Introduction

The Court of Appeal’s latest decision in Drelle is a reminder that, whilst the Supreme Court has confirmed that an unrecognised foreign judgment can support a bankruptcy petition, creditors may still face substantial evidential disputes if recognition has not first been obtained. The result is that, in many cases, the tactical advantage apparently conferred by the Supreme Court’s decision may prove more limited than first appeared.

In our article “Enforceability across jurisdictions” (Recovery, Autumn 2026), we discussed the Supreme Court’s decision in Drelle v Servis-Terminal LLC [2026] UKSC 29. Normally, a foreign judgment must be “recognised” by the English courts before it can be enforced here. The Supreme Court in Drelle held that it is not necessary to take this step before presenting a bankruptcy petition: an unrecognised foreign judgment can stand as evidence that a debt is owed for these purposes. This is because relying on a judgment as evidence of a debt is different from enforcing it. This decision did not, however, alter the established principles governing recognition and enforcement of foreign judgments in England; rather, it drew a distinction between enforcing a foreign judgment and relying upon it as evidence of a debt for insolvency purposes.

As we noted in our previous article, however, creditors in this position may still expect the debtor to challenge the petition on other grounds. In fact, in the Drelle case, Mr Drelle had also disputed the debt on which the petition was based, although this had not been the subject of the appeal to the Supreme Court.

Following its decision, the Supreme Court sent Mr Drelle’s remaining grounds of appeal back to the Court of Appeal. On 30 October 2026, the Court of Appeal decided those grounds in Mr Drelle’s favour and set aside the bankruptcy order.

Whilst the Supreme Court’s decision appeared to remove a significant procedural hurdle for foreign judgment creditors, the latest decision of the Court of Appeal suggests that, in practice, many creditors may still find themselves returning to questions of recognition before obtaining effective insolvency relief.

Case background

Servis-Terminal LLC (“ST”), a Russian company, obtained a RUB 2 billion judgment in Russia against its former Director General, Mr Drelle. ST then used that judgment to bring a bankruptcy petition against Mr Drelle in England.

A bankruptcy petition will not succeed if the debt is genuinely disputed on substantial grounds. Mr Drelle argued that the debt was disputed because the outcome of the Russian case had been decided in advance, in favour of ST’s largest creditor, a subsidiary of the majority state-owned Gazprom. His main evidence came from ST’s former finance director, Ms Zheglova. She said that an acquaintance had spoken to the Chairman of the Russian court, who indicated that Mr Drelle could not win the case and that judgment would be awarded against Mr Drelle for RUB 2 billion. This is what in fact happened.

The judge who first heard the petition (an Insolvency and Companies Court Judge) rejected this evidence as “double hearsay”, because Ms Zheglova was reporting what one person said another person had said. The bankruptcy order was made, and the High Court upheld it on appeal.

Court of Appeal’s Decision

The Court of Appeal (Miles LJ, with whom Falk and Newey LJJ agreed) disagreed, for three main reasons:

• Hearsay must be weighed, not ignored. Hearsay is admissible in civil cases under section 1 of the Civil Evidence Act 1995. The first judge had given the evidence no weight simply because it was hearsay, without actually assessing it on its merits. That was an error of law.
• There is no special higher standard. A debtor challenging a foreign judgment does not have to meet a tougher test. The only question is whether there is a genuine dispute on substantial grounds, although vague or general allegations are unlikely to be enough.
• No need to prove the decision was deliberately wrong. ST argued that Mr Drelle had to show that the Russian court deliberately reached the wrong result. The Court rejected this, pointing out that a biased judge may well try to write a judgment that looks correct.

Taking Ms Zheglova’s evidence together with expert evidence concerning state influence over Russian courts, particularly where a state-owned commercial entity was involved in proceedings in Russia, the Court concluded that Mr Drelle had shown a genuine case that the Russian judgment could be challenged for fraud, unfairness or public policy reasons. Whether those allegations ultimately succeed is a matter more appropriately determined in separate recognition proceedings, where disclosure and cross examination are available. ST has already started those proceedings, which are on hold pending this appeal.

Comment

In many respects, Drelle has come close to full circle. The Supreme Court’s ruling still stands: creditors can present a bankruptcy petition on an unrecognised foreign judgment. However, the Court of Appeal’s decision illustrates the practical limitation of that ruling. Whilst the Supreme Court removed the procedural requirement to obtain recognition before petitioning, it has not insulated foreign judgments from challenge. If anything, the decision demonstrates that where substantial objections exist to the foreign judgment, recognition proceedings may still prove unavoidable. As we noted in our previous article, the ability to petition on an unrecognised foreign judgment does not insulate that judgment from challenge. If the debtor has a well-evidenced dispute, the petition may be successfully challenged and the creditor may have to pursue recognition of the foreign judgment instead, as a precursor to bankruptcy proceedings.  The outcome is perhaps unsurprising; it reinstates the need for creditors to be confident about proving, if challenged, the existence and bona fides of debts upon which bankruptcy petitions are based. Whilst the existence of an unrecognised foreign judgment may in principle give rise to a debt on which a bankruptcy petition may be based, the fact that the judgment is unrecognised by the English courts may also make it susceptible to challenge on the usual grounds.

The decision also fits the wider theme of our previous article. English courts continue to apply traditional principles when foreign judgments are challenged, even in insolvency cases. As we advised in our previous article, creditors should assess these risks at the outset, including whether commencing recognition proceedings first may offer the most effective route to achieving a meaningful result.