Russian Citizen Demands $310,000 From Belarusian MoF
- 28.08.2023, 15:43
The MoF offered London or Minsk as places for the dispute consideration.
The Moscow City Court held a hearing on the lawsuit against the Ministry of Finance of Belarus on the recovery of Eurobonds debt. The Belarusian ministry insists on considering the case in Minsk or London, stating that Russian courts have no jurisdiction to consider this case. The Russian RBC news publisher reports.
Recall that in the spring of this year, Russian citizen Alexander Marchenkov applied to the Moscow City Court for the recovery of $310,000 debt on securities of the Ministry of Finance of Belarus.
We are talking about payments on two issues of Eurobonds of Belarus with maturity in 2030 and 2031, writes RBC with reference to the case file. The plaintiff demands from the Ministry of Finance of Belarus to prepay the bonds he bought, since the international agency Moody's recognized the default on the country's public debt. Claims relating to prepayment of the securities amount to $280,000. Also, Marchenkov demands $17,000 from the Belarusian Ministry of Finance for already paid coupons on securities and also insists on repayment of his interest for the use of his money and compensation of his legal fees.
The representative of the Ministry of Finance of Belarus pointed out that Minsk does not refuse payments, but wants to pay in Belarusian rubles, referring to sanctions.
During the hearing of the case on August 28, the representative of the defendant, that is, the Ministry of Finance of Belarus, said that the Russian courts could not consider this case, and applied for dismissal of the consideration of the case in the Moscow City Court. According to his application, the dispute on the country's Eurobonds can be considered in the London Court, as required by the initial emission documentation of the securities. The Ministry of Finance believes that such proceedings can be held in the UK, despite the fact that this country has imposed sanctions against Belarus.
“The terms of both prospectuses have an arbitration clause that disputes are to be considered in accordance with the arbitration rules of the London Court of International Arbitration (LCIA),” he said.
As an alternative, the representative of the Ministry of Finance proposed a court in Minsk, referring to the Chisinau Convention on Legal Assistance, which provides for the jurisdiction of the courts at the place of activity of the defendant, in this case in Belarus.
Probably, the judge did not satisfy the application of the representative of the Belarusian Ministry of Finance, because the next court hearing is scheduled for September 6 at the Moscow City Court.
Recall that since the summer of 2022, the Ministry of Finance of Belarus began to pay debts on Eurobonds in Belarusian rubles, and not in the currency that was prescribed in loan agreements (usually the USD). This decision in the ministry is explained by sanctions by Western countries against the National Bank, as well as “the inability of the Western payment infrastructure to ensure, under the conditions of sanctions, bringing payments to all the Eurobonds holders.”
International rating agencies recognised defaults on certain interest payments on loans several times due to the fact that the Belarusian authorities violated the terms of contracts and paid in Belarusian rubles, transferring money to a special account in Belarusbank.
In 2022, the Ministry of Finance announced the early redemption of Eurobonds at 30% of the face value. It was planned that the redemption amount would not exceed the volume of Eurobonds that were to be redeemed in 2023.
Since February 2023, Russian investors have been complaining that the Ministry of Finance of Belarus is not paying debts on Eurobonds. They appealed to the Central Bank of the Russian Federation and wrote a joint letter personally to the Minister of Finance of Belarus Yury Seliviorstau. The total amount of uncollected funds was $500 million at the beginning of March.