In Beograd Innovation Ltd v Somovidis [2025] EWHC 1182 (Comm), the High Court reaffirmed the principle that English immovable property is governed solely by English law.. The Court rejected an attempt to stay enforcement of a Russian court judgment, reinforcing creditor rights against immovable assets in England even where the debtor is subject to foreign bankruptcy proceedings.
Background to the Dispute
Beograd Innovation Ltd obtained a £14 million judgment from a Russian court against Mr. Somovidis, a Russian national who had been resident in England since 2016. Mr. Somovidis was declared bankrupt in Russia in 2019, and Beograd was a registered creditor in that process.
When Beograd initiated enforcement proceedings in England targeting Mr. Somovidis’s English assets, including real estate, he argued that the action should be stayed. His position was that Russian bankruptcy law included an “exclusive remedy principle” which “precludes creditors from pursuing or enforcing separate claims against a debtor after the commencement of insolvency proceedings.”
Key Legal Issues
The main issue before the High Court was whether English law could recognise a foreign bankruptcy rule that bars creditors from enforcing claims after the commencement of insolvency proceedings. In assessing this, the High Court also addressed two core legal doctrines, the Modified Universalism and the Immovables Rules.
Modified Universalism
The Modified Universalism encourages English courts to cooperate with foreign insolvency regimes to promote consistency and efficiency across jurisdictions. English courts have recognised the principle of modified universalism since at least 1910, where Lord Dunedin in Galbraith v Grimshaw [1910] AC 508, 581 held that “…if the Court finds that there is already pending a process of universal distribution of a bankrupt’s effects that it should not allow steps to be taken in its territory which would interfere with that process of universal distribution.” This was repeated in 2008 in the case of Re HIH Casualty and General Insurance Limited and Others [2008] UKHL 21, where by Lord Hoffmann stated that courts should “co-operate with the courts in the country of the principal liquidation to ensure that all of the company’s assets are distributed to its creditors under a single system of distribution”.
The Immovables Rule
The “immovables rule” is an established principle in many jurisdictions, providing that the rights to and interests in immovable property are governed solely by the law of the jurisdiction in which the property is situated. The laws and judicial decisions of another jurisdiction will have no effect insofar as they purport to govern or decide issues of rights to or interests in that immovable property.
The above principle was examined in Kireeva v Bedzhamov [2024] UKSC 39 which affirmed that:
(1) The principle of private international law, known as the “immovables rule”, established in many national legal systems, including the common law of England and Wales, provides that questions as regards rights to and interests in land and other immovable property are governed by the law of the country in which the property is situated, and that jurisdiction to decide those questions belongs to the courts of that country, in this case England and Wales.
(2) Therefore, where immovable property is situated in England or Wales, neither English law nor the English Courts will recognise or give effect to any laws or judicial decisions of other countries which purport to govern or decide issues of rights to and interests in that immovable property, save to the extent of any exceptions under English law.
Therefore, the conclusion of the court was that a trustee in bankruptcy has no interest in or right to the bankrupt’s immovable property in another jurisdiction therefore there was no power to provide assistance to a foreign trustee in bankruptcy by appointing a receiver with a power of sale over immovable property. Furthermore, the court concluded that common law offers no assistance in such circumstances in the absence of legislative intervention.
Court’s Judgment
Mr. Somovidis’s application for a stay was dismissed. The Court made several key findings:
Concluding Remarks
In the Beograd decision, the Court extended the principles established in Kireeva by applying the immovables rule not to a trustee’s application for cross-border assistance, but to a creditor’s enforcement efforts. Relying on Kireeva, the court reaffirmed that immovable property situated in England does not form part of a foreign bankruptcy estate.
Together, Kireeva and Beograd underscore the centrality of the immovables rule in safeguarding English territorial sovereignty. They also delineate the boundaries of the principle of modified universalism, making clear that English law retains exclusive jurisdiction over rights over immovable property in England. Consequently, foreign insolvency proceedings cannot prevent creditors from pursuing enforcement over immovable assets in England, as otherwise it would allow from bankrupt individuals to be effectively judgment-proof with respect of those assets.
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