Case Digest No. 9 · Cross-border insolvency
State sovereignty, immovables and foreign bankruptcy
Beograd Innovation Ltd v Somovidis [2025] EWHC 1182 (Comm)
The Commercial Court applied the limits of modified universalism identified in Kireeva and held that foreign bankruptcy proceedings could not determine rights in immovable property outside their jurisdiction.
High Court (Commercial Court)
[2025] EWHC 1182 (Comm)
May 2025
Decision at a glance
The question, answer and consequence.
- Legal question
- The central issue was state sovereignty, immovables and foreign bankruptcy.
- Court's answer
- The Commercial Court applied the limits of modified universalism identified in Kireeva and held that foreign bankruptcy proceedings could not determine rights in immovable property outside their jurisdiction.
- Practical consequence
- The judgment applies territorial and sovereign limits to foreign insolvency claims involving immovable property. It helps international teams identify early whether recognition or assistance can deliver the proprietary result sought in England.
Factual background
The Defendant controlled a network of corporate entities in Russia. The Credit Bank of Moscow (“CBM”) loaned money to one of these entities, Morgan LLC (“Morgan”) and the Defendant personally guaranteed Morgan’s primary liabilities to CBM. CBM commenced proceedings in Russia against both Morgan and the Defendant to recover the sum then outstanding. The Defendant had left Russia for England, where he has resided ever since, and it is alleged that he became the ultimate beneficial owner of two substantial properties in England.
Issue
The central issue was state sovereignty, immovables and foreign bankruptcy.
Procedural history and reasoning
was entered against both Morgan and the Defendant in the Russian proceedings and upheld on appeal. CBM commenced bankruptcy proceedings in Russia against the Defendant and the Defendant was declared bankrupt. The Claimant commenced proceedings in England seeking enforcement of the Russian judgment and a stay. [2025] EWHC 1182 (Comm) KEY TAKEAWAYS: 1.English law does not recognise immovable assets as being part of the assets that are within the scope of an individual’s bankruptcy in a foreign jurisdiction. (Kireeva v Bedzhamov [2024] UKSC 39, Case Digest No.1) 2.Despite modern universalism being the principle that is adopted by English law in support of foreign bankruptcy proceedings, the principle is limited in its application and not engaged on such facts in respect of immovable assets. 3.A stay, of the sort sought by the Defendant in this case, should only be granted where the applicant has demonstrated “a powerful reason” founded on the interests of justice for departing from the usual course of permitting claims over which it has jurisdiction to be determined on their merits.
JUDGMENT - HHJ Pelling KC By submitting to the jurisdiction of the Russian Bankruptcy court, as a matter of English law, the Claimant did NOT become bound by the rules governing that insolvency. Where the principle of modified universalism applied, it could in appropriate circumstances justify a court in England and Wales staying enforcement proceedings before it in favour of foreign insolvency proceedings. However, it is important to note the qualifications that judges stating and restating the principle have included within those statements (see left). There is nothing within those formulations that suggests that the principle is one that should be applied by a court so as to render part of a bankrupt’s estate immune from distribution. The ultimate rationale for the true rule of English law is to achieve a universal distribution of the assets on, as far as possible, a common basis.
Where the rule in relation to immovable assets at common law applies (as it does in this case) the choices lie between: permitting a creditor to enforce its judgment if it can against any immovable assets belonging to the judgment debtor located in England and Wales; or treating the judgment debtor as judgment proof to the extent of their immovable assets in England. THE MODIFIED UNIVERSALISM PRINCIPLE IS NOT ENGAGED IN RESPECT OF IMMOVABLE ASSETS.
Decision and key points
The Commercial Court applied the limits of modified universalism identified in Kireeva and held that foreign bankruptcy proceedings could not determine rights in immovable property outside their jurisdiction.
- English law does not recognise immovable assets as being part of the assets that are within the scope of an individual’s bankruptcy in a foreign jurisdiction. (Kireeva v Bedzhamov [2024] UKSC 39, Case Digest No.1)
- Despite modern universalism being the principle that is adopted by English law in support of foreign bankruptcy proceedings, the principle is limited in its application and not engaged on such facts in respect of immovable assets.
- A stay, of the sort sought by the Defendant in this case, should only be granted where the applicant has demonstrated “a powerful reason” founded on the interests of justice for departing from the usual course of permitting claims over which it has jurisdiction to be determined on their merits.
Why this decision matters
The judgment applies territorial and sovereign limits to foreign insolvency claims involving immovable property. It helps international teams identify early whether recognition or assistance can deliver the proprietary result sought in England.
Particularly relevant to: Foreign office-holders, creditors, property owners and cross-border insolvency counsel.