In Valeriy Ernestovich Drelle (Respondent) v Servis-Terminal LLC (In Liquidation in the Russian Federation) (Appellant) [2026] UKSC 29, the Supreme Court considered whether an unrecognised and unregistrable foreign judgment can form the basis of a bankruptcy petition in England and Wales. It held that it can. The decision constitutes an important development in the landscape of enforcement of foreign judgments in the jurisdiction.
Background
Servis-Terminal LLC (ST), a Russian company in liquidation, obtained a judgment in Russia against its former director, Valeriy Drelle, for RUB 2 billion. Russian courts found that Mr Drelle, who participated in the proceedings, had acted improperly in causing ST to make a substantial loan that was never repaid. The judgment survived multiple stages of appeal in the Russian courts.
After Mr Drelle had moved to England, ST served a statutory demand and presented a bankruptcy petition based on the Russian judgment debt. Mr Drelle challenged the petition before the Insolvency and Companies Court (ICC), arguing, among other things, that the Russian judgment had not been recognised in England and therefore could not constitute a debt for bankruptcy purposes. While the ICC and High Court upheld the petition, the Court of Appeal overturned those rulings and concluded that an unrecognised foreign judgment could not be relied upon as the basis for a bankruptcy petition. ST appealed to the Supreme Court.
The two main legal issues
1. What legal effect does an unrecognised foreign judgment have at common law?
The first issue concerned the status of a foreign judgment that had not been recognised through English proceedings. Mr Drelle argued that such a judgment had no legal effect in England until recognised. ST contended that, under the longstanding common law “obligation principle”, a foreign judgment for a definite sum of money immediately creates a legal obligation on the debtor to pay that sum.
The Supreme Court accepted ST’s position. The Supreme Court reviewed authorities dating back to the 19th century, and noted that English courts have recognised and enforced foreign judgments from the 17th century onwards. It held that a final and conclusive foreign judgment for a debt gives rise, at common law, to an independent obligation to pay the judgment sum. Recognition proceedings are not what create that obligation. It also rejected the Court of Appeal’s view that an unrecognised judgment has no legal effect, saying: “[A]t common law, the legal effect of an unrecognised foreign judgment for a debt or definite sum of money is that it gives rise to an obligation to pay the judgment sum.”
2. Does that obligation amount to a “debt” under section 267 of the Insolvency Act 1986?
The central issue in the appeal was whether the obligation arising from an unrecognised and unregistrable foreign judgment falls within the meaning of “debt” in section 267 of the Insolvency Act 1986, which governs bankruptcy petitions. The Court of Appeal had held that it did not.
The Supreme Court unanimously disagreed. It held that “debt” in section 267 bears its ordinary (broad) common-law meaning: a legal obligation to pay a sum of money to another person. As an unrecognised foreign judgment gives rise to such an obligation, it follows that it can constitute a “debt” under section 267. The court found there were no convincing reasons to suggest that a narrower interpretation of “debt” was intended by the Insolvency Act 1986 (the Act not defining the term), and the previous Bankruptcy Act 1914 could not assist with interpretation given the significant changes made to the bankruptcy regime by the 1986 Act.
This aspect of the judgment is particularly favourable for enforcement. It confirms that creditors holding judgments from jurisdictions outside reciprocal enforcement regimes are not necessarily required to undertake separate recognition proceedings before accessing English bankruptcy processes and the associated toolkit. The same principle will likely apply to winding up proceedings as well in the context of corporate debtors.
Takeaways
The decision is a welcome development for the enforcement of judgments and highlights England as a key forum for international asset recovery.
By confirming that an unrecognised and unregistrable foreign judgment can constitute a debt for the purposes of English bankruptcy proceedings (and, as we say, corporate winding up), the Supreme Court has reinforced the attractiveness of the English courts to creditors. It means that enforcement via insolvency measures can be instigated relatively quickly and cost-effectively.
