Factual and Procedural Background
The Respondent, a Russian citizen residing in The City since 2017, holds long-lease and redevelopment rights over a London property (“the Property”). Two Russian banks obtained judgments against the Respondent for debts exceeding £33 million. Bankruptcy petitions filed in Russia led the Moscow City Arbitrazh Court to issue a bankruptcy order on 2 July 2018 and to appoint the Appellant as trustee (a position equivalent to trustee in bankruptcy).
Parallel English proceedings ensued: one bank began a substantial fraud action and obtained a worldwide freezing injunction that expressly covered the Property. In 2021 the Appellant sought (i) common-law recognition of the Russian bankruptcy and (ii) assistance orders empowering her to control, realise, and question the Respondent about the Property. Snowden J recognised the bankruptcy but, invoking the “immovables rule,” refused assistance regarding English land and dismissed the Appellant’s application to set aside a solicitor’s charge over the Property. The Court of Appeal, by majority, upheld that refusal; one Lord Justice dissented. The Supreme Court granted permission limited to the assistance and set-aside issues and has now delivered the present judgment.
Legal Issues Presented
- Whether, at English common law, the “immovables rule” bars a foreign bankruptcy trustee from asserting any rights over, or obtaining assistance in relation to, immovable property situated in England.
- If the common law currently bars such assistance, whether the court should develop the common law (by reference to the principle of modified universalism) so as to permit orders—such as appointing a receiver with power of sale—over English immovables for the benefit of a foreign bankruptcy estate.
Arguments of the Parties
Appellant’s Arguments
- The immovables rule only prevents automatic vesting of English land in a foreign trustee; it does not preclude the English court from recognising that the land falls within the foreign bankruptcy estate and from appointing a receiver to sell it.
- Common-law recognition, section 426 of the Insolvency Act 1986, and the Cross-Border Insolvency Regulations 2006 (“CBIR”) are merely alternative “gateways” to the same assistance powers; therefore comparable relief should be available at common law.
- Denying assistance renders recognition an “empty formula” inconsistent with the principle of modified universalism and with dicta in cases such as Cambridge Gas and Singularis.
- Even if sale is impossible, a receiver of rents and profits must at least be possible; distinguishing between income and sale proceeds is incoherent.
Respondent’s & Intervener’s Arguments
- The immovables rule is a substantive rule of English law: foreign bankruptcy statutes and judgments have no effect on title to English land, and the English courts have no jurisdiction to affect such land on a foreign trustee’s application.
- Parliament has already delineated the only exceptions (section 426 and the CBIR). Extending assistance at common law would contradict those carefully limited statutory regimes.
- The authorities relied on by the Appellant—particularly In re Kooperman—are either distinguishable or wrongly decided.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|
| British South Africa Co v Companhia de Moçambique [1893] AC 602 | Foreign courts lack jurisdiction to adjudicate title to foreign immovables. | Cited as the jurisdictional foundation of the immovables rule. |
| In re Hoyles [1911] 1 Ch 179 | Public-policy basis of the lex situs for land. | Used to explain sovereignty concerns underlying the rule. |
| Freke v Lord Carbery (1873) LR 16 Eq 461 | Movables follow the domicile; immovables follow the situs. | Illustrated distinction between movable and immovable assets in succession and bankruptcy. |
| Williams & Humbert Ltd v W & H Trade Marks (Jersey) Ltd [1986] AC 368 | Foreign sovereigns cannot alter title to property situated in England. | Reinforced territorial limitation on foreign legislation. |
| Société Eram Shipping Co Ltd v Cie Internationale de Navigation [2003] UKHL 30; [2004] 1 AC 260 | Execution of judgments is an exercise of sovereignty; no extraterritorial seizure. | Used by analogy to deny foreign enforcement affecting English assets. |
| SAS Institute Inc v World Programming Ltd [2020] EWCA Civ 599 | Reciprocal respect for territorial jurisdiction in enforcement. | Cited to show consistency of approach. |
| Peer International Corp v Termidor Music Publishers Ltd [2003] EWCA Civ 1156 | Foreign confiscatory laws have no effect on UK intellectual property. | Analogous support for non-recognition of foreign laws over English assets. |
| Bank Voor Handel en Scheepvaart NV v Slatford [1953] 1 QB 248 | “Simple rule” that English property is subject only to English law. | Cited in support of territoriality. |
| United States v Crosby 11 US (7 Cranch) 115 (1812) | Title to land governed solely by law of situs. | Comparative common-law authority. |
| McCormick v Sullivant 23 US (10 Wheaton) 192 (1825) | Only situs law can pass title to land. | Comparative support. |
| Duke v Andler [1932] 4 DLR 529 | Foreign courts lack jurisdiction over foreign immovables. | Canadian affirmation of the rule. |
| Australian Mutual Provident Society v Gregory (1908) 5 CLR 615 | Rights in relation to immovables are themselves immovable. | Cited on classification of rights. |
| Haque v Haque (No 2) (1965) 114 CLR 98 | Characterisation of secured debts in conflict-of-laws. | Referenced as contrasting view. |
| Philipson-Stow v IRC [1961] AC 727 | Characterisation of proceeds of sale of foreign land. | Discussed and distinguished in rejecting Appellant’s “sale-proceeds” argument. |
| Ashurst v Pollard [2001] Ch 595 | Trustee’s ability to seek in personam orders regarding foreign immovables. | Explained statutory exception under Insolvency Act 1986. |
| HIH Casualty & General Insurance Ltd [2008] UKHL 21 | Common-law assistance may include remitting proceeds to foreign office-holder. | Illustrated scope of assistance for movables. |
| Swissair Schweizerische Luftverkehr-AG [2009] EWHC 2099 (Ch) | Further example of remitting movable proceeds overseas. | Differentiated from immovable context. |
| In re Kooperman [1928] WN 101 | Purported authority for appointing receiver over English leaseholds for foreign trustee. | Supreme Court held it was wrongly decided and affords no weight. |
| In re Osborn (1932) 15 B&CR 189 | Assistance under statutory predecessor to s 426 IA 1986. | Distinguished; depended on statute, not common law. |
| Cambridge Gas Transportation Corp v Official Committee of Unsecured Creditors [2006] UKPC 26 | Dictum on modified universalism. | Dictum rejected as incompatible with immovables rule. |
| Rubin v Eurofinance SA [2012] UKSC 46 | Limits of modified universalism; need for jurisdictional basis. | Supported view that major changes require legislation. |
| Singularis Holdings Ltd v PricewaterhouseCoopers [2014] UKPC 36 | Qualified scope of common-law assistance. | Applied to deny extension inconsistent with local law. |
| Lucasfilm Ltd v Ainsworth [2011] UKSC 39 | Statutory modification of immovables rule for tort claims. | Illustrated that change comes via Parliament. |
| Hesperides Hotels Ltd v Aegean Turkish Holidays Ltd [1979] AC 508 | Court declined to reform Moçambique rule, citing sovereignty concerns. | Analogous caution against judicial reform here. |
| Fothergill v Monarch Airlines Ltd [1981] AC 251 | Value of scholarly commentary depends on reasoning. | Used to downplay unreasoned textbook support for Kooperman. |
Court's Reasoning and Analysis
1. Nature of the Immovables Rule. The rule is both jurisdictional and substantive: English land is governed exclusively by English law; foreign judgments or statutes cannot alter rights in such land.
2. Effect on Foreign Bankruptcies. Absent statute, a foreign bankruptcy does not vest English immovables in the foreign trustee, nor is any “equitable” or “inchoate” interest recognised.
3. Existing Statutory Exceptions. Parliament has already carved out two express exceptions—section 426 IA 1986 (limited to designated jurisdictions) and the CBIR (model-law based). Russia falls within neither.
4. Analysis of Appellant’s Authorities. The single authority supporting assistance over English land (Kooperman) was unopposed, unreasoned and, in the Court’s view, wrongly decided. Other cited decisions either dealt with movable assets or proceeded under statutory regimes.
5. Modified Universalism Cannot Override Substantive Law. The principle is “subject to local law and public policy.” Because the immovables rule is substantive English law, common-law assistance that contradicts it is impermissible.
6. Sale-Proceeds Argument Rejected. Characterisation of assets is fixed at the bankruptcy date; selling land does not convert it into a movable within the estate for recognition purposes.
7. No Incoherence in Allowing Receivers for Rents Only. Even rents may themselves be incidents of the immovable interest; the Court was not satisfied that a receiver could be appointed for them absent statutory power.
8. Appropriateness of Judicial Development. Extending assistance would constitute a “radical departure” involving sovereignty and policy questions suited to legislative, not judicial, determination. Analogous restraint shown in Rubin, Hesperides, and subsequent statutory reform confirms the appropriateness of deference to Parliament.
Holding and Implications
APPEAL DISMISSED.
Consequently, (i) the courts will not appoint a receiver or otherwise assist the Appellant in respect of the Property, and (ii) the related application to set aside the solicitor’s charge likewise fails. The judgment re-affirms the continuing force of the immovables rule except where Parliament has legislated otherwise. No new precedent was created; instead, the Court clarifies that any future relaxation of the rule must come through statutory reform.