Bankim Thanki QC and Simon Atrill (with Ben Jaffey QC) have appeared for Ukraine in the Supreme Court, in the latest hearing of the ongoing dispute between Ukraine and the Russian Federation concerning an alleged $3 billion loan made to Ukraine through the issuance of Eurobonds in 2013. After the 4-day hearing, commencing on 9 December 2019, judgment was reserved and is expected in 2020.

Ukraine disputes the validity of the bonds contracts on various grounds, including on the grounds of duress arising from Russian threats and acts of aggression towards Ukraine leading up to the entry into the contracts and beyond.  Russia’s claim is brought by The Law Debenture Trust Corporation plc as trustee under the Eurobonds, acting at Russia’s direction and for its benefit.  The case raises novel issues concerning the non-justiciability/foreign act of state principle, the capacity of states to contract including with respect to sovereign debt and the application of principles of ostensible authority of agents. It will undoubtedly be the leading case on the application of those principles in a commercial context.

In September 2018 the Court of Appeal (Gloster, Sales and David Richards LJJ) found that Ukraine’s defence of duress is justiciable and should be the subject of a trial.  (Mr Justice Blair had already commented in the first instance judgment that, on the facts, Ukraine’s defence of duress was “strong”.) The Court of Appeal also found that if the duress defence were non-justiciable that would require a stay of the proceedings since the claim could not be fairly adjudicated without considering Ukraine’s defence.

Bankim Thanki QC, Ben Jaffey QC and Simon Atrill are instructed by Quinn Emanuel Urquhart & Sullivan UK LLP (Alex Gerbi) on behalf of Ukraine.  Norton Rose Fulbright LLP (Michael Godden) act for The Law Debenture Trust Corporation plc and instructed Mark Howard QC and Oliver Jones of Brick Court Chambers.

The full text of the judgment of the Court of Appeal is available here.