Landmark Arbitration Victory for Greece
April 13, 2015
Cleary Gottlieb has successfully secured the dismissal of claims against the Hellenic Republic in an ICSID arbitration initiated by the Slovak bank, Poštová banka, and its former Cypriot shareholder under the bilateral investment treaties between the Hellenic Republic and the Slovak Republic and Cyprus, respectively. The claimants sought to recover compensation based on the face value of the bank’s interests in Greek government bonds that were subject to the Hellenic Republic’s 2012 sovereign debt exchange. Poštová banka reportedly held interests in Greek government bonds with face amount of over €500 million prior to the Hellenic Republic’s 2012 restructuring.
In an award published on April 13, 2015, the ICSID arbitral tribunal composed of Eduardo Zuleta (president), John M. Townsend and Brigitte Stern, dismissed all claims against the Hellenic Republic for lack of jurisdiction. The tribunal held that interests in Greek government bonds do not qualify as protected investments under the Slovakia-Greece bilateral investment treaty and that Poštová banka’s former shareholder, Istrokapital, could not base jurisdiction on Poštová banka’s assets. The majority held that interests in Greek government bonds are also not protected under the ICSID Convention, because they do not involve a contribution to an economic venture or operational risk.
Claudia Annacker, partner of Cleary Gottlieb, comments that “this award will remain a landmark in investment treaty case-law, an ICSID tribunal having for the first time declined jurisdiction over interests in sovereign bonds.”
Christopher Moore, partner of Cleary Gottlieb, explains, “this is a critically important award for sovereigns around the world that are faced with making difficult financial decisions in connection with managing unsustainable debt loads, as creditors have increasingly sought to challenge those decisions before international arbitral tribunals.”
For the French translation, please click here.