Way cleared for insolvency proceedings based on unrecognised foreign judgments

Way cleared for insolvency proceedings based on unrecognised foreign judgments | Tuesday 4 August 2026 | 4 min read

Creditors seeking to recover debts arising from foreign court judgments have received a significant boost from the UK Supreme Court. In a decision with important implications for cross-border recovery strategies, the Court has confirmed that insolvency proceedings can be started based on certain foreign judgments, even if those judgments have not been recognised by an English court.

In Drelle v Servis-Terminal LLC (in liquidation) [2026] UKSC 29, the Court confirmed that a bankruptcy petition may be presented on the basis of an unrecognised foreign judgment for a definite sum of money.

The ruling provides greater flexibility for creditors pursuing debt recovery in England and Wales and may reduce the need for separate recognition proceedings before insolvency action can be taken.

The background

The case concerned a Russian judgment which ordered Mr Drelle to pay Servis-Terminal LLC RUB 2 billion following findings that he had breached duties owed to the company while acting as its Director General.

The judgment could not be registered under any applicable English statutory regime and had not been recognised by an English court in the way required to obtain an English judgment based on a Russian court’s ruling.

Servis-Terminal started the English side of the dispute in October 2020. It served a statutory demand on Mr Drelle based on the unrecognised Russian judgment (rather than an English judgment based on it) and subsequently obtained a bankruptcy order against him.

Mr Drelle appealed the bankruptcy in the High Court, where he unsuccessfully argued that the sum due under the Russian judgment was not a ‘debt’ for the purposes of English insolvency legislation.

Undeterred, Mr Drelle appealed to the Court of Appeal, which agreed with him and set aside his bankruptcy.

Servis-Terminal appealed that conclusion to the Supreme Court, which overturned the Court of Appeal and restored the bankruptcy order made against Mr Drelle.

What did the Supreme Court decide?

Under section 267 of the Insolvency Act 1986, a bankruptcy petition must be based on a ‘debt’ owed by the debtor.  The Supreme Court held that a final and conclusive foreign judgment for a definite sum of money can constitute such a debt even if it has not been recognised or registered in an English or Welsh court. Recognition is not a pre-condition to relying on the judgment for the limited purpose of establishing standing to present a bankruptcy petition.

The Court emphasised that this does not deprive the debtor of protection and that a debtor may still oppose a demand or petition on the usual basis by showing that the foreign judgment is disputed on bona fide and substantial grounds, including where issues such as fraud, breach of natural justice or public policy are properly raised.

Why does it matter?

The judgment is significant for cross-border enforcement. Creditors holding unregistrable money judgments from jurisdictions without a registration regime can now consider bankruptcy proceedings as an option without needing to bring separate recognition proceedings first, which has the potential to reduce delay, costs and tactical resistance.

For debtors, the decision means that foreign judgments cannot be ignored simply because they have not yet been recognised in an English court. Instead, the focus will be on whether there is a real, substantial challenge to the judgment or to the creditor’s reliance on it.

The judgment does not impact cases involving registerable judgments. The formalities for registering these must still be followed before they can be enforced in England or Wales.

Practical impact

• Creditors should consider whether insolvency proceedings and the immediate pressure they can deliver offer a faster route to enforcement where they hold a foreign money judgment against a debtor with assets or residence in England and/or Wales.
• Debtors should act quickly if served with a statutory demand or petition based on a foreign judgment and identify any substantive grounds for challenge at an early stage.
• Insolvency practitioners should factor the decision into recovery strategies, particularly in international asset-tracing and office-holder claims.

Looking ahead

The decision is likely to become an important tool in the recovery of debts across jurisdictions. It brings some welcome clarity to this area and strengthens England’s position as a forum for cross-border insolvency enforcement.

Businesses holding foreign judgments against individuals or companies with a presence in England and Wales should review whether insolvency proceedings now offer a quicker and more cost-effective route to recovery. Equally, debtors facing foreign judgments should seek advice promptly to assess any available grounds of challenge.

For advice and guidance on debt recovery and insolvency proceedings, please contact Simon Walsh on 01727 798 085 or email simon.walsh@salaw.com

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  Simon
  Walsh Partner
  Commercial Litigation & Dispute Resolution Team

  • Phone 01727 798 085
  • Mobile 07725 245 723
  • Email simon.walsh@salaw.com
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