Appeals against findings of foreign law: Privy Council explains spectrum approach

A recent judgment from the Privy Council clarifies the approach an appeal court is likely to take where there is a challenge to findings of foreign law: Perry v Lopag Trust Reg No 2 (Cayman Islands) [2023] UKPC 16.

It is the Privy Council's long-established practice to decline to hear appeals which seek to challenge "concurrent findings of fact", ie findings of fact that have been made at first instance and upheld by an appellate court, save in "exceptional circumstances". The Supreme Court takes a similar approach.

The key question addressed in this case was the extent to which that practice applies to findings of foreign law. Although it is clear that such findings are categorised as findings of fact rather than law, the Privy Council described them as a "special category" since, at least in some cases, the appellate judges will be in a similar position to the trial judge in analysing and applying the relevant foreign law.

The judgment clarifies that findings of foreign law exist along a "spectrum". At one end are cases where the foreign system of law is similar to domestic law, so that the judges at all levels can apply their own legal skills and experience to ascertain the applicable foreign law and apply it to the case in question. At the other end of the spectrum are cases where the foreign law is very different, and the trial judge is heavily reliant on expert evidence in analysing and applying the foreign law. The further along this spectrum a case falls, the more hesitant an appeal court is likely to be to intervene, and (where there are concurrent findings at first instance and on appeal) the more likely the Privy Council is to decline to hear an appeal unless exceptional circumstances are established.

Background

Mr Perry was an Israeli-qualified lawyer and businessman. In October 2013, as part of his succession and wealth management planning, Mr Perry transferred the single issued share in a Cayman Islands company to a Liechtenstein trust enterprise.

Mr Perry’s widow and her elder daughter challenged the transfer in the Cayman courts on two principal grounds:

1. it was void or should be set aside as it breached the widow's matrimonial rights under Israeli law ("matrimonial claim"); and
2. it should be set aside for equitable mistake because Mr Perry would not have transferred the share if he had known that discretionary beneficiaries did not have effective rights to apply to the court to enforce the trustees' obligations under Lichtenstein law ("mistake claim").

The trial judge dismissed the claim in relation to both grounds and the Cayman Court of Appeal dismissed the appeal. The claimants then appealed to the Privy Council, which has jurisdiction to hear appeals from the highest domestic courts for a number of Commonwealth countries, crown dependencies and United Kingdom overseas territories, including the Cayman Islands.

Decision

The Privy Council dismissed the appeal, with its judgment given by Lord Hodge.

Application of concurrent findings practice to foreign law findings

Lord Hodge noted the long-standing practice of the Privy Council to decline to hear appeals against concurrent findings of fact, save in exceptional circumstances: Devi v Roy [1946] AC 508. The claimants in this case argued that findings as to foreign law should be treated differently from other findings of fact, since judges at all levels can use their legal training and experience to analyse and reach their own conclusions in relation to foreign law. Accordingly, the claimants said, there was no need for appeal courts to defer to the conclusions of the courts below.

The Privy Council confirmed the starting point, that findings in relation to foreign law are findings of fact because a domestic judge "is not to be imputed to know foreign law", and will typically rely on evidence of suitably qualified experts. However, such findings of fact are in reality a "special category", because there is a "spectrum of circumstances" as to when and to what extent the domestic judge can rely on their own skill and experience to ascertain the applicable foreign law and apply it to the case in question.

At one end of the spectrum are cases where the foreign legal system in question is not a common law system. In such cases, the judge is likely to be heavily dependent on the evidence of the foreign law experts, tested by cross-examination, and the judge's domestic law skills and experience will have minimal impact. Consequently, the findings in relation to foreign law will "have a close kinship to other findings of fact" and an appellate court will be slow to intervene. It follows that the Privy Council in such cases will invoke its usual practice of refusing to hear appeals against concurrent findings of fact unless there are exceptional circumstances.

At the other end of the spectrum are cases where the foreign law in question is a common law system similar to domestic law. In those scenarios the judges at first instance, in the appellate courts and the Privy Council (if necessary) "are entitled and required" to use their legal skills and experience to analyse the foreign law issue.  In such cases, the Privy Council would be unlikely to invoke its practice relating to concurrent findings of fact, as the judges in the appeal courts "are able to bring to bear their own skill and experience" in the same way as the first instance judge.

Application of the "spectrum" approach to the present case

The Privy Council then applied the "spectrum" approach to the Cayman courts' findings in relation to each of (i) the matrimonial claim and (ii) the mistake claim.

• It was satisfied that the matrimonial claim concerning Israeli law lay at or very close to the far end of the spectrum, where skills and knowledge of a domestic judge have minimal impact and findings of fact in relation to foreign law are to be treated in the same way as findings of simple fact. The first instance judge was dependent on expert evidence from two Israeli law experts, who were cross-examined over two and a half days, and he accepted the evidence of each expert on some matters and preferred the opposing expert's evidence on some matters. This decision was subsequently upheld by the Cayman Court of Appeal. The Privy Council's practice on concurrent findings of fact therefore applied.
• The same was true of the mistake claim, which the trial judge rejected after hearing two experts on Lichtenstein trust law. The first instance decision was upheld by the Cayman Court of Appeal, which found that it was not in as good a position as the trial judge to make the assessment of Lichtenstein law because: the judge had considered the expert evidence carefully and given reasons for preferring the evidence of one expert over the other; Liechtenstein law was very different from Cayman law (and English law); and the experts had been cross-examined for a day in the first instance court. The Privy Council agreed, stating that, as with Israeli law, Liechtenstein law was not readily accessible to an English or Cayman law trained judge, and therefore the Privy Council's practice in relation to concurrent findings of fact applied.

Exceptional circumstances

The question was therefore whether the claimants had demonstrated the existence of exceptional circumstances for the appeal, as required for an appeal against concurrent findings of fact. As stated in Devi v Roy, "There must be some miscarriage of justice or violation of some principle of law or procedure."

In the present case, the claimants argued that there were exceptional circumstances because the first instance judge had made findings of fact for which there was no evidential basis whatsoever. The Privy Council stated, however, that to meet the high hurdle set in Devi v Roy, the relevant finding of fact would have to be of such materiality to the decision that, if the allegation were established, the decision could not stand. As the claimants failed to meet this high hurdle, the appeal was dismissed.