Foreign Law as an Issue of Fact: Perry v Lopag Trust and another (No.2) (Cayman Islands) [2023] UKPC 16

A recent judgment of the Privy Council explores the interplay between two principles on appeal.

First, findings of fact are notoriously difficult to appeal, the appellate courts taking the understandable view that the judge at first instance was in a better position than they to determine them, having heard the evidence develop.

Secondly, foreign law, as we all know, is a question of fact and, as such, must be proven on the balance of probabilities in any particular case. It is not permissible, for example, for a claimant in a claim governed by Spanish law to rely on the slew of recent authorities on the recoverability of Spanish penalty interest to inform the court as to the provisions of Spanish law relating to that issue; these are questions of fact which must be proven by reference to expert evidence in each case.

But foreign law does not feel like a question of fact in the same way that other factual issues do. If the interpretation of a provision of the law of England and Wales is a question of law (as it clearly is), why should the interpretation of an equivalent provision of a foreign Code be a question of fact? For historical reasons many other jurisdictions feature laws which are modelled on the law of England and Wales, and some continue to utilise English caselaw as being persuasive. It is a peculiar feature of the Foreign Law Is Fact rule that courts whose decisions are regarded as being persuasive outside the jurisdiction find themselves approaching domestic foreign caselaw as they would any other factual dispute, although no less an authority than Lord Neuberger, in Actavis UK Limited v Eli Lilly [2017] UKSC 48, observed that the notion that findings of foreign law are findings of fact is ‘somewhat artificial’.

In Perry v Lopag Trust (No.2) [2023] UKPC 16 the Privy Council grappled with the approach to be taken by the appellate courts to disputes of foreign law. The members of the Board, Lords Hodge, Lloyd-Jones, Briggs, Kitchin, Sales, Stephens and Richards, determined that the Appellant, in asking them to reconsider matters of foreign law, was asking them to reopen findings of fact; a course they declined to follow, and the appeal was therefore dismissed. However, they considered the approach to be taken to findings of fact on appeal, and concluded that ‘findings of fact in relation to foreign law are findings of fact but they are in a special category’.

The Board noted (at 11) that:

“The starting point is that findings in relation to foreign law are findings of fact because a judge is not to be imputed to know foreign law: Nelson v Bridport (1845) 8 Beav 527; 50 ER 207. Absent agreement between the parties, foreign law is proved by suitably qualified experts in the relevant foreign law. Nonetheless, such findings of fact are in a special category. Judges frequently quote the dictum of Cairns J in Parkasho v Singh [1968] P 233, p 250 that “the question of foreign law, although a question of fact, is a question of fact of a peculiar kind”. Findings of fact as to foreign law are in a special category in part because, in certain circumstances, in particular when the foreign law is a common law system analogous to the judges’ domestic law, the judge at first instance and the judges in the appellate courts can use their legal skills and experience in the analysis of domestic law to analyse the foreign law. In such circumstances the appellate judges are not at any significant disadvantage in carrying out that analysis compared with the trial judge.”

At first instance the court will take the following approach:

1. First, identify what the highest court in the foreign jurisdiction would decide if the point of foreign law were to come before it (Dexia Crediop SpA v Commune di Prato [2017] EWCA Civ 428);
2. Then, if the foreign legal system is a common law system which adopts a similar approach to legal reasoning and statutory interpretation to that of English law, the English judge is entitled and required to bring to bear his or her knowledge of the common law and the rules of statutory construction in analysing the foreign law in dispute (MCC Proceeds Inc v Bishopsgate Investment Trust Plc [1999] CLC 417);
3. Where, on the other hand, the court is faced with differing views as to the law of a codified system which is not based in any relevant aspect on the common law, there is less room for the judge to apply his or her own legal training and experience to help to resolve the relevant question (Morgan Grenfell & Co Ltd v SACE Istituto [2001] EWCA Civ 1932);
4. Where the foreign law is in a foreign language the judge will often be dependent on translations of the relevant texts, which may or may not be precise and which may or may not be disputed, and on the evidence of the foreign law experts to understand the meaning and nuances of the foreign language in the relevant text (Byers v Saudi National Bank [2022] EWCA Civ 43) – we have seen this play out in the Spanish penalty interest cases;
5. Where the judge is dependent upon the evidence of foreign law experts who disagree as to the interpretation and application of a foreign law, and has to decide issue by issue whose evidence to prefer, (s)he will have regard to all the evidence presented and will reach a view based on an assessment of each expert having regard to their evidence as a whole, both written and oral. The trial judge will thus evaluate the experts’ reasoning in a way not open to the appellate court, which will not have seen the experts give evidence.

The Board noted that these practices give rise to a spectrum of circumstances in which a dispute as to foreign law may be determined. On the one hand is the straightforward dispute arising in the context of an English speaking common law jurisdiction, where the trial judge is able to use his or her legal knowledge to assist in reaching a conclusion as to the likely foreign law. At the other end of the spectrum is the foreign language Islamic tradition dealt with in Byers, in which the relevant caselaw was rendered in Arabic and the law itself had no relation to the English common law tradition. In the first instance, an appellate court would be more willing to review the decision of the trial judge, being in as good a position to do so; in the second, the trial judge will have been more heavily dependent on the experts in informing his or her decision, and the appellate court will be correspondingly less willing to interfere with his or her conclusions.

The Board observed (at 16):

“the key variable is the extent of the ability of a judge and an appellate court to use their skill and experience in domestic law to ascertain the relevant rules of foreign law and apply them to the facts of the case.”

Having identified that there is a spectrum of foreign law findings, at one end of which the appellate court may interfere with the finding of the trial judge and at the other end of which it will not, the Board went on to consider where on the spectrum the findings of law in the case before it could be said to fall. It concluded that on the facts before it the findings of foreign law were closer to ‘pure’ findings of fact than to legal analysis, doing so because:

1. the Israeli and Liechtenstein legal provisions in question had ‘no obvious counterpart’ in the judge’s domestic law;
2. he was therefore unable to bring to bear on the legal issues his own knowledge or experience;
3. as a result it was necessary for him to rely heavily on the evidence of the foreign law experts called by the parties, in particular the oral evidence given by them over the course of several days;
4. he evaluated them as witnesses in the usual way, preferring the evidence of one over the other on various matters and giving reasons for doing so;
5. as part of this evaluation he examined translated copies of a number of authorities, which showed that the Israeli law on the issue was not settled; it was not simply a question of interpretation of one statute or authority.

Because the findings at first instance and on appeal fell at the ‘factual’ end of the spectrum, the appeal to the Privy Council was dismissed.

Comment

The spectrum concept propounded by the Board is an interesting one. Although it is vulnerable to the charge that it creates uncertainty, since some findings of foreign law will be appealable but others will not, it has the great advantage of reflecting the reality of the wide range of foreign law questions the courts of England and Wales are called upon to determine. There is, it is suggested, a difference between a trial judge employing his own knowledge of English common law concepts to interpret a statute written in English and derived from an English source statute, and a judge faced with totally unfamiliar concepts of, for example, religious law, originally rendered in a language not closely related to English. Where on the spectrum the codified continental legal systems will fall is yet to be tested, but much will depend on the particular provisions in dispute. Some English practitioners may feel that they have read, heard and thought enough about the Spanish provision on penalty interest that they could make a good attempt at determining the issues arising from it from their own experience, but the fact remains that the original provision is rendered in Spanish, derives from a civil and not a common law tradition, and has been the subject of extensive commentary in the Spanish courts and academia. Commonly in cases in which penalty interest is claimed the parties proffer Spanish law experts for cross examination, and the evidence of one is preferred above the other. All of these factors tend to suggest that were the question of the interpretation of the provision to come before the appellate courts they should decline to interfere with the trial judge’s conclusions in respect of it; but on the other hand, the question is currently vexing judges at first instance to no small degree, particularly given that it can more than double the value of a claim. Perhaps the way around the problem might be that the question of whether or not Spanish penalty interest is payable is a matter of European law (governed by the applicability of Rome II) and so a question for determination as a matter of law by the courts of England and Wales after all. But that would be an argument necessitating an article of its own.