Supreme Court denies assistance claim of Russian trustee in bankruptcy

This case concerned a Russian national who had been made bankrupt in Russia by which time he was domiciled in England. The Russian trustee in bankruptcy sought recognition for the Russian bankruptcy under the common law and sought a receivership order vesting certain London real estate of the bankrupt’s in themselves as receiver.

The Cross-border Insolvency Regulations 2006 were not available as the bankrupt did not have his centre of main interests or an establishment in Russia. Recognition and consequential assistance by means of a receivership order in relation to the London real estate was sought instead under the common law. Recognition of the Russian bankruptcy was ultimately granted following an appeal to the Court of Appeal and subsequent remission back down on a question of fact. The Court of Appeal, however, held 2:1 that there was no jurisdiction to make the receivership order, and the trustee appealed to the Supreme Court.

Counsel for the trustee referred to the immovables rule which is to the to the effect that, as a matter of English law, all rights over an immovable are subject to the law of the country where the immovable is situated. They submitted that this rule meant only that the Russian bankruptcy order by itself could not alter title to the property, but this did not prevent the English court from offering its assistance to give effect to the trustee’s rights and duties under the Russian bankruptcy.

The Supreme Court held unanimously that there was no jurisdiction to grant the assistance sought. The judges reasoned that the immovables rule was not concerned solely with the vesting of title, but was to the effect that at common law no recognition would be given to any provision of foreign law which purported to affect rights to or interests in land located in England. It followed that the common law did not recognise the property as being part of the assets that were within the scope of the bankruptcy in Russia.

Furthermore, it was for Parliament and not the courts to determine whether there should be further modification of the immovables rule beyond those already made by legislation.

In reference to Kireeva v Bedzhamov, Supreme Court, 20 November 2024.

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