Briefing

No recognition? No problem: UK Supreme Court confirms bankruptcy petitions can be based on unrecognised foreign judgments

Can a foreign judgment against someone living in England and Wales be used to petition for their bankruptcy without first being recognised? Until recently, the answer was uncertain. On 27 July 2026, the UK Supreme Court (UKSC) unanimously answered, yes.

In Servis-Terminal v Drelle,¹ the UKSC held unanimously that a creditor can present a bankruptcy petition based on a debt arising from an unrecognised foreign judgment, without first needing to obtain recognition from an English court. This is because the English common law recognises a foreign judgment as a debt for the purposes of section 267 of the Insolvency Act 1986 (the 1986 Act).

Background

The appellant, Servis-Terminal LLC (ST), is a Russian company in bankruptcy. ST issued proceedings against the respondent, Mr Drelle, its former Director General, before the Russian courts on the basis that he had breached his duties by causing ST to advance a RUB 2 billion loan (approximately £18.9m as at the date of publication). Following extensive proceedings spanning ten hearings over 14 months, the Russian court held that Mr Drelle had breached his duties and ordered him to pay RUB 2 billion to ST. Mr Drelle had exhausted all available appeal processes in the Russian court system.

Mr Drelle had by that time settled in London. ST served a statutory demand on him in England and shortly afterwards presented a bankruptcy petition based on the Russian judgment. Mr Drelle applied to set aside the statutory demand on the ground that the Russian judgment was improperly obtained, biased, contrary to natural justice and English public policy, and had been obtained by fraud and/or collusion.

ICC Judge Burton found that the debt was not disputed on bona fide and substantial grounds and made a bankruptcy order. Mr Drelle appealed to the High Court, where Richards J dismissed his appeal. Mr Drelle obtained leave to appeal to the Court of Appeal, which allowed his appeal on the sole ground that a bankruptcy petition cannot be presented on the basis of an unrecognised foreign judgment.

UKSC judgment

The UKSC reaffirmed the common law principle that a foreign judgment for a debt or sum of money gives rise to an obligation to pay the sum for which judgment has been given, provided that:

the foreign judgment is final and conclusive; and
the debt in question meets the requisite conditions laid down in s.267 of the 1986 Act, namely that it (i) exceeds the value threshold (currently £5,000); (ii) is for a liquidated sum; (iii) is payable immediately or at a certain future time; (iv) is payable to the petitioner; and (v) is unsecured.

In other words, it is not necessary to obtain recognition of the foreign judgment as a precondition to it constituting a “debt” for the purposes of s.267 of the 1986 Act.

The UKSC rejected the Court of Appeal’s reliance on two key propositions:

First, the principle that a foreign judgment has no “direct operation” in England means only that it has no status as a judgment in England and that none of the processes of execution available in respect of an English judgment (e.g. third-party debt orders or charging orders) can be invoked absent recognition. The fact that a foreign judgment may not have direct operation in England does not mean it has no legal effect whatsoever.
Second, the Court of Appeal drew a false analogy in these proceedings with the common law “revenue rule”, which acts to prevent a foreign tax claim from grounding a bankruptcy petition. There is instead a fundamental difference between a sovereign authority asserting a public right and a private person bringing a claim asserting a private right, as was the case here.

The separate questions of whether the Russian judgment was disputed on bona fide and substantial grounds, and whether the High Court had applied the wrong standard of appellate review in this respect, were not decided in the Court of Appeal because Mr Drelle had succeeded on the now-overturned principle that an unrecognised foreign judgment does not constitute a debt. These issues have accordingly been remitted to the Court of Appeal for determination.

Key takeaways

The UKSC judgment gives clarity to an area of procedural importance in which the earlier Drelle proceedings had introduced uncertainty. Namely as to whether a creditor holding an unrecognised and unregistrable foreign judgment could rely upon it as the basis for a bankruptcy petition, without first obtaining recognition of that judgment through English proceedings. The UKSC’s decision removes that procedural hurdle.

The judgment confirms that foreign judgment creditors, whose judgments fall outside statutory registration regimes, such as those governed by the Foreign Judgments (Reciprocal Enforcement) Act 1933, which does not apply to a vast number of jurisdictions, do not need to take the additional step of commencing separate recognition proceedings before presenting a bankruptcy petition.

The UKSC decision therefore streamlines the bankruptcy route and reduces the time and cost burden that would otherwise be imposed by mandatory prior recognition.

Foreign judgment creditors in this position should nonetheless be aware that the debtor retains the ability to challenge the underlying debt on bona fide and substantial grounds, including on the basis that the foreign judgment was improperly obtained.

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