Kyiv has secured its right to defend itself in a full-blown trial in London against Moscow’s claims that it owes Russia $3bn for failing to repay a bond issued shortly before Ukraine’s 2014 revolution.
The long-running dispute, which centres on whether or not Ukraine illegally defaulted on $3bn worth of its debt owned by Russia, can be heard in a High Court trial with evidence and witnesses, the UK’s highest court ruled on Wednesday.
The Supreme Court said the dispute would not be determined by summary judgment, a procedure which allows a court to decide a case without trial and where the defence has no prospect of success, as Moscow had requested. The case has been running since 2016, six years ahead of Russia’s full-scale invasion of Ukraine in 2022.
Lord Robert Reed, president of the Supreme Court, said the court had concluded that the validity of Kyiv’s defence that it had issued the bond under duress could not be determined without a trial.
“The success of Ukraine’s defence turns on whether it can establish that Russia threatened the use of force and that those threats were a reason for Ukraine’s decision to enter into the agreement,” he said as he handed down the ruling.
Ukraine’s president Volodymyr Zelenskyy tweeted that the ruling was “another decisive victory against the aggressor”.
“Justice will be ours,” he added.
Kyiv had argued Moscow had used the debt as a “tool of oppression” and that the need to consider the political context of the case meant the capacity of the defence to call witnesses and present evidence was essential.
“All the evidence will be examined and the world will be watching. Ukraine has truth and right on its side,” said Ukraine’s finance ministry in response to the Supreme Court ruling. “In the courts, as on the battlefield, Ukraine will fight Russia until the end.”
Moscow had countered that the legal issues are capable of being decided by the English courts on a summary judgment basis.
The trust corporation acting on behalf of Russia said the Supreme Court had “ruled that none of Ukraine’s defences to the claim is arguable except a limited part of its defence of duress, which Ukraine is now required to amend”. It added: “As required by English law, we take our fiduciary obligations seriously and all action taken to date has been in the proper discharge of those duties.”
The dispute centres around Moscow’s decision to sue Ukraine in 2016 in London’s High Court over the non-payment of $3bn worth of Eurobonds carrying interest of 5 per cent. The notes, covered by English law, were issued in 2013 and matured in 2015.
The dispute reached the UK’s top court in 2019 after Russia appealed a Court of Appeal ruling in 2018 that the matter had to be heard in a full trial. Russia had argued that English judges do not have the authority to adjudicate on such disputes, which are covered by international law and treaties.
Kyiv has claimed that Russia’s actions since 2013 have harmed Ukraine’s capacity to repay the debt. Moscow had applied “massive, unlawful and illegitimate economic and political pressure” since then, according to Ukraine’s case, to prevent pro-Russian president Viktor Yanukovych from signing an agreement with the EU.
The refusal of Yanukovych, who was ousted in 2014, to sign the agreement with the EU forced the country to pivot to Russia for financial support, Kyiv has said.
No date has yet been set for a trial.
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