THE ARBITRATION INSTITUTE OF THE STOCKHOLM CHAMBER OF COMMERCE UNDER THE SCC RULES

Transcription

1 TEAM ALIAS: PADILLA THE ARBITRATION INSTITUTE OF THE STOCKHOLM CHAMBER OF COMMERCE UNDER THE SCC RULES CALRISSIAN & CO., INC. CLAIMANT V. FEDERAL REPUBLIC OF DAGOBAH RESPONDENT MEMORIAL ON BEHALF OF THE RESPONDENT

2 TABLE OF CONTENTS TABLE OF ABBREVIATIONS iii INDEX OF AUTHORITIES v STATEMENT OF FACTS xii CONTENTION 1: THE CLAIMS OF CALRISSIAN & CO. INC. REACH BEYOND THE JURISDICTION OF THIS TRIBUNAL AND HENCE CANNOT BE ADJUDICATED UPON. 1 I. THE TRIBUNAL DOES NOT POSSESS JURISDICTION RATIONAE MATERIAE TO ADJUDICATE THE PRESENT DISPUTE. 1 II. THE TRIBUNAL DOES NOT POSSESS JURISDICTION RATIONAE PERSONAE TO ADJUDICATE THE PRESENT DISPUTE. 5 III. THE STATES PARTIES TO THE BIT DID NOT EVINCE ANY INTENTION TO INCLUDE SOVEREIGN BONDS WITHIN THE DEFINITION OF INVESTMENT UNDER ARTICLE 1 OF THE BIT. 6 CONTENTION 2: THE DECISION OF THE PCA TRIBUNAL, AS CITED BY THE CLAIMANT, IS ANACHRONISTIC AND NOT PERTINENT TO THE PRESENT DISPUTE. 8 I. THE PCA AWARD DOES NOT CONFER JURISDICTION UPON THIS TRIBUNAL. 8 II. THE PCA AWARD SHOULD NOT BE THE BASIS FOR THE INTERPRETATION OF THE BIT. 9 III. THE WEIGHTAGE OF THE DISSENTING OPINION. 10 CONTENTION 3: THE FORUM SELECTION CLAUSE RENDERS THE CLAIMS INADMISSIBLE. 12 I. THE CLAIM IS OF A CONTRACTUAL NATURE AND THUS THE GENERAL UNITY OF THE CONTRACT MUST BE UPHELD. 12 II. THE FORUM SELECTION CLAUSE CONSTITUTES A WAIVER OF THE OFFER OF ARBITRATION UNDER ART. 8 OF THE BIT. 13 III. THE PRINCIPLE OF GENERALIA SPECIALIBUS NON DEROGANT MAKES THE CHOICE OF FORUM EXCLUSIVE AND BINDING. 14 CONTENTION 4: DAGOBAH HAS NOT VIOLATED THE FAIR AND EQUITABLE TREATMENT STANDARD [ FET ] AS A BIT OBLIGATION. 16 I. THE SOVEREIGN DEBT RESTRUCTURING OF 2012 WAS EFFECTED BY THE VOLUNTARY DECISION TAKEN BY A QUALIFIED MAJORITY OF THE BONDHOLDERS, NOT BY THE LEGISLATIVE ACT INTRODUCING COLLECTIVE ACTION CLAUSES [ CACS ]. THUS, TREATY OBLIGATIONS HAVE NOT BEEN TRIGGERED. 16 II. THE USE OF CACS HAS BEEN ENDORSED BY INTERNATIONAL ORGANIZATIONS AND FINANCIAL CIRCLES ALIKE. 16 III. ARBITRATING ON BOND ISSUES DESPITE THE OPERATION OF CACS WOULD ALLOW FOR TREATY SHOPPING AND CREATE A LEGAL GAP IN THE INTERNATIONAL COMMUNITY S COLLECTIVE ACTION POLICY. 18 i

3 IV. ARGUENDO, THE RESPONDENT STATE HAS ACCORDED A FAIR AND EQUITABLE TREATMENT [FET] TO CALRISSIAN INC. 19 A. The Respondent State has respected the Legitimate Expectations of the Claimant without subjecting it to either Coercion or Harassment. 19 B. The Respondent State has followed due process attesting itself to the highest degrees of procedural propriety and good faith. 20 CONTENTION 5: IN ANY EVENT, THE RESPONDENT STATE S ACTIONS RELATING TO THE SDR, QUALIFY AS MEASURES TO PROTECT ITS ESSENTIAL SECURITY INTERESTS UNDER ARTICLE 6 OF THE BIT. 23 II. I. THE RESPONDENT STATE S ACTIONS ARE SAFEGUARDED BY THE LEX SPECIALIS PROVISIONS OF ARTICLE 6 OF THE BIT, THE NON-PRECLUDED MEASURES (NPM CLAUSE). 23 ARGUENDO, THE RESPONDENT STATE S ACTIONS ARE PROTECTED UNDER THE CIL DEFENCES OF NECESSITY AND FORCE MAJEURE. 24 A. Restructuring its Sovereign Debt was the only way for Dagobah to safeguard its economy from the grave and imminent peril of a complete economic breakdown. 24 B. The Respondent State, faced with an irresistible force beyond the control of the State has not in any way contributed to the situation of Force Majeure. 25 C. Lastly, Article 25 deals with inter-state conflicts and excludes Claimant s essential interests. 26 ii

4 TABLE OF ABBREVIATIONS S. No Abbreviation Full Form 1. Paragraph 2. AIL Arbitration International Law 3. Art. Article 4. ARB Arbitration 5. AJIL American Journal of International Law 6. BIT Bilateral Investment Treaty 7. CEPR Centre for Economic Policy Research 8. CAC Collective Action Clause 9. CUP Cambridge University Press 10. EC European Commission 11. EU European Union 12. FDI Foreign Direct Investment 13. FET Fair and Equitable Treatment 14. GA General Assembly 15. GATS General Agreement on Trade and Services 16. ICLQ International & Comparative Law Quarterly 17. ICSID International Centre for Settlement of Investment Disputes 18. ICSID Rev ICSID Review Foreign Investment Law Journal 19. IFLR International Financial Law Review 20. IIA International Investment Agreement 21. ILC International Law Commission 22. ILM International Legal Materials 23. ILR International Law Reports 24. IMF International Monetary Fund 25. Inc. Incorporated iii

5 26. MFCC Most Favored Creditor Clause 27. MFN Most Favored Nation 28. MIGA Multilateral Investment Guarantee Agency 29. MST Minimum Standard of Treatment 30. NAFTA North American Free Trade Agreement 31. OECD Organization for Economic Cooperation and Development 32. OUP Oxford University Press 33. PCA Permanent Court of Arbitration 34. PCIJ Permanent Court of International Justice 35. PUP Princeton University Press 36. SCC Stockholm Chamber of Commerce 37. SDR Sovereign Debt Restructuring 38. SDRM Sovereign Debt Restructuring Mechanism 39. Sess. Session 40. S.p.A Share Price Agreement 41. SRA Sovereign Restructuring Act 42. UNCITRAL United Nations Commission on International Trade Law 43. UNCTAD United Nations Conference on Trade and Development 44. UNCTC United Nations Convention on Transnational Corporations 45. UNGAOR United Nations General Assembly Official Records 46. USA United States of America 47. v. Versus 48. VCLT Vienna Convention on the Law of Treaties 49. WCR World Court Reports 50. YUP Yale University Press iv

6 INDEX OF AUTHORITIES ICSID CASES Abaclat and Others v. The Argentine Republic, Decision on Jurisdiction and Admissibility, ICSID Case No. ARB/07/5 15 AES Corporation v. Argentina ICSID Case No. ARB/02/17 22 Amco v Indonesia 22 Ceskoslovenska Obchodni Banka, A.S. v. The Slovak Republic, ICSID Case No. ARB/97/4 17 CMS Gas Transmission Company v. Argentine Republic, ICSID Case No. ARB/01/8 (2007) _ 23 Compania De Auguas Del Aconquija S.A & Vivendi Universal v. Argentine Republic ICSID Case No. ARB/97/3 25 Compania De Auguas Del Aconquija S.A & Vivendi Universal v. Argentine Republic ICSID Case No. ARB/97/3, Award 25 Continental Casualty Company v. Argentina, ICSID Case No. ARB/03/9 36 Deutsche Bank AG v. Democratic Socialist Republic of Sri Lanka, ICSID Case No. ARB/09/02 15 El Paso Energy International Co. v. The Argentine Republic, ICSID Case No. ARB/03/15 26 El Paso Energy International Company v. The Argentine Republic, ICSID Case No. ARB/03/15 36 Emilio Agustín Maffezini v. The Kingdom of Spain, ICSID Case No. ARB/97/7 26 Enron Corpn. And Ponderosa Assets, L.P v. The Argentine Republic, ICSID Case No. ARB/01/3 22 Enron Corpn. And Ponderosa Assets, L.P v. The Argentine Republic, ICSID Case No. ARB/01/3, Award, 260 (2007) 22 Fedax N.V. v. Venezuela, ICSID Case No. ARB/96/3, Award (1998) 17 Gas Transmission Co. v. Argentine Republic, Award, ICSID Case No. ARB/01/08 33 Genin v. Republic of Estonia, ICSID Case No. ARB/99/2 38 Joy Mining Machinery Limited v. Egypt, ICSID Case No. ARB/03/11 17 v

7 LG&E Energy Corp. v. Argentine Republic, ICSID Case No. ARB/02/1 40 LG&E Energy Corp. v. Argentine Republic, ICSID Case No. ARB/02/1 (2006) 40 Pan American Energy LLC and BP Argentina Exploration Company v. The Argentine Republic, ICSID Case No. ARB/03/13 26 Salini Costruttori S.p.A and Italstrade S.p.A. v. Kingdom of Morocco (ICSID Case No. ARB/00/4) 16 Salini Costruttori S.p.A. and Italstrade S.p.A. v. Kingdom of Morocco (ICSID Case No. ARB/00/4), Decision on Jurisdiction (July 23, 2001) 16 SGS v. Pakistan, Decision of the Tribunal on Objections to Jurisdiction, ICSID (World Bank) Case No. ARB/01/13, (2003) 26 SGS v. Philippines, ICSID Case No. ARB/02/6 26 Spectrum de Argentina S.A. v. Argentine Republic, ICSID Case No.ARB/05/5, Award, (December 19, 2008) 25 Waste Management Inc. v. United Mexican States, 6 ICSID Rep BOOKS A Reinisch, State Insolvency Consequences and Obligations under Investment Treaties Comment in THE INTERNATIONAL CONVENTION FOR THE SETTLEMENT OF INVESTMENT DISPUTES (ICSID): TAKING STOCK AFTER 40 YEARS (Bade Baden: Nomos, 2007) 31 BLACK S LAW DICTIONARY (9 th ed. 2009) 14 Christoph Schreuer, Calvo s Grandchildren: The Return of Local Remedies in Investment Arbitration, Law and Practice International CTS & Tribunals (2005) 26 CHRISTOPH SCHREUER, THE ICSID CONVENTION: A COMMENTARY (2d ed., Cambridge UP 2009) 16 Digest of United States Practice in International Law, Cumulative Index (OUP 1989) 36 Dolzer and Stevens, Bilateral Investment Treaties, (M.N Publishers 1995) 22 G. SACERDOTI, BILATERAL AND MULTILATERAL INSTRUMENTS ON INVESTMENT PROTECTION (1997) 19 Jonathan Lang Bowman Gilfan: BITs 21 vi

8 Lou Wells, Property rights for foreign capital: Sovereign debt and private direct investment in times of crisis, Yearbook on International Investment Law (OUP 2010) 31 M. SORNARAJAH, THE INTERNATIONAL LAW ON FOREIGN INVESTMENT (OUP 2010) 39 M. WAIBEL, SOVEREIGN DEFAULTS BEFORE INTERNATIONAL COURTS AND TRIBUNALS (Cambridge UP, 2011) 17 MARK MOBIUS, BONDS: AN INTRODUCTION TO CORE CONCEPTS (1 st ed. 2010) 14 RICHARD GARDINER, TREATY INTERPRETATION, (OUP 2008) 21 'Treaty shopping UNCTAD, Scope and Definition: A Sequel (2011) 31 Z DOUGLAS, THE INTERNATIONAL LAW OF INVESTMENT CLAIMS (Cambridge UP 2009) 16 JOURNALS, REVIEWS AND PAPERS A.J. Berg, Dissenting Opinions by Party-Appointed Arbitrators in Investment Arbitration 23 Anthea Roberts, State-to-State Investment Treaty Arbitration: A Hybrid Theory of Interdependent Rights and Shared Interpretive Authority, Harvard International Law Journal, (2014) 21 Christoph Schreuer, Fair and Equitable Treatment in Arbitral Practice, 6 Journal of World Investment & Trade (2005) 32 D. Krishan, A Notion of ICSID Investment, Transnational Dispute Management (2009) 15 Di Rosa, The Recent Wave of Arbitrations Against Argentina under BITs Inter-American Law Review (2004-5). 22 Fourth Report on relations between States and international organizations, document Yearbook of the ILC (1989) 34 Gaffney and Loftis, Effective Ordinary Meaning of BITs and the Jurisdiction of Treaty Based Contract Claims, JOURNAL OF INVESTMENT AND TRADE (2007) 27 Hersch Lauterpacht, The function of Law in the International Community, The Judicial Application of the Doctrine of Rebus Sic Stantibus 23 JE Fisch, CM Gentile: Aftermath of Argentine Crisis 15 Josef Ostransky, Sovereign Defaults and Investment Arbitration, University of Geneva ( ) 14 vii

9 Josef Ostransky, SovereignDefaults and Investment Arbitration, University of Geneva ( ) 14 Julian Arato, Subsequent Practice and Evolutive Interpretation: Techniques of Treaty Interpretation over Time and Their Diverse Consequences (2010) 22 Laura Alfaro, Sovereign Debt Restructuring: Evaluating the Impact of the Argentina Ruling, Harvard Law Review (2014) 14 Lee C. Buchheit& G. Mitu Gulati, How to Restructure Greek Debt, DUKE LAW WORKING PAPERS, 47(2010) 29 M Waibel, J. Voss: The Protection and Promotion of FDI in Developing Countries: Interests, Interdependence, Intricacies 17 Marie Claire Colaiacamo, Do CACs Constitute an Expropriation under International Law paper (2013) 29 Matthew Wendlandt, SGS v. Philippines and the Role of ICSID Tribunals in Investor-State Contract Disputes, Texas International Law Journal (2008). 26 Mecagni et. al., Issuing International Sovereign Bonds, IMF Working Paper (2014) 14 Nolan, Sourgens and Carlson, Leviathan on Life Support? Restructuring Sovereign Debt and International Investment Protection after Abaclat 15 Ole Spiermann, Individual Rights, State Interests and the Power to Waive ICSID Jurisdiction under Bilateral Investment Treaties 20(2) Arbitration International (2004). 27 Patrick Augustin, Essays on Sovereign Credit Risk and Credit Default Swap Spreads, Stockholm School of Economics (2010) 16 Raag Yadava, Shiva Y., Divyanshu Agrawal, Vodafone and India: A Review of Claims in Investment Arbitration (2012) 35 Varapat Chensavasdijai, Sovereign Debt Restructuring Recent Developments and Implications for the Fund s Legal Policy and Framework, IMF (April 2013) 34 Waibel, Michael, Opening Pandora's Box: Sovereign bonds in International Arbitration 16 Waibel, Michael, Opening Pandora's Box: Sovereign bonds in international arbitration, 101(4) AMERICAN JOURNAL OF INTERNATIONAL LAW, (2007) 16, 17 viii

10 MISCELLANEOUS ARON BROCHES, THE CONVENTION ON THE SETTLEMENT OF INVESTMENT DISPUTES BETWEEN STATES AND NATIONALS OF OTHER STATES, Recueil des Cours (1972 II) 20 Becker, Torbjorn, Anthony Richards & Yungong Thaicharoen, Bond Restructuring and Moral Hazard: Are Collective Action Clauses Costly? IMF WORKING PAPER SERIES ( Domenico Di Pietro, The Controversial Role of Dissenting Opinions in International Arbitral Awards, NYU Blogs, Transnational Litigation and Commercial Law (2011) 23 European Council, Stability Mechanism, available at 31 IMF Policy Papers on Lending into Arrears to Private Creditors Further Consideration on the Good Faith Criterion (2006) 34 John Taylor, Sovereign Debt Restructuring: A US Perspective, Treasury News (2002) 30 Model Collective Action Clause Explanatory Note, ETC Sub Committee on Sovereign Debt Markets 30 Robert Ago, Addendum to the Eighth Report on State Responsibility: Circumstances precluding wrongfulness (1980) 39 UNCTAD, FAIR AND EQUITABLE TREATMENT, UNCTAD SERIES ON ISSUES IN IIAS, II (2012) 15 TREATISES Argentina-Italy BIT (1990) 15 Bahrain-Italy BIT 20 Cameroon-Italy BIT 20 Croatia Azerbaijan BIT 20 International Law Commission Articles on State Responsibility 37 Japan Colombia BIT 20 Kuwait-China BIT 20 Mexico India BIT 20 ix

11 North American Free Trade Agreement 20 Romania-Belgium/Luxembourg BIT 20 U.S.-Argentina BIT 20 U.S. Bahrain BIT 20 VIENNA CONVENTION ON THE LAW OF TREATIES NON-ICSID CASES Case Concerning Kasikili/Sedudu Island (Botswana v. Namibia), 1999 I.C.J. (1999) 21 CME v. Czech Republic Case No.10435/AER/ACS 32 Gabčíkovo-Nagymaros Project case (Hungary v. Slovakia), ICJ Rep Lauder v. Czech Republic Occidental Exploration and Production Co v. Republic of Ecuador (Award) LCIA Case No UN Occidental Exploration and Production Co v. Republic of Ecuador (Award) LCIA Case No UN (UNCITRAL, 2004) 32 Renta v. Russian Federation, Arb. V 024/2007 SCC 24 Republic of Argentina v. Weltover Inc. U.S. (1992) 17 Republic of Ecuador v. United States of America (PCA Case No ) 22 Romak v. Uzbekistan, PCA Case No. AA280, Award 16 Russia v. Turkey (1912) XI RIAA 430. Cf. Report of the ILC (1980) 38 Saluka Investments BV v. The Czech Republic, Partial Award, Permanent Court of Arbitration, (March 17, 2006) 32 Siemens A.G. v. Argentine Republic ICSID Case No. ARB/02/8 32 Societe Commerciale De Belgique (Belg. v. Greece), 1939 P.C.I.J. 38 United States-Venezuela Claims Protocol, U.S.-Venezuela (1903) 28 West v. Multibanco Comermex, S.A., 807 F.2d 820 (9th Cir. 1987) 36 x

12 UN DOCUMENTS G.A.Res.1289 (XIII) (5 December 1958) 34 U.N.C.I.O., Report of the Rapporteur of Committee IV/2, Doc. 933, IV/2/42 34 United Nations Charter 34 xi

13 STATEMENT OF FACTS Parties to the dispute 1. The Claimant, Calrissian & Co., Inc. ( Calrissian ), a Corellian hedge fund that holds a number of sovereign bonds issued by the respondent. 2. The Respondent, Federal Republic of Dagobah ( Dagobah ) is a party to Corellia- Dagobah BIT, an agreement for Promotion and Protection of Investments. Events leading to dispute Sovereign Debt Restructuring of Dagobah and Corellia entered into Corellia-Dagobah BIT Dagobah was faced with an unsustainable debt burden and descended into a twoand-a-half year long economic crisis May Dagobah restructured its sovereign debt and launched an offer, allowing bondholders to exchange their bonds for new ones which would reduce the bonds face value by 43% Diplomatic negotiations proceeded between Dagobah and Corellia to clarify the language of Corellia-Dagobah BIT. Failing to reach a conclusion, Corellia commenced arbitral proceeding against Dagobah administered by Permanent Court of Arbitration ( PCA ) April PCA Arbitral Tribunal decided that sovereign bonds were investments within the definition of the Corellia-Dagobah BIT and entitled the bondholders to protection and to resort to the investor-state dispute settlement provision May By then, Corellian bondholders had already accepted a restructuring offer by Dagobah, representing losses of less than 20%. Debt Restructuring of Dagobah faced a new recession as a consequence of financial crisis around the world September International Monetary Fund ( IMF ) suggested implementation of a new sovereign debt restructuring to Dagobah. xii

14 9. 28 May Dagobah introduced the Sovereign Reconstructing Act ( SRA ) which entitled the qualified majority of owners of 75% of aggregate nominal value of outstanding bonds to modify terms of the bonds that would be binding on the remaining bondholders. On 29 November 2012 Dagobah offered new bonds worth 70% the net value of outstanding sums under original bonds. Arbitral Proceedings August Calrissian commenced arbitral proceedings against Dagobah before the Arbitration Institute of the Stockholm Chamber of Commerce ( SCC ) pursuant to dispute settlement provision contained in the Corellia-Dagobah BIT. xiii

15 ARGUMENTS ON JURISDICTION AND ADMISSIBILITY CONTENTION 1: THE CLAIMS OF CALRISSIAN & CO. INC. REACH BEYOND THE JURISDICTION OF THIS TRIBUNAL AND HENCE CANNOT BE ADJUDICATED UPON. I. THE TRIBUNAL DOES NOT POSSESS JURISDICTION RATIONAE MATERIAE TO ADJUDICATE THE PRESENT DISPUTE. 1. Bonds are defined as an obligation or a written promise to pay money after a certain time elapses. 1 They are debt instruments that possess legal rights, duties, entitlements or liabilities. 2 The claims in this present dispute concern sovereign bonds issued by the Respondent State which are ordinary commercial transactions, by virtue of which they possess a contractual character In comparison to corporate bonds, which are commercial in nature by virtue of private issuance, Sovereign bonds are different as the issuing entity is public. 4 They typically serve general budgetary purposes and for the lack of such commercial undertaking they fail to qualify as investments The second half of the 20 th century has witnessed state financing through the form of bonds issuance, primarily to intermediaries. 6 The security entitlements arising out of this issuance are subsequently traded in the secondary market to various financial institutions or retail bondholders. The result of this is a high diversity of holders of sovereign bonds and a higher number of creditors dispersed across the globe, 7 giving 1 BLACK S LAW DICTIONARY (9 th ed. 2009); MARK MOBIUS, BONDS: AN INTRODUCTION TO CORE CONCEPTS (1 st ed. 2010) Bonds are basically long-term IOUs between a borrower and a lender. 2 Id. 3 Laura Alfaro, Sovereign Debt Restructuring: Evaluating the Impact of the Argentina Ruling, Harvard Law Review (2014). 4 Josef Ostransky, Sovereign Defaults and Investment Arbitration, University of Geneva ( ). 5 Id. 6 Mecagni et. al., Issuing International Sovereign Bonds, IMF Working Paper (2014). 7 Supra note 4. 1

16 them a heterogeneous disposition. 8 Such atomized anonymity of bondholders provides them a different treatment than regular loans or debt instruments. 4. An enquiry into the relationship between sovereign debt restructurings and IIAs starts by determining whether a particular IIA applies to government bonds. Most of these agreements use a broad asset based definition of investment that covers every kind of asset owned or controlled by an investor. 9 Despite this all-encompassing nature of the definition, BITs from 1985 onwards have included sovereign bonds within the definition of investments, contingent categorically on the fact that these must be made in the territory of the relevant contracting state Since sovereign bonds have not been specifically included within the analytical list of investments under Article 1 of the BIT, they must be presumed to be excluded especially considering that other BITs specifically include debt instruments within their definition The Abaclat tribunal held that the agreement between two states as to the definition of an investment materialized in the BIT trumps any perceived limitation of Article 25 of the ICSID. 12 IIAs are usually concluded on a bilateral basis and reflect an understanding of what should be treated as an investment as between the Contracting Parties It is imperative to then understand the objective criteria laid down in Article 1 of the BIT 14 between the States Parties. This includes the aspects an asset must satisfy to be included under the definition of an investment. The primary characteristics involve a) a commitment of capital, b) expectation of gain or profit, c) or the assumption of risk. 8. In arguendo, even if the Tribunal holds that such criteria as stated above are not mandatory under the purview of this BIT, an asset must satisfy certain outlying 8 JE Fisch, CM Gentile 1074: Several bondholder associations have been created in the aftermath of the Argentine crisis, like the Global Committee of Argentine Bondholders, available at press release pdf>. 9 UNCTAD, FAIR AND EQUITABLE TREATMENT, UNCTAD SERIES ON ISSUES IN IIAS, II (2012). 10 Nolan, Sourgens and Carlson, Leviathan on Life Support? Restructuring Sovereign Debt and International Investment Protection after Abaclat. 11 Deutsche Bank AG v. Democratic Socialist Republic of Sri Lanka, ICSID Case No. ARB/09/02, Dissenting Opinion of Makhdoom Ali Khan, 31 October 2012; Argentina-Italy BIT (1990) 12 Abaclat and Others v. The Argentine Republic, Decision on Jurisdiction and Admissibility, ICSID Case No. ARB/07/5, 364,365; D. Krishan, A Notion of ICSID Investment, 14 Transnational Dispute Management (2009). 13 Supra note Appendix 1. 2

17 characteristics to be considered an investment under any IIA. 15 These characteristics have further been enumerated by the Salini 16 test, placing reliance on Christoph Schreuer s commentary. 9. According to Schreuer, an investment typically possesses five characteristics: i. certain duration and expectation of it being long term ii. regularity of profit and return iii. assumption of risk usually shared by both parties concerned iv. commitment of resources v. contribution to the host state s development Douglas further stresses the interaction between legal and economic characteristics of an investment, whereby the legal dimension means that an investment should have a character of property right situated in the territory of the host State. 18 Other authorsadd necessity of connection with a certain commercial undertaking and emphasize the need of the requisite territorial link With respect to the commitment of capital, in case of sovereign bonds traded on the secondary market, there arises an issue as to firstly, whether the resources invested by the bondholder must be transferred to the host State, necessitating a territorial link 20 ; and secondly, must the transaction to which the bondholder is a party, standing alone, qualify as an investment Investments require the assumption of a risk beyond purely contractual risk. In case of bonds, the only potential risk is that of default on the bond terms which is a mere contractual risk. 22 This element of risk cannot be treated unambiguously, and many tribunals have stated that risk for investment should not be merely a commercial 15 Romak v. Uzbekistan, PCA Case No. AA280, Award, 26 November Salini Costruttori S.p.A and Italstrade S.p.A. v. Kingdom of Morocco (ICSID Case No. ARB/00/4), Decision on Jurisdiction, 52, 341 (July 23, 2001). 17 CHRISTOPH SCHREUER, THE ICSID CONVENTION: A COMMENTARY (2d ed., Cambridge UP 2009). 18 Z DOUGLAS, THE INTERNATIONAL LAW OF INVESTMENT CLAIMS 191 (Cambridge UP 2009). 19 Waibel, Michael, Opening Pandora's Box: Sovereign bonds in International Arbitration, 101(4) AJIL, (2007). 20 Supra note 18 at 191, Douglas sees it as one of the aspects of economic materialization of an investment. 21 Argentina-Italy BIT, art. 1(1). 22 Patrick Augustin, Essays on Sovereign Credit Risk and Credit Default Swap Spreads, Stockholm School of Economics (2010). 3

18 risk. 23 The state s obligations to pay the principal and interest in bonds are fixed, unconditional and not tied to the success of any economic operation The only risk thus present is of non-performance, a purely commercial risk inherent in any commercial transaction. 25 Moreover, Waibel stresses that the risk relevant to constitute an investment is a risk shared between the parties regarding a certain entrepreneurial project. 26 However, since the bonds are traded on the secondary market and there is no exact point of contact to ascertain the parties involved, this condition cannot seen to be satisfied Until recently, Fedax v. Venezuela 28 and CSOB v. Slovak Republic 29 were the two main cases confirming that government debts can qualify as an investment in the sense of Article 25 ICSID Convention. 30 In spite of these decisions, there remained considerable uncertainty whether sovereign bonds notably those traded on secondary markets would fall within ICSID s jurisdiction Scholars pointed out that such bonds would constitute commercial transactions as opposed to investments in the sense of Article 25 ICSID Convention. 32 Besides, they would fail to meet various other requirements of an investment including a long term transfer of funds, the existence of commercial risk, as well as a territorial link with the host State. 33 In so far as the US is concerned as well as other major jurisdictions, it seems that regardless of the type of issuance, international bonds and any subsequent default will be considered a commercial activity The view enjoyed by the tribunal in Fedax is not supported under the argument of whether a bond qualified the element of duration because it does not reflect the fact 23 Joy Mining Machinery Limited v. Egypt, ICSID Case No. ARB/03/11, Award, 57 (Aug. 6, 2004). 24 Supra note Supra note M Waibel (n 1) 237; J. Voss, The Protection and Promotion of FDI in Developing Countries: Interests, Interdependence, Intricacies, 31 ICLQ 686 (1982). 27 Id. 28 Fedax N.V. v. Venezuela, ICSID Case No. ARB/96/3, Award (1998). 29 Ceskoslovenska Obchodni Banka, A.S. v. The Slovak Republic, Case No. ARB/97/4, Objections to Jurisdiction, (May 24, 1999). 30 Supra note M. WAIBEL, SOVEREIGN DEFAULTS BEFORE INTERNATIONAL COURTS AND TRIBUNALS 226 (Cambridge UP, 2011). 32 Supra note Supra note 31; Supra note 19; D. Strik, Investment Protection of Sovereign Debt and its Implications on the Future of Investment Law in the EU, 29 2 Journal of International Arbitration 183 (2012). 34 Republic of Argentina v. Weltover Inc. 504 U.S. 607 (1992). 4

19 that holders of negotiable debt instruments on the secondary market might commit their resources for a short term period only and thus not qualify as an investment under Article 25 of the ICSID. 17. Even with the theory of a continuous credit benefit 35, a secondary market purchase does not satisfy personal link between the bondholder and the substantive requirements of an investment. 36 II. THE TRIBUNAL DOES NOT POSSESS JURISDICTION RATIONAE PERSONAE TO ADJUDICATE THE PRESENT DISPUTE. 18. The bonds lack a territorial nexus with the state of Dagobah and therefore do not qualify as an investment.financial instruments and debt securities, like bond entitlements, are as a rule bought outside the host State and the purchaser does not transfer any money into the country According to Douglas, there is a problem in: The nexus between the finds transferred as consideration for the negotiable instrument and the employment of those funds for commercial purposes in the economy of the host State. 38 He adds that trading on the short term money market in negotiable certificates of treasury cannot constitute an investment due to the weakness of the nexus. Under this view, security entitlements purchased on the secondary market would not qualify as opposed to the transaction between the issuer and the original holder In contrast to typical foreign investments, sovereign bonds are intangible capital flows; their situs is thus more difficult to determine. 40 The crucial issue is whether transactions have a positive impact on the host country s development without 35 Supra note 28 at Supra note 19 at Supra note Supra note 18 at Id. Douglas argues that only three requirements are necessary for economic materialization of investment, the other two is assumption of risk and an expectation of commercial return. 40 Supra note 19. 5

20 physical presence in that country s territory. 41 In general, secondary-market purchases by bondholders lack a territorial link withthehostcountry and in that the development contribution does not happen in tangible assets or property of the State, like industry or infrastructure. 42 For that reason, they are highly unlikely to contribute to the host country s development Fordebtinstrumentstradedonsecondarymarkets,theterritoriallinkisespeciallytenuous. Ruritania s sovereign bonds being traded on the secondary market in Zurich provide an exemplary case law. 44 It was held that with secondary market purchases, there is typically no flow of even financial resources into the issuing country. 45 The debtor state receives funds only on primary issuance of the bonds. 46 For that reason, they are highly unlikely to contribute to the host country s development According to Sacerdoti, since the issuance of sovereign bonds would not meet the requirement of a territorial link with the host country, protection would not extend to sovereign bonds, rationae loci. 48 In Fedax 49, while dismissing Venezuela s argument against Fedax, the tribunal did acknowledgethat it is doubtful whether a bond issue would meet a territorial BIT condition. 50 III. THE STATES PARTIES TO THE BIT DID NOT EVINCE ANY INTENTION TO INCLUDE SOVEREIGN BONDS WITHIN THE DEFINITION OF INVESTMENT UNDER ARTICLE 1 OF THE BIT. 23. An objective enquiry of major BITs etched in the past 2 decades tells us that the intention of States Parties to either include or exclude bonds from the definition of 41 Supra note Id. 43 Supra note Id. 45 Id. 46 Supra note Id. 48 G. SACERDOTI, BILATERAL AND MULTILATERAL INSTRUMENTS ON INVESTMENT PROTECTION 308 (1997). 49 Supra note The argument that money is fungible and that the proceeds from the sovereign bonds could therefore free financial resources in the host country for other uses is to no avail; such a reading is at odds with the plain meaning of in the territory. 6

21 investment has manifested clearly in the phraseology of such BITs: a) IIAs exclusive of bonds as Investments: NAFTA [Art. 1139], Mexico India BIT [Art. 1(7)], U.S. Bahrain BIT [Art. 1(d) (2)], Croatia Azerbaijan BIT [Art. 1(aa)], Japan Colombia BIT [Art. 1(a) (iii)]. b) IIAs inclusive of bonds as Investments: Romania-Belgium/Luxembourg BIT [Art. 2(1) (c)], Kuwait-China BIT [Art. 1(1) (b)], Bahrain-Italy BIT [Art. 1(1) (b)], Cameroon-Italy BIT [Art. 1(1) (c)], U.S.-Argentina BIT [Art. 1(1)(iii) (1991)]. 24. It is pertinent to note that Aron Broches, former general counsel of the World Bank and spiritus rector of the ICSID Convention, recognized that the absence of a definition of investment does not translate into unlimited jurisdiction. 51 The same is limited to the nature of the dispute, which stands to be contractual, more so, due to the lack of the fundamental condition of consent ARON BROCHES, THE CONVENTION ON THE SETTLEMENT OF INVESTMENT DISPUTES BETWEEN STATES AND NATIONALS OF OTHER STATES, 132 Recueil des Cours 330 (1972 II). 52 Id. 7

22 CONTENTION 2: THE DECISION OF THE PCA TRIBUNAL, AS CITED BY THE CLAIMANT, IS ANACHRONISTIC AND NOT PERTINENT TO THE PRESENT DISPUTE. I. THE PCA AWARD DOES NOT CONFER JURISDICTION UPON THIS TRIBUNAL. 25. The timeline of the case lends significant import to this argument. The PCA rendered its decision in April 2003, in the wake of the first sovereign debt restructuring and ruled on bonds long years before the enactment of the SRA. 53 The claimant, however, purchased Dagobah s sovereign bonds which had undergone a 20% haircut only in It is emphasized thus, that the Award does not amount to an amendment of the terms and definitions present in the BIT. 55 A treaty is a form of agreement between nation states and like most agreements, cannot be amended unilaterally. 56 In order to constitute an amendment of the treaty terms or addition of a special meaning to clarify interpretation, the consent of both parties to the same is a prerequisite under Article 39 of the VCLT. 57 Here, state-state arbitration is distinct from an amendment through a voluntary agreement between the parties. 27. For the purpose of treaty interpretation, a subsequent agreement is a manifested agreement between the parties after the conclusion of a treaty regarding its interpretation or the application of its provisions. 58 Subsequent practice consists of conduct, including pronouncements, by one or more parties to the treaty after its conclusion regarding its interpretation or application. 59 It is held that the PCA Award does not amount to either subsequent agreement or subsequent practice by virtue of this understanding and thus cannot amend the BIT. 53 Uncontested Facts Appendix Anthea Roberts, State-to-State Investment Treaty Arbitration: A Hybrid Theory of Interdependent Rights and Shared Interpretive Authority, 55 Harvard International Law Journal, 1 (2014). 56 Jonathan Lang Bowman Gilfan BITs 57 VCLT, art. 39 (1969); MARK VILLIGER, COMMENTARY ON THE 1969 VIENNA CONVENTION ON THE LAW OF TREATIES, 514 (December 2008). 58 Case Concerning Kasikili/Sedudu Island (Botswana v. Namibia), 1999 I.C.J. 1045, 63, (1999). 59 RICHARD GARDINER, TREATY INTERPRETATION, 226 (OUP 2008) 8

23 28. In arguendo, there cannot be a basis for evolutive interpretation 60 with respect to subsequent practice because when the treaty was ratified between the two States Parties, trade of financial instruments could not be overlooked. There can be no contemporary meaning of the treaty provisions as the instruments sold and purchased then assume same contemporary significance. II. THE PCA AWARD SHOULD NOT BE THE BASIS FOR THE INTERPRETATION OF THE BIT. 29. It is well established that tribunals in investment arbitration are not bound to observe stare decisis, 61 despite their reliance on case law as per discretion. 62 In AES Corp. v. Argentina, the tribunal pointed out on the value of a precedent that each decision or award rendered by an ICSID tribunal is only binding on the parties to the dispute settled by this decision or award Owing to similar reasoning, the PCA Award rendered under Article 7 of the BIT, while creating rights for third parties in the present case cannot be binding upon the States Parties in the absence of an explicit stipulation of such binding nature upon subsequent tribunals Moreover, the factual matrix of the case entails the application of the Rebus Sic Stantibus 65. It is very rare for international tribunals to grant relief to a treaty Party on the basis of a fundamental change of circumstances, known as Rebus Sic Stantibus. 66 Enshrined under Article 62 of the VCLT 67, it has been highlighted as a 60 Julian Arato, Subsequent Practice and Evolutive Interpretation: Techniques of Treaty Interpretation over Time and Their Diverse Consequences, in THE LAW AND PRACTICE OF INTERNATIONAL COURTS AND TRIBUNALS 443, 465 (2010) The basis of evolutive interpretation is the idea that parties may conclude a treaty with the intention that it, or some of its provisions, be capable of evolving in meaning over time, in light of certain changes in factual or legal circumstances ranging from scientific or technical developments to the emergence of new legal regimes. 61 Supra note 17; Dolzer and Stevens, Bilateral Investment Treaties, (M.N Publishers 1995). 62 Amco v Indonesia; Enron Corpn. And Ponderosa Assets, L.P v. The Argentine Republic, ICSID Case No. ARB/01/3, Award, 260 (2007). 63 AES Corporation v. Argentina ICSID Case No. ARB/02/ Republic of Ecuador v. United States of America (PCA Case No ), Expert Opinion of Michael Reisman with Respect to Jurisdiction, 29, 32, (April 24, 2012). 65 VCLT, art. 62 (1969). 66 Di Rosa, The Recent Wave of Arbitrations Against Argentina under BITs 36 (1) 41 Inter-American Law Review (2004-5). 67 Supra note 65. 9

24 CIL principle in CMS Gas Transmission Co. v. Arg. Rep. 68 The two justifications, under Article 62, that lead to the invocation of this principle have been satisfied in the present case: Firstly, the circumstances existing at the time of conclusion of the treaty were indeed objectively essential to the obligations of the treaty, and secondly, the instance wherein the change of circumstances has had a radical effect on the obligations of the treaty This refers to the contrast between the existing stable world economic condition in 2003 and the volatile exposed one in The global financial crisis of 2008 which occasioned the recession in Dagobah s economy and an eventual unsustainable debt of US$400 billion 71 was nothing short of an apocalyptic event, dictating an altered approach to this dispute. Thus, the PCA award of 2003 is anachronistic. III. THE WEIGHTAGE OF THE DISSENTING OPINION In arguendo, in light of the Award being rendered admissible, the dissenting opinion must be brought to the Tribunal s notice. In investment arbitration, to reiterate, a tribunal is not bound by the previous decision of another tribunal. It merely has persuasive value, much the same as a dissenting opinion. 73 Many authors are of the view that dissenting opinions have a significant role to play and treaty arbitrators should refrain from elevating collegiality over the expression of individual judgment on a significant point of international investment law CMS Gas Transmission Company v. Argentine Republic, ICSID Case No. ARB/01/8 (2007). 69 Hersch Lauterpacht, The function of Law in the International Community, The Judicial Application of the Doctrine of Rebus Sic Stantibus. 70 Appendix 4; Uncontested Facts. 71 Uncontested Facts Appendix 2 PCA Award. 73 Domenico Di Pietro, The Controversial Role of Dissenting Opinions in International Arbitral Awards, NYU Blogs, Transnational Litigation and Commercial Law (2011) available at 74 A.J. Berg, Dissenting Opinions by Party-Appointed Arbitrators in Investment Arbitration. 10

25 34. It was clearly stated by the dissenting arbitrator in an SCC Tribunal case 75 : it may not be amiss to anticipate the possibility of judicial proceedings in due course in which the correctness of the Award is put in issue, in which case I entertain the fond hope that the views I express may further illuminate certain issues for the benefit of any such forum. 35. Hence, since the duty to exercise independent judgment is legally relevant, it becomes vital to accept the same as persuasive authority at the very least, for the purpose of incorporating it into the understanding of the definition clauses present in the BIT. 75 Renta v. Russian Federation, Arb. V 024/2007 para 1 (Arb. Inst of SCC 2009) (Separate opinion of Charles N Bower). 11

26 CONTENTION 3: THE FORUM SELECTION CLAUSE RENDERS THE CLAIMS INADMISSIBLE. I. THE CLAIM IS OF A CONTRACTUAL NATURE AND THUS THE GENERAL UNITY OF THE CONTRACT MUST BE UPHELD. 36. The sovereign bonds in question under this dispute bind the investor and the host state on the basis of a contractual claim and clearly lay down the exclusive choice of forum as Dagobah s courts to be adhered to in case of a dispute. 76 The non-observance of this leads to violation of the general unity of the contract The tribunal in Joy Mining v. Egypt 78 was faced with a similar understanding of a conflict between contact and treaty claims. In this respect, it concluded that there were no treaty-based claims presented by the Claimant but only contract claims which were governed by the valid forum selection clause in the contract, entered into between the Claimant and an Egyptian State enterprise Very prominently, the tribunal further said that it could not be held that an umbrella clause inserted in the treaty could have the effect of transforming all contract disputes into investment disputes under the treaty, for the want of a proper link between the two. 80 A similar line of reasoning was adopted by the tribunal in CMS too The tribunal in Vivendi 82 found that the breach of the BIT and that of a concession contract between the parties are two separate questions determined by reference to the laws applicable the BIT by international law, and the contract claims by proper law of the contract respectively. 83 To this effect it stated that where the essential basis of a claim is a breach of contract, the tribunal will give effect to any valid choice of forum clause in the contract Uncontested Facts Spectrum de Argentina S.A. v. Argentine Republic, ICSID Case No.ARB/05/5, Award, 89-92, (December 19, 2008). 78 Supra note Id at Id. 81 Supra note Compania De Auguas Del Aconquija S.A & Vivendi Universal v. Argentine Republic ICSID Case No. ARB/97/3, Award, Decision on Annulment. 83 Id at Id at

27 40. Moreover, the Maffezini case also held that recourse to arbitration may be taken only once domestic remedies proved unsuccessful. 85 It is pertinent to note that if despite the presence of an exclusive domestic jurisdiction clause in the bond contract or a CAC under the terms of the bond, arbitration is pursued, a party is essentially claiming on that contract without itself complying with it Analogous to such rulings, tribunals in El Paso Energy International Company v. The Argentine Republic 87 and Pan American Energy LLC and BP Argentina Exploration Company v. Argentine Republic, 88 have validly refrained from allowing such universality to the umbrella clause. II. THE FORUM SELECTION CLAUSE CONSTITUTES A WAIVER OF THE OFFER OF ARBITRATION UNDER ART. 8 OF THE BIT. 42. The tribunals in SGS v. Pakistan 89 and SGS v. Philippines 90 were presented with the issue of whether the ICSID tribunal had jurisdiction over an investor s contract claims despite the presence of an exclusive forum selection clause in the contract. Both, answered in the negative. 91 It was held that if an investor wants to make a contractbased claim against the host country, it must do so consistent with its obligations under the contract The investor-state contract was held to be a waiver by the investor of its right under the BIT to bring a contract claim before ICSID. 93 Assuming that the contract claim is 85 Christoph Schreuer, Calvo s Grandchildren: The Return of Local Remedies in Investment Arbitration, 4 Law and Practice International CTS & Tribunals (2005); Emilio Agustín Maffezini v. The Kingdom of Spain, ICSID Case No. ARB/97/7. 86 SGS v. Philippines, ICSID Case No. ARB/02/ El Paso Energy International Co. v. The Argentine Republic, ICSID Case No. ARB/03/ Pan American Energy LLC and BP Argentina Exploration Company v. The Argentine Republic, ICSID Case No. ARB/03/ SGS v. Pakistan, Decision of the Tribunal on Objections to Jurisdiction, ICSID (World Bank) Case No. ARB/01/13, 163 (2003). 90 Supra note Matthew Wendlandt, SGS v. Philippines and the Role of ICSID Tribunals in Investor-State Contract Disputes, 43: 253 Texas International Law Journal (2008). 92 Supra note 86 at Id at

28 elevated to a BIT claim by the umbrella clause, the investor may have waived his right to an ICSID forum upon becoming a party to the contract with the host state The tribunals in Vivendi and Aguas de Tunari have embraced this jurisprudence holding that an exclusive forum selection clause in an investor-state contract may serve to exclude jurisdiction of a treaty-based tribunal It is vitally important to note that by allowing a contrary approach in investment arbitration, the investor will have an advantage over the state, as the former will have a choice between the forum stipulated in the contract and the forum of arbitration in the BIT, leaving the state with no choice whatsoever This has been well reasoned by noted jurists 97 also, observing that a host state should not be subject to an avalanche of investment treaty claims for a mere breach of the contract between it and the investor for the payment of the bond obligations, and thus, observance of the forum selection clause becomes of vitality. Hence, Article 8 of the BIT is overridden by the contractual forum selection clause. III. THE PRINCIPLE OF GENERALIA SPECIALIBUS NON DEROGANT MAKES THE CHOICE OF FORUM EXCLUSIVE AND BINDING. 47. Generalia specialibus non derogant is an international law principle which was defined by the SGS v Philippines tribunal as universal things not detracting from specific things. 98 Schreuer in application of the principle holds that a document containing a dispute settlement clause which is more specific in relation to the parties and to the dispute should be given precedence over a document of more general application Two considerations thus arise out of this principle. First, that the BIT itself was not concluded with any specific investment or contract in view. It is not to be presumed 94 Supra note Gaffney and Loftis, Effective Ordinary Meaning of BITs and the Jurisdiction of Treaty Based Contract Claims, 8:1 JOURNAL OF INVESTMENT AND TRADE (2007). 96 Ole Spiermann, Individual Rights, State Interests and the Power to Waive ICSID Jurisdiction under Bilateral Investment Treaties 20(2) Arbitration International 196 (2004). 97 Supra note Supra note 86 at Supra note

29 that such a general provision has the effect of overriding specific provisions of particular contracts, freely negotiated between the parties The second consideration derives from the character of an investment protection agreement as a framework treaty, intended by the States Parties to support and supplement, not to override or replace, the actually negotiated investment contact arrangements made between the investor and the host State The preamble to the Corellia-Dagobah BIT lays down that it recognizes the importance of providing effective means of asserting claims and enforcing rights with respect to investment under national law as well as through international arbitration. 102 This overture in itself clearly specifies that any agreement or contract, as in this case, entered into between the two contracting parties with regard to the use of national laws for the purpose of dispute settlement shall be upheld. 51. The majority in the SGS v. Philippines case further pointed out that: Where a claimant has expressly agreed in writing that in all matters pertaining to the execution, fulfillment, and interpretation of the contract he will have resort to local tribunals, remedies, and authorities, and then willfully ignores them by applying in such matters for remedies under broadly applicable treaties, he will be held bound by his contract Even in the event of contractual relationships materializing into investment, a condition precedent to the trigger of BIT provisions, it does not mean an automatic amalgamation of contract claims and BIT claims or transubstantiation. 104 The Claimant therefore, is foreclosed from initiating any arbitration proceedings against the Respondent State in view of this clause and the tribunal, as a consequence, should dismiss this claim. 100 Supra note Supra note 86 at Corellia-Dagobah BIT. 103 United States-Venezuela Claims Protocol, U.S.-Venezuela (1903) 104 Supra note 86 at

30 ARGUMENTS ON MERITS CONTENTION 4: DAGOBAH HAS NOT VIOLATED THE FAIR AND EQUITABLE TREATMENT STANDARD [ FET ] AS A BIT OBLIGATION. I. THE SOVEREIGN DEBT RESTRUCTURING OF 2012 WAS EFFECTED BY THE VOLUNTARY DECISION TAKEN BY A QUALIFIED MAJORITY OF THE BONDHOLDERS, NOT BY THE LEGISLATIVE ACT INTRODUCING COLLECTIVE ACTION CLAUSES [ CACS ]. THUS, TREATY OBLIGATIONS HAVE NOT BEEN TRIGGERED. 53. The Respondent State most categorically submits that the losses imposed on the haircut do not stem from a sovereign act that would trigger Treaty claims. Losses in this view stem from the decision of the majority of the bondholders within the bond issue that reached the super-majority needed to activate the CAC. 105 The Claimant, lost as a consequence of the bond issue vote, not as the result of the exercise of Dagobah s sovereign authority 106 ; therefore no claim exists against Dagobah on any BIT. 54. The necessary number of bondholders gave its consent prior to the SDR and the law was meant for exactly one purpose, to facilitate and effect such a decision of the majority. II. THE USE OF CACS HAS BEEN ENDORSED BY INTERNATIONAL ORGANIZATIONS AND FINANCIAL CIRCLES ALIKE. 55. CACs have been viewed as one tool that could facilitate bail-ins in the future and indeed reduce the need for bail-outs by international financial institutions. 107 The idea behind Collective Action Clauses is to facilitate a sovereign s restructuring process in the context of a sovereign financial crisis and to enable a quick and orderly 105 Uncontested Facts Lee C. Buchheit& G. Mitu Gulati, How to Restructure Greek Debt, DUKE LAW WORKING PAPERS, 47(2010). 107 Marie Claire Colaiacamo, Do CACs Constitute an Expropriation under International Law paper, 2 ILR 175 (2013). 16