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33 J. Int'l Arb. 687 (2016)
Greek Debt Restructuring and Investment Treaty Arbitration: Jurisdictional Stumbling Blocks for Bondholders

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Greek Debt Restructuring and Investment Treaty

      Arbitration: Jurisdictional Stumbling Blocks

                              for   Bondholders



                                  Anna   0.  MITsou


     The recent award of an International Centerfor the Settlement of Investment Disputes (ICSID)
     tribunal in Poitovi banka a.s. and ISTROKAPITAL SE v. Hellenic   Republic came as an
     unpleasant surprise for holders of Greek sovereign debt, who suffered losses because of the
     sovereign debt restructuring (SDR) that took place in February 2012, since it seems to be at
     odds with past case law on the matter. The tribunalfound that it did not have jurisdiction to hear
     the dispute, inter alia, because the acquisition of Greek sovereign bonds by Poitovo banka did not
     constitute an 'investment' under Article 1(1) of the Greece-Slovakia Bilateral Investment Treaty
     (BIT). At any rate, according to the tribunal, transactions over sovereign bonds on the secondary
     markets do not fall within the definition of 'investment' under Article 25 of the ICSID
     Convention.
          In this article, the author questions the narrow interpretation of the definition of 'invest-
     ment', as set forth in Article 1(1) of the Greece-Slovakia BIT, adopted by the tribunal. In
     declining jurisdiction, the tribunal looked through the provisions of Greek law so as to ascertain
     whether the claimants had rights protected under the BIT. The author advocates a different
     interpretation of the relevant provisions of Greek law in accordance with legal doctrine in Greece
     concerning the rights of investors over dematerialized government debt. The author also supports
     a wide meaning of the term 'investment' under Article 25 of the ICSID Convention, so that
     sovereign bonds are included in the definition.


1   INTRODUCTION

In February   2012,  Greece  launched   a sovereign  debt restructuring  (SDR),  which
was  the largest in history covering approximately   206  billion euros of public  debt,
and  the first of a Eurozone Member State.   Investors holding  sovereign  bonds  issued
by  the Greek  state were  invited to turn in their bonds  and  exchange   them  with  a
bundle  of new   securities. The new   securities consisted of new  government bonds
of substantially lesser nominal value  and much   longer  maturities, and  bonds  issued
by the European Financial Stability   Facility (EFSF).  Greece  received a second  bail-
out  package   by   its official sector creditors  as  financial support   in order   to


    Adjunct Lecturer at the Hellenic Open University, Ph.D (University of Athens), LLM (Queen Mary
    and Westfield College), Attorney-At-Law (Athens Bar).

0. Mitsou, Anna. 'Greek Debt Restructuring and Investment Treaty Arbitration: Jurisdictional Stumbling
Blocks for Bondholders'. Journal of International Arbitration 33, no. 6 (2016): 687-722.
0 2016 Kluwer Law International BV, The Netherlands

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