03:24, July 27 176 0

2017-07-27 03:24:08
Ukraine $3bn sovereignty struggle with Russia delayed until 2018

The High Court has ruled that Ukraine will not be forced to pay Russia $325m in security for costs as the ongoing battle over a $3bn loan is delayed until January 2018.

In the latest twist in one of The Lawyer’s Top 20 cases of 2017, Mr Justice Blair granted a stay of enforcement on an earlier judgment that permitted Ukraine to appeal the loan repayment to The Law Debenture Trust, which is bringing the claim on behalf of Russia.

The Law Debenture Trust sought to persuade Blair J that the the stay should be subject to the condition that Ukraine pay $325m in advance in the event that Ukraine loses the appeal and Russia is unable to enforce the judgment in Ukraine.

Blair J refused to grant the condition on the grounds the the trustee “is not prejudiced by the delay in enforcement should the appeal fail and judgment remain unpaid, as might be the case with a company”.

The Law Debenture Trust was represented by Norton Rose Fulbright partner Michael Godden, who instructed Brick Court’s Mark Howard QC and Oliver Jones.

Quinn Emanuel Urquhart & Sullivan partner Alex Gerbi is defending Ukraine and has instructed Fountain Court’s Bankim Thanki QC and Simon Atrill, along with Essex Court’s Malcom Shaw QC.

Indeed, the battle is between two warring countries, despite Russia bringing its claim through a British-based, London Stock Exchange-listed private company. It is not the first time the complex case has been subject to delay.

In March, Blair J ruled that it “would not be right” for the $3bn bond case bought by the Law Debenture Trust to proceed to a full trial on the grounds that Ukraine had  “no justiciable defence”.

He ruled that it was outside the remit of the English courts to decide on “transactions entered into by independent sovereign states between themselves on the plane of international law”. Although he said the background to the loan was “extraordinary” – “troubling”, even – Russia could still prove on technical points of law that this was a loan entered into under English law.

Unusually, Blair J granted a stay of execution, which was lifted on 26 May when the Financial List of the High Court heard further consequential matters on the judgment. It was expected that Ukraine would have to pay some of the costs incurred, but the judge ruled today that Russia would only be granted indemnity costs.