Government bonds not covered, despite broad definition of “investment” in Slovakia–Greece BIT; tribunal dismisses claims against Greece

Poštová Banka, a.s. and Istrokapital SE v. The Hellenic Republic, ICSID Case No. ARB/13/8

On April 9, 2015, a tribunal at the International Centre for Settlement of Investment Disputes (ICSID) dismissed for lack of jurisdiction a case against Greece related to the downgrading of Greek Government Bonds (GGBs) as a result of the economic crisis in the country.

The claimants were Poštová banka, a.s. (Poštová banka), a Slovak bank, and Istrokapital SE (Istrokapital), a company organized under Cypriot law. Poštová banka had acquired a total of €504 million in GGBs through several transactions in 2010; Istrokapital held shares in Poštová banka. The deterioration of Greece’s economy and the downgrading of the GGBs by bond rating agencies led the claimants to initiate arbitration on May 3, 2013 under the Slovakia–Greece and Cyprus–Greece bilateral investment treaties (BITs).

Greece’s jurisdictional objections

Greece objected to the tribunal’s subject matter, personal, and temporal jurisdiction; it also maintained that the claims should be dismissed for abuse of process, and that the tribunal had no jurisdiction over the umbrella clause claims. The tribunal focused first on Greece’s two-fold objections to subject matter jurisdiction, concerning Istrokapital’s claims under the Cyprus–Greece BIT and Poštová banka’s claims under the Slovakia–Greece BIT.

Istrokapital under Cyprus–Greece BIT: “indirect investment” not protected

Istrokapital argued that it had made an indirect investment in GGBs through its shareholding in Poštová banka, and that this investment—and not its shareholding in Poštová banka—was protected under the Cyprus–Greece BIT. Greece objected to the tribunal’s jurisdiction on the grounds that Istrokapital itself did not have an investment under the Cyprus–Greece BIT and could not base jurisdiction on Poštová banka’s GGBs.

The tribunal extensively reviewed case law on whether shareholders have claims or rights in assets of companies in which they hold shares; it looked at HICEE B.V. v. SlovakiaST-AD GmbH v. BulgariaEl Paso v. ArgentinaBG v. ArgentinaUrbaser v. ArgentinaCMS v. Argentina, and Paushok v. Mongolia. For the tribunal, these decisions established that, while “a shareholder of a company incorporated in the host State may assert claims based on measures taken against such company’s assets that impair the value of the claimant’s shares,” the shareholder does not have “standing to pursue claims directly over the assets of the local company, as it has no legal right to such assets” (para. 245).

Considering that Istrokapital had sought jurisdiction on its indirect investment, but failed to establish that it had any rights to Poštová banka’s assets protected by the BIT, the tribunal dismissed all of Istrokapital’s claims for lack of jurisdiction.

Poštová banka under Slovakia–Greece BIT: the tribunal structures its approach to interpreting whether GGBs qualified as “investments”

The parties disagreed as to how the Vienna Convention on the Law of the Treaties (VCLT) guides the interpretation of “investment” under the ICSID Convention and the Slovakia–Greece BIT, and as to whether Poštová banka’s GGBs were within the scope of those definitions of “investment.”

The tribunal first analyzed how the GGBs were issued by Greece and acquired by Poštová banka. In particular, it pointed out that Poštová banka acquired its interests in the GGBs not in their initial distribution, but on the secondary market, and that it deposited these interests with Clearstream Banking Luxembourg (Clearstream), a universal depository. It then turned to analyzing whether Poštová banka’s interests in the GGBs qualified as “investments” under Article 1(1) of the Slovakia-Greece BIT.

If “investment” is “every kind of asset,” does the illustrative list serve a purpose?

The claimants understood that their interests were encompassed in the broad definition of “investment” in the chapeau of the Article 1(1) (“[i]nvestment means every kind of asset and in particular, though not exclusively includes: […]”) and in the references to “loans” or “claims to money” in its section (c). They argued that “investment” has no inherent meaning under international law. Greece disagreed, maintaining that the term has an inherent meaning, and that the tribunal should not look for a special definition under the treaty.

The tribunal considered that, while the definition of “investment” under the BIT was broad (“every kind of asset”), this meant neither that all categories qualified as an “investment” nor that the only way to exclude a category would be an express exclusion. It held that “investor–State tribunals are [not] authorized to expand the scope of the investments that the State parties intended to protect merely because the list of protected investments in the treaty is not a closed list” (para. 288).

While observing that several treaties include broad asset-based definitions of “investment,” the list of categories that illustrate what may constitute an investment can vary significantly. To interpret the treaty in good faith—considering its text, context, object, and purpose, as required by the VCLT—the tribunal understood that it should interpret the list of examples under the “investment” definition without making the list useless or meaningless.

The tribunal also looked to case law to support its conclusion. It found that the decisions in Fedax v. VenezuelaAbaclat v. Argentina and Ambiente Ufficio v. Argentina “have consistently considered the text of the list of categories that may constitute an investment as a definitive element to determine whether the activity or operation at stake may be considered an investment” (para. 303).

Are GGBs “investments” under any of the categories of the illustrative list?

The tribunal set out to determine whether Poštová banka’s interests in GGBs fit within the categories of investments listed in the BIT. It started from the premise—undisputed by the parties—that GGBs constitute sovereign debt, which cannot be equated to private debt, as well as securities in the form of bonds, which are subject to specific and strict regulation.

It then noted that none “[n]either Article 1(1) of the Slovakia–Greece BIT nor other provisions of the treaty refer, in any way, to sovereign debt, public titles, public securities, public obligations or the like” (para. 332). The only reference to bonds, under Article 1(1)(b), is limited to bonds issued by private companies (“debentures”). The tribunal agreed with Greece that the exclusion of sovereign bonds from the definition of “investment” indicates that the contracting parties did not intend to cover them as investments.

The claimants had proposed that GGBs fit within a wide interpretation of Article 1(1)(c), which refers to “loans, claims to money or to any performance under contract having a financial value.”

The tribunal disagreed that GGBs could be considered loans, because of the distinction between loans and bonds. Loans generally have identified creditors and limited tradability, are not subject to securities regulations, and involve a contractual relationship between lender and the ultimate debtor. In turn, bonds are generally held by large groups of anonymous creditors, have high tradability, are subject to restrictions and regulations, and involve a contractual relationship between the holder and the intermediaries (not with the ultimate debtor). The facts of the case emphasized the relevance of the distinction: Poštová banka was able to trade the GGBs fast, and had a direct contractual relationship not with Greece, the ultimate debtor, but with Clearstream, the intermediary from which it had acquired GGBs.

The claimants had also wanted to include GGBs within “claims to money” under Article 1(1)(c). The tribunal again disagreed. First, it explained that it should not lightly expand treaty language to interpret a general reference to “claims to money” as including government bonds. Second, looking at the context—“claims to money or to any performance under contract having a financial value”—the tribunal held that any claim to money, to fall within the definition, must arise from a contract with the respondent. This was not the case, given that Poštová banka did not have a contract with Greece.

Dismissal and costs

Concluding that neither of the claimants had an “investment” within the meaning of the relevant BITs, the tribunal dismissed the case for lack of jurisdiction, and considered it unnecessary to examine Greece’s other objections.

Even ruling in favour of Greece, the tribunal noted that “the jurisdictional issue was not clear-cut and involved a complex factual and legal background” (para. 377), and ordered each party to bear its own legal costs and an equal share of the arbitration costs.


The ICSID tribunal was composed of Eduardo Zuleta (President appointed by the Secretary-General of ICSID, Colombian national), John M. Townsend, (claimant’s appointee, U.S. national) and Brigitte Stern (respondent’s appointee, French national). The award is available at


Martin Dietrich Brauch is an International Law Advisor and Associate of IISD’s Investment for Sustainable Development Program, based in Latin America.