UK court sides with Ukraine over bond default battle with Russia

Kiev’s defense that it accepted a $3 billion loan from Moscow under duress will go to full trial

The UK Supreme Court has decided to send a case concerning Ukraine’s unpaid debt to Russia to a full trial, it was announced on Wednesday.

The case focuses on $3 billion in Eurobonds that Moscow lent Kiev in 2013, which Ukraine later refused to pay, claiming it was a political credit that the country had been forced to take.

According to the Supreme Court’s ruling, Kiev will be permitted to defend its claim at trial before the High Court “because Ukraine had an arguable and justiciable defense of duress.”

Russia had sought a so-called summary judgment, a simplified procedure which enables the court to decide a claim without a trial.

Ukrainian President Vladimir Zelensky hailed Wednesday’s ruling as a “victory.”

The hearing in the case was held in November 2021, and, according to a press release, the Supreme Court was not asked to consider Russia’s military operation in Ukraine in considering its judgment.

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Moscow lent the money in the form of a Eurobond to Kiev in December 2013, during the presidency of Viktor Yanukovich, who was ousted in the Euromaidan coup a year later.

After Ukraine failed to repay the notes by late 2015, Russia brought a lawsuit in the English courts, as Eurobonds are governed by English law. The case has a long history of appeal judges overturning lower court rulings.

A previous High Court ruling in 2017 stated that Ukraine had failed to offer a “justifiable” or court-ready defense for not paying back the $3 billion lent to it by Russia. The judge refused to send the case to a full trial. Kiev appealed the decision.

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