Georgy Bedzhamov and the Immovables Rule
In what is now being seen as a landmark case, the Supreme Court of the United Kingdom sided with Russian national Georgy Bedzhamov as it prevented a foreign bankruptcy trustee, namely Lyubov Kireeva, from seizing his high-value London property through application of the immovables rule that property located in the United Kingdom was only governable by UK law.
The principle of the immovables rule is a well-established concept in private international law that states that rights and interests in land, also known as immovable property, are exclusively governed by the laws of the country where the land is located, commonly referred to by its Latin term, lex situs.
The context of Kireeva v Bedhzamov
The case in question, Kireeva v Bedzhamov, is based on a long-running, highly complex and on-going legal situation in which Bedzhamov, a former banker and now fugitive from Russia, was declared bankrupt in his home country in 2018. Bedzhamov’s Russian court-appointed insolvency trustee, Kireeva, sought to take control of his London property located in Belgravia, then valued at approximately £35 million, towards satisfying debt payments to creditors.[1]
Bedzhamov is a Russian citizen who left Russia in 2015 and has lived in England since 2017. Having acquired an interest in the house in Belgrave Square and its associated mews house in 2015, his stake in the property comprised a lease with some 20 years remaining and an agreement with the freeholder for the grant of a new lease for a period of 129 years conditional on the redevelopment of the Property.
Among many other properties and outstanding expenditure, Bedzhamov is accused of acquiring the mansion in question as the result of fraud of up to £1.34 billion, of which he had personally benefitted to the tune of some £35.4 million.
Even though a worldwide freezing order, that applies to all his assets including the mansion, was made against Bedzhamov in March 2019, he was permitted to use his own funds for living expenses and for the payment of legal costs, towards which Bedhzamov succeeded in a 2022 application, which was opposed by Kireeva, to divert the freezing order to permit a sale of the house.
Prior to the case, in February 2021, Kireeva filed an application in the corresponding area of the UK law courts to seek recognition of the Russian bankruptcy order and her appointment as the Respondent’s bankruptcy trustee and financial manager. The application also requested additional relief as deemed appropriate by the Court, including orders for the entrustment of the Belgrave Square Property and permission for her to be able to question Bedzhamov regarding the property.[1]
Kireeva stated that she had been made aware of the property in January 2021, and that once its significance as a major asset had been ascertained she had expressed her intention to assume control over the property, citing her entitlement and obligation under Russian law to protect the interests of the bankruptcy estate. The Supreme Court judgement quotes her as then stating she ‘would therefore like to take control over it, as I am entitled and obliged to do under Russian law, to protect the interests of the bankruptcy estate (which includes the collective interest of at least three creditors)’.
The applications were considered and the Russian bankruptcy order and Kireeva’s appointment by the Arbitrazh Court were recognised but Kireeva’s application for help concerning the Belgravia property and any other immovable assets located in England was rejected.[2]
Bedzhamov's legal team argued that while English law might recognize a foreign bankruptcy order for moveable assets, it does not automatically grant foreign trustees authority over immovable assets such as English real estate.
The Supreme Court unanimously upheld this rule, publishing its judgement in November 2024, in which they confirmed that under English common law, a foreign court has no jurisdiction to make orders affecting land in England and Wales. [1]
Sources
[1] Supreme Court of the UK, Kireeva v Bedzhamov, supremecourt.uk, 20 November 2024
[2] England and Wales Court of Appeal (Civil Decisions), Kireeva v Bedhzamov and Vneshprombank v Bedzhamov and Others, British and Legal Information Institute, 21 January 2022
