UK Supreme Court considers Russian bankruptcy recognition and the 'immovables rule'

The English Supreme Court has considered whether assistance for foreign insolvency proceedings is limited by the "immovables rule" which provides that rights relating to land are governed exclusively by the law of the country where the land is situated.

Background

The case involves Lyubov Kireeva, acting as the bankruptcy trustee for Georgy Bedzhamov. The Russian courts had declared Mr Bedzhamov bankrupt. Ms Kireeva sought recognition of this order in England to access Mr Bedzhamov's assets in London, including a property at Belgrave Square. Additionally, she requested assistance to realise this "immovable" asset under English law.

Decision

In its ruling, the Supreme Court confirmed the recognition of the Russian bankruptcy order but declined to grant Ms Kireeva assistance concerning the Belgrave Square property. It held that the 'immovables rule' prevents English courts from assisting a trustee in Russian bankruptcy proceedings in relation to land in England. 

The two statutory exceptions to the immovables rule did not apply in this case (Bedzhamov's centre of main interests (COMI) had not been in Russia since he left in 2015, and Russia is not a 'relevant country'). 

Key takeaways

• There is no common law power to transfer or sell immovable property in England based on foreign insolvency orders alone. Creditors must follow English insolvency procedures to realise immovable properties.
• The Supreme Court noted that to develop the common law to allow for further assistance to be given to foreign bankruptcy trustees would be a significant departure from the existing law which could only be achieved by legislation.

Find out more

To discuss the issues raised in this article in more detail, please contact a member of our Restructuring & Insolvency team.

Kireeva v Bedzhamov [2024] UKSC 39 (20 November 2024)