Court rejects stay on creditor enforcement

1st July 2025

The High Court has rejected a stay on creditor enforcement based on Russian insolvency proceedings in relation to the debtor’s immovable property in England. We examine the implications of Beograd Innovation Ltd v Somovidis [2025] EWHC 1182 (Comm), handed down on 27 May 2025, High Court (Commercial Court).

Facts

The claimant, Beograd Innovation Ltd (“Beograd”), seeks enforcement in England of a Russian judgment worth approximately £14 million against the defendant, Mr Somovidis.

Mr Somovidis, originally a Russian national, moved to England in late 2016 and was served with proceedings in England.

Following the Russian judgment, Mr Somovidis was declared bankrupt in Russia in 2019, where Beograd is a recognised creditor.

Mr Somovidis filed an application seeking that the Court decline jurisdiction or, alternatively, to stay the proceedings, claiming that under Russian law (the “Exclusive Remedy Principle”), a creditor cannot enforce claims outside the Russian bankruptcy.

Legal Issues

  • 1. Should the English court decline jurisdiction or grant a stay based on ongoing Russian bankruptcy proceedings and the Exclusive Remedy Principle under Russian law?
  • 2. How should English courts apply the doctrine of modified universalism, and does it override claims against immovable property in England?
  • 3. Are Mr Somovidis’s immovable properties within the scope of the Russian bankruptcy under English law?

Judgment

The court held that there is no English rule binding creditors to foreign bankruptcy rules that would mandate a stay; modified universalism only allows English courts to assist foreign proceedings where consistent with justice and public policy.

Following the Supreme Court’s decision in Kireeva v Bedzhamov [2024] UKSC 39, immovable assets in England are not part of a foreign bankruptcy estate, and enforcing against them does not infringe the doctrine of modified universalism.

The court found that granting a stay would, in effect leave Mr Somovidis “judgment‑proof” against English properties, which the court found unjust and contrary to public policy.

Beograd is permitted to proceed to enforce the Russian judgment against Mr Somovidis’s immovable assets in England.

Significance

The case:

  • (i) clarifies the limits of modified universalism in that a foreign bankruptcy does not  prevent separate creditor actions against immovables in England;
  • (ii) reinforces the English principle that immovable English assets lie outside foreign bankruptcy estates unless domestic law provides otherwise; and
  • (iii) confirms that stays to protect debtors from foreign insolvency provisions are only granted where compelling justice-based reasons exist.

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