No requirement for an English judgment as a precondition to proceeding with a petition

Ernestovich Drelle was made bankrupt on 31 March 2023. The bankruptcy petition was based on a judgment debt of RUB 2 billion (c.£22 million) (the judgment).

The judgment was made in the Arbitrazh Court, and was not eligible to be registered in England under the Foreign Judgments (Reciprocal Enforcement) Act 1933.

Drelle appealed the bankruptcy order. In considering Mr Drelle’s appeal, the court had two issues to consider:

  1. The Petition Debt Point (whether the judgment was a debt under s. 267 IA 1986)
  2. The Fraud Point (whether there was judgment may have been impeachable for fraud).

Petition Debt Point

Drelle argued that there can be no debt for the purposes of s.267: if there is an obstacle that prevents a creditor from taking direct action at law to enforce the debt; the failure to have the judgment recognised meant that the creditor is precluded from relying on the foreign judgment in the English courts; and that this was an obstacle that prevented the judgment being a “debt”. The High Court rejected this argument on the basis that the judgment was final and required the payment of a liquidated sum that is not subject to any contingency.

Fraud Point

On appeal, the court agreed with the judge’s overall conclusion that the debt was not subject to a genuine and substantial dispute. Not only had the judgment been appealed and upheld in the relevant Russian courts, but the judge at first instance was entitled to find that the evidence presented by Drelle’s expert was insufficiently cogent to demonstrate a triable issue of fraud.

The appeal was dismissed.

In regards to Ernestovich Drelle v Servis-Terminal LLC  [2024] EWHC 521 (Ch).

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