Asters acted as local Ukrainian counsel for Ukraine in Eurobond dispute with Russia

Asters acted as local Ukrainian legal counsel for Ukraine in the USD 3 billion Eurobond dispute with Russia where Ukraine has scored an important victory. The English Court of Appeal has handed down judgment in the latest hearing of the ongoing dispute commenced by the Trustee, The Law Debenture Trust Corporation plc, against Ukraine regarding its alleged debt under USD 3 billion bonds purportedly issued by Ukraine in 2013 and 100% taken up by the Russian Federation.

Ukraine disputes the validity of the loan on various grounds, principally on the grounds of duress arising from Russian threats and 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 English case on the application of those principles in a commercial context.

The English Court of Appeal (Gloster, Sales and David Richards LJJ) has unanimously overturned the decision of Mr Justice Blair of the English High Court, 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 Court of Appeal granted both parties permission to appeal to the Supreme Court.

Asters acted as local Ukrainian counsel and assisted Quinn Emanuel Urquhart & Sullivan UK LLP, the lead counsel to Ukraine. Asters’ team working on this project was led by partner Svitlana Chepurna and included counsel Oksana Legka and associates Kateryna Kylyvnyk and Olena Nikolenko under the general direction of the firm’s managing partner Oleksiy Didkovskiy and senior partner Armen Khachaturyan.


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