The background to the decision involves Russian company Servis-Terminal, which entered insolvency in 2017. Its trustee began proceedings in Russia against the company’s former CEO, Mr Valeriy Drelle, alleging that he caused a loss of 2 billion roubles (approximately USD 25 million) by approving an unpaid loan. In May 2019, the Russian court issued a judgment against Mr Drelle, who had since relocated to London. Relying on this judgment, the trustee filed a bankruptcy petition in October 2020 in England under section 267 of the Insolvency Act 1986. The Insolvency and Companies Court subsequently made a bankruptcy order in March 2023.
In January 2025, the Court of Appeal reversed the ICC’s decision. It held that an unrecognised foreign judgment, which had not undergone recognition proceedings in the UK, had no legal effect in England. The Court of Appeal reasoned that such a judgment could not constitute a ‘debt’ under section 267 and therefore could not support a bankruptcy petition.
The trustee appealed to the UK Supreme Court, arguing that a final foreign judgment creates an immediate legal obligation to pay and qualify as a ‘debt’ under section 267.
In allowing the appeal, the Supreme Court held that, at common law, a final foreign judgment for a monetary sum creates an immediate and enforceable obligation to pay in England. This means that a payment obligation arising from an unregistrable and unrecognised foreign judgment constitutes a ‘debt’ under section 267 regardless of its geographical origin.
This ruling provides significant cross-jurisdictional opportunities for creditors seeking enforcement in England. Creditors holding foreign judgments can now bypass traditional recognition procedures and directly petition for bankruptcy against debtors residing in England. The decision underscores the flexibility of English courts in accommodating claims based on foreign judgments and reinforces England’s position as a creditor-friendly jurisdiction.
The case can be found here.
Authors:
Louis Castellani, Partner
Hannah Phipps, Paralegal
He advises global businesses at board level and private office investors, leading disputes in sectors that include entertainment, commerce and finance. His experience covers challenges such as corporate investigations, urgent injunctions, royalty audits and KPI disputes, contractual problems, complex cases at trial, appeals, references to the Copyright Tribunal, arbitration under various rules and advising clients appearing before public bodies. He co-ordinates cross-border litigation all over the world, including enforcing against, and defending, valuable assets.
Louis also supports his clients with early strategic risk management decisions and helps guide them towards ways in which litigation can be avoided where that is in their interests.
Louis’ case highlights include (clients are listed in italics):
Investigations
Media, entertainment and sport
Commercial and arbitration
Civil law processes
Louis qualified as a solicitor-advocate and spent the early years of his career at Clyde & Co.