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Ukraine ‘Has No Choice but to Pay Back’ Debt to Russia After UK Court’s Ruling

Ukraine ‘Has No Choice but to Pay Back’ Debt to Russia After UK Court’s Ruling

Ukraine ‘Has No Choice but to Pay Back’ Debt to Russia After UK Court’s Ruling
March 30
15:07 2017

On Wednesday, the UK High Court in London ruled against holding a full trial on Ukraine’s $3 billion debt to Russia as Kiev had no justifiable defense for failing to pay it back.
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The Russian Foreign Ministry said that Moscow considers the ruling as “final and obligatory.”

“After reviewing the Russian request for quick hearings of the Russian lawsuit, the High Court in London ruled that Ukraine must pay off the nominal sum of the Eurobonds in the amount of $3 billion, as well as the accumulated interest,” the Ministry’s statement read.

The debt was secured by former Ukrainian President Viktor Yanukovych’s government in late 2013. Russia has repeatedly stated that Ukraine’s failure to pay back the debt should be classified as a default.

In February 2016, Russia filed a lawsuit against Ukraine with London’s High Court of Justice, demanding that its neighbor pay back the loan.

Weak Arguments

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Pavel Nefidov, director of the CIS Financial and Banking Council, said Kiev does not have solid arguments to challenge the ruling.

“Ukraine has some arguments, but all of them are feeble and related to politics, not to legal norms. Of course, the majority of financial transactions in Ukraine are currently related to politics. Neither the World Bank nor other financial institutions would unveil a loan to such an economically and politically unstable country as Ukraine. This is why the government and the Ukrainian National Bank hope that the argument will work again,” Nefidov told reporters.

However, he suggested that this time, the “we don’t have money scenario” will not work out.

“Ukraine has no choice but to pay it back. Otherwise, this case would undermine prospects for any future loans. Of course, Kiev will drag its heels. But the ‘we don’t have money and won’t pay’ scenario will not work out. I can’t rule out that some international financial institution may provide Kiev with money to settle the debt. Ukraine always borrows to repay other debts,” Nefidov said.

Fake Excuses

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“[After the lawsuit was launched] the court found itself in a difficult situation because it was expected to issue a concrete ruling while Ukraine explained its rejection to pay back the debt only with political reasons,” political observer Rostislav Ishchenko wrote in an analysis for RIA Novosti.

Kiev has repeatedly said that it would settle the debt after Moscow returns Crimea and compensates it for losses incurred in the conflict in eastern Ukraine.

“Kiev’s position is very interesting. According to the Ukrainian government, the country is not at war with anyone. The demand to compensate losses from the conflict presumed that the London court would have to recognize Russia as party to a non-existing war. […] In fact, Ukraine tried to turn the hearings into thelegalization of Kiev’s political claims against Moscow, in terms of international law,” the author wrote.

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Ishchenko noted that if the London’s High Court had issued a ruling in favor of Ukraine, such a move would have damaged its reputation as an independent arbitrator and undermined the existing European and global financial system.

“Any country can accuse any other country of information, proxy, hacker or any other aggression. If such political motives were taken into consideration [by courts] there would be no guarantees for the repayment of a loan,” he pointed out.

Finally, the decision was found and the Court issued a ruling securing Russia’s right to urge Ukraine to pay back the debt.

However, according to the Ukrainian Finance Ministry, the court also allowed Kiev to appeal the decision. An appeal has been filed with the Supreme Court of the United Kingdom, the highest appellate court in the UK.

“Thus, London’s High Court found a way out and evaded responsibility for a final decision. On the one hand, it showed off its intention to rule in favor of Russia. On the other hand, it declined all responsibility for any politically motivated decision,” Ishchenko wrote.

Commenting on the possible future development, he suggested that Ukraine would not be able to settle the debt due to its financial problems and that is why Kiev wants politics to prevail in this case.

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Edward Bokhua

Edward Bokhua

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