The Law Debenture Trust Corporation p.l.c. v Ukraine - Update

26 September 2017

This is an update on the ongoing action in Claim No. FL-2016-000002: The Law Debenture Trust Corporation p.l.c. v Ukraine. The claim relates to Ukraine’s default on its U.S.$3,000,000,000 5.00 per cent. Notes due 2015.

The Law Debenture Trust Corporation p.l.c. acted as Trustee on this Eurobond and made an application for summary judgment for the benefit of Noteholders (currently the Russian Federation).  As the Judge explained in his judgment: "[s]ummary judgment is the procedure by which the court may decide a claim without a trial, where the claimant can show that the defendant has no real prospect of successfully defending the claim.”  On 29 March 2017, the English High Court concluded that this test was met and awarded summary judgment in favour of The Law Debenture Trust Corporation p.l.c..  In summary, the judgment confirmed that Ukraine is obliged to repay U.S.$ 3,000,000,000 plus interest.  The judgment and a summary prepared by the Judge are available here: https://www.judiciary.gov.uk/judgments/law-debenture-v-ukraine/."

On 26 May 2017, there was a further hearing in the English High Court to decide various procedural matters. The Judge entered judgment for the Trustee and ordered Ukraine to pay the sum of USD 3,421,331,574.32, constituting the principal (U.S.$ 3,000,000,000), coupon (U.S.$ 75,000,000) and interest outstanding under the Notes up to 26 May 2017. Interest will continue to accrue on the principal at the rate of 8% per annum and on the coupon at 3 month LIBOR  plus 2%.  With some limited exceptions, the court also ordered Ukraine to pay the costs of The Law Debenture Trust Corporation p.l.c. on an indemnity basis, in particular, to pay £1,160,760.79 as an interim costs payment by 20 September 2017.  Law Debenture confirms that its counsel have now received £1,160,760.79 from Ukraine.

The Judge granted permission to both sides to appeal any issue on which they were unsuccessful.  That appeal is due to be heard from 22 January - 26 January 2018.  Ukraine’s obligation to pay the USD 3,421,331,574.32, and interest on that amount, as well as certain procedural questions, have been stayed until the appeal has been decided.

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