Today, Mr Justice Zacaroli in the High Court of Justice handed down a public Judgment in the Directions Application brought by the Trustee, Madison Pacific, in respect of and pursuant to the Partial Final Awards (the Awards) issued by the Tribunal on 13 June 2019 in the ongoing LCIA arbitration proceedings concerning the PrivatBank Eurobonds issued in 2010 and 2013.

In today’s Judgment, the English Court has held that, against the background of the illegality of the Former Owners affecting the Notes which was found conclusively by the Tribunal and resulted in its Awards, and having regard to the terms of the Trust Deeds to which the Trustee is subject, the Trustee is at liberty to make payments in accordance with the payment scheme under the Awards and will not incur liability to ultimate account holders in doing so.

This decision, which effectively upholds the Awards and the Tribunal’s scheme for payment under them, means that, should the Awards (which in any event remain contingent) come into effect in due course, PrivatBank will only be required to make payments under the Notes in respect of a limited class of holders.

As a result, even if PrivatBank comes to be required to make any payments, such payments will be substantially less than the total sums claimed by the Trustee in the arbitration proceedings. If PrivatBank’s ‘bail-in’ defence succeeds in due course, it will not be required to make any payments at all.


As the Bank has explained previously:

(1) The Awards were issued by the Tribunal following a hearing in the arbitrations concerning PrivatBank’s case that both issuances and Notes were affected by illegality in various respects connected with its former owners (the Former Owners).
(2) In its Awards, the Tribunal upheld PrivatBank’s case on illegality and consequently ruled that Privatbank would not be required to make payment in respect of the ultimate interests in either 2010 or 2013 Notes held by or for the benefit of certain entities connected to the Former Owners.
(3) Furthermore, the Tribunal imposed a mechanism to identify, out of then unidentified groups of ultimate account holders, which ought to be entitled to payment and which not.
(4) Only those ultimate account holders within the so-called Instructing Group, who have been shown not to be affected by illegality in connection with their holdings of Notes, were found by the Tribunal at that stage to be entitled to payment.
(5) Any liability of PrivatBank to make payments under the Awards is in any event subject to PrivatBank’s other ‘bail in’ defence in the arbitrations, which the Tribunal has yet to determine.
(6) The Trustee subsequently brought proceedings before the English Court seeking confirmation from the Court that (a) it is at liberty to make payments in accordance with the payment scheme set out in the Awards and (b) it will not incur any liability to ultimate account holders if it does so. It is this application which has been determined by the Judgment of Zacaroli handed down today, with the Court granting the confirmations sought by the Trustee.

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