Greek Debt Restructuring and Abaclat v. Argentina – The impact of Bilateral Investment Treaties (BITs) on the Greek default

The Euro zone crisis is a sovereign debt crisis. It results from the enormous amounts of debt accumulated by a number of currency union member states. The markets question the sustainability of their debt and suspect default. As a result, investors abstain from investing in sovereign bonds from these countries or require high risk yields. However, sovereign bonds are the main source of financing for modern industrialized nations. For a number of Euro zone countries the lack of market financing has been replaced by public funding, predominantly from other Euro zone member states.[1] In the case of Greece, this aid was insufficient. Greece debt was restructured in March 2012. Private creditors of the Hellenic Republic accepted an exchange offer which led to a haircut on their debt. Greek domestic bonds were exchanged for new bonds with lower principal, lower interest rates and longer maturity.[2]

I. Private Sector Involvement

The Greek restructuring took place in the form of a so-called Private Sector Involvement (PSI). It was a voluntary haircut accepted by the private holders of Greek bond debt that excluded the debt held by the public sector, in particular the substantial amount of sovereign bonds held by the Euro zone central banks.[3] Over 90% of Greek’s private creditors participated. However, the remaining holders of Greek bonds withstood political pressure and did not agree to what was called a “voluntary” bond restructuring. In particular some hedge funds did not trade in their old bonds. As a result, the restructuring was accompanied by Greece’s announcement that all remaining old bonds would never be paid. The remaining creditors who defied the exchange would either lose everything or be forced into an exchange. Greece intends to compel this exchange by the introduction of retroactive (also called retrofit) Collective Action Clauses.[4]

II. Retroactive Collective Action Clauses

Collective Action Clauses in sovereign bond issues can be defined as a compendium of standardized provisions in sovereign bond contracts.[5] Their major purpose is to introduce a principle of majority voting into the bond terms. If a (qualified) majority of bondholders agree to a proposed restructuring of the bond obligations all bonds are modified.[6] Majority provisions in Collective Action Clauses thereby deviate from one of the most basic principles of contract law. The contractual claims of the dissenting minority are modified without the creditors’ consent.[7] This mechanism intends to overcome the so-called holdout problem – the phenomenon that bondholders will wait for their peers to give in to the demands of the creditor in order to profit from the compromise and to get paid in full.[8]

Prior to the haircut, domestic bonds were issued under Greek law, and the underlying issuance contract does not contain terms that protect the investors from negative changes of the legal framework (e.g. in the form of a “stabilization” or “freezing” clause). Taking advantage of that, Greece plans to enact a law which automatically amends all domestic bonds if a set majority of the bondholders accepts the voluntary exchange offer. What sounds like a legislative measure that leaves the decision about the amendment to the private sector, is actually a mere paltry excuse: the decision by the (qualified) majority of bondholders had already been taken before the enactment of the law.

III. Legal issues

Therefore, the question arises whether such a procedure leads to an expropriation of the bondholders. An expropriation might violate the Greek constitution that protects the right of property.[9] It may also violate the European Convention on Human Rights (ECHR).[10] However, this contribution will leave these aspects aside and entirely focus on the effect of Bilateral Investment Treaties (BITs) on the Greek CACs. BITs generally contain rules on the expropriation of foreign investment and provide that expropriation measures “must generally be non‐discriminatory, for a public purpose, accompanied by prompt, adequate and effective compensation and in accordance with due process of law”.[11]

IV. Expropriation of bondholders

Bondholders’ protection under these provisions depends on the issue of whether the exchange of bond debt by way of retroactive Collective Action Clauses qualifies as an expropriation (and in the case of BITs additionally on the controversially assessed preliminary question whether sovereign bond debt is covered by BITs)[12]. It could be argued that the actual haircut follows from the voluntary decision taken by a qualified majority of the bondholders, not by the legislative act.[13] However, in the current scenario, this line of argumentation must fail. It is merely formalistic and ignores the predetermined outcome of the law as well as the obvious intentions of the legislator. The Greek scenario is incomparable to the general exercise of standard Collective Action Clauses. The necessary number of bondholders has given its consent prior to the enactment of the law. Furthermore, this law does not define (and amend) the legal situation in a general way and for an indefinite number of cases. It is meant for exactly one case, and the beneficiary is the country itself. These benefits do not come as a mere reflex, but are the very purpose that the law is being enacted for. In contrast to that, a typical legislative measure regulates legal relationships in a general way and with no regard to a specific case that benefits the government. If, for example, the legislator changes the laws on rental property, the government may well benefit as part of a multitude of affected landlords. However, this effect is merely reflexive and not the pursued legislative purpose. The principle should be that when a sovereign chooses to deal with investors on a contractual basis, it waives its sovereign powers. As a consequence, the entire legal relationship should be subject to general principles of private law. It seems contradictory to turn to sovereign powers when conflicts arise in order to avoid being held by contractual promises.

It is for these reasons that the Greek law is incomparable to what might be considered an example for the legitimacy of retroactive Collective Action Clauses. The German statutes on corporate bonds allow the introduction of retroactive majority provisions into existing bond terms by majority vote.[14] However, this law does not apply to German sovereign bonds, and the German legislator therefore enacted it in its general legislative capacity and regulated the contractual relationship of third parties in an abstract and general way.

V. Inequality of treatment

In addition to that, matters of inequality of treatment arise. The restructuring only affects the private sector. All public debt is exempted. This includes all bonds held by the European financial facilities and especially the high number of Greek bonds owned by the central banks. This does not necessarily manifest a breach of the principle of equal treatment. Unequal treatment is open to justification. This justification could lie in the fact that the public sector provided and provides the liquidity which is necessary to guarantee the future sustainability of Greek debt. The Euro system has purchased the bonds as part of their Securities Markets Program in order to – in the words of the ECB – implement its monetary policy in times of perturbed transposition mechanisms (see above at B. III.). However, a proper assessment requires that these reasons are communicated clearly by the legislator.

VI. Bilateral Investment Treaties (BITs)

Bilateral Investment Treaties (BITs) seem bondholders’ best chance to argue their case for expropriation compensation. BITs are bilateral treaties between two governments which intend to mutually protect private foreign investment. BITs give rise to individual claims and remedies. They generally protect foreign investment from expropriation by requiring strict conditions for expropriation and appropriate compensation. They further provide non-discrimination and fair and equitable treatment clauses which necessitate that the foreign investors may not be discriminated in comparison to nationals or third parties.[15]

1. Application of BITs to investments in bonds

The typical investment protected by BITs is a direct investment in the host’s territory including the acquisition of assets held in the host country or the acquisition of a majority shareholding position. It is, on the other hand, an unresolved issue whether indirect investment also benefits from the protection, especially investments in sovereign bonds.

a) The Argentine default

A recent arbitration decision, however, helps to shed light on the issue. The Arbitral Tribunal at the International Centre for Settlement of Investment Disputes (ICSID) in Washington, D.C., decided in Abaclat et al. and the Argentine Republic about various claims against Argentina resulting from sovereign bonds. It was decided on the basis of the Argentina-Italy BIT which entered into effect on 14 October 1990. It is a decision affecting the claims of over 180,000 individuals and corporations. Argentina had defaulted on its sovereign bonds in December 2001 and in the following years extended exchange offers to the investors. In 2005, Argentina enacted a law (the “Cram Down” or “Emergency” Law) which provided that the exchange procedure would not reopen for bonds that had not been exchanged.

b) Exercise of sovereign powers

One of the essential issues in Abaclat concerned the tribunal’s jurisdiction in light of the contractual nature of the investors’ claims against Argentina and is equally important in the Greek scenario. The tribunal held that “(…) with respect to a BIT claim an arbitral tribunal has no jurisdiction where the claim at stake is a pure contract claim (…) because a BIT is not meant to correct or replace contractual remedies (…).” But it added that “(…) where the equilibrium of the contract and the provisions contained therein” were “unilaterally altered by a sovereign act of the Host State” the claim could not be considered a pure contract claim. The tribunal decided to apply this exception where “(…) the circumstances and/or the behavior of the Host State appear to derive from its exercise of sovereign State power. Whilst the exercise of such power may have an impact on the contract and its equilibrium, its origin and nature are totally foreign to the contract.”[16]

The tribunal saw these circumstances in the Argentine Emergency Law of 2005.[17] In the case of Greece, the retroactive Collective Action Clauses enacted by a Greek law fulfill these exceptional requirements. By passing such a law Greece applies means which have no basis in the bond contracts and do not derive from its rights as a party to the contract, but are wholly based on its sovereign powers.

c) Qualification of investment

A further issue in the Argentine that is elementary to the Greek scenario concerns the meaning of “investment”. The BIT was only relevant insofar as the bond claims could be qualified as investment claims under the scope of the BIT. In determining the matter, the tribunal interpreted the wording of the BIT. It decided that the BIT pursued a wide approach. Art. 1 of the unofficial English translation provides that “(i)nvestment shall mean, in compliance with the legislation of the receiving State and independent of the legal form adopted or of any other legislation of reference, any conferment or asset invested or reinvested by an individual or corporation of one Contracting Party in the territory of the other Contracting Party, in compliance with the laws and regulations of the latter party”. Art. 1 further named certain examples of investments, among which were “bonds, private or public financial instruments or any other right to performances or services having economic value, including capitalized revenues”. The tribunal started its analysis by looking for “(…) rights and values which may be endangered by measures of the Host State, such as an expropriation, and therefore deserve protection”. It came to the conclusion that in respect to the protective purpose of the BIT and in light of the wording of Art. 1, the Argentine sovereign bonds were a form of investment covered by the protection under the BIT.[18]

A further issue was whether the bond purchases constituted an investment “in the territory of the other Contracting Party” which is a common requirement in BITs. Argentina argued that the bondholders’ purchases did not qualify as such investment since the investment had taken place between investors and banks as intermediaries. Therefore, no actual transfer of money from the investors to Argentina had taken place.  In answer to these objections, the tribunal defined the criteria applying to investments of purely financial nature. It held that it was essential “(…) where and/or for the benefit of whom the funds are ultimately used, and not the place where the funds were paid out or transferred.”[19] It dismissed the argument that the intermediaries as primary underwriters extended the principal to Argentina and only afterwards received payments from their customers. For the tribunal, the solely relevant factor was the fact that the underwriters extended their lump payment only in regard to the fact that they would “(…) be able to collect sufficient funds from the individual purchasers of security entitlements (…)” and that “(…) the funds generated through the bonds issuance process were ultimately made available to Argentina (…)”.[20]

All of these holdings by the tribunal support the qualification of Greek sovereign debt as investments under the BITs that Greece entered into.

d) Dissenting opinions

The decision in Abaclat is the holding of the majority of the tribunal members, and the dissenting opinion has argued for a more limited definition of investments.[21] Argentina has filed for an annulment of the decision, and the result of the annulment procedure seems unpredictable. This is due to the fact that there is no established opinion on the definition of an investment. Other ICSID have come to different conclusions. Whereas the majority in Abaclat held that the definition of investment should be decided independently on the basis of the provisions of the individual BIT, other tribunals favor a more general approach and base their definition of investments on the wording of the ICSID Convention. Art. 25(1) of the Convention provides that “(t)he jurisdiction of the Centre shall extend to any legal dispute arising directly out of an investment, between a Contracting State (…) and a national of another Contracting State, which the parties to the dispute consent in writing to submit to the Centre”. Some tribunals decided that this provision of the Convention contained an objective standard from which the parties to a treaty could not deviate.[22]

However, even the supporters of such an “objective standard theory” have not agreed on a uniform definition of investment. Whereas one tribunal excluded contingent liabilities form the scope of investment, another required that the investor participate in the risks of the transaction.[23] The latter approach could exclude sovereign bonds from the definition of an investment since the bondholders do not bear typical business risks. Their risks are limited to a sovereign default and therefore to the situation that gives raise to the dispute.

However, such a limited interpretation of the term “investment” seems unfounded. Bondholders are as exposed to arbitrary sovereign measures as other investors. Furthermore, the purpose of BITs and other treaties on the protection of Foreign Direct Investment (FDI) should be considered. The amount of money invested in sovereign bonds is enormous, and Argentina and Greece illustrate how vulnerable these investments are. Low levels of protection cause insecurities in the markets for foreign investments, and other sovereigns feel the negative impact.  In the absence of sovereign debt restructuring regimes (see above at C I), arbitration promises to (re-)establish market confidence. In the light of that, it is neither helpful nor required to limit the scope of arbitration on BITs to non-securitized forms of investment. Therefore and in unison with the majority in Abaclat, the matter whether sovereign bond debt qualifies as investment should be decided by interpretation of the wording of the individual BIT.

2. The Greek BITs

Greece has entered into 38 BITs. The contractual partners of these treaties are Albania, Algeria, Argentina, Armenia, Azerbaijan, Bosnia and Herzegovina, Bulgaria, Chile, China, Croatia, Cuba, Czech Republic, Egypt, Estonia, Georgia, Germany, Hungary, Republic of Korea, Latvia, Lebanon, Lithuania, Moldova, Romania, Slovenia, South Africa, Turkey, Uzbekistan, Serbia, Mexico, Kazakhstan, Morocco, Poland, Russian Federation, Syrian Arab Republic, Tunisia, Jordan, India and Iran.[24] As can be seen from this list, typical hedge fund hubs are not among these countries so that hedge funds will hardly profit from the protection provided form these BITs. However, not only hedge funds, but also retail investors are among the bondholders which oppose the voluntary haircut.[25]

Some of these BITs define the term investment in a very similar way as the Argentine-Italian treaty in the Abaclat decision. A randomly picked BIT, the one between Greece and Bosnia and Herzegovina, defines investment as “(…) every kind of asset by an investor of one Contracting Party invested in the territory of the other Contracting Party, and in particular, though not exclusively includes (…) claims to money or any performance having economic value, as well as loans connected to an investment (…)”. An expropriation is deemed lawful in this BIT if it takes place in the public interest, under due process of law, on a non-discriminatory basis and against prompt, adequate and effective compensation.[26]

Similar provisions can be found in other BITs that Greece signed. If the Abaclat interpretation is applied to these BITs, it could well follow that the investment in Greek sovereign bonds is protected by the BITs and that Greece infringed its obligations as to equal treatment because the entire public sector – Greek and foreign – had been spared by the latest restructuring.[27] In any case Greece would owe prompt, adequate and effective compensation. The Greek scenario is comparable to the findings in Abaclat in that “(i)t may (…) constitute an act of expropriation where the new regulations and/or laws deprive an investor from the value of its investment or from the returns thereof.”

Another problematic matter is the determination of the amount of compensation that would have to be granted to the bondholders for expropriation. Are the bondholders entitled to full compensation for the full principal and interest even if they purchased their bonds on secondary markets and paid significantly less than the bonds were sold for in the primary markets or should this fact reduce their claims to the market value of the bonds? If the market value seems appropriate, how should it be determined?

Purchases in the secondary market are problematic for another reason. Can they be considered investments in the territory of Greece given that the purchase price may flow from one foreign investor to another? This issue is not explicitly addressed in the Abaclat decision. However, the line of argumentation helps. The tribunal emphasizes the fact that in transactions involving intermediaries, the ultimate beneficiary is the issuer of sovereign bonds. From that it could be derived that transactions in the secondary markets are a consequence of the issuance of sovereign bonds and therefore indirectly benefit the sovereign. Investors in the primary markets may be found only because the bonds are transferable and therefore tradable on secondary markets. A different line of argumentation might simply hold that all further investors merely succeed into the legal position that the primary purchaser acquired.

The amount of compensation depends on the approach taken. If the rights of the bondholders are seen as derived from the primary purchasers, compensation should cover the full amount promised by the issuer at the time of the underwriting. The alternative approach which emphasizes the fact that every transfer of title is part of the bond scheme approved by the issuer would lead to the more satisfactory result that compensation would have to reflect the market value of the bond. The market value could be determined according to what can be considered a recognized standard for BITs. The 2012 U.S. Model BIT provides that the value of the investment is decided by the price paid prior to the act of expropriation and may not reflect any change in value occurring because the intended expropriation had become known earlier.[28] This corresponds to the findings of international arbitrators who applied customary international law to determine the standard of compensation for expropriation.[29]

3. New challenges to Arbitration

In respect to BITs, there is a dimension to the newly introduced inter-governmental financial facilities of the Euro zone which seems unique. The traditional wording of BITs seems ill-prepared for the new approaches taken by the Euro zone governments. Generally speaking, BITs include most favorable nation (MFN) clauses as well as fair and equitable treatment (FET) clauses. These clauses guarantee that all investors regardless of their nationality and affiliation to the public or private sector enjoy equal treatment. In the event of a sovereign default, these clauses intend to prevent investors from losses resulting from the preferential treatment of a third party. The new Euro zone financial facilities, however, create a category of investors for which the BITs seem ill-prepared. The European Stability Mechanism (ESM) which will start operating later in 2012 ESM[30] claims preferential creditor status.[31] This is not unheard of. The IMF enjoys this status, not explicitly granted by international law, but due to customs and general recognition.[32] However, with more and more emergency funding pouring into troubled Euro zone countries and enjoying preferred creditor status, the intention of the BITs to guarantee investor protection in the situation of sovereign default seems challenged.

E. Conclusions

The first restructuring in the Euro zone took place in March 2012 when Greece offered a voluntary exchange of its sovereign bonds and simultaneously announced that non-participating bondholders would be forced to comply. This event is remarkable since the imminent legal issues have not been addressed and might lead to a number of law suits of bondholders against the Hellenic Republic. It has been argued here that an involuntary restructuring could not only be challenged in Greek courts for infringements of the Greek constitution, but also find its way to arbitral tribunals for potential breach of BIT clauses. The holdings of the ICSID arbitration tribunal in its Abaclat decision against Argentina provide persuasive arguments that bondholders could use in disputes against Greece if they are nationals of a country that has entered into a BIT with Greece.

A further dimension of the current restructuring regime in the Euro zone deserves attention. The European Stability Mechanism (ESM) that is supposed to become a permanent source of funding for Euro zone sovereigns (and other benefactors such as financial institutions) claims preferred creditor status. This conflicts with traditional clauses in BITs. Non-Euro zone countries entering into BITs with Euro zone countries will have to decide whether they are willing to accept such a disadvantage to their investors. If they do they will not do it for free, and the Euro zone will face yet another increase in costs resulting from its rescue efforts.

Christian Hofmann


[1] On the European Stability Facility see the framework agreement and the articles of incorporation, both available at http://www.efsf.europa.eu/about/legal-documents/index.htm; on an up-to-date summary of the lending operations of the EFSF see at http://www.efsf.europa.eu/about/operations/index.htm. On the future European Stability Mechanism (ESM) see the Treaty establishing the European Stability Mechanism of 2 Feb 2012, available at http://www.european-council.europa.eu/media/582311/05-tesm2.en12.pdf; see also the ECB Monthly Bulletin 7/2011, 71-84; on the financing by the European Financial Stability Mechanism (EFSM) see the Council Regulation (EU) No 407/2010 of 11 May 2010 establishing a European financial stabilisation mechanism, OJEU 2010 L 118/1. On all of these funding mechanisms in detail J.-V. Louis, 47 Common Market Law Review (CMLR) 971 (2010); D. Zandastra, 3 Capital Markets Law Journal (CMLJ) 285; S. Seyad, 9 Journal of International Banking Law and Regulation 421 (2011).

[2] On some of the facts of the Greek restructuring see http://www.spiegel.de/international/europe/historic-opportunity-greece-pulls-off-debt-restructuring-deal-a-820343.html. On the negative effect of a restructuring on the markets see S. Choi/M. Gulati/E. Posner, 6 Capital Markets Law Journal 163, 175 et seq. (2011). However, restructuring of domestic bond by legislative means did happen in the past, see on Russia and Uruguay L. Buchheit/M. Gulati, How to Restructure Greek Debt, Duke Law Working Papers 2011, p. 6 and p. 11, available at http://scholarship.law.duke.edu, on the dangers involved.

[3] The Euro zone central banks have provided a number of measures to aid the indebted Euro countries. The most significant ones are the sovereign bond purchasing programs. On an updated list on the volume of the sovereign bond purchase programs see at http://www.ecb.int/mopo/liq/html/index.en.html#portfolios. On the latest announcement of the ECB of its new purchasing program, called “Outright Monetary Transactions (OMT)”, see at http://www.ecb.int/press/pr/date/2012/html/pr120906_1.en.html.

[4] On retroactive Collective Action Clauses in general and the Greek restructuring see M. Boudreau, 2 Harvard Business Law Review 164, 166 (2012). Generally on Collective Action Clauses L. Dixon/D. Wall, 8 Financial Stability Review 142, 148 (2000); C. Hofmann/C. Keller, 175 Zeitschrift für das gesamte Handels- und Wirtschaftsrecht (ZHR) 684-723 (2011).

[5] On the terminology F. Elderson/M. Perassi, 4 European Banking and Financial Law Review (Euredia) 239, 241 (2003): “Collective action clauses (CACs) are the denominator usually given to a number of different clauses found in various forms and to a varying degree in bond contracts under the laws of various jurisdictions which have in common, principally, that they enable a majority of bondholders to bind a minority against their will to the amendment of the terms of the contract and to a number of other actions in relation to the bonds (such as acceleration and de-acceleration)“. Compare also the report by the G-10 of May 1996, “The Resolution of Sovereign Liquidity Crises“, p. 16.

[6] On majority provisions in Collective Action Clauses following the English law model L. Burn, “Bond issues under U.K. law: how the proposed German legislation compares“, in: Baums/Cahn (ed.), Die Reform des Schuldverschreibungsrechts, 2004, p. 219, 238. On New York law style Collective Action Clauses L. Buchheit/M.  Gulati, 51 Emory Law Journal (2002) 1317, 1329. On the impediments for Collective Action Clauses resulting from the Trust Indenture Act (TIA) which has been applied beyond its limited scope to sovereign bonds see G. Shuster, “The Trust Indenture Act and International Debt Restructurings“, 14 American Bankruptcy Institute (ABI) L.R. 431 (2006). On an international approach to majority provisions see the report of the G-10 Working Group on Contractual Clauses of 26.9.2002, p. 3.

[7] On this principle see H. Beale (ed.), Chitty on Contracts, Vol. 1 (General Principles), 29th ed. 2004, para 1-5; E. McKendrick, Contract Law, Text, Cases and Materials, 3rd ed. 2008, p. 939 et seq.; G. Treitel, The Law of Contract, 6th ed. 2004, p. 312 et seq. On the protection of contractual expectations see p. 5 et seq.

[8] On the holdout problem L. Buchheit/M. Gulati, 48 U.C.L.A. Law Review 59, 65 et seq. (2000); L. Alfaro/N. Maurer/F. Ahmed, “Gunboats and Vultures: market Reaction to the ‘Enforcement’ of Sovereign Debt”, Working Paper 2007, p. 4, available at http://www.econ.ucla.edu/workshops/papers/History/Maurer,%20Gunboats%20and%20Vultures,%20version%205.2.pdf; P. Kenadjian, “Bond Issues under New York and U.S. Law: Considerations for the German Law Maker from a U.S. Perspective“, in: Baums/Cahn (ed.), Die Reform des Schuldverschreibungsrechts, 2004, p. 245, 263. See also S. Choi/M. Gulati/E. Posner, 6 Capital Markets Law Journal 163-187 (2011). The authors reach the conclusion that Collective Action Clauses should create creditor confidence and potentially lower the cost of financing, at least for financially stable sovereigns. On this see also F. Elderson/M. Perassi, 4 European Banking and Financial Law Review (Euredia) 239, 262 (2003); L. Dixon/D. Wall, 8 Financial Stability Review 142, 148 (2000). On the harmonized Colective Action Clauses of the Euro zone see the Common Terms of Reference of 17 February 2012, available at http://europa.eu/efc/sub_committee/pdf/cac_-_text_model_cac.pdf, as well as the supplemental provisions at http://europa.eu/efc/sub_committee/pdf/cac_-_supplemental_provisions.pdf.

[9] Art. 17(2) of the Greek constitution provides that “(n)o one shall be deprived of his property except for public benefit which must be duly proven, when and as specified by statute and always following full compensation corresponding to the value of the expropriated property at the time of the court hearing on the provisional determination of compensation (…)”.

[10] To a similar effect, Art. 1 of the Protocols to the European Convention on Human Rights (ECHM) guarantees that “(e)very natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law”.

[11] See Art. 6 of the 2012 U.S. Model Bilateral Investment Treaty; see also J. Dunoff/S. Ratner/D. Wippman, International Law, Norms, Actors, Process: A Problem-oriented Approach, 2nd ed. 2006, p. 87 et seq.

[12] On the approach to covered debt and the investors entitled to claims see UNCTAD, Investor-State Dispute Settlement and Impact on Investment Rulemaking, p. 9 et seq, and also the changing opinion on minority shareholders on p. 15-17.

[13] Compare L. Buchheit/M. Gulati, How to Restructure Greek Debt, Duke Law Working Papers 2011, p. 11, available at http://scholarship.law.duke.edu, who consider Greek retroactive Collective Action Clauses in a less drastic scenario.

[14] See sec. 24(2) of the Gesetz über Schuldverschreibungen aus Gesamtemissionen of 31 July 2009, BGBl. I, p. 2512.

[15] On all of the above see J. Alvarez, The Public International Law Regime Governing International Investment, 2011, p. 30-33.

[16] Decision on Jurisdiction and Admissibility by the Arbitral Tribunal at the International Centre for Settlement of Investment Disputes Washington, D.C., Abaclat and others and the Argentine Republic of 4 August 2011, at 316-318.

[17] Abaclat (fn. 16), 321-326.

[18] Abaclat, (fn. 16), at 347-356.

[19] Abaclat, (fn. 16), at 374.

[20] Abaclat, (fn. 16), at 376-378.

[21] See the dissenting opinion by Georges Abi-Saab at http://italaw.com/documents/Abaclat_Dissenting_Opinion.pdf.

[22] ICSID tribunal decision Joy Mining Machinery Limited and The Arab Republic of Egypt (ICSID Case No. ARB/03/11) of 6 Aug 2004, at 50; Salini Costruttori SpA v Morocco (ICSID Case No. ARB/00/4), 42 ILM 609, 622 (2003).

[23] ICSID tribunal decision Salini Costruttori SpA v Morocco (ICSID Case No. ARB/00/4), 42 ILM 609, 622 (2003).

[24] See the full list of countries at http://icsid.worldbank.org/ICSID/FrontServlet.

[25] On the definition of a retail investor see Abaclat, (fn. 16), at 23: “Retail investors are those who are individuals, investing on their own behalf (…)”.

[26] See Art. 1 and 5 of the agreement on the Promotion and Protection of Investments between the Hellenic Republic and Bosnia and Herzegovina of 1 May 2002.

[27] On fair and equitable treatment Enron Corp. v. Argentine Republic, ICSID Case No. ARB/01/3 of 22 May 2007; J. Dunoff/S. Ratner/D. Wippman, International Law, Norms, Actors, Process: A Problem-oriented Approach, 2nd ed. 2006, p. 814 et seq.

[28] Art. 6 No. 2 b and c of the 2012 U.S. Model Bilateral Investment Treaty provides that “(t)he compensation referred to in paragraph 1(c) shall (…) be equivalent to the fair market value of the expropriated investment immediately before the expropriation took place (“the date of expropriation”) and not reflect any change in value occurring because the intended expropriation had become known earlier”. See also the 1992 World Bank World Bank Guidelines on the Treatment of Foreign Direct on the Treatment of Foreign Direct Investment, available at http://italaw.com/documents/WorldBank.pdf. See also Metalclad Corp. and Mexico, ICSID CASE No. ARB(AF)/97/1 of August 30, 2000, para. 122: “(…)any award to the claimant should, as far as is possible, wipe out all the consequences of the illegal act and reestablish the situation which would in all probability have existed if that act had not been committed (the status quo ante)”.

[29] See the decision by the Iran-United States Claims Tribunal in SEDCO, Inc. v. National Iranian Oil Company and the Islamic Republic of Iran, 10 Iran-U.S. Cl. Rep. 180 (1986).

[30] On the ESM see the ESM treaty of 2 Feb 2012, above fn. 1. The ratification of the ESM was delayed by Germany because its federal constitutional court (Bundesverfassungsericht) had asked for a delay in the ratification process until its ruling in a preliminary hearing on the compatibility of the obligations arising from the ESM with the German constitution. On the ruling see the Press release no. 67/2012 of 12 September 2012 of the German Constitutional Court, available at http://www.bundesverfassungsgericht.de/pressemitteilungen/bvg12-067en.html.

[31] See the ESM treaty of 2 Feb 2012 at 13 (fn. 1). See also ECB Monthly Bulletin, July 2011, p. 82.

[32] On the preferred creditor status of the IMF see ECB Monthly Bulletin, July 2011, p. 80.

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