Following on from the Supreme Court’s decision late last year regarding application of the “immovables rule” in the context of foreign insolvency proceedings, the High Court and the Court of Appeal’s recent decisions in Vesnin v Queeld Ventures Ltd and Servis-Terminal LLC v Drelle highlight the evolving landscape of cross-border insolvency and the recognition of foreign judgments in England.
Here, we review both of these cases in more detail and explore how, together, they provide critical insights into the administration of cross-border insolvencies and the enforcement of foreign judgments, setting important precedents for future legal actions.
Vesnin v Queeld Ventures Ltd: Defining legitimate interests in bankruptcy recognition
In Vesnin v Queeld Ventures Ltd [2025] EWHC 104 (Ch), the High Court addressed the proposed recognition of a Russian bankruptcy order in England and Wales, and the standing of two companies to oppose such recognition.
Background
After former Russian politician Dmitry Nikolaevich Ananyev was declared bankrupt by the Moscow Arbitrazh Court, Evgeny Vesnin was appointed as his trustee in bankruptcy. Vesnin sought recognition of this order in England under the Cross-Border Insolvency Regulations 2006 (‘the 2006 Regulations’), which implement the UNCITRAL Model Law on Cross-Border Insolvency.
Queeld Ventures Limited and Mispare Limited, companies that were ostensibly strangers to the bankruptcy, opposed the recognition, claiming they had lost share certificates in a Russian mineral and mining exploration company and were pursuing their own separate High Court claim for replacements. They argued that recognition of the Russian bankruptcy order by the English court would prejudice their separate High Court claim, because they were concerned that recognition would facilitate the Russian trustee’s intervention in their separate High Court proceedings and, in particular, that said trustee would claim an interest in the relevant shares on the basis that they purportedly amounted to an asset of the bankruptcy.
Legal issues
The primary legal issue in Vesnin v Queeld Ventures Ltd was whether the English court should recognise the Russian bankruptcy order issued by the Moscow Arbitrazh Court.
Specifically, the Court needed to determine if Queeld and Mispare had the standing to oppose the recognition of this order.
The Court had to decide if these companies had a tangible economic interest in the bankruptcy, which would give them the legitimate right to oppose the recognition under the 2006 Regulations.
The Court’s analysis
The Court ruled that Queeld and Mispare had no standing to oppose the recognition as they were strangers to the bankruptcy and had no legitimate interest. The Court confirmed that only those with a tangible economic interest in the bankruptcy could oppose such recognition, emphasising that the purpose of the 2006 Regulations is to assist in the efficient administration of cross-border insolvencies and protect the interests of creditors and other interested parties.
The English court also recognised the Russian bankruptcy order, noting that Ananyev had submitted to the jurisdiction of the Russian court and that there were no bars to recognition, such as fraud or breach of natural justice.
The Court also directed that the Russian trustee be joined as a party to Queeld’s and Mispare’s separate High Court proceedings for replacement share certificates.
Implications of Vesnin v Queeld Ventures Ltd
The decision underscores the principle of universalism in insolvency proceedings, which requires that cross-border insolvencies, where possible, be managed by a single officeholder as a single estate, thus promoting international cooperation and efficiency.
By recognising the Russian bankruptcy order, the Court has supported the Russian trustee’s efforts to manage the debtor’s assets comprehensively. It also sets a precedent for future cross-border insolvency cases, encouraging courts to assist foreign trustees in bankruptcy.
There are also several potential consequences for those impacted by cross-border insolvency proceedings, including:
- Stricter criteria for opposition. In order to oppose the recognition of a foreign bankruptcy order in England, the opposing party must demonstrate a tangible economic interest in the bankruptcy. This, therefore, limits the ability for interference in recognition proceedings if the requisite economic interest cannot be shown.
- Submission may lead to recognition. Once a bankrupt has submitted to the jurisdiction of a foreign court, recognition of the foreign bankruptcy order in England under the 2006 Regulations is a very likely consequence, provided there are no issues such as fraud or breach of natural justice or public policy.
- Ensuring all relevant parties are included in related legal actions. The English court’s decision to join the Russian trustee to the separate High Court mining and mineral company proceedings highlights its universalist approach, and its willingness to assist foreign insolvency proceedings so far as it properly can, in this case by facilitating the Russian trustee’s intervention regarding a potential asset of the foreign bankruptcy.
Servis-Terminal LLC v Drelle: Unrecognised foreign judgments in bankruptcy
The Court of Appeal’s decision in Servis-Terminal LLC v Drelle [2025] EWCA Civ 62, which was handed down about a week later, has provided a further twist in this long-running dispute and provided important clarity going forward on the recognition of foreign judgments in the context of bankruptcy proceedings in England. It also demonstrates why it is important for creditors to now seek recognition of foreign judgments in England and Wales before a bankruptcy petition is presented in this jurisdiction based on a foreign judgment debt.
Background
Servis-Terminal LCC, a Russian company in liquidation, obtained a judgment from the Russian Arbitrazh Court against Mr Drelle for approximately £16m.
Despite Mr Drelle’s appeals in Russia, the judgment stood. Seeking enforcement in England, Servis-Terminal LLC served a statutory demand on Mr Drelle, by then a resident of England. This went unpaid, which led to a bankruptcy petition being presented against him in England.
Initial rulings and the Court of Appeal’s decision
In March 2023, ICC Judge Burton ruled in favour of Servis-Terminal LLC, making a bankruptcy order against Mr Drelle. On appeal, Mr Drelle contended that the bankruptcy petition should not proceed because the Russian judgment had not been recognised by an English court.
In March 2024, however, Richards J rejected the appeal, ruling that the foreign judgment still qualified as a “debt” under section 267 of the Insolvency Act 1986.
The case then moved on to the Court of Appeal, which needed to determine if a foreign judgment that was not previously recognised in this jurisdiction could still be considered a payable debt for the purposes of a creditor’s bankruptcy petition.
Mr Drelle’s appeal was successful, with the Court of Appeal unanimously ruling that foreign judgments must be recognised in England before they can be relied upon as a foundation for presenting a bankruptcy petition, underscoring the principle that foreign judgments do not automatically carry enforcement rights in England.
Under section 267(2)(b) of the Insolvency Act 1986, a debt must be a liquidated sum payable to the petitioning creditor, either immediately or at a certain time in the future. Foreign judgments debts, therefore, cannot be considered, in this jurisdiction, ‘payable’ without first being recognised by the English court.