Ukraine hails early 'victory' over Russia in Eurobond case

The UK Supreme Court ruled on Wednesday that Ukraine can mount a defense against a Eurobond lawsuit brought by Russia.

Judges in London rejected a bid by a Russian-backed investment trust to throw out Ukraine's case — that it had to accept the money in the face of Russian aggression. 

What was case about?

The lawsuit was brought in 2016 and long predates Russia's 2022 invasion of Ukraine. It centers on billions of dollars borrowed from Moscow by pro-Russian Ukrainian President Viktor Yanukovich, months before he was toppled in a popular uprising in February 2014 and shortly before Russia's annexation of Crimea from Ukraine.

The court decision hinged on Ukraine's assertion that Moscow's threats of military force amounted to illegitimate pressure on Ukraine to assume the $3 billion (€2.8 billion) debt in 2013. The ruling allows Ukraine to stave off any further repayments.

Kyiv celebrates judges' decision

Ukrainian President Volodymyr Zelenskyy hailed a "decisive victory" against Russia in the UK Supreme Court.

"Today Ukraine secured another decisive victory against the aggressor," Zelenskyy wrote on Twitter. "The Court has ruled that Ukraine's defense based on Russia's threats of aggression will have a full public trial. Justice will be ours."

Other Ukrainian officials also celebrated the court's decision. Prime Minister Denys Shmyhal called it a "victory of justice and the rule of law" on Twitter, while Foreign Minister Dmytro Kuleba tweeted about "great news in the legal arena."

"The case will now go back into the merits, and we will persist in defending our position," Kuleba said.

What are the positions of Ukraine and Russia?

Ukraine says the debt was procured by duress, including unlawful trade measures to deter the country from signing an association agreement with the European Union and threats to its territory.

Lawyers representing Russia had told the court in 2019 that the "geopolitical dispute" between Ukraine and Russia at the time of the contract had nothing to do with whether the debt was enforceable.

A lower court in the UK had endorsed Russia's attempt to throw out the Ukrainian defense. But that was overturned on appeal, and a panel of five judges on the Supreme Court unanimously sided with Kyiv, agreeing with the appeals court that Ukraine has "an arguable and justiciable defense of duress".

Now the Eurobond case will now go to a full public trial. No trial date has been set yet.

"The success of Ukraine's defense 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," Judge Robert Reed, the court's president, said when announcing its decision.

"That question can only be determined after trial," he added.

Reed also said the appeal "was heard before Russia's invasion of Ukraine last year and neither party has argued that the invasion is of any relevance to our decision".

dh/rc (AFP, Reuters)