The English Court of Appeal has today given its long awaited judgment in Ukraine’s appeal against the Summary Judgment entered in Russia’s favour in March 2017 by Mr Justice Blair in the case concerning the so called Russian debt. The decision to reverse Summary Judgment and permit Ukraine to argue its case before the court of first instance represents a significant victory for Ukraine.
The Judgment of the Court of Appeal was delivered following the hearing of Ukraine’s appeal held in London from 22 to 26 January 2018. The appeal justices hearing the appeal, and who have now released their unanimous verdict, are Lady Justice Gloster (then Vice President of the Court of Appeal, Civil Division), Lord Justice Sales and Lord Justice David Richards.
The Court of Appeal has issued a fully reasoned written judgment which is publicly available.
In a unanimous decision in favor of Ukraine all three Judges of the English Court of Appeal agreed that the first instance judge was wrong:
(1) to decline to permit Ukraine’s defence of duress to proceed to trial; and
(2) to refuse to grant Ukraine a permanent stay of the proceedings if Ukraine’s defence of duress could not be adjudicated by the English Court.
Ukraine has therefore succeeded in its appeal and the Summary Judgment of Mr Justice Blair is to be set aside.
Russia tried every argument to avoid being held accountable for its behavior. But the Court of Appeal has ruled unanimously that Ukraine’s case should go to a full public trial before the English Court.Ukraine argues that the alleged contracts for the Russian bonds are void and unenforceable because of Russia’s wanton threats and acts of political and military aggression towards Ukraine.
Ukraine welcomes this important outcome, which reflects the strength of the case that Ukraine has made at this stage in the proceedings.
The Court of Appeal Condemns Russia’s Acts Towards Ukraine
As the Court of Appeal held in its judgment, Russia “presses the court to determine the contract claim…without Ukraine being able to defend itself by raising its defence of duress at trial”. Such a course, which Russia chose, has been held by the Court to be contrary to “basic justice” and “unjust”.
Among the reasons cited by the Court for rejecting Judge Blair’s belief that he could not hear Ukraine’s defence of duress is that “no country should be able to take advantage of its own violation” of international law.
In this connection the Court expressly reflected in its Judgment that the government of the United Kingdom “regards the activities of Russia in seizing the Crimea and assisting military action by insurgents in Eastern Ukraine against the Ukrainian government as being in clear violation of Russia’s obligations under international law, including in particular its obligations under the norm of ius cogens reflected in Article 2(4) of the UN Charter“.
Aspects of the Appeal on which Ukraine did not Succeed
The Court of Appeal upheld the Summary Judgment of Mr Justice Blair in respect of Ukraine’s defences based on capacity, authority, implied terms and countermeasures, and also agreed with the first instance Judge that there are no other compelling reasons for the case to go to trial.
However, as Ukraine has secured victory in overturning the adverse decision of Mr Justice Blair on the duress defence, the Summary Judgment is to be set aside even though Ukraine did not win on all points. There will be no judgment entered against Ukraine by the Court of Appeal which has decided that the case on duress should go to a full public trial.
The outcome of consideration of Ukraine's appeal against the first-instance English court Judgment is that:
- Ukraine has won on the point that its duress defence must be heard at a full trial, as well as on the point that the proceedings must be permanently stayed if the English Court were to conclude that Ukraine's duress defence is not justiciable.
- Ukraine has lost on the issues of capacity, authority, implied terms and countermeasures, as well as on the issue as to whether there are any other compelling reasons for the case to go to trial.
As a result, the Summary Judgment of the first-instance English Court is set aside in full.
Acting Minister of Finance Markarova Comments on the Judgment
According to Ms Oksana Markarova, the Acting Minister of Finance of Ukraine:
“The unanimous findings of the Court of Appeal mean that Ukraine will have a full opportunity to prove at trial its long held position that the contracts for the $3 billion Eurobonds are invalid and unenforceable. This is because of the egregious threats and acts of aggression perpetrated against Ukraine by Russia not only in the lead up to and which procured the entry of the relevant contracts, but also in the period after their entry and continuing until the present day. Ukraine welcomes the opportunity to make a full evidentiary showing concerning Russia’s unlawful actions. Russia must be held accountable for its internationally wrongful acts and the English Court has made clear that it will not shy away from doing so.“
The Ministry of Finance is grateful to its advisory team for their long professional work aimed at defending Ukraine's rights and interests in this case. Ukraine is represented by lead counsel Alex Gerbi of international litigation firm Quinn Emanuel Urquhart & Sullivan, UK LLP, English barristers Bankim Thanki QC, Ben Jaffey QC and Simon Atrill, and partner Svitlana Chepurna of Ukrainian law firm Asters.
So far as Ukraine understands, the Court of Appeal has granted permission to both sides to appeal the to the UK Supreme Court.
Ukraine is confident that it will persuade that court to recognise and uphold the findings of the Court of Appeal. In either case, Ukraine looks forward to the opportunity of bringing its case and evidence concerning Russia’s wanton acts of aggression to a full public trial before the English Court in due course.