Unrecognised foreign judgments and winding up petitions

In Re Drelle, a debtor appealed a bankruptcy order made arising from a petition debt based on a Russian judgment. In dismissing Mr Drelle’s appeal, the court held that a petitioning creditor did not need to first convert or have the Russian judgment recognised by issuing proceedings in England as it fitted the definition of a debt under s.268 Insolvency Act 1986, and Mr Drelle had no genuine or substantive dispute to it.

We covered this case in our May update

Drelle was handed down the day before the hearing of Re a Company [2024] EWHC 1070 which concerned similar issues in the context of companies. In this case, an application was made to restrain the presentation of a winding up petition based on a debt arising from a Lebanese judgment. As in Drelle, all rights of appeal to the overseas court had been exhausted. Recognition of the judgment would only be possible by issuing English proceedings as no enforcement conventions are in place with Lebanon and the creditor threatened to serve a statutory demand.

The court accepted that a debt arising under a foreign judgment was a debt for the purposes of winding up proceedings, just as it had for bankruptcy proceedings in Drelle. However, unlike in Drelle, the judgment was more than six years old, so a question arose around whether the debt was now time barred. This depended, among other things, on whether a debt arising under a foreign judgment was analogous to a liability under a contract, which is subject to a six year limitation period under section 5 Limitation Act 1980, or to a domestic judgment where in effect no limitation period applies - section 24 Limitation Act 1980 does provide for a limitation period for an action on a judgment debt, but the presentation of a winding up petition is not an “action”. 

The Court accepted a foreign judgment was analogous to a domestic judgement for these purposes meaning no limitation defence would be available to resist the presentation of a winding up petition based on a debt arising from a foreign judgment.  Further, the position was also the same whether the foreign judgment required registration under either The Foreign Judgments (Reciprocal Enforcement) Act 1933 or the Administration of Justice Act 1920, both of which had their own time limits for registration.

Re a Company [2024] EWHC 1070

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