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City showdown: US firms take roles as Russia and Ukraine’s $3bn debt dispute heads to London court

City lawyers at US firms Cleary Gottlieb Steen & Hamilton and Quinn Emanuel Urquhart & Sullivan are to face off after Russia filed a claim against Ukraine at London’s newly created financial court over its default of $3bn in bonds.

Russia’s finance minister Anton Siluanov said yesterday (16 January) that it will seek to recover the principal in full, as well as $75m in unpaid interest and legal fees.

‘I expect that the process in the English court will be open and transparent,’ Siluanov said. ‘This lawsuit was filed after numerous futile attempts to encourage Ukraine to enter into good faith negotiations to restructure the debt.’

It is the most high-profile case filed at the so-called financial list, a division of the High Court with specialist financial services judges, since its launch at the end of last year.

The claim will be seen as an endorsement of the specialist court, which handed down its first judgment earlier this year, and the English courts more generally, as some in the City had feared Russian claimants would take their cases elsewhere after the implementation of economic sanctions on the state.

The bond, arranged by White & Case and Clifford Chance, was made under English law which allows the superpower to bring a claim in the English courts.

The claim has been filed through London-listed Law Debenture Corporation, which is the trustee of the bond. The company has instructed Norton Rose Fulbright’s financial disputes partner Michael Godden to lead the claim.

Russia instructed Cleary Gottlieb London litigator Jonathan Kelly to bring the claim, with Ukraine selecting Alex Gerbi of litigation specialist Quinn Emanuel to defend it.

The filing follows failed bilateral attempts to settle the debt after Russia declined to take part in a $15bn restructuring with European creditors last year. The creditors agreed a 20% write-off on Ukraine’s outstanding sovereign debt and extended the repayment period.

Russia lent Ukraine $3bn in December 2013 as now ousted president Viktor Yanukovych stalled on whether the country should integrate with the EU or Russia. It has since annexed Crimea.

Read more about London’s specialist financial court here.