Haircut Undone? The Greek Drama and Prospects for Investment Arbitration

Abstract

As a result of the sovereign debt crisis that engulfed Europe in 2010, investors are much more likely to pursue dispute resolution options when faced with losses. This article seeks to examine the position of investors who suffered losses in the Greek haircut of 2012 in the context of investment treaty arbitration. The article evaluates arguments that investments in Greek sovereign bonds have been expropriated by the introduction of retrofit Collective Action Clauses (CACs) and that compensation is payable as a result of the protections offered by Bilateral Investment Treaties (BITs). The article investigates whether sovereign bonds come within the definition of protected investment in BITs, assesses the degree to which CACs act as a jurisdictional bar to investor-state claims and attempts an evaluation of whether claims could be successful. The analysis uses as an illustration a recent case brought against Greece at ICSID. The article concludes by considering whether the Greek haircut was expropriatory and reflects on the possible outcome of current arbitrations.