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A two-year row between Ukraine and Russia is on the verge of being played out in a London courtroom after the government in Kyiv defaulted on $3 billion in bonds due to Moscow, Bloomberg reported.
The eurobonds were drafted under English Law, so any claim must be submitted to a court in London, according to Bloomberg.
Russia has said it will sue Ukraine for the $3 billion, plus an outstanding $75 million interest payment and all other interest that accumulates between now and a court verdict.
Russia "probably has at least a reasonably strong case" of securing a ruling in its favor, according to Michael Waibel, a professor of international law at the University of Cambridge.
Read alsoIMF Executive Board decides on status of Ukraine's eurobond held by RussiaGetting its money back may prove challenging even if arbitrators order Ukraine to pay compensation, however. Russia may try to seize Ukrainian state assets abroad through legal processes in the countries where they’re located, Waibel said.
Andrew Wilkinson, a partner at law firm Weil Gotshal & Manges LLP who worked on drafting Ukraine’s restructuring documents, said: "legally, Russia’s options are very limited if it wants to get its money back." He said lawyers took care to draft the debt deal to prevent holdouts getting the upper hand.
A defeat could cause "great embarrassment" for Putin if a judge determines that Russia already had plans to annex Crimea when the bond documents were drawn up, according to Mitu Gulati, a law professor at Duke University who specializes in sovereign debt, Bloomberg reported.
Read alsoCabinet proposes abolition of end date for debt moratoriumAs reported earlier, on December 18, Ukraine announced the moratorium on any payments of the Russian debt.
At the same time, Russia says it still waits for the repayment of $3 billion in bonds Ukraine owes.
The Russian Finance Ministry noted formal default would occur on December 31 after expiration of the so-called "grace" period, during which Kyiv is still able to make a payment.
"Russia's Finance Ministry expects that Ukraine will fulfill its debt obligations in full by the mentioned date," the ministry said in its statement.
Read alsoPutin tests English Debt Law as Ukraine feud heads to LondonOtherwise, Russia will bring the case to court, as stated.
Ukrainian Prime Minister Arseniy Yatsenyuk said Kyiv was ready to start legal proceedings over the Russian debt.