to provide them to Spirits.
Eleventh, FKP submitted that, contrary to the suggestions in the temporary stay reasons at [36] and [40], the permanent stay reasons at [56] (last sentence) and the form of orders reasons at [17] (last sentence), the imposition of any discovery requirement upon the Federation had never been agreed to, settled or determined by consent. Rather, FKP argued that the correspondence between the parties demonstrates that FKP had simply indicated to Spirits in 2014 that requests were to be sent to the Federation entities for documents in the discovery categories. FKP later indicated that the relevant Federation entities appeared to be voluntarily undertaking the discovery process. The evidence was that FKP only had authority to agree on the discovery categories for their own documents, not for discovery by other Federation entities. We again note that the 4 December 2013 orders, including the discovery categories set out in Annexure B, did not identify or extend to the Federation entities.
The Federation entities – General
It is convenient at this point to set out each of the 13 Federation entities and their status as a Brodsky or non-Brodsky Federation entity.

Federation entity

Name of Ministry/Agency

Brodsky entity (US discovery)

1.

The Apparatus of the Government of the Russian Federation

Yes

2.

Administrative Office of the President of the Russian Federation

Yes

3.

Ministry of Finance of the Russian Federation

Treated as yes

3a.

Federal Service for Alcohol Market Regulation (Rosalcohol)

Yes

4.

Ministry of Agriculture of the Russian Federation

Yes

5.

Ministry of Internal Affairs of the Russian Federation

No

6.

Federal Security Service of the Russian Federation

No

7.

Ministry of Economic Development and Trade of the Russian Federation

Treated as yes

8.

Federal Agency for the State Property Management (including its predecessor, the Ministry of Property Relations of the Russian Federation)

Yes

9.

Federal Service on Intellectual Property, Patents and Trademarks (Rospatent)

Yes

10.

Federal Service on Financial Markets

No

11.

Accounting Chamber of the Russian Federation

No

12.

State Archive of the Russian Federation

Treated as yes

13.

Investigation Committee of the Russian Federation

No

At this point a number of observations should be made.
The third Federation entity, the Ministry of Finance, is not itself a Brodsky Federation entity. Rather, it controlled Rosalcohol, which is a Brodsky Federation entity. As such, the Ministry of Finance is included as a Brodsky Federation entity in respect of the documents produced by Rosalcohol in the US proceeding.
Similarly, although the seventh Federation entity, the Ministry of Economic Development and Trade, is not itself a Brodsky Federation entity, it controlled the Federal Agency for the State Property Management and Rospatent, being, relevantly, both Brodsky Federation entities and the eighth and ninth Federation entities. As such, it is appropriate to treat the Ministry of Finance as a Brodsky Federation entity in respect of the documents produced by the Federal Agency for the State Property Management and Rospatent.
The 12th Federation entity, the State Archive, stored archival documents for several of the Brodsky Federation entities and was in fact searched by those entities for the purpose of satisfying their US discovery obligations. Thus, though the State Archive was not the subject of a discovery order in the US proceeding, as the primary judge noted, “it is clear that it has also been involved, as a matter of practical reality, in the searches conducted for the US proceeding” (at [69]). For this reason, it is convenient to include the State Archive as a Brodsky Federation entity for the purpose of our reasons given that that entity produced documents in the US proceeding.
Expert evidence before the primary judge showed that the State Archive stored documents of federal executive bodies and operated as a library, which both Spirits and FKP could access on generally equal terms (see at [74]).
It is now convenient to distinguish further between the Brodsky and non-Brodsky Federation entities.
The first to fourth, seventh to ninth and 12th Federation entities (the Brodsky Federation entities)
We begin with the Brodsky Federation entities.
The US discovery concerning the Brodsky Federation entities had been provided to Spirits. The US discovery contained documents from eight of the Federation entities, being the first to fourth, and seventh to ninth and 12th Federation entities. As we have said, though the third, seventh and 12th Federation entities were not themselves the subject of the first Brodsky order, these entities produced documents in the US proceeding because, in respect of the Ministry of Finance and the Ministry of Economic Development and Trade, their subsidiary agencies were subjects of the first Brodsky order, and, in respect of the State Archive, as a practical reality given the nature of that entity. As such, it is appropriate to treat these entities as Brodsky Federation entities for present purposes.
FKP submitted that the primary judge ought to have found that the US discovery categories were relevantly commensurate with the Australian discovery categories.
They argued that there was no basis for his Honour’s finding at [108] that category 2, which we will set out shortly, was not covered by the US discovery, given the primary judge’s acknowledgement that this case was concerned with chain of title in the trade marks in Russia in 1992, as opposed to any chain of title issues specific to the Australian or US registered trade marks (see the temporary stay reasons at [1] and the final orders reasons at [4] and [5]).
FKP also argued that the primary judge ought to have accepted their submission that categories 18 and 19, which we will set out shortly, concerned FKP only and were relevantly covered by FKP’s discovery, which the primary judge accepted was complete, with the result that other entities within the Federation were unlikely to hold any relevant documents.
FKP submitted that the primary judge also erred in finding (at [128]) that FKP were continuing searches of the electronic database of the first Federation entity, the Apparatus. Based upon the evidence before him, FKP argued that the primary judge ought to have found that such searches were complete. Further, it is said that FKP’s searches of the Apparatus for the US proceeding were completed. The Apparatus later confirmed that if FKP needed to repeat its searches for the Australian proceeding it could do so. It is pointed out that no further documents were found in the repeated searches, with the result that all relevant documents were discovered to Spirits on 7 March 2019.
Next, FKP submitted that the primary judge also erred in finding (at [124]) that the 8,000 pages located in the eighth Federation entity, the Federal Agency for the State Property Management, had not yet been provided to Spirits. But the 8,000 pages, which included documents generated by the Agency’s predecessor, the Ministry of Property Relations of the Russian Federation, were reviewed by FKP’s US attorneys for privilege and 3,618 pages were discovered and produced. It is said that his Honour was in error concerning [124] and [131] (seventh dot point).
Finally, FKP submitted that the primary judge ought to have found that FKP’s searches of the ninth entity, Rospatent, were complete (cf at [127] and [131]). Rospatent confirmed that FKP could repeat its searches for the Australian proceeding if necessary. Those searches were completed and no further documents were found. It is said that all relevant documents were produced to Spirits in the Australian proceeding on 7 March 2019.
By contrast, Spirits submitted that FKP’s approach to the Brodsky Federation entities was misconceived for various reasons.
First, Spirits pointed to his Honour’s finding at [122] that FKP’s argument must fail because the discovery categories were not encompassed by the US discovery categories ([121]) and that it was “not enough to satisfy the categories … that documents have been produced in compliance with the Brodsky Order” (at [122]). Spirits submitted that four of the discovery categories were “not necessarily encompassed under the Brodsky Order”.
Second, Spirits submitted that FKP’s challenges to findings made for specific Brodsky Federation entities should be rejected as they were supported by the evidence.
In our view his Honour was correct to conclude that three of the Australian discovery categories, being categories 2, 18 and 19 were not substantially encompassed in the first Brodsky order. We will return to category 8 in a moment.
Category 2 was to the following effect:
Documents dated between 20 January 1992 and November 2004 recording or evidencing the ownership of or title to the Australian Trade Marks.
His Honour said in his permanent stay reasons at [108] and [109]:
US Request for Production 4 was ‘All documents relating to your purported chain of title to the Trademarks’ but ‘Trademarks’ was defined to mean, summarising, various US trademarks. I reject therefore the submission that US Request for Production 4 included any documents caught by Category 2. US Request for Production 5 is as follows:
REQUEST FOR PRODUCTION NO. 5:
All documents on which you rely, to which you have referred, or that you have used to form any opinion or understanding about whether or not SPI has any interest in the Trademarks or any of the Foreign Trademarks, or about whether or not PepsiCo, Allied Domecq, or William Grant previously had any interest in the Trademarks or any of the Foreign Trademarks.
‘Foreign Trademarks’ is defined in a way which would include the Australian trademarks. However, US Request for Production 5 is concerned with documents which have been used by the Cross-Claimants to form an opinion as to whether SPI has any interest in the Foreign Trademarks. Category 2, by contrast, is not subject to any such limitation. I therefore reject the submission that Category 2 is fully encompassed in US Requests for Production 4 and 5.
There is no reason to doubt his Honour’s conclusion.
Category 18 was to the following effect:
Documents evidencing or relating to the involvement of the Russian Federation in this proceeding (Federal Court Proceeding (NSD1816 of 2004) and in the conduct of this proceeding.
His Honour said at [116]–[118]:
The Cross-Claimants did not submit that Category [18] was encompassed in the requirements of the Brodsky Order. Instead, they submitted that they had already given discovery of this category of documents. There were two aspects to this. The first was that they relied upon a finding by me at [15] of the First Stay Decision. The second was a contention that they had conducted reasonable searches for these documents.
I do not accept either submission. Paragraph [15] of the First Stay Decision says this:
The present application for a stay represents the end-point of the drawn-out process commenced by the Full Court’s decision. On 4 December 2013, the parties were able to agree what the relevant categories for this discovery process should be and, on that day, Edmonds J made further orders giving effect to that agreement. As I understood it, there was no substantive complaint about FKP/FGUP’s own compliance with those orders. The difficulty instead lay in FKP/FGUP’s efforts to have the Russian Federation give discovery of the same matters.
This says nothing about the primary question here which is whether the Russian Federation has given discovery. For the same reason, it is not to the point that the Cross-Claimants allege they have made reasonable searches.
Category 19 was to the following effect:
Documents relating to the negotiation, drafting and grant of the Power of Attorney from FGUP to FKPS dated 8 December 2003.
The primary judge said at [120]:
The Cross-Claimants submitted that Category 19 fell within US Requests for Production 10 and 11. These are set out above; they appear to me to have nothing to do with Category 19.
His Honour concluded at [121]–[122]:
In light of these matters, it appears to me that Mr Swinson is correct. Categories 2, 8, 18 and 19 of the Australian Discovery Categories are not necessarily encompassed under the Brodsky Order. It is not necessary in that circumstance to assess the correctness of his claims in relation to particular classes of documents.
This means that the Cross-Claimants’ argument must fail. It is not enough to satisfy the categories of discovery approved by Edmonds J that documents have been produced in compliance with the Brodsky Order.
At [121] his Honour also included category 8, but it is apparent from what he said at [114] that this was a slip.
His Honour then explained that, given the non-overlap of the Australian discovery categories with the US discovery categories and the fact of there being non-Brodsky Federation entities, it was not strictly necessary to consider how complete the searches had been under the first Brodsky order. Nevertheless he went on to make the following observations:
The Federal Agency for the State Property Management
1248,000 pages have been located but they have not yet been provided to the Cross-Respondent. Production is therefore incomplete.
The Ministry for Agriculture
125Searches of this Ministry are not complete. The Ministry informed the Cross-Claimants that it would collate the documents for the period 2004-2009 after which they will be permitted to inspect them. Plainly, this process is not complete.
126Certain documents of the Ministry of Agriculture are deposited with the State Archive. Ms Semenova has deposed that the State Archive searches are complete resulting in 100 pages of documents. Nevertheless, the continuing searches at the Ministry itself demonstrate that discovery is not complete.
The Russian Agency on Patents and Trademarks
127It appears as though 1,000 pages of documents have been identified as relevant to the Australian Proceeding, I am unable to fully determine the position in relation to this agency as the evidence is too unclear.
The Apparatus
128Although 1,000 pages of documents have been produced from the Apparatus this process is not yet complete as FKP is continuing searches of the electronic database.
The Administration of the President
129The President’s office does not send documents to the State Archive and destroys documents after 5 years unless they are important. Nevertheless, the Cross-Claimants were permitted to search and found 18 pages of reports.
At [124] his Honour neglected to mention that 3,618 pages had been provided to Spirits. Further, his Honour’s statements in [126] (last sentence), [127] and [128] do not appear to be accurate. Nevertheless, these errors and omissions do not assist FKP. The issue before the primary judge did not turn on the completeness of the discovery ordered in the US proceeding.
In summary then, with respect to the Brodsky Federation entities, his Honour was correct to find that there were various Australian discovery categories that were not embraced by the US discovery categories.
The fifth, sixth, 10th, 11th and 13th Federation entities (the non-Brodsky Federation entities)
We now turn to the non-Brodsky Federation entities. We begin with FKP’s complaints.
FKP alleged that, in relation to the fifth Federation entity, the Ministry of Internal Affairs, the primary judge erred in finding at [94] that neither the Federation nor FKP had concluded the searches necessary for this entity on the basis that reasonable searches of the 13th Federation entity, the Investigation Committee, a separate and independent state body, were not complete.
As to the sixth Federation entity, the Federal Security Service, which was the federal executive body responsible for the provision of security of the Federation, Ms Semenova set out inquiries made by FKP of the Federal Security Service, in which the Federal Security Service indicated that it had no relevant documents. FKP said that the primary judge concluded at [86] and [87] that these indications were false apparently because President Putin did not direct the Federal Security Service to swear an affidavit to that effect. But there was no order requiring it to do so, as the primary judge accepted (at [135]).
FKP submitted that documents of the 10th Federation entity, the Federal Service on Financial Markets (the former regulator of financial markets), were likely to be of tangential relevance. Ms Semenova gave evidence that this entity’s documents were in the State Archive and described the searches conducted by FKP of the State Archive. As we have said, the State Archive was also searched as part of the US discovery (at [77]).
FKP submitted that the 11th Federation entity, the Accounting Chamber, was a permanent standalone supreme body that performed independent external audits of the use of federal budget funds. Evidence was given as to FKP’s inquiries of this entity. As the primary judge recorded (at [83]), it had produced documents relating to the audit of FKP. But it held no other documents and documents from the period were deposited in the State Archive. FKP submitted that, other than documents the subject of the specific audit of FKP, documents of the Accounting Chamber from that period were likely to be of tangential relevance. Further, as we have said, evidence was given as to searches conducted by FKP of the State Archive. And the State Archive was searched as part of the US discovery.
FKP also submitted that the primary judge erred in finding at [100] that FKP had not discovered the criminal case against Mr Sorochkin in full. FKP discovered only that part of the criminal case which had not previously been discovered by Spirits in the US proceeding (see Ms Semenova’s evidence at [173]).
By contrast, Spirits submitted that, as the non-Brodsky Federation entities were not the subject of the US discovery orders, on no view could compliance with those orders satisfy the Australian discovery obligation in relation to those entities.
Further, Spirits submitted that many of the primary judge’s findings in relation to the non-Brodsky Federation entities have not been challenged. Spirits pointed to findings that:
(a)searches of the State Archive were not complete ([80]–[81]);
(b)searches for records of the Accounting Chamber had not been conducted ([84]–[85]);
(c)searches of the Federal Service on Financial Markets, Ministry of Economic Development and Trade and Ministry of Finance were not shown to have been completed ([89], [90], [93] and [94]); and
(d)searches of the Investigation Committee were “not remotely close to being finished, indeed, [they have] scarcely commenced” ([101]).
Spirits also submitted that FKP’s assertion that documents from certain of these entities were likely to be of tangential relevance was without any evidentiary foundation. Further, Spirits submitted that such a proposition implies an approach which is inconsistent with Clifton. We discuss Clifton below. It suffices to say at this point that Spirits has sought to draw too much out of Clifton.
Spirits further submitted that the primary judge did not err in finding that searches in relation to the Ministry of Internal Affairs were incomplete. It argued that this conclusion necessarily followed from his Honour’s unchallenged findings that its documents were held by the Investigation Committee, searches of which were not “remotely close” to being finished (at [94] and [101]).
We should say something about the primary judge’s findings concerning the searches of the non-Brodsky Federation entities and also the State Archive.
In relation to the State Archive, his Honour concluded in the permanent stay reasons that the searches of the State Archive were incomplete (at [81]). That conclusion has not been successfully impugned.
In relation to the Accounting Chamber, his Honour said (at [85]):
I conclude therefore that neither the Russian Federation nor the Cross-Claimants have conducted reasonable searches for documents of the Accounting Chamber. No adequate reason is proffered for why the State Archive has not been searched for the Accounting Chamber’s documents beyond the Cross-Claimants’ lack of resources. As with the State Archive itself, there is no evidence of the Russian Federation taking any step to produce the Accounting Chamber’s documents.
That conclusion has not been successfully impugned.
As to the Federal Service on Financial Markets, the Ministry of Economic Development and Trade and the Ministry of Finance, the primary judge appeared to accept that extensive searches had been undertaken, but that searches of the State Archive for documents lodged by these entities had not been completed (see at [89]–[93]).
The state of the searches of the State Archive should be put in context. Ms Semenova gave the following evidence concerning searches of the State Archive after the temporary stay decision (see her affidavit at [151]–[155]):
The State Archive can be accessed by any member of the public in order to search for documents. To locate documents relevant to the US Proceeding, FKP employee David Kobakhidze attended the State Archive to search for documents in January 2018. At this time Mr Kobakhidze, was told that pursuant to a directive, Order for the Use of Archival Documents in State and Municipal Archives of the Russian Federation dated 1 September 2017, No. 143 (adopted by the Federal Archive Service of Russia), making copies of the materials was subject to a fee and that it would come at a cost of $0.50 per page. FKP was therefore required to negotiate and conclude a contract with the State Archive so that FKP could pay for the photocopies and proceed with its searches. That contract was finalised on 5 June 2018 for searches conducted during 2018. A new contract was finalised on 6 February 2019 for searches conducted during 2019.
Between June - December 2018 FKP employees David Kobakhidze, Ivan Sokolov, Alexey Golubtzov, Alexandr Loktev, Pavel Shalaginov, Mariana Rumyantzeva, Alexandr Tarasov, Julia Seryapina and Oksana Borushevskaya visited the State Archive to undertake searches.
In addition to the information provided above in respect of searches of the State Archive in respect of specific entities:
a)FKP has conducted searches in the State Archive on at least 30 days between June and October 2018.
b)FKP employees typically attend the State Archive in groups of 1 - 3 persons and search for documents for an entire day;
c)the searches take place in the archival repositories of the State Archive which is located at Bolshaya Pirogovskaya Street, 17, Moscow;
d)        The State Archive stores the documents of:
1.        the Apparatus of the Government;
2.        the Ministry of Agriculture;
3.        the Chamber of Accounts;
4.        the Ministry of Economics;
5.        the Ministry of Finance; and
6.the Ministry of Property (a predecessor of the Federal Agency for State Property);
e)FKP employees have manually reviewed approximately 1,800 document folders, each typically containing about 200 pages of documents; and
f)Through this process, FKP employees have spent in excess of 280 hours searching for documents in the State Archive.
As a result of the searches above, approximately 1,100 pages of documents were located which were deemed responsive to FKP’s US Proceeding and which are also responsive to the discovery obligations of FKP in this proceeding.
FKP are continuing to search the State Archive for any documents which may be responsive to the discovery categories in this proceeding. At the time of deposing this affidavit, FKP have completed a contract with the State Archive which will allow FKP to continue searching the State Archive during 2019.

FKP’s rejoinder submissions dated 13 October 2019 sought to grapple with Spirits’ points.
Now we have set out more than is usual in terms of the parties’ arguments before the primary judge. But we assume that his Honour considered the detailed submissions.
Problematic features of the reasons
Before we turn to the parties’ specific arguments, it is appropriate to begin by expressing our own views as to various problematic features of the form of orders reasons.
First, his Honour referred (at [2]) to his earlier conclusions in the permanent stay reasons. He said (at [2]):
The basis of both decisions was that the Russian Federation, which stands behind FKP, had failed to comply with an invitation to give discovery over an unreasonably extensive period of time. I also concluded that FKP had itself failed to give complete discovery despite having been afforded a reasonable opportunity to do so. However, as I noted at [152] and [160] in the Permanent Stay Decision, there were potentially some issues which arose on the cross-claim to which the documents which ought to have been discovered by FKP and the Russian Federation might not have been relevant. In relation to any such issue, a permanent stay did not in principle appear appropriate since Spirits could not be prejudiced.
But this does not sit that well with what his Honour said in [151] of the permanent stay reasons:
I do not accept the Cross-Respondent’s submission that the proceeding should be dismissed for want of prosecution for it is evident that the Cross-Claimants are prosecuting the proceeding. In that regard it is to be noted that the Cross-Claimants have complied with their own discovery obligations as ordered by Edmonds J on 4 December 2013: see First Stay Decision at [15]. They have also been attempting, with more limited success, to respond on the Russian Federation’s behalf to the discovery invitation issued to the Russian Federation. As such I do not think that it can be said that the Cross-Claimants are not prosecuting the proceeding: cf Professional Administration Service Centres Pty Ltd v Commissioner of Taxation [2012] FCAFC 180; 295 ALR 52 at 62 [44].
Clearly, so far as FKP were concerned, there has been substantial compliance with discovery.
Further, his Honour said (first sentence of [17]):
The reason the permanent stay was considered appropriate in the Permanent Stay Decision was because the Russian Federation and FKP had failed unreasonably to give discovery and their continuing inaction or delay had reached a point where the proceeding had become an abuse of process.
This was problematic with respect to the position of FKP.
Second, on various occasions his Honour did not apply the right test.
At [18], his Honour said:
The only way therefore that one can say that the discovered documents could not have been relevant to what is left of the proceeding is if one can say that Spirits cannot succeed on the Discretionary Defences. I reject the submission that the material which would have been discovered could not assist on the Discretionary Defences. Category 29(d) is an immediate obstacle to that contention. But in any event, the scale of the discovery categories goes to the entire history of the transformation and what the Russian Federation knew about it at various times. The contention that such material could have no conceivable bearing on the Discretionary Defences needs only to be stated to be rejected.
Contrary to the approach his Honour adopted, he ought to have considered how and to what extent Spirits was prejudiced by the deficiencies in discovery in pursuing the discretionary defences and in dealing with the issues estoppel arising from the Dutch decisions. The focus ought not to have been on the low bar of whether discovery “could not assist” or “could have no conceivable bearing”.
There is a further manifestation of the use of an inappropriate test at [19] where his Honour said:
Despite that, given that neither party sought to have any definitive determination of what issue estoppels the Dutch Decisions give rise to, it is difficult presently to say that the documents which would have been discovered must be irrelevant to FKP’s claim that it is entitled to rely on issue estoppel to defeat the Discretionary Defences.
This statement implies that his Honour was setting the bar too low in determining whether a permanent stay was warranted.
Further, the primary judge erred in his application of the principles discussed in Aetna, which his Honour had briefly mentioned in the temporary stay reasons at [61]. In Aetna, Giles J said that in determining whether a permanent stay of the proceeding was warranted, it was necessary to identify what effect any actual non-production of documents would have upon the conduct of the proceeding and then to only stay the proceeding if the needs of justice as between the parties to the proceeding justified that course.
In our view, the primary judge did not give sufficient consideration to the needs of justice as between the parties by failing to determine what effect any actual non-provision of documents by the Federation would have upon Spirits’ ability to defend the cross-claim in light of any issues estoppel that might flow from the Dutch decisions.
Third, his Honour at [20]–[23] accepted the application of the Arnold principle. In our view, he ought not to have done so.
It is important to be clear about what the principle in Arnold stands for.
Lord Keith referred to three concepts, namely:
(a)cause of action estoppel;
(b)issue estoppel of a type that arises where “a necessary ingredient in a cause of action has been litigated and decided and in subsequent proceedings between the same parties involving a different cause of action to which the same issue is relevant one of the parties seeks to re-open that issue” (at 105); and
(c)issue estoppel of a type “where in the subsequent proceedings it is sought to raise a point which might have been but was not raised in the earlier” (at 106).
Now under Australian law, (a) would be described as a res judicata and (c) would be described as an Anshun estoppel. In the present case we are only dealing with (b), not (a) or (c).
Lord Keith envisaged that “there may be special circumstances where estoppel does not operate”. If his Lordship is to be taken as permitting of such an exception in an Anshun estoppel situation, we have no difficulty with it. But if he is intending to apply it to what we would consider to be a res judicata or a true issue estoppel (see (b) above), we would disagree. There is no such principle under Australian law. The High Court has not in any ratio or considered majority dicta ever gone so far. And it is not appropriate for an intermediate appellate court to so innovate (see also Commonwealth of Australia v Cockatoo Dockyard Pty Ltd [2006] NSWCA 322 at [487] per Tobias JA).
Further, even if there was such a principle and even if it applied to a type (b) issue estoppel, none of this helps Spirits.
Lord Keith stated (at 108 and 109):
It is to be noted that there appears to be no decided case where issue estoppel has been held not to apply by reason that in the later proceedings a party has brought forward further relevant material which he could not by reasonable diligence have adduced in the earlier. There is, however, an impressive array of dicta of high authority in favour of the possibility of this. It was argued for the defendants that exceptions to the rule of issue estoppel should be admitted only in the case of the earlier judgment being a default or a foreign judgment and further that an exception should not be recognised where the point at issue had actually, as here, been raised and decided in the earlier proceedings, but only where the point might have been but was not so raised and decided. The later dicta are, however, adverse to these arguments. It was argued that there was no logical distinction between cause of action estoppel and issue estoppel and that, if the rule was absolute in the one case as regards points actually decided, so it should be in the other case. But there is room for the view that the underlying principles upon which estoppel is based, public policy and justice, have greater force in cause of action estoppel, the subject matter of the two proceedings being identical, than they do in issue estoppel, where the subject matter is different. Once it is accepted that different considerations apply to issue estoppel, it is hard to perceive any logical distinction between a point which was previously raised and decided and one which might have been but was not. Given that the further material which would have put an entirely different complexion on the point was at the earlier stage unknown to the party and could not by reasonable diligence have been discovered by him, it is hard to see why there should be a different result according to whether he decided not to take the point, thinking it hopeless, or argue it faintly without any real hope of success. In my opinion your Lordships should affirm it to be the law that there may be an exception to issue estoppel in the special circumstance that there has become available to a party further material relevant to the correct determination of a point involved in the earlier proceedings, whether or not that point was specifically raised and decided, being material which could not by reasonable diligence have been adduced in those proceedings. One of the purposes of estoppel being to work justice between the parties, it is open to courts to recognise that in special circumstances inflexible application of it may have the opposite result, as was observed by Lord Upjohn in the passage which I have quoted above from his speech in the Carl Zeiss case [1967] 1 A.C. 853, 947.
And here lies the problem for Spirits. If it wanted to rely upon special circumstances it would need to show that it could not have obtained the relevant documents in the Dutch proceedings. In other words, the question is not the consequence of incomplete discovery in the Australian proceeding by FKP, but whether Spirits could have through reasonable efforts obtained the documents in the Dutch proceedings. We would have thought that that was also plain from Diplock LJ’s discussion in Mills v Cooper [1967] 2 QB 459 at 468 to 469 which provided the foundation for Lord Keith’s discussion in Arnold.
The primary judge (at [20]) accepted Spirits’ submissions based on Arnold. With respect, he should not have done so. There are other passages at [21]–[23] with which we also have difficulties.
In the last two sentences of [21] his Honour said:
For present purposes, I do not see how I can proceed on the basis that Spirits’ invocation of the Arnold principle cannot succeed because the principle does not exist. It is not entirely self-evident that this was FKP’s submission, although it certainly flirted with it.
But the Arnold principle did not apply and, even if it did, it is unlikely to succeed in the present circumstances in any event.
At [22] his Honour said:
Nor do I accept FKP’s submission that the Arnold principle is not engaged because Spirits does not presently point to any document that could enliven it. In the counterfactual where FKP and the Russian Federation gave proper and timely discovery, Spirits would have had access to the full range of discovered documents. They may, or may not have, included documents which would assist it in invoking the Arnold principle. Of course, Spirits does not have access to those documents at the moment (or at least not to the full range of them). But this inability on Spirits’ part is to be laid at the feet of FKP, so it seems to me, and not Spirits. It is FKP and the Russian Federation which have not given proper discovery. It would be surprising if it were open to FKP to submit that it should be entitled to proceed to a trial of part of the case to which its discovered documents might be relevant to a submission which Spirits wishes to make because no such documents had been produced by Spirits when Spirits’ inability to do so is a direct function of the failure of FKP and the Russian Federation to give discovery. It would be circular.
The first sentence of [22] is problematic. Further, the real question is whether the documents could have been sought by Spirits in the Dutch proceedings. They could have been, but Spirits chose not to.
At [23] the primary judge said:
I also do not accept FKP’s submission that the Arnold principle cannot be invoked because Spirits could have sought the documents in the Dutch proceedings. That seems to be an issue suitable for trial. To embrace it for present purposes would be tantamount to concluding that FKP must inevitably succeed on this issue and Spirits fail. But I do not see how such an inquiry could be conducted without considering much more closely the course of Spirits’ attempt to reopen the 2006 judgment of the District Court of Rotterdam.
As we have already observed, this was the real issue. If Spirits wanted to invoke the Arnold principle, this is what was required.
The primary judge went on to say (at [24]):
In particular, making the assumption in FKP’s favour that the Supreme Court of the Netherlands will dismiss Spirits’ appeal on 24 January 2020, the following questions would then arise:
(a)are the documents which are the subject of Spirits’ reopening application before the District Court of Rotterdam the same documents the subject of the agreed discovery categories in this proceeding;
(b)in the Dutch proceedings was Spirits entitled to seek discovery from the Russian Federation (as it has done here);
(c)what is the precise nature of the juridical entitlement under Dutch law to seek discovery, and when precisely can it be granted;
(d)does the fact that Spirits applied to reopen the 2006 District Court of Rotterdam decision and has pursued it all the way to the Supreme Court of the Netherlands mean that it has taken reasonable steps to obtain the documents in the Dutch proceedings under Arnold;
(e)as a matter of Dutch law, did (or will) Spirits fail on its reopening because of the unreasonableness of its conduct or because of the asperity of Dutch civil procedure on the topic of discovery;
(f)if Spirits’ conduct for the purposes of Dutch civil procedure was unreasonable does that entail that it was unreasonable for the purposes of Arnold;
(g)are the reasons the District Court of Rotterdam gave for concluding that Spirits knew in 2006 about the documents seized from VAO by the Russian Federation applicable to all of the documents which are the subject of the agreed discovery regime in this case; and
(h)where the hearing in this Court concerns what the consequences for FKP should be for failing to comply with a consensual discovery regime, is there something incongruous in FKP submitting that Spirits should fail because it failed to seek discovery in a jurisdiction which does not generally order discovery?
But these are the questions his Honour should have addressed before deciding whether to permanently stay the cross-claim.
The primary judge went on to say in the first two sentences of [25]:
These issues are trial questions and cannot sensibly be embarked on in the present hearing. The parties did not attempt to wrestle with them other than in a superficial way (and I do not say that by way of criticism—the superficiality is driven by the nature of the debate as one about the form of orders).
One can only agree. This is the very reason a permanent stay was not justified.
His Honour concluded at [26]:
Accordingly, I do not accept that I can determine at this hearing the contention that Arnold will not apply because Spirits did not seek the documents in the Dutch proceedings.
But if that be correct, it merely demonstrates why a permanent stay was not then justified.
His Honour then said in the first sentence of [27]:
Inevitably this must mean that I cannot say that the trial of the issue estoppel arguments would not involve the documents which would have been discovered by FKP and the Russian Federation.
But the trial of the issue estoppel arguments did not have to involve the documents but rather whether discovery of documents responsive to the discovery categories could have been obtained in the Netherlands.
Fourth, at [19] the primary judge seemed to countenance the possibility, that even if FKP’s points concerning the issues estoppel arising from the Dutch decisions were made good and even assuming that the Arnold principle did not apply, the discretionary defences could “remain live”. Countenancing that possibility, his Honour considered that the lack of complete discovery could still go to the discretionary defences.
With respect, this was an uncertain position. In these circumstances, rather than ordering a permanent stay of the entirety of the cross-claim his Honour should have addressed the possibility referred to in ground of appeal 7 or something analogous as was put to him at the hearing culminating in the form of orders reasons (see FKP’s supplementary outline filed on 9 October 2019).
In summary, each of the four matters that we have identified amounts to House v the King error. It follows that the discretion miscarried and must be re-exercised. Since we are not in a position to do so, the matter should be remitted to the primary judge to undertake that task. We will say something more about the form of the remitter later.
Arguments and analysis
We now turn to the parties’ specific arguments.
FKP advanced various arguments by way of challenge to the form of orders decision.
First, FKP contended that the primary judge failed to address whether the discretionary defences were sustainable either as a matter of law or such as would at least survive a summary judgment application.
By contrast, Spirits said that his Honour expressly addressed the question whether the discretionary defences were sustainable in light of the Dutch decisions (at [19]) and held that it could not be said they were not.
Spirits submitted that the alleged representations are not matters of opinion and are capable of founding an estoppel. Further, Spirits submitted that the test for laches is whether the claimant has, by inaction, put the defendant in a situation where it was inequitable and unreasonable to assert the remedy. Spirits also submitted that where the power to cancel a registered trade mark under s 88(1) is enlivened, nevertheless a discretion not to so cancel can be exercised if there is sufficient reason. The power under s 88(1) is “at large, constrained only by the general scope and objects of the [Trade Marks Act]”, but subject to s 89 (see Anchorage Capital Partners Pty Ltd v ACPA Pty Ltd (2018) 259 FCR 514 at [146], [148]–[150], [158] and [159] per Nicholas, Yates and Beach JJ).
In addition, Spirits argued that the Federation’s knowledge is relevant to the discretionary defences. As to laches, the degree of the claimant’s knowledge needs to be evaluated. And as to estoppel and whether departure from the relevant assumption would be unconscionable, this must be resolved “by reference to all the circumstances of the case” (The Commonwealth of Australia v Verwayen (1990) 170 CLR 394 at 445 per Deane J). And as to the s 88 discretion, considerations include the respective contributions of the parties to the state of affairs. Spirits says that during the 1990s, the Federation acted as if VAO owned the relevant marks.
We accept that an estoppel by conduct can preclude departure from a represented or assumed state of affairs whether of fact or law (Foran v Wight (1989) 168 CLR 385 at 435 per Deane J). Promissory estoppel is just a subset of estoppel by conduct.
With respect to the principles of promissory estoppel, we adopt what was said by Brennan J in Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 at 420 and 421 and his six elements for establishing an equitable estoppel (see at 428 and 429). It is unnecessary to list them here.

Further, as to whether there can be an estoppel against the exercise of any statutory power (in this case, s 88), we would refer to the discussion by Gummow J in Minister for Immigration and Ethnic Affairs v Kurtovic (1990) 21 FCR 193 at 207, 208, 211, 213, 227 and 228.
The primary judge did not consider whether the discretionary defences were sustainable as a matter of law; and if they were not, whether any deficiency in discovery was superfluous.
FKP had a case to put, which has now been denied to them, that no documents or statements by functionaries of the Federation could either give rise to a relevant estoppel or change the objective fact, established by the Dutch issues estoppel that, because VVO existed after the incorporation of VAO (a matter known to VAO), it is not possible for VVO to have been transformed into VAO.
Second, FKP submitted that his Honour failed to consider whether any documents not discovered were “critically relevant” to the discretionary defences. By contrast, Spirits argued that the test is whether there is “no realistic possibility” that the discovered documents “might be deployed” by Spirits as part of the discretionary defences (see Clifton at [203]).
FKP overstated the test. Spirits understated it.
Third, FKP submitted that the primary judge wrongly concluded that category 29(d) supported Spirits’ claims to prejudice and wrongly dismissed criticism of the breadth of that category.
We agree.
Category 29(d), the only category exemplified as directly relevant to the discretionary defences, is a “catch all” category as FKP described it. Category 29(d) is expressed as follows:
To the extent not already covered by the above categories. Documents:
…
(d)which support the First Cross Respondent’s case as set out in paragraphs 60-88 of the Defence to the Second Further Amended Cross Claim.
It seeks documents which support Spirits’ case on the discretionary defences. The primary judge concluded that it supported Spirits’ claims to prejudice and wrongly dismissed criticism of the breadth of that category. He did so on the basis that “the category was determined by consent” (at [17]). But category 29(d) was not determined by consent insofar as it applied to the Federation entities. Strictly, it was determined by consent only insofar as FKP were concerned.
Fourth, his Honour also found that other discovery categories were relevant to the discretionary defences, stating that their “scale… goes to the entire history of the transformation and what [the Federation] knew about it at various times” (at [18]). Spirits sought to rely on categories 2, 10, 11, 15, 18 and 20 to 24.
But these categories are broad and in many respects unrelated to the issues that would arise in relation to the discretionary defences. There was little analysis by the primary judge.
Fifth, as to Spirits’ reliance on the Arnold principle, assuming contrary to what we have said that it applied, and Spirits’ resistance to any issue estoppel arising from the Dutch decisions, we agree with FKP that the primary judge should have concluded that further documents would be unlikely to change the transformation issue finding.
Sixth, we should say something more about the relevant test.
As stated in Clifton at [60], once Spirits had raised the question of the adequacy of discovery, FKP bore the onus of establishing the steps they took to comply with the order for discovery and satisfying the primary judge that they were, in the circumstances, adequate. As the permanent stay reasons explain, FKP failed to satisfy the primary judge that the steps taken were complete, although as we have said, his Honour overstated their inadequacy.
Spirits submitted that the relevant test was whether there was “no realistic possibility” that the discovered documents “might be deployed” by Spirits. We disagree. As we have already observed, that sets the bar too low. Moreover, it is contrary to authority.
Spirits relied on Clifton especially at [203] where the Full Court said:
We consider that unless this Court is satisfied that there is no realistic possibility of there being documents which might be deployed by the innocent parties to meet the defaulting party’s claims, the defaulting party’s claims (ie the appeals) should not be considered by this Court because to do so would be to consider them on a hypothetical and potentially false basis. It is tempting to think that most, if not all, of the relevant documents have been produced. We give the following example. We address below what we call the Charge issue. As we explain (at [366]–[380] below), the Liquidators appear to be right about the issue at least up to the point of the question of whether it is likely that Westpac would have consented to a sale of the RECs holding. We know the Liquidators sought production of documents from Westpac, among others (see [121] above), and we know that they have made extensive discovery. It is tempting to conclude that the possibility of identifying on discovery further documents relevant to this issue is so remote that it can be ignored. However, it is not for this Court to in effect “take a chance” on this issue. It was for the Liquidators to establish the absence of the realistic possibility we have described and they have failed to do that.
Spirits takes the remarks in Clifton out of context. What the Full Court said in Clifton at [203] was not an exposition of general principle, but an application of existing principle. The Full Court in Clifton made it clear (at [181] and [189]) that it was following High Court authority to the effect that, on the facts of each case, the Court must assess “what will best serve the interests of justice either particularly in relation to the parties or more generally having regard to the administration of justice” In Clifton at [196] the Full Court then turned to consider “what will best serve the interests of justice in this case having regard to its facts which are unique and different to those which were presented to the Court in … the … cases to which we were taken”.
Granting a permanent stay is a draconian remedy. It is fair to say that Spirits could not speculate as to what was missing. But it is not enough to say that discovery was not complete. Spirits needed to do more to persuade the Court that the interests of justice warranted a permanent stay. It ought to have explained why, with what it had, it was nevertheless still substantially prejudiced in its conduct of the discretionary defences. There was no such analysis either by Spirits or the primary judge.
Recently, in Victoria International Container at [18] Kiefel CJ, Gageler, Keane and Gordon JJ observed that:
The fundamental responsibility of a court is to do justice between the parties to the matters that come before it. In the performance of that function, the doing of justice may require the court to protect the due administration of justice by protecting itself from abuse of its processes. The power to stay, or summarily dismiss, proceedings because one party has abused the processes of the court is concerned to prevent injustice, and that power is properly exercised where the conduct of the moving party is such that the abuse of process on its part may prevent or stultify the fair and just determination of a matter.
(Footnotes omitted.)
And at [20] their Honours said that, “where a court is able, by means less draconian than summary termination, to cure any apprehended prejudice to a fair trial so as to ensure that justice is done, the court’s responsibility to the parties, and to the community, requires that those other means be deployed so that the matter before the court is heard and determined in accordance with the justice of the case”. Similarly, Edelman J said at [43] that “[i]f the integrity of the court can be protected by remedies less drastic than a permanent stay of proceedings then there is no justification for a court to go further than necessary to protect its processes by denying a party the liberty of a fair hearing”.
Seventh, FKP submitted that the proposal in ground 7 of the notice of appeal (see [247]) identifies the way the matter should have proceeded. In other words, his Honour should have permitted FKP to apply for judgment on the ground that Spirits is precluded from relying on its pleaded defences because of issues estoppel or res judicata arising from the Dutch decisions and to address the discretionary defences in the context of such an application.
By contrast, Spirits argued that there was no reason for the primary judge to reserve for some future occasion the question of whether Spirits was entitled to argue the discretionary defences when he had already found that it could not be said that Spirits was not so entitled. Spirits also argued that there was no reason for the primary judge to defer the question of whether Spirits had suffered prejudice by reason of the failure to give discovery, when he had already found that they had.
The problem with Spirits’ position is that his Honour’s findings were reached after he had misdirected himself on the appropriate test.
Finally, Spirits argued that orders for separate questions relating to any issues estoppel from foreign decisions had previously been made on FKP’s application, but FKP had elected to have those questions set aside by consent on 4 December 2013. That is not to the point. As we understand it, the separate questions were concerned with the Russian, not the Dutch, decisions (see the 2011 Full Court reasons at [127] per Buchanan J).
(f) Conclusion
For the foregoing reasons, the appeal should be allowed and the permanent stay order lifted and modified.
In the circumstances, rather than re-exercise the discretion for ourselves, the matter should be remitted to the primary judge for reconsideration of a modified form of permanent stay order in accordance with our reasons.
On the question of costs, we are inclined to the view that FKP should have their costs of the appeal, but we will hear further from the parties if necessary.

I certify that the preceding three hundred and ninety-five (395) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justices Katzmann, Beach and Markovic.
Associate:
Dated: 21 May 2021

Appeal from:	Federal Treasury Enterprise (FKP) Sojuzplodoimport v Spirits International B.V. (Permanent Stay) [2019] FCA 802 Federal Treasury Enterprise (FKP) Sojuzplodoimport v Spirits International B.V. (Form of Orders) [2019] FCA 1772
File number(s):	NSD 1974 of 2019
Judgment of:	KATZMANN, BEACH AND MARKOVIC JJ
Date of judgment:	21 May 2021
Catchwords:	TRADE MARKS – ownership of trade marks – vodka products – competing claims to ownership of trade marks between Russian Federation entities and Dutch company – permanent stay of cross-claim – failure to give proper discovery – extent of permanent stay – whether issues estoppel arising from Dutch litigation should have been permitted to be further litigated – relevance and application under Australian law of the principle in Arnold v National Westminster Bank plc [1991] 2 AC 93 – whether discretionary defences of laches, equitable estoppel and rectification under s 88 of the Trade Marks Act 1995 (Cth) should have been permitted to be further litigated – relevance of the discovery given in the US proceeding to the discharge of Australian discovery obligations – leave to adduce new evidence concerning US proceeding – leave refused – principles to apply in permanently staying a proceeding for want of discovery – exercise of discretion – discussion of Clifton (Liquidator) v Kerry J Investment Pty Ltd (2020) 379 ALR 593 – whether discretion miscarried – appeal allowed – limited remitter
Legislation:	Evidence Act 1995 (Cth) ss 91, 190 Federal Court of Australia Act 1976 (Cth) s 27, 37M Trade Marks Act 1995 (Cth) s 88
Cases cited:	Aetna Pacific Securities Ltd v Hong Kong Bank of Australia Ltd (Supreme Court of New South Wales, 29 April 1993, unreported) Ainsworth v Burden [2005] NSWCA 174 Anchorage Capital Partners Pty Ltd v ACPA Pty Ltd (2018) 259 FCR 514 Arnold v National Westminster Bank plc [1991] 2 AC 93 Australian Coal & Shale Employees’ Federation v The Commonwealth (1953) 94 CLR 621 Australian National Airlines Commission v The Commonwealth (1975) 132 CLR 582 Clifton (Liquidator) v Kerry J Investment Pty Ltd (2020) 379 ALR 593 Commonwealth of Australia v Cockatoo Dockyard Pty Ltd [2006] NSWCA 322 Commonwealth of Australia v Verwayen (1990) 170 CLR 394 Federal Treasury Enterprise (FKP) Sojuzplodoimport v Spirits International N.V. (2007) 157 FCR 558 Federal Treasury Enterprise (FKP) Sojuzplodoimport v Spirits International BV [2010] FCA 1293 Federal Treasury Enterprise (FKP) Sojuzplodoimport v Spirits International B.V. (No 4) [2017] FCA 1345 Federal Treasury Enterprise (FKP) Sojuzplodoimport v Spirits International B.V. (Permanent Stay) [2019] FCA 802 Federal Treasury Enterprise (FKP) Sojuzplodoimport v Spirits International B.V. (Form of Orders) [2019] FCA 1772 Foran v Wight (1989) 168 CLR 385 House v The King (1936) 55 CLR 499 Johnson v Gore Wood & Co [2002] 2 AC 1 Mango Boulevard Pty Ltd v Spencer [2008] QCA 274 Michael Wilson & Partners Ltd v Nicholls (2011) 244 CLR 427 Mills v Cooper [1967] 2 QB 459 Minister for Immigration and Ethnic Affairs v Kurtovic (1990) 21 FCR 193 National Mutual Life Association of Australasia Ltd v Grosvenor Hill (Queensland) (2001) 183 ALR 700 Palavi v Radio 2UE Sydney Pty Ltd [2011] NSWCA 264 Re HIH Insurance Ltd (in liq) [2015] NSWSC 790 Rogers v The Queen (1994) 181 CLR 251 Rozenblit v Vainer (2018) 262 CLR 478 Spirits International BV v Federal Treasury Enterprise (FKP) Sojuzplodoimport (2011) 91 IPR 438 SPI Spirits (Cyprus) Ltd v Diageo Australia Ltd (No 2) (2006) 155 FCR 150 UBS AG v Tyne (2018) 360 ALR 184 Victoria International Container Terminal Limited v Lunt [2021] HCA 11 Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387
Division:	General Division
Registry:	New South Wales
National Practice Area:	Intellectual Property
Sub-area:	Trade Marks
Number of paragraphs:	395
Date of hearing:	17 to 19 August 2020
Counsel for the Appellants:	Mr D Shavin QC and Ms C Cochrane
Solicitor for the Appellants:	Quinn Emanuel Urquhart & Sullivan
Counsel for the Respondent:	Mr M Darke SC and Mr D Larish
Solicitor for the Respondent:	King & Wood Mallesons

ORDER MADE BY:	KATZMANN, BEACH AND MARKOVIC JJ
DATE OF ORDER:	21 MAY 2021

(a) Background	[20]
The temporary stay decision	[21]
Permanent stay decision	[55]
The form of orders decision	[68]
(b) Leave to tender new evidence	[74]
(c) Some general principles	[114]
(d) The permanent stay reasons	[123]
*FKP’s efforts to obtain documents from the Federation entities*	[128]
The Federation entities – General	[140]
The first to fourth, seventh to ninth and 12th Federation entities (the Brodsky Federation entities)	[147]
The fifth, sixth, 10th, 11th and 13th Federation entities (the non-Brodsky Federation entities)	[171]
*FKP or the Federation?*	[212]
*Notice of contention*	[234]
(e) The form of orders reasons	[240]
*FKP’s principal points*	[249]
*The pleaded issue estoppel*	[273]
*The Dutch and European Union decisions*	[276]
The Dutch proceedings	[277]
The EU proceedings	[302]
The Austrian proceedings	[309]
*The discretionary defences*	[311]
*Problematic features of the reasons*	[322]
*Arguments and analysis*	[361]
(f) Conclusion	[393]

Federation entity	Name of Ministry/Agency		Brodsky entity (US discovery)
1.	The Apparatus of the Government of the Russian Federation		Yes
2.	Administrative Office of the President of the Russian Federation		Yes
3.	Ministry of Finance of the Russian Federation		Treated as yes
3a.	Federal Service for Alcohol Market Regulation (Rosalcohol)	Yes
4.	Ministry of Agriculture of the Russian Federation		Yes
5.	Ministry of Internal Affairs of the Russian Federation		No
6.	Federal Security Service of the Russian Federation		No
7.	Ministry of Economic Development and Trade of the Russian Federation		Treated as yes
8.	Federal Agency for the State Property Management (including its predecessor, the Ministry of Property Relations of the Russian Federation)		Yes
9.	Federal Service on Intellectual Property, Patents and Trademarks (Rospatent)		Yes
10.	Federal Service on Financial Markets		No
11.	Accounting Chamber of the Russian Federation		No
12.	State Archive of the Russian Federation		Treated as yes
13.	Investigation Committee of the Russian Federation		No