On December 17, 2013, in Moscow, President Yanukovych signed an agreement on a $ 15 billion loan from Russia. The $ 3 billion loan was to be the first tranche of the loan. According to the agreement, the provision of funds was not direct. Ukraine has issued Eurobonds under a Russian loan. The parties have previously agreed that all disputes will be resolved under British law.
After Viktor Yanukovych fled Ukraine in February 2014 to Russia, given the catastrophic state of public finances, the new Ukrainian government began negotiations on external debt restructuring. In autumn 2015, long and difficult negotiations culminated in an agreement to restructure the payments of 13 of the 14 issues of Ukrainian Eurobonds worth $ 18 billion. All bondholders except Russia agreed to the terms offered by Ukraine. As the loan negotiations were held at the highest level, Russia insisted that the debt was public. The Russian authorities have stated that Kyiv's inability to pay will mean default on its official debt and, therefore, could lead to the cessation of IMF lending to Ukraine. Stopping lending is possible because, according to IMF rules, countries that do not repay public debt, cannot count on fund loans. The maturity of Eurobonds owned by Russia coincided in December 2015. But in December, the IMF decided to change these rules, agreeing, as IMF spokesman J. Rice put it, to change the policy of "intolerance of sovereign debt."At the same time, the IMF recognized a $ 3 billion public debt. On December 18, 2015, the Ukrainian government announced a moratorium on payments on these Eurobonds. In February 2016, the Ministry of Finance of the Russian Federation filed a lawsuit in the High Court of London to recover from Ukraine a debt of $ 3 billion in the form of Eurobonds.
A hearing was held in London on January 17-19. Lawyers from both countries appeared in court: Russia was represented by M. Howard, and Ukraine by B. Tanki.The Ukrainian side argued in court that, first, the loan was taken under pressure from Russia, which demanded that Ukraine renounce the association agreement with the European Union, in addition, the Yanukovych government, agreeing to this loan, violated the budget law, which was the borrowing limit per year is set. Secondly, from Ukraine's point of view, Russia's further actions - the annexation of Crimea and support for the war in Donbas - give Kyiv a legitimate reason to refuse to pay. TheIn turn, M. Howard, arguing, referring to various precedents, that the High Court should not take into account the relationship of sovereign countries when considering a loan case. «International laws and obligations are not part of the laws of England and therefore do not apply. There are no strong arguments in Ukraine to defend its position. "The representative of Ukraine also substantiated his counter-evidence with various precedents in the form of court decisions and showed that in some cases the English court took into account aspects related to international law. "The conditions of these bonds are unusual and severe, and these conditions show the pressure Ukraine was under. The agreement on these terms was reached in an unusual hurry, hence the violation of the laws of Ukraine in the design, "- said B. Tanki. Ukraine continues to call the loan a" bribe "of the Kremlin to the former Ukrainian government and does not recognize it as a sovereign debt.Judge W. Blair thanked the parties for their views and for their "very helpful remarks."
On March 29, the High Court of London approved an expedited consideration of Russia's lawsuit against Ukraine for Eurobonds worth $ 3 billion. The judge rejected all arguments of the Ukrainian side, including removing charges of political pressure on Ukraine. The court found that the transaction was a standard debt transaction, albeit an unusual one. The court ordered Ukraine to pay Russia the nominal value of Eurobonds of $ 3 billion, the amount of the unfulfilled coupon payment of $ 75 million, as well as penalty interest accrued in the amount of $ 674 thousand for each day of delay. As a result, Kyiv filed an appeal against the decision of the High Court of London. The court granted permission to appeal. The then Minister of Finance O. Danyliuk stated that the decision of the High Court of London on the "so-called Russian debt" does not recognize the position and arguments of Ukraine in this case."We respect this decision, but we rightly believe that such a decision does not take into account the objective facts of economic and military aggression against Ukraine and its people, which Russia has been continuously carrying out since 2014."On May 26, 2017, Judge W. Blair extended the deadline for filing an appeal with Ukraine for 14 days (from June 9, 2017 to June 23, 2017). On June 10, the Ministry of Finance filed an appeal with the court. September 14The Court of Appeal of Great Britain sent for reviewhigher instance of the case and thus satisfied the complaint of Kyiv, which stated that the court of first instance erroneously did not consider the arguments of the Ukrainian side. The Court of Appeal ruled that the trial court should hear the case in full. The legitimacy of Ukraine's refusal to consider three of the four grounds stated by it in order to avoid fulfillment of obligations under these Eurobonds was also confirmed. At the same time, the court stated that the fourth argument that the issue of Eurobonds was made under pressure from Russia could not be rejected without a comprehensive trial. Both sides appealed the decision to the Supreme Court.
When the British Supreme Court on December 9 began a hearing in the case of the debt of former President of Ukraine Viktor YanukovychRussia has increased the amount of claims on "Yanukovych's debt" by $ 1.5 billion - to $ 4.5 billion.This was explained by accrued interest. This assessment was given by the RF Ministry of Finance to the Supreme Court of Great Britain. Initially, the amount of claims in connection with Ukraine's default on Eurobonds was $ 3 billion, according to the decision, the Supreme Court of the United Kingdom decided to postpone the decision in this case.The British court informed Ukraine and Russia that before deciding on the Eurobond case, it would first consider an appeal in another case, Pakistan International Airline Corporation v. Times Travel (United Kingdom) Ltd. (Times Travel case).The Times Travel Appeal concerns the existence and application of the doctrine of coercion "through a lawful act" under English law. The Supreme Court has decided to postpone the ruling in the case of the so-called Russian Eurobonds, as the argument of coercion is one of Ukraine's lines of defense against Russia's claim.
The case is as follows - in 2008 the defendant in this case, the Pakistani international airline PIAC, entered into an agency agreement with the plaintiff, Times Travel (UK) Ltd (Times Travel). Times Travel, as a small family agency, sold tickets for PIAC. The terms of the original contract included provisions to pay the Times Travel commission for the sale of PIAC tickets and that either party should notify the termination of the contract. Times Travel's activities were almost exclusively selling tickets to and around the Pakistani community in Birmingham for trips to and from Pakistan. As PIAC was the only airline operating direct flights between Pakistan and the United Kingdom at the time, Times Travel relied heavily on PIAC in its trading activities. Disputes between Times Travel and PIAC arose at an early stage over an unpaid commission. By 2010, a number of PIAC-appointed agents, in addition to Times Travel, began threatening lawsuits against PIAC over unpaid commissions. In September 2012, PIAC officially announced the termination of existing agency agreements and offered Times Travel a new agreement. The new contract contained Times Travel's waiver of unpaid commissions under previous arrangements. Times Travel has accepted and signed a new contract. But in 2014, Times Travel filed a lawsuit to recover unpaid commissions, which, according to the agency, belonged to him in accordance with the previous contractual terms. PIAC's argument for the lawsuits was a refusal agreed by Times Travel under the new contract. Times Travel's conclusion in this regard was that that a new contract should be avoided because it was concluded as a result of economic coercion. The London court initially ruled in favor of Times Travel and ruled that it had the right to avoid a contract based on economic coercion. Analyzing the law on economic coercion,Warren J. identified three necessary components for a successful case: the applicant must be subject to undue pressure; pressure must be a significant reason that motivates the plaintiff to enter into a contract; and the practical effect of the pressure is that the plaintiff requires coercion or no practical choice.The similarity of the two disputes described is very distant in essence, but the Supreme Court of Great Britain has found similarities and is going to apply the decision in the Times Travel case as a precedent to the Russian-Ukrainian case. It is worth noting that the Court of Appeal upheld the appeal of the Pakistanis and decided that having previously abandoned the "old" commissions when concluding a new contract, the agency can no longer claim them.
Thus, the Supreme Court considers that its Times Travel ruling, which will clarify some aspects of the legal doctrine of coercion, may have some bearing on how it will act when it comes time to decide an appeal in the case of Russian Eurobonds. Both Ukraine and Russia (acting through its Trustee) have applied to the Supreme Court for permission to join the Times Travel case, which is pending before the Supreme Court. The hearing of this appeal in the Supreme Court took place on November 2-3.The team of legal advisers of Ukraine presented strong legal arguments of Ukraine and presented its legal position before a panel of five highly respected judges of the Supreme Court, four of whom also participated in the appeal in the case of Russian Eurobonds last December.. Following the hearing, the judges announced that the decision had been postponed to a later date. The Supreme Court does not specify a specific date.
Thus, in December 2015, Ukraine defaulted on Eurobonds purchased by Russia in December 2013 at the expense of the National Welfare Fund ($ 3 billion - the issue itself and $ 75 million - the last coupon payment). Kyiv offered Moscow debt restructuring on terms common to commercial creditors, but Russia refused to discuss this option. The debt was to be repaid by January 1, 2016. On February 17, 2016, the Ministry of Finance of the Russian Federation filed a lawsuit in the High Court of London to recover the debt from Eurobonds. On March 29, 2017, the court approved the expedited consideration of this claim, in fact rejecting the main objections of Ukraine and agreeing that it has obligations regarding Eurobonds. By its decision, the court ordered Ukraine to pay Russia the nominal value of Eurobonds of $ 3 billion, the amount of the unfulfilled coupon payment of $ 75 million, as well as penalty interest accrued in the amount of $ 674 thousand for each day of delay. On May 26, 2017, the High Court of London granted Ukraine's request to suspend the execution of the decision of March 29, 2017 until the completion of Ukraine's appeal in the Court of Appeal. On September 14, 2018, the Court of Appeal ruled that the court of first instance should consider the case in full. The Court of Appeal upheld the lawfulness of Ukraine's refusal to consider three of the four grounds it had raised in order to avoid fulfilling its obligations under these Eurobonds. In November 2020, a hearing was held in Pakistan International Airline Corporation v. Times Travel (United Kingdom) Ltd. (Times Travel case), to which Ukraine gained access, as the decision may affect the further consideration of the case on Yanukovych's debts.
