The On 27 July 2026, the Supreme Court handed down its judgment in Drelle v Servis-Terminal LLC (in liquidation in the Russian Federation) [2026] UKSC 29. Allowing the appeal, the Supreme Court confirmed that an unregistrable, unrecognised foreign judgment gave rise to an obligation to pay the judgment sum. This was a ‘debt’ and could, subject to conditions, provide grounds for a creditor to present a bankruptcy petition under section 267 of the Insolvency Act 1986 (“the IA 1986”).

The Facts
The Appellant, Servis-Terminal LLC (“ST”), was a Russian company in bankruptcy, acting by its trustee in bankruptcy. Mr Drelle, the Respondent, was a former director general and a shareholder of ST. Gazprom Neft (“GPN”), a sanctioned entity, was a creditor of ST. In 2011, ST advanced RUB 2 billion (“the Loan”) to Fort-Steiton LLC (“FS”). FS’s owner, the chairman and majority shareholder of the Russian Credit Bank (“RCB”) personally guaranteed the Loan. In 2015, RCB collapsed. As a result, ST lost RUB 7.9 billion held in its accounts with RCB; most of these funds came from GPN. The Loan was never repaid.

Bankruptcy and the foreign judgment
In 2017, ST was declared bankrupt by the Arbitrazh Court of Yaroslavl Region, a first-instance federal commercial court in Russia. In 2018, ST issued a claim against Mr Drelle in the Russian Court. ST claimed that Mr Drelle, by causing ST to advance the loan, had acted unreasonably and in bad faith and caused loss to ST. In 2019, the Arbitrazh Court issued a judgment, finding that Mr Drelle had breached his duties and ordering him to pay RUB 2 billion to ST (“the Judgment Debt”). Mr Drelle unsuccessfully appealed this judgment all the way to the Supreme Court of the Russian Federation, where his application for appeal was dismissed by a single judge.

Proceedings in England
In October 2020, ST served a statutory demand under section 268(1)(a) of the IA 1986 (“the Statutory Demand”) and presented an expedited bankruptcy petition under section 270 of the 1986 Act (“the Petition”).

Mr Drelle issued an application to set aside the Statutory Demand (“the Set Aside Application”).  The grounds of the Set Aside Application were that the Russian Judgment debt was disputed on bona fide and substantial grounds because the Russian judgments were improperly obtained, biased and/or contrary to natural justice and English public policy, and further or alternatively were obtained by fraud and/or collusion. In short, Mr Drelle claimed that the Russian proceedings were predetermined against him.

Following trial on the Petition, which took place in England in 2022 in the Insolvency and Companies Court, Burton J held in 2023 that the Judgment Debt was not disputed on bona fide and substantial grounds. In 2023, a bankruptcy order was made (“the Bankruptcy Order”).

Three appeals followed. First, Mr Drelle appealed the Bankruptcy Order in 2024 before the High Court, but Richards J dismissed the first appeal ([2024] EWHC 521 (Ch)). Second, the appeal was allowed by the Court of Appeal, which set aside the Bankruptcy Order, reasoning that a bankruptcy petition could not be presented on the basis of an unrecognised foreign judgment. Third, ST appealed to the Supreme Court. The Respondent sought to uphold the order made by the Court of Appeal to set aside the Bankruptcy Order.

The Appeal before the Supreme Court
Three central issues were considered by the Supreme Court:

1.    At common law, what is the legal effect, if any, of an unrecognised foreign judgment for a debt or definite sum of money?

2.    The construction of section 267 of the IA 1986 — does such a judgment give rise to a “debt” within the meaning of section 267 such that a bankruptcy petition can be presented in reliance upon it?

3.    Does Article 13 of the UNCITRAL Model Law mean that a “foreign creditor” under an unrecognised foreign judgment for a debt has the same rights as a creditor with an equivalent claim under English law?

(1)  Legal Effect of Unrecognised Foreign Judgments at Common Law
Having considered a line of 19th century cases concerning the enforceability of judgments, the position on registration of foreign judgments in Foreign Judgments (Reciprocal Enforcement) Act 1933, and previous decisions of the highest appellate court, namely Owens Bank v Bracco [1992] 2 AC 443 (HL) and Rubin v Eurofinance SA [2012] UKSC 46, the Supreme Court distilled the following recognised and stable common law principle:

“… a foreign judgment for a debt or definite sum of money gives rise to an obligation to pay the sum for which judgment has been given. That obligation arises when the final and conclusive judgment is given. It does not depend upon recognition. As noted in the Greer report, the cause of action is “as for a debt”.” (at [56]).

The Supreme Court then addressed Dicey Rule 45, a concise principle of private international law (conflicts of laws), that a foreign judgment has no “direct operation”. This means that none of the methods of enforcing judgments in CPR 70, such as a third-party debt order or a charging order or the appointment of a receiver, can be invoked in respect of a foreign judgment. However, the Supreme Court reasoned that an unregistrable and an unrecognised foreign judgment may have indirect operation in England (at [58]-[61]). Specifically, mirroring the above quotation, a foreign judgment creates a common law obligation to pay the debt, upon which a party can sue to recover that debt. If the action succeeds, there will then be an English judgment, which can at last be enforced in the English courts. The Russian judgments against Mr Drelle therefore created a common law obligation that ST could enforce.

A Sword and a Shield
Applying Dicey Rule 45, it was highlighted that a foreign judgment can be relied on as final and conclusive in support of a freestanding claim, not only as a defence. Therefore, the Supreme Court endowed commercial litigants, successful in obtaining a money judgment in a foreign jurisdiction, not only with a strategic “shield” but also with a powerful “sword” capable of piercing through jurisdictional borders.

(2)  Obligation to pay under a foreign judgment as a “debt” relied on to bring a bankruptcy petition under section 267

Section 267 of the IA 1986, entitled “Grounds of creditor’s petition”, states:

“(1) A creditor’s petition must be in respect of one or more debts owed by the debtor…”.

Since, to bring a bankruptcy petition, a creditor must rely on a debt, the question before the Supreme Court was whether a foreign unregistrable and unrecognised foreign judgment was a “debt” within the wording of s. 267 above. The meaning of “debt” is undefined by s. 267, which deals with who may present a bankruptcy petition. “Debt” in s. 267 is also different to “bankruptcy debt” in s. 382 of the IA 1986, concerned with who may prove in the bankruptcy.

A general common law definition of a s. 267 “debt” was adopted by the Supreme Court. Lord Briggs and Lord Hamblen stated at [80]:

“a debt is a legal obligation owed by one person to pay a sum of money to another person… . It may arise under a contract, a deed, a covenant, a statute, or anything else giving rise to the necessary obligation. Plainly it may arise under a judgment or a court order.”

As a foreign unregistrable and unregistered judgment gave rise to an obligation to pay, as decided above, it was within the above definition of “debt”. Hence, it can be relied on as grounds for a bankruptcy petition, subject to s. 268-270 of the IA 1986 and the additional criteria set out in s. 267(2) IA 1986, namely that:

1.    The amount of the debt, or the aggregate amount of the debts, is equal to or exceeds the bankruptcy level;

2.    The debt, or each of the debts, is for a liquidated sum, payable to the petitioner immediately or at a certain future time;

3.    The debtor appears to be unable to pay or to have no reasonable prospect of being able to pay the debt or each of the debts;

4.    There is no outstanding application to set aside a statutory demand served (under s. 268 IA 1986) in respect of the debt or any of the debts.

The Supreme Court then addressed the difference between reliance on registrable and unregistrablejudgments in the context of a bankruptcy petition. On the one hand, to found bankruptcy proceedings upon a registrable foreign judgment, that judgment must first be registered in line with the in Foreign Judgments (Reciprocal Enforcement) Act 1933 (at [87]). On the other hand, an unregistrable and unrecognised foreign judgment could be relied on as a “debt” at common law or under s. 267 of the IA 1986. Therefore, an additional hurdle of registration forms a required preliminary for registrable foreign judgments, whereas a debtor with an unregistrable and unrecognised foreign judgment can proceed straight to bringing a bankruptcy petition. The Judgment Debt stemmed from an unregistrable, unrecognised foreign judgement and therefore ST was not required to register the underlying Russian judgment before the Judgment Debt could be considered a “debt” within the wording of s. 267.

(3)  A “foreign creditor” with an unrecognised foreign judgment for a debt has the same standing to bring a bankruptcy petition as a creditor claiming a debt under an English judgment
Article 13 of the UNCITRAL Model Law, in force in Great Britain by virtue of Regulation 2(1) of the Cross-Border Insolvency Regulations 2006 (“CBIR”), states:

“Subject to paragraph 2 of this article, foreign creditors have the same rights regarding commencement of and participation in proceedings under British insolvency law.”

Interpreting the above, it was held that a “foreign creditor”, protected from discrimination in cross-border insolvency proceedings by the Model Law, is one who is geographically located abroad. Therefore, a creditor located in Russia seeking to rely upon a debt under a Russian judgment is treated equally to a UK-based creditor relying on an identical Russian judgment. This confirms the principle of equal treatment of foreign creditors and prevents a foreign creditor from being placed in a worse position than a domestic creditor in insolvency proceedings before the English Courts. This treatment of foreign creditors is consistent with the Court’s conclusion that the foreign origin of the judgment does not disadvantage the creditor who relies on it in commencing bankruptcy proceedings. ST therefore had the same standing as a creditor bringing a bankruptcy petition to enforce an English judgment.

Practical Implications of Drelle [2026] UKSC 29
Drelle [2026] UKSC 29 strengthened the status of unregistrable and unrecognised foreign money judgments in English law. This Supreme Court ruling has immediate utility for a creditor seeking to enforce a foreign judgment debt in insolvency proceedings in the English courts. The implications for insolvency disputes are threefold.

First, a party with a foreign unregistrable and unrecognised judgment in its favour can enforce it with greater certainty.

Second, since a foreign judgment of the kind in Drelle is not capable of registration, there is no requirement to register it before it can be relied on as grounds for a bankruptcy petition. Therefore, a creditor with unrecognised, unregistrable foreign judgment in its favour can benefit from the relative efficiency and attractiveness of insolvency proceedings as an enforcement strategy.

Third, to avoid a bankruptcy or winding up order, debtors will need to challenge the foreign judgment in the insolvency proceedings in England on traditional impeachment grounds, including lack of jurisdiction or due process, fraud, public policy concerns, and questions regarding the finality of the foreign judgment.

This judgment increases the attractiveness of English courts as enforcement centres for foreign money judgments, both in the context of insolvency and in the wider context of commercial litigation strategy. Foreign unregistrable and unrecognised judgments give rise to an obligation to pay and constitute a “debt” within s. 267 of the IA 1986. Ultimately, the proper limits of judicial assistance to foreign courts in complex cross-border insolvency proceedings remain unsettled. These are likely to continue being tested before the appellate courts in the near future.

Note: This is a general summary of an evolving field of law, and is made available for general discussion purposes only between CANDEY and its clients and prospective clients. This memorandum does not constitute legal advice and must not be relied on as such. It should also not be cited as legal or academic authority.

CANDEY is a boutique litigation law firm that has extensive experience in complex cross-border insolvency disputes. We can guide clients through all aspects of insolvency litigation, from bankruptcy petitions and statutory demands to complex asset recovery, director liability and office-holder claims, helping clients navigate both the procedural and substantive challenges involved.