The Supreme Court’s decision in Drelle v Servis-Terminal LLC provides welcome clarity for creditors seeking to pursue bankruptcy proceedings in England and Wales based on unrecognised foreign judgments.

The recent decision of the Supreme Court in Valeriy Ernestovich Drelle v Servis-Terminal LLC (In Liquidation in the Russian Federation) [2026] UKSC 29 (“Drelle”), overturning the Court of Appeal, is welcome news for creditors seeking to recover sums due under foreign judgments in England and Wales as expeditiously and cost-effectively as possible.

Background

It had long been accepted that an unrecognised and unregistrable foreign judgment against an individual could be pursued by way of bankruptcy proceedings without the need to have the judgment recognised first by issuing a fresh claim in the English courts – provided, of course, the judgment debtor’s centre of main interests was in England and Wales or they satisfied one of the other statutory tests for presenting a bankruptcy petition under s. 265 of the Insolvency Act 1986 (“the Insolvency Act”).

This view however was rejected by the Court of Appeal on 31 January 2025 when granting the appeal of Mr Drelle against a bankruptcy order made on an unrecognised and unregistrable Russian judgment on 31 March 2023 by ICC Judge Burton (which had then been upheld by Mr Justice Richards).

The Supreme Court, in a judgment handed down on 27 July 2026, has however now restored the position to what it was, rejecting the Court of Appeal’s reasoning (although all is not lost for Mr Drelle).

The claim against Mr Drelle

Servis-Terminal LLC (“Servis”) is a Russian company in bankruptcy. Mr Drelle is its former Director General. In December 2011, Servis lent RUB 2 billion to another Russian company and took a personal guarantee from the borrower’s owner, a Mr Motylev. The borrower defaulted, Mr Motylev failed to honour the guarantee and was made bankrupt in Russia and England.

In March 2018, Servis issued proceedings in Russia against Mr Drelle (who had relocated to England). The basis of its claim was that, by causing Servis to advance the loan, he had acted unreasonably and in bad faith and had caused loss to Servis.

Mr Drelle defended the claim but, in a judgment given on 24 May 2019, the Russian court held that he had breached his duties to Servis and ordered him to pay damages of RUB 2 billion. A series of appeals by Mr Drelle were unsuccessful and, on 9 October 2020, Servis served a statutory demand on him in England based on the Russian judgment. On 13 October 2020, Servis presented a bankruptcy petition on an expedited basis under s.270 of the Insolvency Act.

Mr Drelle applied to set aside the demand and opposed the making of a bankruptcy order, arguing that the Russian judgment debt was disputed on bona fide and substantial grounds because (he contended) the Russian judgment and the judgments on his unsuccessful appeals had been improperly obtained, were biased and/or contrary to natural justice and English public policy, and further or alternatively were obtained by fraud and/or collusion.

The trial of the bankruptcy petition was heard by ICC Judge Burton. In her judgment, handed down on 9 March 2023, she found that the Russian judgment debt was not disputed on bona fide and substantial grounds and made a bankruptcy order against Mr Drelle on 31 March 2023.

Mr Drelle obtained permission to appeal on the basis that ICC Judge Burton’s conclusion that the Russian judgment debt was not disputed on bona fide and substantial grounds was wrong. He also raised for the first time the argument that the Russian judgment did not constitute a petition debt since it had not been recognised by the English courts. That appeal was heard by Mr Justice Richards and dismissed on 11 March 2024.

Mr Drelle then obtained permission to appeal from the Court of Appeal on the ground that the judge had erred in holding that an unrecognised foreign judgment is a debt within the meaning of s.267(2)(b) of the Insolvency Act (Ground 1) and also on the ground that he had applied the wrong standard of appellate review to the decision of ICC Judge Burton and that his conclusion that the Russian judgment debt was not disputed on bona fide and substantial grounds was therefore wrong (Grounds 2 to 4).

What did the Court of Appeal decide?

The Court of Appeal handed down judgment on 31 January 2025. Mr Drelle’s appeal was allowed on the ground that a bankruptcy petition cannot be presented on the basis of an unrecognised foreign judgment (Ground 1). As he had succeeded on Ground 1 and because the Court of Appeal did not want to say anything which might prejudice the hearing of any future recognition proceedings concerning the Russian judgment brought by Servis, it did not address Mr Drelle’s other grounds of appeal (Grounds 2 to 4).

Why the Supreme Court disagreed

Servis obtained permission to appeal to the Supreme Court. The appeal was heard on 24 and 25 June 2026 and Lord Briggs and Lord Hamblen (with whom Lords Sales, Stephens and Doherty agreed) gave a joint judgment on 27 July 2026.

Overturning the Court of Appeal, they held that a foreign judgment for a debt or definite sum of money gives rise to an immediate obligation at common law on the foreign judgment debtor to pay the relevant sum and that this obligation does not depend upon the foreign judgment first being recognised by the English courts. This was the juridical basis, referred to as the ‘obligation principle’, upon which a foreign judgment creditor may bring an action in England and Wales. Surveying the authorities, the Supreme Court noted that the obligation principle was clearly established in judicial decisions dating back to the 19th century and had not been doubted by modern authorities. A statutory demand and bankruptcy petition could therefore be founded on an unrecognised and unregistrable foreign judgment.

The Supreme Court also ordered that Mr Drelle’s other grounds of appeal, which challenged ICC Judge Burton’s conclusion that the Russian judgment debt was not disputed on bona fide and substantial grounds, should be remitted to the Court of Appeal – so Mr Drelle may yet avoid bankruptcy, despite the Supreme Court finding against him on the issue of recognition.

Good news for creditors with foreign judgments

Creditors with unrecognised and unregistrable foreign judgments against individual debtors who meet the test under s. 265 of the Insolvency Act can now immediately serve a statutory demand on the debtor and then present a bankruptcy petition if the demand is nether set aside nor satisfied. However, it should still be borne in mind that a creditor cannot enforce an unrecognised and unregistrable foreign judgment using the methods of enforcement set out at paragraph 1.1 of CPR Practice Direction 70A, including third party debt orders and charging orders. To use these enforcement tools, the judgment would first need to be recognised by the English courts.

Further, if the foreign judgment is capable of registration, for example under the Foreign Judgments (Reciprocal Enforcement) Act 1933 or the Administration of Justice Act 1920, then it must be registered before bankruptcy proceedings are brought.

The Supreme Court did not consider the position where a creditor holds an unrecognised and unregistrable foreign judgment against a company registered in England and Wales, but their decision is likely to assist creditors who wish to present a winding up petition pursuant to such a judgment