Supreme Court Allows Ukraine to Defend Claim Under Eurobonds on the Ground of Duress

19 June 2023
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In The Law Debenture Trust Corporation plc v Ukraine (acting upon the instructions of the Cabinet of Ministers of Ukraine) [2023] UKSC 11, the Supreme Court has confirmed that a foreign state which is recognised as such by the UK executive has the status of a legal person with full capacity under English law. Further, if a state represents that an individual has authority to act on its behalf, it will be bound by the acts of that person with respect to anyone dealing with them as an agent on the faith of that representation.

Notably, in what appears to be the first case to consider the issue of duress caused by sanctions or threats of force against a state, the Supreme Court has found that:

  • the imposition or threat of trade sanctions cannot sensibly be regarded as inherently illegitimate (i.e., cannot constitute duress in English law); and
  • threats of force against a state, in so far as they involve threats to a state‚Äôs citizens, military or property, can constitute duress of the person or of goods.

Interestingly, the Supreme Court also rejected an alternative submission made by counsel for Ukraine which had effectively asked the court to recognise a novel common law defence to a claim for breach of contract founded on the public international law right to take proportionate countermeasures.