Fountain Court Chambers

London & Singapore

Bankim Thanki QC and Simon Atrill succeed for Ukraine in $3bn Eurobond dispute with Russia in Court of Appeal

The Court of Appeal has today handed down judgment 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.

Ukraine disputes the validity of the loan on various grounds, principally on the grounds of duress arising from Russian aggression (including with regard to Crimea and the eastern Ukraine) leading up to the entry into the loan 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 and the capacity of states to contract, and will undoubtedly be the leading case on the application of those principles in a commercial context.

The Court of Appeal (Gloster, Sales and David Richards LJJ) in allowing Ukraine’s appeal has unanimously overturned the decision of Mr Justice Blair, and 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 reversed the Judge on Ukraine’s alternative case, and has 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. The interim payment on account of costs in favour of Russia ordered by Blair J has been ordered to be repaid to Ukraine.

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 is available here.