On 27 July 2026, the English Supreme Court handed down its judgment in Drelle v Servis-Terminal LLC [2026] UKSC 29, resolving an important question in cross-border insolvency practice: can a creditor rely on an unrecognised and unregistrable foreign judgment as a “debt” sufficient to pursue bankruptcy proceedings in England and Wales? It was unanimously held that it can, reversing the Court of Appeal's earlier decision and reaffirming the right of creditors to recover such foreign debts.
The decision has clarified the circumstances in which foreign judgement creditors can deploy the English insolvency regime and pursue enforcement of foreign debts in this jurisdiction.
This article examines the issues presented to the Supreme Court in this case, the implications for insolvency proceedings going forwards, and some resulting practical guidance for creditors and debtors in England and Wales.
Factual background
In May 2019, Servis-Terminal LLC (ST) obtained judgment in Russia against Mr Drelle, ST’s former Director General, requiring him to pay ST approximately RUB 2 billion in damages. Mr Drelle made several appeals in the Russian courts against the decision, each of which was dismissed.
In October 2020, ST served a statutory demand on Mr Drelle (who had left Russia and re-settled in London) in England under section 268(1)(a) of the Insolvency Act 1986 (IA 1986) based on the Russian judgment, and following non-payment presented a bankruptcy petition to the English courts. Mr Drelle applied to set aside the statutory demand and opposed the petition on the basis that the debt was disputed on bona fide and substantial grounds, contending that the Russian judgment was improperly obtained, biased, contrary to natural justice, and/or obtained by fraud or collusion.
At first instance, ICC Judge Barton found the debt was not disputed on bona fide and substantial grounds, and a bankruptcy order was made against Mr Drelle. Mr Drelle made two further appeals against the decision, the second of which was successful (the Court of Appeal allowing the appeal holding that a bankruptcy petition cannot be presented on the basis of an unrecognised foreign judgment). The case was then appealed to the Supreme Court.
Key issues
The appeal centred on two key questions:
- What is the legal effect of an unrecognised foreign judgment at common law?
- Does an unrecognised foreign judgment give rise to a “debt” within the meaning of section 267 IA 1986, such that it is capable of founding bankruptcy proceedings?
In respect of the first question, the Court of Appeal had earlier held that a foreign judgment does not have legal effect until recognised by a competent court. The Supreme Court disagreed, holding that the well-established "obligation principle” confirms that a qualifying foreign money judgment for a debt (i.e. one that is conclusive, from a court of competent jurisdiction, and not impeachable) gives rise to a legal obligation to pay the judgment sum, without the need for prior recognition by the English courts. It should be noted that recognition proceedings still provide the appropriate legal mechanism for enforcement of foreign judgments through the English courts other than by way of bankruptcy and insolvency proceedings (for example, possession proceedings, or applications for charging orders).
In respect of the second question, it was observed that petition debts must be “for a liquidated sum payable to the petitioning creditor … either immediately or at some certain, future time." The Supreme Court held that the term “debt” bears its ordinary meaning (i.e. a legal obligation owed by one person to pay a sum of money to another).
Since the “obligation principle” establishes that an unrecognised foreign judgment creates just such a legal obligation, a foreign judgment would therefore qualify as a debt sufficient for the purposes of insolvency proceedings in England and Wales.
Implications for insolvency proceedings in England and Wales
The Supreme Court’s decision is a welcome clarification for creditors, confirming that a creditor holding an unrecognised and unregistrable foreign judgment for a liquidated sum can pursue bankruptcy proceedings in this jurisdiction without first obtaining recognition or registration of the judgment in the English courts.
The decision has also clarified that recognition would be required if other processes of execution are to be pursued, such as charging orders, third-party debt orders, or the appointment of a receiver.
Practical guidance for insolvency creditors and debtors
- For creditors holding foreign judgments, they now have a clear route to bankruptcy proceedings in England and Wales without first commencing (potentially costly and time-consuming) recognition proceedings. They may serve a statutory demand based directly on the foreign judgment (though it should be noted that the statutory framework contained in section 267 IA 1986 for presenting bankruptcy petitions must still be adhered to).
- Debtors can no longer hide behind the absence of recognition proceedings as being an automatic bar to the presentation of a bankruptcy petition founded on a foreign judgment.
- However, debtors are still afforded appropriate protections provided under English insolvency law. They may still apply to set aside statutory demands or oppose bankruptcy petitions on the grounds that the debt is disputed on bona fide and substantial grounds (for example, by arguing that the foreign judgment was obtained in breach of natural justice, that it was procured by fraud, that it is contrary to English public policy, that the foreign court did not have competent jurisdiction, or that the judgment is not final and conclusive).
- Debtors facing judgments from jurisdictions where concerns about judicial independence or state interference may arise should take early legal advice on whether the foreign judgment is impeachable.
What does this mean in practice?
For restructuring and insolvency practitioners, the decision in Drelle is important in cross-border matters where there are debtors with assets or a presence in England who are also subject to underlying foreign judgments. By confirming that unrecognised foreign judgments can found bankruptcy petitions in England and Wales, the Supreme Court has widened the pool of creditors who can use English insolvency proceedings whilst still preserving the debtor's right to challenge the underlying judgment. Practitioners advising parties on either side should ensure they are alive to both the opportunity and the risk this decision presents as the law further develops in this area.
