You're reading: Ukraine says Russian military aggression, Crimea annexation among reasons for debt payback failure

Ukraine says Russia's invasion of eastern Ukraine and the annexation of Crimea are among the reasons it cannot remunerate Russia for placing $3 billion worth of eurobonds.

The arguments are outlined in Ukraine’s defense paper to the claims of the Law Debenture Trust Corporation Plc brought to the High Court of Justice in England on May 27.

The document is 42 pages long, as opposed to the standard 25 pages used to file defense papers. The length of the document was agreed with the court by Ukraine’s request.

The High Court of Justice is hearing the dispute between the economic entity – trustee in the deal on the eurobond issue – and the state Ukraine. The claimant in the case is acting on instructions from Russia, as confirmed by the claim. The defense paper references Russia and facts about Russia.

Ukraine’s defense arguments are divided in four groups.

The first says that the decision to release $3 billion eurobonds in 2013, eventually bought by Russia using funds from the national welfare Fund (NWF), was taken in violation of Ukrainian legislation and Ukrainian regulatory procedures.

It says some decisions on the loan were taken out of their proper (legal) sequence. Ukraine notes other violations of procedure, arguing the decision to borrow was not made in line with Ukrainian legislation.

The second set of arguments claim the deal is invalid because the loan was procured through duress created by Russia during 2013.

The document gives examples of duress after Ukraine initialed the Ukraine-EU Association Agreement in March 2012.

Ukraine also provides evidences of Russia’s military interference in Crimea, culminating in the annexation of the Black Sea peninsula in March 2014.

Russian steps aimed at destabilizing the situation in eastern Ukraine are listed separately.

The third set of arguments deals with implied terms for the eurobond issue. Ukraine claims the eurobond loan document implied that Russia would exert pressure on Ukraine. The implication was misleading and Ukraine cannot stick to the terms and conditions outlined in the document.

The fourth set of arguments is based on a concept of counter-measures involving international public law. Ukraine claims Russia does not observe its international and legal liabilities to Ukraine, which has the right to take counter-measures, including the suspension of its liabilities under the loan agreement.

The claimant is to respond to the defense paper within 21 days. It has the right to ask for additional time to file a response.