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Westminster Law School lecturer highlights importance of win for Greek government in legal case

Law 27 April 2015

Dr Ioannis Glinavos, Senior Lecturer in Law at Westminster Law School, has written about the high profile legal case of Poštová Banka vs Greece.

Poštová Banka is a Slovak bank (along with its Cypriot shareholder, Istrokapital SE) that sued Greece at investment arbitration for losses incurred due to the 2012 ‘haircut’ on Greek sovereign bonds. A haircut on bonds is a reduction of their face-value amount and is treated like a credit event and/or default by credit rating agencies.

Poštová and Istrokapital argued that under the Greece-Slovak Republic and the Cyprus-Greece bilateral investment treaties they are entitled to compensation for their losses, which amount to roughly half the amount of €504,000,000 they had invested in Greek bonds.

In what amounts to a significant win for Greece, the tribunal rejected the claim on the basis of lack of jurisdiction. The Bilateral Investment Treaty on which Poštová based its claim, did not cover financial investments such as the purchase of sovereign bonds.

The Greek win weakens the arguments of opponents to the Transatlantic Trade and Investment Partnership (TTIP) by showing that investors do not always win and that tribunals are not always investor biased (the language of the tribunal has made this clear). However the case also weakens the arguments of the European Commission as to the need to codify standards to prevent ever-expanding definitions of investor rights.

Further details about the case on the personal blog of Dr Ioannis Glinavos.

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