Russian Sovereign Debt Defaults: A Disputes Perspective

Russia's default on its foreign currency sovereign bonds is unprecedented and likely to lead to bondholder litigation as well as derivatives disputes. This article highlights the reasons for Russia's default and explores the scope of potential bondholder litigation, together with some of the obstacles which bondholders may face in bringing claims against Russia. The article then considers the ripple effect on the derivatives market, where it is possible that investors in products linked to Russian debt may seek to recover losses by bringing mis-selling claims.

Russia has defaulted on two series of foreign currency sovereign bonds (a US dollar denominated bond due to mature in 2026 and a euro denominated bond due to mature in 2036). The reason is unprecedented: it is able to pay bondholders but effectively prevented from doing so by Western sanctions. This article considers the Russian default from a disputes perspective and considers some of the litigation risks