High Court ruling on cross-border insolvency

On 27 May 2025, the High Court of Justice in England and Wales delivered a landmark judgement in Beograd Innovation Limited v Dimitrios Konstantinosovich Somovidis. This significant ruling arose from the claimant's attempt to enforce a Russian judgement against Somovidis, who has resided in England since late 2016. The case posed crucial questions regarding the jurisdiction of English courts when foreign bankruptcy proceedings are ongoing.

Beograd Innovation Limited sought recognition of a judgement that mandated Somovidis to repay a considerable loan. Meanwhile, the defendant argued that the English court should not exercise its jurisdiction due to the active bankruptcy proceedings occurring in Russia. Specifically, Somovidis contended that under Russian law, particularly the "Exclusive Remedy Principle", creditors are prohibited from pursuing claims outside of those proceedings once bankruptcy is initiated, rendering him effectively judgement proof regarding his UK properties.

However, the court firmly rejected this argument, stating that jurisdictional questions must be determined by English law. The ruling highlighted the principles of modified universalism which govern how foreign bankruptcy proceedings are treated in the English legal system. It further noted the defendant’s significant holdings in England, including a family home, which complicated the claimant's efforts to recover assets.

Judge Pelling KC addressed whether the court should defer to the Russian proceedings and pointed out that while the court has the discretion to stay proceedings, this must be based on strong reasons connected to the interests of justice, rather than simply on the existence of foreign insolvency proceedings. The court cited precedents emphasising that undue delays in accessing justice would typically not be tolerated, particularly when such delays could obstruct claimants from enforcing judgements.

The court also evaluated the relevance of the Russian insolvency law principles in conjunction with English jurisdiction. It concluded that, although Russian law restricts enforcement of judgements outside its bankruptcy process, it does not impose similar limitations on those recognised by English courts. Therefore, the court asserted that Somovidis's immovable assets in England could not be governed by Russian bankruptcy trustees, thereby affirming the supremacy of English property rights.

Ultimately, the High Court dismissed the defendant's application for a stay, reaffirming that the English court has jurisdiction to hear the case. The ruling underscored the necessity for access to justice, asserting that the English legal framework should persist in upholding the enforcement of judgements irrespective of foreign bankruptcy claims.

This pivotal ruling is a crucial clarification regarding the interplay between international insolvency law and English jurisdiction, establishing that English courts are a fitting forum for actions involving foreign debts and reinforcing the principle that justice should be administered equitably and without unnecessary delay

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