Enforcing foreign judgments in the Isle of Man: decision in Wilton

Isle of Man High Court on scope of jurisdiction to enforce unrecognised foreign judgment

The key issue for Acting Deemster Cope in Grover v Wilton Group Ltd (CHP 26/0007) (07.07.26) was whether a creditor could present a winding-up claim in the Isle of Man based on an unrecognised foreign judgment.

On 5th September 2024, the US District Court for the Northern District of Illinois had entered judgment for the Claimant against the Defendant, its UK subsidiary and others for $64,685,877.57. Isle of Man statutory demands, and an Isle of Man winding-up claim, followed.

The Defendant argued that a winding-up order should be refused as: (i) unrecognised foreign judgments are not “debts” under the Companies Act 1931 (relying on Servis-Terminal v. Drelle [2024] EWCA Civ 62); and (ii) the judgment debt was disputed on (other) “genuine and substantial” grounds, including whether the US Court had jurisdiction over the Defendant.

The Claimant argued: (i) the Court was bound by Obertor v Gaetano (2DS 2010/17) (25.11.10) (holding that an English judgment not registered under s 6 of the Judgments (Reciprocal Enforcement) (Isle of Man) Act 1968 was still capable of founding a statutory demand); (ii) there was no “genuine and substantial dispute as to the existence of the debt”, as the Defendant had submitted to the US Court’s jurisdiction; and (iii) the US judgment was not impeachable on any standard ground.

Court’s analysis

Acting Deemster Cope started by reviewing general principles:

“General principles

49. In Lehman Brothers Inc v Navigator Gas Management, CPL 2004/9-14 [31.05.04], Deemster Kerruish said this:

    “[104] … the Petitioner is a substantial creditor and has the requisite standing to bring the Petitions… [T]he Debtor Companies are each insolvent. I have rejected the… submissions as to improper purpose, collateral attack, res judicata and issue of estoppel. … [T]he Petitioner is exercising its statutory rights to seek a winding up of each of the Debtor Companies and, subject to satisfying this Court that there is a possibility of a prospect of some sort of benefit from the winding-up…, in the absence of good reason, a creditor of a company who has not been paid is entitled to a winding-up order “virtually as of right” .”…

50. …the Court should not order the winding-up of a company if there is a genuine and substantial dispute as to the existence of the debt claimed, see Sian Participation Corp v Halimeda International Ltd [2024] UKPC 16 and … Exclusiva v Vintage and others [CHP 2014/24] [23.06.14], at [§§] 28-29:

    “28. It is well established (see… Le Breton v Petrodel Resources [Ltd] [29.10.09]; see also Appeal Division… in Petrodel Resources Limited v Le Breton [2DS 2012/26] [20.07.12]) that a winding up order should not normally be made if there is a genuine and substantial dispute as to the existence of the debt… Lord Hoffmann in Parmalat Capital Financial Ltd v Food Holdings Ltd [[2008] UKPC 23] … stated:

    “… If a petitioner’s debt is bona fide disputed on substantial grounds, the normal practice is for the court to dismiss the petition and leave the creditor first to establish his claim in an action…

    29. Lord Brightman delivering the judgment of the [JCPC] in Brinds Limited v Offshore Oil NL & Ors [16/12/85] stated:
“It is a matter for the discretion of the judge whether a winding-up order should be made on a disputed debt, and… whether he decides the substantive question of debt or no debt. Their Lordships agree with… Gibbs J in Re QBS Pty Ltd [1967] Qd R 218, at p 225:

    “… in every case it becomes necessary for the court to exercise its discretion as to how far it will allow the question whether or not the dispute is bona fide to be explored.””…

52. The test for whether there is a “substantial dispute” has been said to be the same as the test for summary judgment, namely whether the debtor can raise a triable issue on the point, see Vendort Traders Inc v Evrostroy Grupp LLC [2016] UKPC 15 at [§] 1, per Lord Sumption…

Drelle

57. In Drelle, the question… was whether a bankruptcy petition could be founded on a foreign judgment which had not been recognised in England and Wales…

58. The leading judgment was given by Newey LJ… 

    41. “… any use of an unrecognised and unregistered judgment as a “sword”, including presentation of a bankruptcy petition founded on it, is objectionable”…

    61. “A sum for the payment of which a foreign judgment provides is not… to be regarded as so “payable” if the judgment is unenforceable unless and until recognised by a Court in this jurisdiction“…

62. [PTA] the ruling has been granted by the Supreme Court… listed for hearing on 24 June 2026…

64. … the sovereignty rule… should be limited to preclude direct enforcement under the methods by which domestic judgments are carried into effect, e.g…. execution…, arrestment, charging orders and the like. To utilise those remedies [it] is logical that there should be a domestic judgment first. But does that mean that the foreign judgment cannot be relied upon for other purposes… ? It can…be relied upon under… res judicata and issue estoppel… It can be relied upon as the basis of a common law action. [I]t is not clear why reliance on it in the insolvency context should be considered differently. This is especially so considering the… nature of insolvency proceedings as described by Lord Hoffman in Cambridge Gas Transportation Corp’n v Official Committee of Unsecured Creditors of Navigator Holdings [2007] 1 AC 508 at [§§] 14-16:

    “14. The purpose of bankruptcy proceedings… is not to determine or establish the existence of rights, but to provide a mechanism of collective execution against the property of the debtor by creditors whose rights are admitted or established…

    15. … bankruptcy, whether personal or corporate, is a collective proceeding to enforce rights and not to establish them…”….

67. … I consider that I am bound by the decision in Obertor.

69. .. See [§§] 52-58.
    “52. … [s] 6 of the 1968 Act does not prevent reliance on the foreign judgment in the context of winding up proceedings.
    53. To construe [s] 6 of the 1968 Act otherwise would be to add another unnecessary procedural hurdle for judgment creditors seeking winding up orders to jump. That would involve unnecessary further expense, complexity and delay. It would also be inconsistent with expressions of judicial cooperation between the Isle of Man and England and Wales and other jurisdictions…”…

71. … There is no doubt that the winding up process can be invoked by a foreign creditor. Why should a foreign creditor who has obtained a foreign judgment be treated differently, indeed worse, than one who has not?

Jurisdiction

74. Any claim for the enforcement of a foreign judgment at common law must satisfy certain…  criteria. These include that the foreign judgment be for a fixed sum of money, final and conclusive, and that the court… must be regarded… as having had jurisdiction… (Dicey, Morris & Collins on the Conflicts of Laws, 16th Edition, Rules 66-47)…

76. This jurisdictional requirement has four limbs. [See] Dicey’s rule 47 as follows:…

(iii)… If the person against whom the judgment was given, submitted to the jurisdiction of that court by voluntarily appearing in the proceedings.

77. The Claimant relies upon [(iii)], submitting that the Company voluntarily submitted to the foreign court.

78. A useful summary of the… law on voluntary submission can be found in… Shovlin v Careless & ors [2024] EWHC 325 at [§] 6:

    “a) The onus lies on the claimant seeking to enforce the judgment of a foreign court at common law to prove the competence of such court…

    b) … The question whether there has been a submission is to be inferred from all the facts.“

    c) The same general rule applies whether the court is looking at the question of voluntary submission to an English court or a foreign court.

    d) …the… test is to ask whether there has been an unequivocal representation by word or conduct that objection is not taken to the relevant jurisdiction.

    e) … the test… meant that relevant conduct must be unambiguous and unequivocal.

    f) The court must look at all the circumstances and the totality of the conduct.

    g) The assessment of the defendant’s conduct must be undertaken objectively…

    h) Both parties… adopted the test of Goff LJ in The Messianiki Tolmi [1984] 1 Lloyd’s Rep. 266, 270:
    “A party “makes a voluntary submission to the jurisdiction if he takes a step which in all the circumstances amounts to a recognition of the court’s jurisdiction in respect of the claim which is the subject matter of those proceedings…”…

82. … [S]ee [s] 3 of Civil Jurisdiction Act 2001 which provides:
    “3. Certain steps not to amount to submission to jurisdiction of overseas court
    (1) Subsection (2) shall have effect for the purposes of determining whether a judgment given by a court of a country or territory outside the Island should be recognised or enforced in the Island.
    (2) The person against whom the judgment was given shall not be regarded as having submitted to the jurisdiction of that court by reason only of the fact that he appeared (conditionally or otherwise) in the proceedings for all or any one or more of the following purposes, namely
    (a) to contest the jurisdiction of that court…“…

Conclusions

86. … [the Defendant] has raised a genuine and substantial dispute in this regard which I cannot describe as fanciful or intrinsically unrealistic.

87. Has there been an unequivocal representation by word or conduct that objection was not taken to the Illinois court’s jurisdiction? … [M]y picture of the Illinois proceedings is still so far from clear such that I am unable to determine this crucial issue.

88. I am also struck by the very different approach taken in Shovlin, which I consider to be… correct… . Although, determination of the question of jurisdiction was ultimately a matter of English law… the English Court was required to conduct a careful assessment of what took place in the Californian proceedings… . This included consideration of the relevant Californian law and practice regarding general and special appearances. The Court was provided with transcripts of hearings, most of the documents filed and… expert evidence on Californian law from each side who then prepared a joint statement…

91. Although I have found that the Company has raised a genuine and substantial dispute as to jurisdiction, in my opinion that discrete issue can be conveniently determined within these proceedings. In the meantime, the application for a winding-up order will be stayed…

92. I envisage the filing of concise pleadings, disclosure (including full provision of the relevant parts of the record of proceedings), witness statements, expert evidence of Illinois law and, potentially, cross-examination…

94. If the Illinois Court had jurisdiction, winding-up should surely follow. If it did not this claim must fail.”

Note for practitioners: The judgment in Wilton decides whether an unrecognised foreign judgment can found a winding-up claim. It will be interesting to see whether the judgment is challenged [see update below], and what the Supreme Court has to say about Drelle.

[Update: 16.07.26] It appears that this decision will indeed be challenged: see TAL – Corin James Stuart Mews (CHP 26/0007) (16.07.26)

[Update: 09.08.26] The Supreme Court decision in Drelle v Servis-Terminal [2026] UKSC 29 (27.07.26) has overturned the Court of Appeal decision.

Disclaimer: professional advice should be sought before applying any information in a given case.

For advice on Isle of Man civil procedure, or on litigation relating to Isle of Man enforcement or insolvency, contact Coren Law.

See also Coren Law’s Isle of Man civil procedure portal: Click On | Coren Law.

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