Ukraine (Represented by the Minister of Finance of Ukraine acting upon the instructions of the Cabinet of Ministers of Ukraine) v The Law Debenture Trust Corporation P.L.C.

JurisdictionEngland & Wales
JudgeLord Reed,Lord Lloyd-Jones,Lord Kitchin,Lord Hodge,Lord Carnwath
Judgment Date15 March 2023
Neutral Citation[2023] UKSC 11
CourtSupreme Court
The Law Debenture Trust Corporation plc
Ukraine (represented by the Minister of Finance of Ukraine acting upon the instructions of the Cabinet of Ministers of Ukraine)
The Law Debenture Trust Corporation plc
Ukraine (represented by the Minister of Finance of Ukraine acting upon the instructions of the Cabinet of Ministers of Ukraine)

[2023] UKSC 11


Lord Reed, President

Lord Hodge, Deputy President

Lord Lloyd-Jones

Lord Kitchin

Lord Carnwath

Supreme Court

Hilary Term

On appeals from: [2018] EWCA Civ 2026

Law Debenture Trust

Mark Howard KC

Oliver Jones

(Instructed by Norton Rose Fulbright LLP)


Bankim Thanki KC

Ben Jaffey KC

Simon Atrill

(Instructed by Quinn Emanuel Urquhart & Sullivan UK LLP)

Heard on 9, 10, 11, 12 December 2019 and 11 November 2021

Lord Reed, Lord Lloyd-Jones AND Lord Kitchin ( with whom Lord Hodge agrees):


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 account of what has occurred were accurate, it would be irrelevant to a debt obligation governed by English law, such as that which is the subject of the present appeal.


Ukraine also maintains that it lacked capacity to enter into the Trust Deed and issue the Notes, and that the Trust Deed was signed and the Notes were issued by the Minister of Finance in the absence of actual authority under Ukrainian law to do so. It contends that:

(1) Ukrainian law imposed a limit, in the Budget Law of 2013, in relation to Ukraine's external borrowing during 2013 and the issue of the Notes caused that limit to be exceeded.

(2) An expert opinion required for the CMU to deliberate validly was not provided to the Ministers of the CMU at the time when the borrowing was approved in the course of a meeting on 18 December 2013.

(3) The CMU invalidly delegated consideration of some material terms of the Notes to the Minister of Finance.

The Trustee does not challenge those factual allegations for the purposes of the summary judgment application which is the subject of the present appeal.


At first instance, Blair J considered that the court should proceed on the basis that the terms of the Notes were onerous and, for Ukraine, unusual, because there was an issue to be tried in this respect that could not be resolved on a summary judgment application: [2017] QB 1249. On appeal, the Court of Appeal (Sales and David Richards LJJ, Dame Elizabeth Gloster) held that they were not self-evidently abnormal so as to put the Trustee on enquiry and that there was no evidence that they would have appeared abnormal to market participants: [2019] QB 1121.


The Trustee maintains that such allegations do not assist Ukraine in establishing a defence to the claim because Ukraine, as a sovereign state, had unlimited contractual capacity and that, in any event, they are matters of authority rather than capacity. The Minister of Finance plainly had usual and/or ostensible authority to enter into the Notes, and the Trustee could not reasonably have been expected to be aware of the breaches alleged by Ukraine. Ukraine denies this.


Furthermore, the Trustee contends that Ukraine ratified the Notes. US$ 3 billion subscription money for the Notes was paid into Ukraine's central bank reserves in December 2013 and this sum was accepted and credited to the state budget. Thereafter, during the course of 2014–15:

(1) Ukraine made three payments under the Notes in the full amount of interest allegedly due on each occasion, totalling US$ 233,333,350.

(2) On 26 September 2014, Ukraine's Ministry of Finance publicly announced that “All state debt indicators as at the end of 2013 were within the limits defined by the [Budget Law of 2013]”.

(3) In May 2015, the Ukrainian Parliament passed a law that, as a matter of Ukrainian law, authorised the CMU to impose a moratorium on some of Ukraine's debt obligations, including the Notes.

(4) In September 2015, Ukraine's CMU issued an Exchange Offer Memorandum inviting holders of its outstanding Eurobonds (including the Russian Federation as holder of the Notes) to exchange outstanding debt securities (including the Notes) for new securities on different terms. The Exchange Offer was not accepted by the Russian Federation.

(5) On 18 December 2015, Ukraine's CMU adopted a resolution imposing a moratorium on Ukraine's payment obligations under the Notes, effective 20 December 2015. Following its adoption, the moratorium was announced in a press release dated 18 December 2015, in which Ukraine expressly reserved its rights in relation to its payment obligations under the Notes. Ukraine had not reserved its rights before 17 December 2015.


The principal amount of the Notes and the last instalment of interest fell due for payment on 21 December 2015. However, no further payment was made and Ukraine has refused to make payment.


On 17 February 2016, the Trustee, acting on the instruction of and for the benefit of the Russian Federation as sole Noteholder, issued proceedings against Ukraine in the English High Court (Financial List) claiming US$ 3.075 billion plus interest and legal costs.


Ukraine filed a Defence on 27 May 2016 in which it disputed the validity and enforceability of the Notes on the grounds that:

(1) Ukraine lacked capacity to enter into the transaction as a matter of Ukrainian law.

(2) The Minister of Finance lacked the authority to enter into the transaction by which the Notes were issued.

(3) Ukraine was entitled to avoid the Notes for duress arising from unlawful threats made by the Russian Federation against Ukraine (including to its territorial integrity) and the application of unlawful trade measures and economic pressure by the Russian Federation before the transaction was entered into.

(4) The terms on which the Notes were issued included implied terms to the effect that, inter alia, they would not be enforceable in circumstances where the Russian Federation itself was preventing or hindering their performance.

(5) In light of the Russian Federation's alleged breach of its obligations to Ukraine not to use force against Ukraine and not to intervene internally in the affairs of Ukraine, Ukraine was entitled to rely on the public international law doctrine of countermeasures to decline to make payment.


On 28 July 2016 the Trustee applied for summary judgment:

(1) The Trustee denied that Ukraine lacked capacity to enter into the transaction.

(2) The Trustee contended that the Minister of Finance plainly had usual or ostensible authority, even if he did not have actual authority (which was not admitted, but which it was accepted could not be resolved on a summary judgment application).

(3) The Trustee denied that Ukraine's duress defence was arguable, contending that it lacked any domestic foothold and was not justiciable in any event.

(4) The Trustee denied that it was appropriate to imply the terms for which Ukraine contended.

(5) The Trustee denied that the doctrine of countermeasures could be relied on by Ukraine.

The Trustee also contended that, if the Minister of Finance lacked authority or if the Notes had been issued under duress, Ukraine had, respectively, ratified and affirmed the contract by its subsequent conduct. Ukraine denied this and also submitted that there were other compelling reasons for the dispute to be subjected to a full public trial.


On 29 March 2017, Blair J upheld the Trustee's case on each of the five grounds set out above and held that there was no other compelling reason for a trial. He entered summary judgment against Ukraine. He also rejected Ukraine's case that, if its duress defence was non-justiciable, the claim should be...

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