Vol 22 (2025) - Issue 3

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Redefining ‘Debt’ in the Face of Unrecognised Foreign Judgments: Servis-Terminal LLC v Drelle [2025] EWCA Civ 62

Synopsis
The enforceability of debts arising from unrecognised foreign judgments, by English bankruptcy proceedings, was recently reconsidered in Servis-Terminal LLC v Valeriy Ernestovich Drelle (the 'Judgment').
The Court of Appeal ('CA') considered this issue in the context of the statutory demand, and the criteria that must be fulfilled to allow a creditor to present a bankruptcy petition. This, in turn, required the CA to determine whether non-payment of a sum ordered by a foreign court could amount to a 'debt' for the purpose of s. 267 Insolvency Act 1986 ('IA 1986').
In overturning the High Court decision at prior instance, the CA has reaffirmed the importance of obtaining recognition of a foreign debt when pursuing a creditor with assets situated in England & Wales. Effectively, the CA has confirmed that, in the absence of recognition, such sums will not be caught by the s. 267 meaning of 'debt', cannot give rise to a 'debt' capable of forming the basis of a bankruptcy petition, and will, in turn, be non-recoverable in the courts of England & Wales.
This decision should be of interest both to foreign creditors, who face additional procedural hurdles in enforcing debts ordered in their home country – and to debtors with a presence in England & Wales, who will benefit from the extra protections afforded by this Judgment.