The case of Valeriy Ernestovich Drelle v Service-Terminal LLC[1] has, over recent years, caused lots of debate over whether unrecognised, unregistrable foreign judgments could form the basis of a bankruptcy petition pursuant to sections 267 and 268 of the Insolvency Act 1986 (“Act”). On 27 July 2026, the Supreme Court finally put that debate to rest and unanimously held that they can. The ruling means that certain creditors can now rely upon certain foreign judgment debts as the basis for English bankruptcy proceedings, even when other enforcement tools are not available to them.

Background

Servis-Terminal LLC (“ST“) is a Russian company which, in April 2017, was declared bankrupt, with Mr Sergey Lisin appointed as trustee in bankruptcy.

In May 2019, ST obtained a judgment from the Arbitrazh Court of the Yaroslavl Region against ST’s former director, Valeriy Drelle (“Mr Drelle“), requiring Mr Drelle to pay approximately RUB 2 billion in compensation (“Judgment“). Mr Drelle submitted various appeals, all of which were dismissed and, in 2020 the Supreme Court of the Russian Federation concluded that he had no further grounds of appeal.

Following that ruling and in light of the fact that Mr Drelle had relocated to London, ST served a statutory demand on Mr Drelle and subsequently presented a bankruptcy petition against him on 13 October 2020, though the Judgment itself had neither been recognised in England and Wales, nor did it qualify for registration under the Foreign Judgments (Reciprocal Enforcement) Act 1933.

Mr Drelle sought to set aside the petition on grounds that the debt was disputed and/or that the Judgment was obtained by fraud and/or collusion. At a trial of the petition, however, the High Court found that the debt was not disputed, and Mr Drelle was declared bankrupt on 31 March 2023.

The Appeal

Before reaching the Supreme Court, Mr Drelle appealed against the bankruptcy order of 31 March 2023 on two occasions. Amongst other arguments raised by Mr Drelle when the matter arrived with the Supreme Court was whether the Judgment, being an unrecognised, unregistrable judgment of a foreign court, was capable of being a ‘debt’ within the meaning of s. 267(2)(b) of the Act.

It was accepted by Mr Drelle that the Judgment was final, conclusive, and given by a court of competent jurisdiction. Therefore, the questions requiring the Supreme Court’s input were:

  • what is the legal effect of an unrecognised, unregistrable foreign judgment for a debt or definite sum of money?
  • does such a judgment give rise to a ‘debt’ for the purpose s. 267 of the Act?

The Supreme Court’s Decision

The Supreme Court held that a final and conclusive foreign judgment for a debt or definite sum of money, given by a court of competent jurisdiction, creates an obligation at common law on the judgment debtor to pay the judgment sum. That obligation arises regardless of whether the judgment has been recognised or registered in England and Wales.

In reaching that conclusion, the Supreme Court rejected the proposition that an unrecognised foreign judgment has no legal effect in England and Wales unless and until recognition proceedings are commenced.

The Supreme Court distinguished between:

  • the inability to enforce an unrecognised foreign judgment through English execution procedures; and
  • the existence of the underlying payment obligation created by that judgment, which was sufficient to constitute a debt for the purpose of s. 267 of the Act.

By extension, the Judgment was capable of forming the basis of a statutory demand and the bankruptcy proceedings against Mr Drelle.

The Supreme Court also rejected the argument that presenting a bankruptcy petition amounts to enforcement of the foreign judgment itself. Instead, it emphasised the collective nature of insolvency proceedings, which are directed toward the administration and distribution of the debtor’s estate rather than enforcement of an individual creditor’s judgment.

Significance

The decision has immediate practical significance for creditors pursuing cross-border recovery strategies.

Had the Court of Appeal’s decision been upheld, foreign judgment creditors would, in many cases, have been required first to undertake separate recognition proceedings before being able to invoke the English bankruptcy regime. The Supreme Court’s judgment removes that additional step.

The Supreme Court’s judgment in the case of Drelle will therefore be of significance in the following ways:

  • Availability of insolvency remedies:

Creditors with judgment debts from courts outside of England and Wales which are incapable of registration or recognition can now be sure of their ability to proceed to issue a statutory demand for the judgment sum and proceed to petition for the debtor’s bankruptcy, notwithstanding the unavailability of other remedies usually available to judgment creditors in England and Wales.

  • Relevance to Corporate Insolvency

Although Drelle concerned a bankruptcy petition, analogies can clearly be drawn to winding up petitions. Although a winding up petition is not always preceded by a statutory demand – more often a two day letter is relied on as evidence of inability to pay – the principles from Drelle are likely to apply and allow a creditor to rely on an unrecognised, unregistrable foreign judgment debt to commence winding up proceedings against companies with a sufficient connection to England and Wales.

[1] Drelle v Servis-Terminal LLC (In Liquidation in the Russian Federation) [2026] UKSC 29.