By Maya Lester KC & Michael O’Kane

UK Supreme Court says trade sanctions aren’t duress in English law

The UK Supreme Court held that the Law Debenture Trust Corporation plc, acting on behalf of Russia, is not entitled to a summary judgment in its contractual dispute with Ukraine relating to a loan made by Russia to Ukraine. The loan took the form of Eurobonds with a nominal value of US $3 billion and interest at 5% per annum to Russia, issued by Ukraine in 2013. Judgment and Press Release.

Ukraine’s defences to payment of the Notes included that the Notes were procured by duress arising from unlawful and illegitimate threats and pressure, including trade sanctions. On this point the Supreme Court said:

  • A contract is voidable if it was induced by illegitimate pressure.
  • But trade sanctions and embargoes are “important aspects of statecraft in the modern world” and not illegitimate under English law nor contrary to public policy.
  • “The imposition or threat of trade restrictions in order to exert pressure upon other states, and thereby achieve political objectives, has been part of the armoury of the state since classical times.”
  • “The UK uses sanctions to fulfil a range of purposes, including supporting foreign policy and national security objectives, as well as maintaining international peace and security, and preventing terrorism. Other countries do likewise. In particular, the trade restrictions alleged to have been adopted or threatened by the Russian Federation are another example of the use of such measures by a sovereign state in the pursuit of its interests.”
  • “Measures of this kind, whether imposed by the UK or by other countries, cannot sensibly be regarded as being, as a category, inherently illegitimate or contrary to public policy.”

United KingdomUnited Kingdom

About Maya Lester KC

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Maya Lester KC is a senior barrister (King’s Counsel) at Brick Court Chambers with a wide-ranging practice in public law, European law, competition law, international law, human...

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