Tsarist-Era Bonds Resurface: US Investment Fund Sues Russia for $225 Billion

An American investment fund, Noble Capital RSD, has filed a lawsuit against the Russian Federation in a US court. The filing has been published on the CourtListener website.

The fund is seeking to recover alleged debts tied to bonds issued during the era of imperial Russia. According to the plaintiffs, the total claim amounts to $225.8 billion. The defendants listed in the lawsuit include the Russian Federation, the Ministry of Finance of the Russian Federation, the Central Bank of the Russian Federation, and the National Wealth Fund.

Frozen Assets Proposed as Source of Payment

The investment fund argues that the claimed amount could be recovered from frozen Russian sovereign assets. As justification, the plaintiffs assert that the outright confiscation of sovereign assets without compensation would violate customary international law, whereas using those assets to settle outstanding debt obligations would not constitute illegal expropriation.

Noble Capital RSD states that it is the "successor in interest and lawful owner of Russian sovereign bonds issued by the Imperial Russian government to public investors in the United States.” The lawsuit further claims that in December 1991, the Russian Federation became the legal successor to the sovereign assets and sovereign debts of the Soviet Union, the Provisional Government of Russia, and the Imperial Government of Russia.

"Although the Russian Federation has settled virtually all sovereign debts of the USSR, it has failed and continues to fail to repay sovereign bonds issued by the Imperial Russian government to US citizens,” the lawsuit states.

Russia's interests in the case will be represented by the law firm Marks & Sokolov, which specializes in international arbitration and cross-border litigation.

Russia Previously Repaid Soviet-Era Debts

In August 2017, Russia paid $125.2 million to settle the remaining debt obligations of the Soviet Union to Bosnia and Herzegovina. That country was the last foreign creditor of the USSR whose claims had remained unresolved, according to the Russian Ministry of Finance.

Earlier, in 2006, Russia fully repaid $23.7 billion owed to the Paris Club. In 2013, Moscow settled outstanding obligations to the Czech Republic ($3.6 billion), Montenegro ($18 million), and Finland ($30 million).

Russia also assumed and repaid debts on behalf of other former Soviet republics. In particular, President Vladimir Putin reminded American filmmaker Oliver Stone that Moscow had paid $16 billion to cover Ukraine's share of Soviet-era obligations.

Imperial Bonds and the French Precedent

The oldest outstanding obligation involved imperial Russian bonds held in France. Although the Soviet authorities annulled this debt, Russia agreed in 1997 to settle imperial-era liabilities, and in 2000 Moscow completed payments on those bonds.

However, the compensation did not satisfy all claimants. According to Francis Vercamer, a deputy of the French National Assembly, descendants of bondholders continued to demand repayment more than a century later.

Subsequently, Paris declared that it no longer had the legal right to demand compensation from Moscow for pre-revolutionary Russian bonds. At the same time, France did not bar its citizens from pursuing private claims independently.