UK Supreme Court: trial must decide if $3B Ukraine loan from Russia was taken under duress News
© WikiMedia (Tom Morris)
UK Supreme Court: trial must decide if $3B Ukraine loan from Russia was taken under duress

The UK Supreme Court Wednesday ruled that a full public trial must be held to evaluate Ukraine’s “arguable and justiciable defence of duress” in relation to a $3 billion debt the nation owes to Russia.

In 2013, Ukraine issued Eurobonds to Russia worth $3 billion, effectively a loan by Russia to Ukraine repayable in December 2015. On Wednesday, the UK Supreme Court again determined that this issue is not amenable to summary judgement, a mechanism through which a court may decide a case without trial when the defence has no real prospect of success.

In their written opinion, Lord Reed, Lord Lloyd-Jones and Lord Kitchin stated:

We conclude that Ukraine’s defence of duress, so far as based on the threats of the use of physical violence towards Ukraine’s armed forces and civilians, and the threats of damage to, or destruction of, Ukrainian property […] cannot be determined without a trial. On that ground alone, the Trustee is not entitled to summary judgment.

Speaking on the decision, President of Ukraine Volodymyr Zelenskyy tweeted that “Ukraine secured another decisive victory against the aggressor […] Justice will be ours.”

Ukraine initially made some payments but failed to repay the debt in 2015. Trustees involved then issued proceedings to claim the sums owed to Russia. In response, Ukrain filed a defence on several grounds, arguing:

  • Ukraine lacked capacity to enter into the transaction as a matter of Ukrainian law;
  • The Minister of Finance lacked authority to enter into the transaction;
  • Ukraine was entitled to avoid this transaction because of duress arising from Russia’s unlawful and illegitimate threats and pressure, including restrictive trade measures and threats to Ukraine’s territorial integrity and independence; and
  • Ukraine was entitled to rely on the public international law doctrine of countermeasures to decline to make the payments.

In response, the trustee applied for summary judgment, and a trial court granted the application. As of Wednesday, that grant has been overturned.

This legal victory comes in stark contrast to recent comments by the Kharkiv Human Rights Protection Group, calling for Russia’s sham trials to be considered null and void for international law violations.