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Supreme Court Judgement Regarding Unrecognised Foreign Judgements

Drelle v Servis-Terminal

The Supreme Court has ruled that a creditor holding an unrecognised foreign judgement can present a bankruptcy petition in England and Wales without first bringing separate recognition proceedings, overturning a Court of Appeal decision that had threatened to complicate cross-border insolvency claims involving judgements from jurisdictions outside reciprocal enforcement regimes.

The decision is significant for creditors pursuing cross-border recovery strategies. It confirms that, in certain circumstances, a foreign judgment can support a bankruptcy petition without first being recognised in England and Wales, potentially reducing cost, delay and procedural complexity.

On 27 July 2026, the UK Supreme Court (Supreme Court) handed down judgment in Drelle v Servis-Terminal, overturning the Court of Appeal's decision that an unpaid foreign judgment must first be recognised in England and Wales before it can support a bankruptcy petition.

Background

The Court of Appeal reasoned that a foreign judgment has no "direct operation" in England unless recognised and that an unrecognised judgment could therefore be used only defensively and not as the basis for a creditor's claim in insolvency proceedings.

That decision created a divergence between the English position and the approach adopted in the Royal Court of Jersey (Jersey Court) in HWA 555 Owners, LLC v Redox PLC S.A., where the Jersey Court accepted that an unrecognised foreign judgment could support a winding-up application without prior recognition.

The Supreme Court's decision

The Supreme Court has now reversed the Court of Appeal's decision.

The Supreme Court held that, at common law, a final and conclusive foreign judgment for a debt or definite sum of money gives rise to an obligation to pay that arises when judgment is issued. That obligation exists independently of any recognition process in England and Wales.

The Supreme Court confirmed that the obligation to pay under an unrecognised and unregistrable foreign judgment constitutes a "debt" for the purposes of section 267 of the Insolvency Act 1986.

Why does this matter?

Following Drelle, creditors holding qualifying foreign judgments may be able to present a bankruptcy petition without first pursuing separate recognition proceedings in England and Wales. This has the potential to reduce cost, delay and procedural complexity when assessing recovery options against a debtor.

The judgment also restores a degree of certainty following the Court of Appeal's decision and reinforces the common law principle that a foreign judgment can give rise to an enforceable obligation, even where it has not yet been recognised by the English courts.

Synopsis of Judgemnet and its Effects

The UK Supreme Court's decision in Drelle v Servis-Terminal LLC ([2026] UKSC 29) is an important insolvency and private international law case. It resolved a disagreement between the High Court and the Court of Appeal about whether a foreign judgment can support a bankruptcy petition in England and Wales before it has been formally recognised here.

Facts

• Servis-Terminal LLC, a Russian company in liquidation, obtained a Russian judgment against its former director, Valeriy Drelle, for approximately RUB 2 billion.
• Mr Drelle lived in England.
• Rather than first seeking recognition of the Russian judgment in England, Servis-Terminal presented a bankruptcy petition against him under the Insolvency Act 1986.
• The case turned on whether the Russian judgment created a "debt" capable of founding an English bankruptcy petition.

Court of Appeal (2025)

The Court of Appeal held that an unrecognised foreign judgment could not found a bankruptcy petition. It reasoned that the creditor first had to:

• register the judgment under an applicable statutory scheme; or
• sue on the judgment at common law and obtain an English judgment.

Supreme Court (2026)

The Supreme Court unanimously allowed Servis-Terminal's appeal, reversing the Court of Appeal.

The Court held that:

• A final foreign judgment from a court of competent jurisdiction creates an immediate common law obligation on the debtor to pay.
• That obligation exists even before the judgment has been recognised or enforced in England.
• Accordingly, such a judgment can constitute a "debt" for the purposes of section 267 of the Insolvency Act 1986.
• Recognition proceedings are relevant to enforcement, but they are not a prerequisite for establishing the existence of the debt in bankruptcy proceedings.

What the Court did not decide

The Supreme Court did not make Mr Drelle bankrupt. Instead, it sent the case back to the Court of Appeal to determine whether the Russian judgment debt was disputed on bona fide and substantial grounds, an issue that had not yet been resolved.

Significance

The decision:

• clarifies the distinction between recognition/enforcement of foreign judgments and the existence of a debt;
• makes it easier for creditors with qualifying foreign judgments to commence bankruptcy proceedings in England without first obtaining recognition of the judgment; and
• is likely to be a leading authority on the interaction between foreign judgments and English insolvency law. 

The UK Competition and Markets Authority (CMA) has published its final revised guidance on unfair contract terms following a public consultation. The updated guidance, published on 22 July 2026, replaces the previous 2015 guidance (CMA37) and is intended to help businesses better understand and comply with the unfair contract terms provisions in the Consumer Rights Act 2015.

Key points include:

• No change to the underlying law. The legal test for whether a contract term is unfair remains the same under the Consumer Rights Act 2015. The guidance is a clarification and modernization rather than a change in legal obligations.
• Updated to reflect new enforcement powers. The guidance now explains the CMA's direct enforcement powers under the Digital Markets, Competition and Consumers Act 2024 (DMCC Act), which allow the CMA to take direct action against businesses using unfair or non-transparent consumer contract terms.
• Greater emphasis on transparency. Businesses are reminded that important terms should be presented clearly, prominently, and at the appropriate stage of the customer journey—not merely included in lengthy terms and conditions.
• More practical guidance. The revised document includes updated examples, clearer explanations, and improved structure to help businesses assess the fairness of common contractual provisions such as:
  • price variation clauses;
  • automatic renewal provisions;
  • cancellation and exit fees;
  • limitation of liability clauses; and
  • unilateral rights to change contract terms.

For businesses, the publication signals that although the substantive law has not changed, the CMA expects consumer-facing terms and notices to be reviewed in light of its updated guidance and enhanced enforcement powers under the DMCC Act. Businesses using standard consumer contracts should assess whether their terms remain fair, transparent, and appropriately communicated

Should you use a Debt Collection Agency or a Solicitors Law Firm?

What are the pros and cons?

The simple answer is, it depends on your needs, but we always say that someone who offers no win no fee as standard should be looked at before someone who tells you their hourly rate before they read anything.

In life there is no such thing as a free lunch, but typically, a solicitors’ practice would charge either up-front fees, an hourly rate, or fixed fees per stage (or all of the above) so whether your debt is collected or not, you have still paid upfront for a service. There’s nothing wrong with that but you need to be aware to make an informed decision.

The best debt collectors back themselves by offering no win no fee, so the simple question is: who is more skilled and motivated to achieve successful recovery of your debt.

We seem to have forgotten the adage that a hungry fighter is a good fighter because we live in a country now where nobody is hungry, but more and more companies are owed money than ever before.

A solicitors practice doesn’t tend to do the debt collection (90% of the work up to the steps of the court) and usually only gets involved once a case is ready for litigation whereas a debt collection agency usually can do the entire process, from early arrears to pre-litigation to litigation and enforcement as AVC Debt Recovery have an association with a reputable solicitor’s firm.

Who has more authority, a debt collection agency or a solicitor’s law firm? In both instances they are considered to be third parties and therefore there is no perceptible difference. A debt may escalate from a debt collection agency to a solicitor’s law firm but very rarely, if ever, is it vice versa.

Therefore, you can have best of both worlds by going via the debt collection route first and then them escalating to a solicitor’s law firm thereafter as here at AVC Debt recovery we seek to spend your money as we spend our own. There is no downside as debt collectors operate on a time is of the essence basis as every minute they work without recovering debt is another minute they do not eat.

Pre-litigation debt collection can save you time and money. Whilst it should always be the objective to avoid litigation, sometimes it can be unavoidable therefore thrusting you into a time consuming and expensive process. A good debt collector will know that the threat of litigation and the instigation of the litigation processes will prompt a debtor into paying or entering into some kind of negotiation especially if the creditor has the correct audit trail of POs and Invoices in place.

Does a solicitor’s law firm have more powers than a debt collection agency? 

Only if the matter comes to court and a creditor does not seek to act as a claimant in person as debt collectors cannot enact the  conduct of litigation, but the parameters of The Legal Services Act 2007 and unregulated activity were defined recently in the High Court case: Julia Mazur and another -v- Charles Russell Speechlys LLP, and others, so debt collectors legal standing is now set out in a High Court ruling.

As a reputable debt collection agency AVC Debt recovery have all the processes and structures in place to enable the most cost effective and best legal outcome to obtain creditors’ monies. Not many debt collectors collect debts for solicitors, but AVC Debt Recovery have successfully done that and continue to do so.

Visit our Business Debt recovery company on 

www.avcdebtrecovery.com

Here are a list of our most recent Blogs

1. Jaevee Homes Limited v Mr Steve Fincham (t/a Fincham Demolition) [2025] EWHC 942 (TCC)

2. County Courts in Crisis: Justice Committee’s Report

Posted 27 04 2026

Contract Review Contract Checking

We never cease to be amazed at the lack of recourse to simple contracts of terms and conditions  in business, but especially the construction industry where we come in when contractors remain unpaid. We see half-baked JCT contracts  or documents that have been culled from someone else’s contract from the internet and now the favourite – the Chat GBT contract. In an industry such as construction whereby the contractor is always behind on payments and some unscrupulous employers (and consumers) deliberately raise objections at the end of the job to get a discount then recourse to contract or even a contractor issuing their own Ts & Cs should be standard. The worst contract we ever saw was a 3 page drafted document for a £1.5m build and surprise surprise the employer terminated to contract owing the contractor £300k then hired aggressive solicitors because he knew the contractor would be unable to finance legal action as he was insolvent. Some simple measures are all that is required.

1. Get a Review of any Contract you are sent.
2. Issue your Terms and conditions if no contract is sent to you
3. Always try and use your terms and conditions.

SHAREHOLDER AGREEMENTS ... WHY DO WE NEED THEM?

Whether you are two shareholders or several hundred, it is vital to have a shareholders’ agreement drafted to your unique requirements.

What is a shareholder's agreement?

A shareholder’s agreement manages the relationship between directors and shareholders within a business and allows directors to focus on the running of the business whilst providing protections for shareholders. 

Many people think that shareholders agreements relate to large corporations and think of large boardrooms as set out in the films, but many small businesses and SME’s operate shareholder agreements and often fail to put in place a basic agreement and issues arise when there are the minimum number of 2 shareholders with work allocations and specialities to be agreed.

It is very important that a shareholder’s agreement is specifically drafted to the individual requirements of the company, and addresses the specific needs of shareholders or groups of shareholders. For example, the agreement can be used to:

Clearly set out loan repayments and dividends;

control the decision making powers of directors ;

set the company’s dividend policy ;

put in place procedures which the company must follow for share transfers or on a sale of the company either to protect minority shareholders’ interests; or

clearly allocate areas of responsibility;

determine what happens to shares if a shareholder becomes bankrupt;

the employment of an appointed director with the company is terminated;

a shareholder dies;

place restraint of trade provisions on shareholders, restricting their ability to compete against the company .

Failure to put a shareholder’s agreement in place results in greater uncertainty in the event of a dispute or if an unexpected event occurs. Without an agreement in place it will be harder to resolve disputes between shareholders quickly –if at all and then the law becomes expensive and that is where it can get scary.

To get in touch visit us at www.cwcontractlawandlegal.co.uk or  call us on  0161 333 121,  for a no charge no obligation discussion about how we can add value to your business proposition through fixed price legal services.