A foreign judgment cannot be used as the basis for a bankruptcy petition in England and Wales unless it has already been recognised by an English court. This has overturned the High Court’s decision, which had reached the opposite conclusion.
This case concerns an appeal of the case of Drelle v Servis-Terminal LLC [2024], which has previously been covered in Caseplayers. Here, the Court of Appeal clarifies a substantial aspect of cross=border enforcement in insolvency proceedings.
Now, following this judgment, before a creditor under a foreign judgment can petition for bankruptcy against a debtor in this jurisdiction, the creditor must either register the judgment under one of the statutory schemes giving effect to bilateral enforcement treaties between the UK and other foreign states; or, in cases where these schemes do not apply (including in Russia, the USA and China), they must bring an action on the judgment at common law.
The decision appears to indicate that the same will also be true where a creditor wants to serve a statutory demand in respect of the judgment debt. It will not, however, prevent a creditor from petitioning for bankruptcy on the basis of a foreign debt, if the debt is for a liquidated sum, it exists independently and it is not disputed on substantial grounds, as long as it is not the subject of a foreign judgment.
Unfortunately, the decision will end up meaning that creditors will have to spend more time and expense if they wish to enforce a foreign judgment in England against an individual.