The Law Debenture Trust Corporation plc (Appellant) v Ukraine (Represented by the Minister of Finance of Ukraine acting upon the instructions of the Cabinet of Ministers of Ukraine) (Respondent) - [2023] UKSC 11

Hilary Term
[2023] UKSC 11
On appeals from: [2018] EWCA Civ 2026

JUDGMENT

The Law Debenture Trust Corporation plc (Respondent) v Ukraine (represented by the Minister of Finance of Ukraine acting upon the instructions of the Cabinet of Ministers of Ukraine) (Appellant)
The Law Debenture Trust Corporation plc (Appellant) v Ukraine (represented by the Minister of Finance of Ukraine acting upon the instructions of the Cabinet of Ministers of Ukraine) (Respondent)

before

Lord Reed, President
Lord Hodge, Deputy President
Lord Lloyd-Jones
Lord Kitchin
Lord Carnwath

JUDGMENT GIVEN ON
15 March 2023

Heard on 9, 10, 11, 12 December 2019

and 11 November 2021

Law Debenture Trust
Mark Howard KC
Oliver Jones
(Instructed by Norton Rose Fulbright LLP)

Ukraine
Bankim Thanki KC
Ben Jaffey KC
Simon Atrill
(Instructed by Quinn Emanuel Urquhart & Sullivan UK LLP)

LORD REED, LORD LLOYD-JONES AND LORD KITCHIN (with whom Lord Hodge agrees):

Introduction

The Law Debenture Trust Corporation plc (“the Trustee”), a company incorporated in England and Wales, is the trustee of Notes with a nominal value of US$ 3 billion, maturing on 21 December 2015, and carrying interest at 5% per annum through maturity (“the Notes”). The Notes were issued by Ukraine represented by its Minister of Finance, acting upon the instructions of the Cabinet of Ministers of Ukraine (“the CMU”), and constituted by a trust deed dated 24 December 2013, to which the parties were the Trustee and Ukraine (“the Trust Deed”). The Trust Deed is governed by the law of England and Wales, with the courts of England and Wales having exclusive jurisdiction (subject to the Trustee’s right of election to arbitrate, which has not been exercised). The sole subscriber of the Notes was the Russian Federation. Although the Notes were tradeable, the Russian Federation has retained the Notes since their issue.

Ukraine’s pleaded case is that the Notes are voidable (and have been avoided) for duress. Ukraine contends that the Russian Federation applied massive unlawful and illegitimate economic and political pressure, including threats to its territorial integrity and threats of the use of unlawful force, to Ukraine in 2013 to deter the administration led by President Yanukovych from signing an Association Agreement with the European Union (“the Association Agreement”) and to induce acceptance of the Russian Federation’s financial support instead, in the form of the Notes. Following the decision by Ukraine not to sign the Association Agreement, protests in Ukraine grew and ultimately President Yanukovych fled, reportedly on 21 February 2014. Shortly afterwards, the Russian Federation invaded Crimea and purported to annex it. Ukraine maintains that the Russian Federation has since supported separatist elements in eastern Ukraine and has interfered militarily and succeeded in destabilising and causing huge destruction across eastern Ukraine. The court has not been asked to consider events subsequent to the hearing of this appeal, which was concluded prior to Russia’s invasion of Ukraine in February 2022.

The Trustee does not accept Ukraine’s pleaded case in this regard. The Trustee maintains that in any event, even if Ukraine’s…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading The Law Debenture Trust Corporation plc (Appellant) v Ukrain...

Details

AGLC: The Law Debenture Trust Corporation plc (Appellant) v Ukraine (Represented by the Minister of Finance of Ukraine acting upon the instructions of the Cabinet of Ministers of Ukraine) (Respondent) [2023] UKSC 11
Case: [2023] UKSC 11
Decision Date

CaseChat Overview and Summary

In the Supreme Court of the United Kingdom, Law Debenture Trust Corporation plc, as trustee of Notes issued by Ukraine, brought an action against Ukraine seeking payment of US$ 3 billion plus interest. Ukraine defended the claim on various grounds, including duress and lack of authority. At first instance, Blair J dismissed Ukraine's defence and granted summary judgment to the Trustee. The Court of Appeal allowed Ukraine's appeal against the decision of Blair J in respect of the duress defence and dismissed the Trustee's appeal in all other respects. Both parties appealed to the Supreme Court. The Trustee appealed against the Court of Appeal's decision to permit Ukraine's duress defence to proceed to trial, and Ukraine appealed against the Court of Appeal's decision to strike out its lack of authority and countermeasures defences. The Supreme Court held that Ukraine's defence of duress, to the extent it was based on duress of the person or of goods resulting from the alleged threatened use of force, was arguable and should proceed to trial. The Supreme Court also held that Ukraine had no arguable case that it lacked capacity to issue the Notes or to enter into the relevant contracts; or that the Notes were issued, or the relevant contracts entered into, without authority; or that it is entitled to withhold payment of the sums due under the Notes as a lawful countermeasure. The Trustee's appeal was dismissed, and Ukraine's appeal was also dismissed. Lord Carnwath dissented in part, agreeing with the majority on the issues of capacity, authority, and countermeasures but disagreeing on the scope of the duress defence. He would have allowed the duress defence to proceed to trial as currently pleaded.

Orders