English Court Permits Ukraine to Appeal in Court Proceeding Regarding So-Called Russian Debt

3/29/17

Today the High Court of Justice in London handed down its judgment in respect of the application for summary judgment brought by the Trustee, The Law Debenture Trust Corporation, in the claim it is bringing, at the direction of the Russian Federation, against Ukraine relating to the US$ 3 billion Eurobonds (the so-called "Russian debt").

The judgment was delivered as an outcome of the hearings held on 17 – 19 January 2017.
The Judge provided a judgment which was only received by the parties for the first time at today’s hearing. Ukraine will therefore be taking time to consider the full judgment and its consequences in detail with its team of advisors over the coming days.

The crux

The English Court has not supported the position of Ukraine with respect to the so-called Russian debt, but it has permitted an appeal. Ukraine respects this decision which was handed down in the context of very complex and uncertain law.

Furthermore, we welcome the fact that the Judge has recognised the acts of economic and military aggression that have been perpetrated by Russia against Ukraine and its people on a continued, indeed escalating basis since 2013, as also recognised and condemned by the international community.

The Judge clearly described the acts of economic, political and military aggression perpetrated by Russia against Ukraine as “deeply troubling”. As the Judge stated, “…there is much material before the court substantiating Ukraine’s case as to Russian pressure and ultimately military action…”, “Ukraine’s case as to the threats made is credible, and has not been answered [by Russia]” and “…Ukraine has made out a strong case that economic pressure applied by Russia … along with threats led to its Government’s decision not to sign the EU Association Agreement at the Vilnius Summit on 28 November 2013, and to accept Russian economic support instead…” [as a so-called loan].

The Judge also expressly recognised that “…Ukraine can powerfully contend that military action by Russia in Crimea and eastern Ukraine has the economic effect of severely impeding the State’s ability to meet its obligations under the Notes.”

The Judge also acknowledged that the essence of this case was not a “clear one” but “an issue of difficulty”. Despite this, the Judge found that he was prohibited by English legal doctrine specifically relating to the competence of the English courts to adjudicate in the sphere of high international politics, from taking Russia’s illegal actions and the ‘duress’ by Russia into consideration as part of Ukraine’s defence. As the Judge recognised, were it not for that legal doctrine, Ukraine’s case “is plainly a strong one”.

In short, the Judge recognised that Ukraine’s case was strong and had merit. However, the Judge ultimately decided to apply certain technical rules of English law to determine the application against Ukraine.

What next?

The Judge allowed the request of Ukraine to appeal to the Court of Appeal, granting Ukraine general permission to appeal on all issues.

The Judge also granted Ukraine's request for a provisional suspension of execution of the handed down judgment.

It is important for us that the English Court has recognised the wrongful and egregious acts perpetrated by the aggressor state against Ukraine and its people.

This decision was the first stage. Ukraine will continue defending its case and protecting the state interests consistently using all avenues available to it under English law.

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