Drelle v Servis-Terminal LLC [2024] EWHC 521 (Ch)
- Bankruptcy
- by Caroline McDonagh
- 26-04-2024
A judgment obtained for two billion Rubles in a Russian court was not eligible for registration under the Foreign Judgments (Reciprocal Enforcement) Act 1933, and no separate proceedings were taken in the English courts seeking an English judgment. Could the judgment still be a debt which satisfied the grounds of a bankruptcy petition in an English court under s.267 Insolvency Act 1986?
In this important case, the court rejected a debtor's challenge to a bankruptcy petition which had been presented against him, on the grounds that the debt was disputed. The debt upon which the petition was founded was a foreign judgment granted by the Arbitrazh Court of Yaroslavl in Russia.
The debtor had been unsuccessful in all of his appeals against the debt in Russia. The petitioning creditor then issued a bankruptcy petition against the debtor who was by then residing in England, but did so without first seeking recognition of the judgment under Part 7 CPR. However, the High Court rejected the submission that it was necessary to first seek recognition of a foreign judgment under Part 7 before issuing a bankruptcy petition which was founded upon it.
The High Court also rejected the submission that the court should not make a bankruptcy order on the grounds of public policy, specifically because it was alleged that a bankruptcy order would be to the exclusive benefit of the Russian state. This was because Gazprom Neft, being the biggest creditor of the petitioning creditor (which was in liquidation), had funded the bankruptcy proceedings and was ultimately owned by the Russian state.