Recently, we flagged an important High Court decision in which it was decided that a foreign judgment which had not been registered or recognised in England could nevertheless found a bankruptcy petition. The High Court has now confirmed that same position applies in respect of a winding-up petition.

The issue arose in the case of Re a Company [2024] EWHC 1070 (Ch). This case concerned an application to restrain the presentation of a winding-up petition based on a judgment for almost USD $777,000 which was obtained in a Lebanese court in 2010. The court had to decide whether or not the Lebanese judgment could be relied upon to found a winding-up petition. 

It was recognised that no statutory regime applies to the enforcement of Lebanese judgments in England and Wales. It was also common ground that no steps had been taken pursuant to English common law whereby Part 7 proceedings are issued to obtain an English judgment in respect of the Lebanese judgment debt (i.e., to ‘recognise’ the foreign debt).

The Court considered the case of Valeriy Ernestovich Drelle v Servis-Terminal LLC [2024] EWHC 521 (Ch) in which (as summarised in our article) it was confirmed that a foreign judgment which had not been registered or recognised in England could nevertheless found a bankruptcy petition. In that case, the judge focused on the meaning of ‘debt’ under section 267 of the Insolvency Act 1986 and concluded that an unrecognised foreign judgment satisfies the requirements of this section. 

The equivalent provision in relation to winding-up petitions is section 122(1)(f) of the Insolvency Act 1986. The court concluded that the principles which applied in Drelle applied in this case and found that the Lebanese judgment formed a debt for the purposes of winding-up, despite the fact that the judgment had not been recognised or registered. 

The court then considered whether there was any limitation issue. The court followed Ridgeway Motors (Isleworth) Limited v ALTS Limited [2005] EWCA Civ 92, in which the Court of Appeal held that bankruptcy or winding-up proceedings based on judgment debts did not constitute an “action on a judgment” under section 24 of the Limitation Act 1980 (which the court found was the relevant provision of the Act). Therefore the six-year limitation period applicable to an action on a judgment did not apply. It was concluded that there was no limitation barrier to the presentation of the winding-up petition. 

The court went on to consider whether the position would be different if a foreign judgment had to be registered under the statutory regime and concluded that it would not - if registered, section 24 of the Limitation Act 1980 would apply, but an insolvency procedure based on the registered judgment would not be an action on a judgment, as above, and could proceed. The court was also of the opinion that there was nothing to prevent enforcement via insolvency proceedings as an alternative to the statutory recognition method. 

Comment

This decision provides welcome confirmation that the principles set out in Drelle also apply to the winding-up of a company on the basis of a foreign judgment debt. The court also sought to align the position in respect of judgments which can be registered under the statutory regime and those which cannot. 

A practical point for those seeking to take action in England and Wales pursuant to a foreign judgment debt is to consider all options. Insolvency procedures provide an alternative to issuing proceedings in England in respect of the foreign judgment debt and, although there may be downsides, may represent a quicker and cheaper option.

For information on our international asset recovery expertise, contact Fraser Mitchell.