Leave to appeal refused in latest round of STOLICHNAYA dispute

In Spirits International NV v Federal Treasury Enterprise (FKP) Sojuzplodoimport ([2007] HCATrans 595, October 5 2007), the High Court of Australia has refused leave to appeal against a decision of the Full Court of the Federal Court which held that the order for discovery made by the trial judge against the Russian Federation was wrong in principle and inconsistent with established criteria of international law with regard to comity.

The substantive case concerned complex factual issues relating to the ownership of the well-known vodka marks STOLI and STOLICHNAYA. In broad terms, Federal Treasury Enterprise (FKP) Sojuzplodoimport alleged that, upon the dissolution of the former Soviet Union in 1992, the trademarks were wrongfully appropriated and came in Australia to be held (wrongly) by Spirits International NV.

Importantly, the trial judge found that the Russian Federation was in fact the 'real' plaintiff in the proceedings because the claims concerning the trademarks were brought on its behalf by FKP, and not in FKP's own right.

Accordingly, on September 5 2006 the trial judge ordered that "unless the Russian Federation provides discovery of all documents falling within the categories... by filing and serving a verified list..., [FKP's] claim be stayed... until further order".

This order was set aside by the full court, which considered that it was unnecessary for the proper conduct of the proceedings for the trial judge to make such an order without first giving the Russian Federation the opportunity to provide the discovery sought voluntarily. The full court made the following observations:

• No disadvantage to the parties would have resulted from such an opportunity other than some delay (which has now occurred in any event); and
  
  
• To have given this opportunity would not have denied Spirits any substantive rights and would have minimized any intrusion upon the sovereignty of the Russian Federation, as required by the principle of comity.

Spirits sought leave to appeal against this decision, primarily because potentially significant documents were alleged to be held by the Russian Federation (or its various instrumentalities) which FKP did not have power to obtain. Furthermore, Spirits described the appointment of FKP as an agent (or bailiff) to recover the alleged rights to the Australian trademarks as a mere 'device', because FKP did not claim any right itself other than an annually renewable mandate to recover the marks on behalf of the Russian Federation. On that basis, Spirits argued that as the Russian Federation had stepped in and sought the assistance of the Australian courts, it should accept the obligation of discovery.

Spirits conceded that, generally, Australian courts do not require third parties in foreign jurisdictions to submit to coercive processes, unless the foreign state is first requested in some formal way to cooperate. However, Spirits argued that this principle is not applicable where the third party is the 'real' plaintiff and is a foreign state; if the foreign state were the plaintiff, the Foreign States Immunities Act made all questions of immunity and comity irrelevant.

FKP alleged that because the regular discovery process as between the actual parties on the record had not finished, those parties should provide their discovery and, at the end of that process, decide whether there were gaps or deficiencies.

The High Court accepted this proposition, saying that it would be 'premature' to enter upon a consideration of the questions of general principle said to arise. However, FKP may only have bought itself breathing time before the issue arises again as and when (or if) the actual parties (let alone other 'real' parties) complete their discovery process.

Julian Gyngell, Julian Gyngell, Wahroonga