Supreme Court guidance on issue estoppel: impact for the Isle of Man

Scope of issue estoppel clarified – and narrowed – in far-reaching win for Danish customs authority

In Skatteforvaltningen (The Danish Customs and Tax Administration) (“SKAT”) v MCML Ltd (previously known as ED&F Man Capital Markets Ltd) (“EDFM”) [2026] UKSC 19 (01.07.26) the Supreme Court has just issued its much-anticipated guidance on issue estoppel.

The issue before the Supreme Court was whether a claim brought by SKAT, the Danish Customs and Tax Administration, against EDFM in 2022 was barred by issue estoppel because of the dismissal of an earlier claim brought by SKAT against EDFM in 2018.

Key principles on issue estoppel

In SKAT, Lord Sales and Lord Doherty (with whom Lord Lloyd-Jones, Lady Rose and Lady Simler agreed) held as follows:

“38. Issue estoppel may have the effect of restricting or denying a litigant’s access to court… or of preventing a litigant from raising what is otherwise a good defence… When it applies, it involves a serious interference with the ordinary entitlement of litigants… Conscious of this, and of the availability of and ground covered by the doctrine of abuse of process…, the courts have been astute to ensure that issue estoppel is kept within… narrow limits…

40. We consider that the following legal principles relating to issue estoppel are well established. 

41. The issue decided in the prior proceedings must have been necessary and fundamental to the decision if it is to give rise to an issue estoppel…

43. Whether an issue arose on the parties’ pleadings in the prior civil proceedings is critical in deciding whether its determination was necessary and fundamental…

45. While the immediate foundation of the ultimate decision can give rise to an issue estoppel, elements of the prior court’s reasoning leading up to that decision cannot…

48… it would be potentially unjust for a party to be estopped by elements of judicial reasoning which went wider than was necessary for the prior court to determine the particular case before it… The scope of an estoppel should not depend upon the happenstance of how widely or narrowly a judge chooses to frame the reasoning in their judgment…

49. It is not reasonable to expect litigants to spend time and effort litigating points which, in the first set of proceedings, appear to be of little significance. Further… they should not be given incentives to do so, since the limited resources of the time and attention of courts should be focused on resolving points of substance that really matter… [T]he doctrine of issue estoppel would be profoundly unfair and would work injustice if it were found to be applicable in a case where a party could have put some point in issue, but chose not to do so…

50. … there is a distinct aspect of the law of res judicata… to control against any unfairness between litigants, if one of them omits to raise a point in a first set of proceedings and then seeks to raise it later, namely the law on abuse of process first identified in Henderson v Henderson and explained in Virgin Atlantic. The law on abuse of process is carefully modulated… to achieve overall justice…

51. A further reason for confining the operation of issue estoppel within narrow limits is that it would otherwise displace the operation of the doctrine of precedent in an inappropriate manner. The interpretive process for identifying the ratio decidendi of a case for the purposes of that doctrine is not the same interpretive process that is employed for identifying the immediate foundation of a decision for the purposes of issue estoppel. It would undermine the coherence of the law and the proper application of the doctrine of precedent to conflate the two. The doctrine of precedent has developed to strike a balance taking account of the need for certainty and predictability in the law, through authoritative guidance provided by the decisions of appellate courts (while also allowing for the possibility for correction of errors), and the desirability of doing justice in a particular case by applying the law relevant to that case, as properly identified by the courts… Over-extensive application of the doctrine of issue estoppel, beyond the field in which it is strictly required to do justice… would undermine the balance struck more generally in the public interest, and taking account of the private interests of the parties, by the doctrine of precedent.

52. Such considerations underpin the emphasis upon the narrow operation of the doctrine of issue estoppel… The scope of an issue estoppel is not to be enlarged by inference, deduction or argument from the prior decision…

53. An issue estoppel arising from a decision on one set of facts is not to be expanded to cover another set of facts, even if the factual differences were not material in law to the prior court’s decision…”.

On the facts, as was put (at § 56): “The factual and legal bases of the 2018 Claim and the 2022 Claim are different. They were different causes of action”.

In so finding, the Supreme Court reached the opposite conclusion to the Court of Appeal, which had found that SKAT’s 2022 claim was barred by an issue estoppel.

SKAT’s appeal to the Supreme Court therefore succeeded.

Application to the Isle of Man

Whilst not automatically binding in the Isle of Man, SKAT will now undoubtedly be cited to, and followed by, future Manx Courts considering issue estoppel. Similarly, the earlier leading Supreme Court decision on res judicata, Virgin Atlantic Airways Ltd v Zodiac Seats UK Ltd [2014] A.C. 160, was followed in Manx cases eg. Alder & another v Lloyds Bank International plc (2DS 2015/6) (08.12.15) (at § 27) and Craine & Hommet v Cleator (2DS 2020/39) (07.07.21) (at § 101).

Note for practitioners: SKAT will doubtless be cited to, and followed by, future Isle of Man Courts on issue estoppel.

Disclaimer: professional advice should be sought before applying any information in a given case.

For advice on Isle of Man civil procedure, contact Coren Law.

See also Coren Law’s Isle of Man civil procedure portal: Click On | Coren Law.