30/04/15 18:00 Filed in:
Awards On 9 April 2015, an International Centre for Settlement of Investment Disputes (“ICSID”) arbitral tribunal dismissed a case arising out of Greece’s sovereign debt exchange for lack of jurisdiction. The landmark decision is the first time that an ICSID tribunal has declined jurisdiction over interests in sovereign bonds.
The award was made in Poštová banka, a.s. and ISTROKAPITAL SE v. Hellenic Republic, a bilateral investment treaty (“BIT”) arbitration initiated in 2013 by a Slovak bank and its former Cypriot shareholder under the Slovak Republic-Hellenic Republic BIT (“Slovakia-Greece BIT”) and the Cyprus-Hellenic Republic BIT. The claimants had sought compensation for illegal expropriation, failure to accord fair and equitable treatment, and violation of umbrella clauses in respect of the bank’s interests in Greek government bonds (“GGBs”) that were exchanged in 2012.
Beyond the headline, the decision is an important reminder that not every kind of asset qualifies as a protected investment under a potentially applicable investment treaty or the ICSID Convention, and of the basic yet fundamental rule of treaty interpretation that a BIT’s terms must be interpreted in good faith within their context and in light of the treaty’s object and purpose. More generally, the conclusion by a majority of the Tribunal that the bank’s interests in GGBs did not meet the objective requirements of contribution and risk for the purposes of Article 25 of the ICSID Convention may have broader implications for treaty-based claims asserted by other holders of interests in restructured sovereign debt. Read More…Tags: International Dispute Resolution