This article focuses on the #dispute between Ukraine and the Russian Federation concerning the repayment of USD 3 billion debt and the lawsuit it might result in.
The Ministry of Finance of the Russian Federation announced that it is preparing documents and conducting all necessary procedures in relation to submission of a dispute over non-repayment of debt by Ukraine to the London Court of International Arbitration. In its statement the Russian Ministry referred to Ukraine as ‘a state in default’ and stated that the lawsuit will be ready and submitted by the end of January 2016.
The dispute refers to a deal between the president of the Russian Federation Vladimir Putin and former Ukrainian President Viktor Yanukovich, which provided for purchase of USD 15 billion Ukrainian bonds. The repayment of the debt was due to take place on 20 December. However, the Government of Ukraine adopted a moratorium on repayment of this debt to Russia. In addition, such moratorium also envisaged prohibition on repayment of private debts owed to the Russian banks by several Ukrainian state-owned entities. The Prime Minister of Ukraine said that the moratorium shall be effective until Russia agrees to Ukraine’s proposal on debt restructuring or decision of the court on repayment of debt. In relation to the latter, the head of the government confirmed that Ukraine is prepared to defend its position in courts.
We note that in August 2015, Ukraine managed to successfully complete restructuring of its debts with the committee of creditors, which provided a 20% write-down on approximately USD 18 billion debt. Russia refused to participate in this debt restructuring process.
We also note that during 2014-2015 Ukraine and several of its state-owned corporations have started to prepare lawsuits against Russia that concern annexation of Crimea. It is expected that such lawsuits will be filed in the first couple of months of 2016.
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