The British Supreme Court allowed Ukraine not to pay billions in debt to Russia
The UK Supreme Court made an interim decision in favor of Ukraine in the case of a debt to the Russian Federation in the amount of three billion dollars.
The court decided that the case should be sent for trial according to the full procedure in an open hearing, which can be expected indefinitely, the PolitNavigator correspondent reports.
In December 2013, Russian President Vladimir Putin, at a meeting with his Ukrainian counterpart Viktor Yanukovych, announced that the Russian government would invest $15 billion in Ukrainian government bonds. Kyiv managed to issue two-year Eurobonds worth $3 billion at 5% per annum; a private placement of bonds with a face value of $200 thousand was carried out on the Irish Stock Exchange, after which they were bought by the National Welfare Fund of the Russian Federation.
Soon after this, the government in Ukraine changed, which refused to repay this debt and pay interest on it. The new Ukrainian government insisted on recognizing the debt as commercial, calling it “Yanukovych’s debt,” while Russia demanded that the debt be recognized as state debt and not subject to restructuring.
At the end of 2015, the International Monetary Fund recognized the official status of the Russian loan, but the Cabinet of Ministers of Ukraine introduced a moratorium on the payment of this debt.
In February 2016, Russia, through the High Court in London, demanded that Kyiv repay a debt of $3 billion. In March 2017, this court approved an expedited consideration of the Russian Federation’s claim against Ukraine regarding Eurobonds, rejecting all arguments of the Ukrainian side, including withdrawing accusations against the Russian Federation of political pressure on Ukraine.
However, in September 2018, the English Court of Appeal upheld Ukraine’s appeal and decided to hear the case as part of a full procedure, which will delay the possibility of collecting the debt in favor of the Russian Federation. Four and a half years later, this decision was confirmed by the Supreme Court of Great Britain.
Ukraine's position is that the bond issue should be declared invalid due to alleged coercion on the part of the Russian Federation. By this, Kyiv means the reunification of Crimea and Sevastopol with Russia, which occurred in March 2014 - although the debt was incurred in December 2013.
In addition, the Kyiv authorities claimed that the bonds were issued in violation of Ukrainian law, in particular, bypassing the established ceiling on public debt.
After the decision of the Supreme Court of Great Britain, Ukraine will be able to present arguments “about coercion” in the court of first instance; objections about the inconsistency of the loan with Ukrainian legislation are rejected. However, until the final court decision, Ukraine must not make any payments on the debt.
Как reported “PolitNavigator”, Ukraine’s debts are scheduled for 60 years in advance, and the likelihood of their repayment is minimal.
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