Can a Russian bankruptcy order, recognised at common law, force the sale of a property owned by the debtor in London? In Kireeva v Bedzhamov [2024] UKSC 39, the Supreme Court unanimously held that it cannot. The judgment, delivered jointly by Lord Lloyd-Jones and Lord Richards, reaffirms the supremacy of the “immovables rule” and marks another significant retreat from the high-water mark of “modified universalism” in cross-border insolvency.
The facts were stark. The respondent, Mr Bedzhamov, was a Russian national who had been domiciled in England since 2017. He owned a valuable property in Belgravia. In 2018, a Russian court declared him bankrupt and appointed the appellant, Ms Kireeva, as his “financial manager” (functionally equivalent to a trustee in bankruptcy). Having obtained recognition of the Russian bankruptcy at common law, the appellant sought an order vesting the Belgravia property in her for the benefit of creditors.
The issue was whether the English court could, or should, exercise its discretion to assist the foreign trustee by effectively handing over title to English land. In the Court of Appeal ([2022] EWCA Civ 35), Arnold LJ had characterised the immovables rule - which generally provides that rights to land are governed by the lex situs - as a choice of law rule (at [110]). Following Dicey, Morris & Collins on the Conflict of Laws (Rule 132), he viewed it as a procedural hurdle that could potentially be overcome by the court’s in personam jurisdiction over the debtor.
The Supreme Court dismantled this analysis, restoring a welcome degree of orthodox certainty to the law of property and insolvency. The Court held that the immovables rule is not merely a choice of law rule but a substantive rule of English law founded on the principle of territorial sovereignty (at [69]). A foreign court simply has no jurisdiction to make orders affecting title to land in England. It followed that the respondent’s proprietary interest in the property remained “unaffected by the Russian bankruptcy order”.
This conclusion is sound in principle. The Court of Appeal’s characterisation of the rule as procedural was doctrinally incoherent. If the rule were merely procedural, it would invite a discretionary weighing of connecting factors, thereby subordinating the lex situs to foreign judicial fiat. The rule provides a singular and definitive answer because land possesses a unique status in English law, inextricably linked to the sovereignty of the state. Lord Richards’ analysis rightly restores the orthodoxy that rights in rem over English land are immune to alteration by foreign decree, notwithstanding the exigencies of universalist insolvency policy.
The rejection of the appellant’s alternative argument - that the court could exercise its in personam jurisdiction to compel the respondent to deal with the property - was equally emphatic. To allow an in personam order to strip a debtor of property rights that the foreign order could not reach directly would be to countenance an impermissible subversion of the substantive law. In doing so, the Supreme Court overruled Re Kooperman [1928] WN 101, an anomaly that has long troubled the commentators. Its removal from the canon is a welcome rationalisation of the law.
Modified Universalism
Perhaps of greatest significance is the judgment’s treatment of “modified universalism”. The appellant relied on the expansive assistive principles articulated by Lord Hoffmann in Cambridge Gas. That decision posited a common law power to assist foreign officeholders by doing whatever the court could properly have done in a domestic insolvency, even if it meant bypassing standard conflict-of-law rules.
Kireeva confirms that the judicial tide has definitively, and rightly, turned against the Hoffmann-ian vision. The retreat began with Rubin, where the Supreme Court rejected the proposition that foreign insolvency judgments were subject to a sui generis “universalist” enforcement regime. It then continued in Singularis in which the Privy Council clarified that the common law power to assist foreign liquidators was strictly circumscribed by local law and public policy. Lord Richards’ judgment in Kireeva reinforces this trajectory: the power to assist must yield to the substantive rules, including the immovables rule.
The decision in Kireeva resolves a tension between universalist aspirations and established conflict-of-laws rules (rooted in territorial sovereignty). It establishes that while the English courts remain amenable to recognising foreign insolvencies, such recognition does not provide a license to bypass the fundamental tenets of conflict-of-laws rules, and rightly so.
