Russia sues Ukraine over debt repayment in London court

By Dmitry Rashnitsov  |  Feb. 17, 2016 at 3:52 PM
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MOSCOW, Feb. 17 (UPI) -- Russia's Finance Ministry on Wednesday filed a lawsuit against Ukraine at the High Court in London seeking recovery of a $3 billion debt obligation.

Ukraine had until Dec. 21, 2015, to pay back the investment, but it missed that deadline and negotiations between Kiev and Moscow hit a roadblock as the two countries could not agree on new terms, the Russian government broadcaster First Channel reported.

The bond was originaly issued in late 2013 during the final months of pro-Russian President Viktor Yanukovych's term. Two days before its maturity date, Ukraine's Prime Minister at the time, Arseny Yatsenyuk, said the country had created a moratorium on the repayment. Ukraine and Russia have struggled to find common ground on many issues since the 2014 annexation of Crimea.

"We have repeatedly stated our readiness to discuss the possibility of a bilateral settlement of the matter out of court, but Ukraine was not ready to negotiate in a spirit of 'goodwill,' neither with us or the IMF," Anton Siluanov, head of the Ministry of Finance for Russia, told Russian media outlet RBC, referring to the International Monetary Fund.

Siluanov said Moscow and Kiev failed to agree that Eurobonds are owned by Russian official creditors and demand for them should be settled on terms better than the ones proposed by Ukraine to its private creditors.

"The trial at the English court will be open and transparent, and the protection of rights of the Russian Federation as a creditor will be carried out by an independent, authoritative court, which impartially considers the dispute between the two sovereigns, regarding debt default on Eurobonds," Siluanov said.

Original issue terms said that Russia could apply to Ukraine in the English national court or to initiate arbitration at the London Court of International Arbitration. The arbitration process, according to the LCIA, would allow Russia to rely on the confidentiality of the hearings, materials and even the decision itself, but Russia has made a choice in favor of "open and transparent" process in the English Court.

The countries started fueding over disputes in gas supplies and commerce following Ukraine's decision to ratify an EU free trade agreement in 2010.

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