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‘No justiciable defence’: Cleary, NRF and Quinn to go another round in $3bn Russian bond dispute

Partners from Cleary Gottlieb Steen & Hamilton, Norton Rose Fulbright and Quinn Emanuel Urquhart & Sullivan are set to go another round as Ukraine has vowed to appeal a pre-trial decision over a $3bn Russian bond repayment.

The High Court has ruled that Ukraine did not provide a ‘justiciable defence’ in the case, heard in London’s recently created financial court.

The case relates to a $3bn loan Russia made out to Ukraine in December 2013 in the form of a Eurobond. The Law Debenture Trust Corporation is the trustee of the bond, which was arranged by White & Case and Clifford Chance.

Ukraine argued the loan was made as part of wider Russian economic and military pressure to prevent Ukraine from signing an EU Association Agreement at the Vilnius Summit in November 2013. In March 2014, Russia annexed Crimea.

But following a pre-trial hearing, Justice Blair concluded: ‘The threats of the use of force by Russia which are relied upon by Ukraine as vitiating the Eurobond transaction fall within the foreign act of state doctrine as issues upon which the court should refrain from adjudicating.

‘This is a claim for repayment of debt instruments to which the court has held that there is no justiciable defence.’

Quinn partner Alex Gerbi lead for Ukraine and Norton Rose’s financial disputes partner Michael Godden acted for The Law Debenture Trust Corporation, the trustee directed by Russia’s Ministry of Finance to bring the case. Cleary acted for the Russian government, with a team including partners David Sabel and Jonathan Kelly.

Norton Rose instructed Brick Court’s Mark Howard QC and Oliver Jones. Fountain Court Chambers’ Bankim Thanki QC and Simon Atrill and Essex Court Chambers’ Malcolm Shaw QC were enlisted by Quinn.

In August 2015, Weil, Gotshal & Manges and White & Case acted as the lead advisers as Ukraine struck a debt-relief deal on its $18bn sovereign debt pile in a bid to rebuild its fragile economy.