Law Debenture Trust Corp plc v Ukraine
Ukraine was entitled to a trial of its defence that it had issued 3 billion US dollars of Eurobonds to Russia under duress, consisting of threats of force, but its other defences failed.
Facts
In 2013, Ukraine issued Eurobonds worth 3 billion US dollars, governed by English law, which were subscribed by Russia. Ukraine failed to repay them when they fell due in 2015, and the trustee of the bonds brought proceedings for payment, seeking summary judgment. Ukraine argued that it had lacked capacity to issue the bonds, that its minister had no authority, and that the bonds had been issued under duress, because Russia had threatened it with economic and military harm, including the subsequent invasion of Crimea, if it did not accept the Russian financing rather than an agreement with the EU.
Legal principle
The Supreme Court held that Ukraine's defences of lack of capacity and lack of authority failed, among other reasons because the minister who signed the documents had ostensible authority to bind Ukraine. However, the majority held that Ukraine's defence of duress, based on Russia's threats of the use of force, was justiciable and should go to trial, because the doctrine of foreign act of state did not prevent the court from considering it, and threats of force by a state were capable of amounting to illegitimate pressure. The court held that the economic pressure alleged could not on its own amount to duress. The case returned to the High Court for trial.
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