Ten Years After the European Crisis : Arbitrating Sovereign Debt

The sovereign debt crisis that engulfed Europe in 2010 led investors to pursue dispute resolution options primarily through investor state arbitration when faced with losses. This paper looks back at the cases of investors who suffered losses in the Greek haircut and because of the Cypriot banking crisis resolution in 2012-13 in the context of investment treaty arbitration. The paper evaluates the introduction of retrofit CACs and other mechanisms that resulted in losses for investors and reflects on attempts to obtain compensation through protections offered by BITs. The analysis uses as an illustration cases relating to Greece and Cyprus at ICSID. The paper re-evaluates whether the Greek haircut and the Cypriot bank restructuring were expropriatory and reflects on lessons learned on how to best deal with distressed state debt within the Eurozone in the future