The Supreme Court has today handed down judgment in the dispute between Ukraine and the Russian Federation concerning an alleged US $3 billion loan made to Ukraine through the issuance of Eurobonds in 2013, as part of a US$ 15 billion loan programme:  UKSC 11. Bankim Thanki KC, Ben Jaffey KC and Simon Atrill appeared for Ukraine in two hearings before the Supreme Court in December 2019 and November 2021.
Ukraine disputed the validity of the loan on various grounds, principally on the ground of duress arising from threats of Russian aggression (as eventuated shortly afterwards in Crimea and eastern Ukraine). 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 raised novel issues concerning the non-justiciability/foreign act of state principle and the capacity of states to contract.
The Court of Appeal (Lady Justice Gloster, Vice-President of the Court of Appeal Civil Division, Lord Justice Sales and Lord Justice David Richards) had allowed Ukraine’s appeal, overturning the decision at first instance of Mr Justice Blair, and found that Ukraine’s defence of duress was justiciable and should be the subject of a trial in the Financial List:  QB 1121. The Supreme Court (Lord Reed PSC, Lord Hodge DPSC, Lord Lloyd-Jones JSC, Lord Kitchin JSC and Lord Carnwath JSC) has today dismissed Law Debenture’s appeal from the decision of the Court of Appeal on the basis of Russia’s threats of physical duress: . In a partially dissenting judgment Lord Carnwath would have allowed Ukraine to defend the action on a broader basis, including through the deployment of the defence of countermeasures under public international law in respect of the subsequent conduct of Russia. Ukraine’s cross-appeal seeking to affirm the Court of Appeal’s decision on other grounds, including capacity and authority, was also dismissed: .
At any trial the onus will now be on Russia to show that its threats of aggression contributed nothing to Ukraine’s decision to enter the transaction: majority at .
Bankim Thanki KC, Ben Jaffey KC and Simon Atrill were instructed by Quinn Emanuel Urquhart & Sullivan UK LLP (Alex Gerbi) on behalf of Ukraine. Norton Rose Fulbright LLP act for The Law Debenture Trust Corporation plc and instructed Mark Howard KC and Oliver Jones of Brick Court Chambers.