Written by Dipti Hunter Last Updated: 7 October, 2026Introduction
Foreign lawyers, insolvency practitioners and award creditors may assume that transactions involving foreign companies, foreign assets and foreign individuals must be challenged in the jurisdiction where those assets are located. The Commercial Court’s decision in The State Oil Company of the Republic of Azerbaijan & Ors v Mubariz Mansimov & Ors [2026] EWHC 2102 (Comm) demonstrates that the position may be more nuanced.
The decision confirms the potential breadth of section 423 of the Insolvency Act 1986 (IA 1986). Although the impugned transactions concerned foreign parties and foreign assets, the Court was prepared to permit the section 423 claim to proceed because the underlying dispute arose from English-law agreements and London-seated arbitrations.
The dispute reached the Court on the defendants’ application to set aside permission for service out of the jurisdiction. The claimants established a serious issue to be tried, a good arguable case within a jurisdictional gateway and that England and Wales was the appropriate forum. The defendants did, however, obtain important clarification of the limits of the Marex tort.
Although interlocutory, the judgment contains important observations on the evidential requirements for section 423 claims, the jurisdictional reach of the provision and the remedies available to creditors pursuing enforcement strategies following London-seated arbitrations.
Why This Matters
- English courts may scrutinise foreign asset transfers even where the parties, assets and transactions are located abroad.
- Section 423 may provide a powerful remedy where transactions are intended to place assets beyond creditors’ reach or prejudice their interests.
- English-law obligations and London arbitration agreements may provide the necessary connection with England.
- Award creditors should consider remedies beyond straightforward recognition and enforcement proceedings.
- Early investigation, preservation of evidence and careful analysis of chronology may materially improve recovery prospects.
Background
The claimants, including The State Oil Company of the Republic of Azerbaijan (SOCAR), obtained two awards arising from London-seated arbitrations (the Awards). They alleged that a series of restructurings within the Palmali group (the Group) transferred valuable interests for little or no consideration in order to place assets beyond creditors’ reach and frustrate future enforcement.
The restructurings took place in April 2018, June 2018 and February 2020. The parties accepted that substantial corporate reorganisations occurred. The principal issue concerned the purpose and effect of those transactions.
SOCAR argued that the transfers formed part of a wider strategy to shield assets from claims under English-law contracts and prospective arbitral awards. The defendants contended that commercial necessity drove the restructurings. They relied on evidence of financial distress within the Group, pressure from Turkish lenders and the consequences of criminal proceedings involving Mr Mansimov in Turkey.
The Awards were not made until January and February 2021. That chronology became critical to the Court’s analysis of the Marex claim.
Section 423 IA 1986
The judgment reinforces the flexibility and utility of section 423 in a cross-border context. Section 423 focuses on purpose rather than insolvency. A claimant must establish that the transaction took place for the purpose of putting assets beyond creditors’ reach or otherwise prejudicing their interests.
The parties agreed that the claimants would ultimately need to establish transactions at an undervalue, a prohibited statutory purpose, prejudice to the claimants and an appropriate basis for relief. The defendants challenged the allegations of undervalue, disputed the alleged purpose and argued that the case lacked a sufficient connection with England.
Undervalue
The claimants submitted that the relevant interests, transferred for no or nominal consideration, possessed significant value. They relied on forensic accounting evidence analysing the Group’s historic financial information and corporate structure.
The defendants highlighted liquidity pressures and alleged insolvency within the wider Group. The Court nevertheless recognised the distinction between financial pressure affecting a corporate group and the value of individual assets or subsidiaries transferred as part of a restructuring.
The claimants’ accounting evidence established a real dispute. It identified continuing trading activity, debt-reduction measures and material suggesting that certain transferred entities possessed substantially greater value than the consideration paid. The Court also noted evidence indicating that one transferred company may previously have had a value significantly exceeding the transfer consideration. Those questions could only properly be determined at trial.
For arbitration and enforcement practitioners, the practical point is that claimants do not need to prove valuation conclusively at the interlocutory stage. They must, however, put forward coherent evidence capable of demonstrating that the transferred assets may have possessed meaningful value.
Purpose
The Court also accepted that the claimants had established a serious issue to be tried on purpose. It recognised that businesses frequently reorganise for legitimate commercial reasons.
However, the timing of the restructurings, transfers for nominal consideration, inconsistencies concerning beneficial ownership and the absence of convincing contemporaneous explanations collectively justified closer scrutiny.
The defendants maintained that lenders effectively required the restructurings, but produced little contemporaneous material supporting that account. The absence of lender correspondence, board papers, facility documentation and restructuring records weakened the evidential force of the explanation.
There was also evidence suggesting that Mr Mansimov may have continued to exercise influence over assets notwithstanding the restructuring. These matters potentially supported an inference that the transactions pursued a purpose beyond ordinary commercial reorganisation.
Importantly, the Court did not determine that the defendants had acted dishonestly or with an improper motive. It held only that the claimants had assembled sufficient evidence to justify a trial.
The Cross-Border Reach of Section 423
The most commercially significant aspect of the decision is the Court’s approach to jurisdiction. The transactions concerned foreign companies, foreign parties and foreign assets, and the relevant transfer documents did not depend on English law. At first sight, the dispute appeared to have only a limited connection with England and Wales.
However, the underlying commercial relationship pointed towards England: the parties had entered into English-law agreements and selected London arbitration as their dispute-resolution mechanism.
By the time many of the challenged restructurings occurred, arbitration proceedings had commenced or were objectively foreseeable. If the allegations are proved at trial, the restructurings were undertaken to frustrate rights arising from an English arbitral process.
The Court accepted that pre-existing English-law obligations and London arbitration agreements could provide a sufficiently strong jurisdictional nexus for a section 423 claim, even where the parties, assets and transactions were foreign. For award creditors, this reinforces the potential role of the English courts in challenging transactions allegedly designed to undermine London-seated arbitration.
The Limits of the Marex Tort
While the claimants preserved their section 423 claim, they encountered a significant obstacle in relation to the Marex tort. The Court distinguished interference with existing judgment or award rights from conduct occurring before those rights crystallised.
The restructurings occurred in 2018 and February 2020. The Awards followed in January and February 2021. At the time of the challenged transactions, no award rights existed.
That chronology was fatal to the Marex claim. A defendant cannot procure a breach of rights that do not yet exist. The tort protects existing judgment or award rights, not anticipated rights that may arise from future litigation or arbitration.
The Court declined to extend the tort into territory occupied by established causes of action, including inducing breach of contract. Before an award is made, the relevant rights remain contractual. After an award, they take a different juridical form.
The ruling therefore imposes chronological discipline on creditors and their advisers. They must identify the precise legal right existing at the time of the impugned conduct and align their causes of action accordingly. It also underlines the importance of alternative pleading: a court will not rescue an inadequately pleaded claim by reformulating it during a jurisdiction challenge.
Practical Lessons for Foreign Lawyers and Insolvency Practitioners
- Analyse each transaction separately. Identify the asset, consideration, contemporaneous value, transferee and stated commercial rationale.
- Secure contemporaneous evidence early. Board minutes, lender communications, restructuring proposals, facility documents and ownership records may be critical to purpose.
- Address jurisdiction from the outset. An English-law relationship and London arbitration agreement may provide a stronger basis for establishing the necessary connection with England.
- Test chronology against every proposed cause of action. The date of the transfer, commencement of proceedings and creation of judgment or award rights may determine which claims are available.
- Coordinate across jurisdictions. English proceedings may form one part of a wider strategy involving local asset investigations, interim relief, insolvency remedies and enforcement.
Conclusion
SOCAR v Mansimov is an important development for creditors pursuing international enforcement and asset-recovery strategies. It demonstrates that section 423 may be available where cross-border restructurings are alleged to have frustrated English-law rights and London-seated arbitral awards.
The decision also shows the value of rigorous forensic preparation. The claimants advanced a coherent evidential case on value, purpose and connection with England. Conversely, the apparent absence of contemporaneous restructuring records, lender communications and ownership evidence created difficulties for the defence.
At the same time, the Court drew a clear boundary around the Marex tort. Creditors cannot invoke it merely because a debtor dissipated assets before a judgment or award existed. The relevant rights and causes of action must be identified by reference to the chronology.
For foreign lawyers, insolvency practitioners, office holders and award creditors, the key message is that remedies in England should be considered early, even where the parties, assets and transactions are located elsewhere. Success will depend on careful pleading, transaction-specific evidence and a disciplined focus on jurisdiction and chronology.
Discussing a cross-border recovery strategy
Summit Law LLP works with overseas lawyers, insolvency practitioners, office holders and creditors on English-law aspects of cross-border disputes, including:
- section 423 and other asset-recovery claims;
- asset tracing and enforcement strategy;
- recognition and enforcement of judgments and arbitral awards;
- insolvency-related litigation; and
- fraud and shareholder disputes.
If a client, estate or office holder is facing suspected asset dissipation or an enforcement problem with an English connection, please contact Jeremy Boyle or Dipti Hunter to discuss the available options. Early, confidential input may help identify the most effective route before assets or evidence move further.
