Russia has threatened to take Ukraine to arbitration unless the country pays its $3 billion bond in full. As Anna notes
, the bond gives the holder the option to sue in English court or to arbitrate under the rules of the London Court of International Arbitration
(LCIA). The LCIA is a preeminent international arbitration institution, but the choice of arbitration over litigation is an unusual one in this context. Non-consumer lenders typically prefer litigation to arbitration. As I've shown elsewhere
, sovereign lenders share this preference. Arbitration clauses rarely appear in sovereign bonds unless (i) the issuer's internal law forbids it to submit to foreign court jurisdiction (e.g., Brazil, El Salvador) or (in English-law bonds) (ii) the issuer has not agreed to enforce English court judgments but has signed on to the New York Convention
, which requires it to enforce foreign arbitration awards.