The Law Debenture Trust Corporation plc v Ukraine [2023] UKSC 11 (15 March 2023)
Citation:The Law Debenture Trust Corporation plc v Ukraine [2023] UKSC 11 (15 March 2023)
Rule of thumb:If person A makes a valid loan to person B, but person A then commences physically intimidating person B in another matter, with this not being related to the actual loan, does this mean person B does not have to repay the loan anymore, or at least until the physical intimidation stops? The Court held that the answer is ‘maybe’ – there has to be a trial to hear the full factual circumstances of this because threats of violence in relation to loan repayments are not acceptable, but at the same time a valid loan contract properly agreed at the time should generally always have to be repaid.
Background facts:The basic facts were that the Ukrainian Government issued bonds in order to raise money – this means that people give them a sum of cash, say $1 billion, and the Government have to pay a return of say 5% per year on this, and then return the sum of cash at the end.
Parties argued:The Ukrainian Government issued these bonds, and one of the countries who bought them was the Russian Government. The Ukrainian Government stopped paying the interest they owed Russia for this once the war started. The contract stated that any disputes between the parties should be resolved in the UK Courts if necessary. Russia therefore sued Ukraine for the interest they were owed on the cash sum issued. This case invoked the contract law principle of duress & its interface with commercial loans. Ukraine argued that they did not have to pay this due to duress – if one person threatens another then the contract is not valid. Russia argued that duress only applies for entering the contract, and not after, and that just because one person commits a crime on a person it does not make all other contracts they have with them void. Russia therefore argued that Ukraine’s arguments should be struck out without a trial.
Court held:The Court held that there should be a full trial on this matter to determine what the full facts were as well as consider whether duress does apply in these circumstances.
Ratio-decidendi:
‘For the foregoing reasons, we conclude that the Trustee is not entitled to summary judgment. Ukraine should be permitted to defend the claim on the ground of duress, to the extent identified in this judgment (ie to the extent - and only to the extent - that it is based on duress of the person or of goods resulting from the alleged threatened use of force), subject to the amendment of its pleadings so as to clarify that that (and that alone) is the basis of its defence of duress’, Lord Reed at 209
Warning: This is not professional legal advice. This is not professional legal education advice. Please obtain professional guidance before embarking on any legal course of action. This is just an interpretation of a Judgment by persons of legal insight & varying levels of legal specialism, experience & expertise. Please read the Judgment yourself and form your own interpretation of it with professional assistance.