Jurisdiction(s):
United Kingdom

Foreign judgments as ‘debts’ for bankruptcy petitions in England and Wales, without prior recognition: Drelle v Servis-Terminal on IA 1986 s 267 and impeachment (fraud, public policy, natural justice)

Published on: 09 April 2024

Published by a LexisNexis Restructuring & Insolvency expert

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Article summary

Drelle v Servis-Terminal LLC [2024] EWHC 521 (Ch), [2024] All ER (D) 54 (Mar)

What are the practical implications of this case?

This ruling clarifies that, for the purposes of section 267 of the Insolvency Act 1986 (IA 1986), a foreign judgment amounts to a “debt”. In consequence, a creditor can deploy such a judgment to lodge a bankruptcy petition in the court, offering a distinct enforcement pathway as an alternative to seeking registration/recognition and then enforcing. However, a bona fide dispute on substantial grounds will be found—so the petition fails—if the foreign judgment is vulnerable to impeachment for fraud, conflicts with public policy, or is inconsistent with natural justice; those circumstances may arise, for example, where there has been judicial bias and/or improper interference. Accordingly, practitioners should assess with care, when instructed by a judgment creditor holding a foreign judgment and intending to proceed in the English courts against the judgment debtor, whether the preferable course is to pursue registration/recognition followed by enforcement measures, or instead to rely on the judgment as the basis for a bankruptcy petition, bearing in mind any arguable challenges that might demonstrate a substantial dispute and thereby prevent bankruptcy relief...

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