Theodoros Adamakopoulos and others v. Republic of Cyprus

Case summary

At a glance

Parties: Theodoros Adamakopoulos and 955 other claimants (Greek nationals and Greek companies, and one Luxembourg company) v. Republic of Cyprus
Case no.: ICSID Case No. ARB/15/49
Forum and rules: ICSID Convention arbitration; ICSID Arbitration Rules 2006; place of proceedings Washington, DC
Treaty: Cyprus–Greece BIT (in force 26 February 1993) and Cyprus–BLEU BIT (in force 5 June 1999)
Tribunal: Donald M. McRae (President), Alejandro Escobar, Marcelo G. Kohen (dissenting on jurisdiction). Escobar replaced Francisco Orrego Vicuña, who died in 2018.
Sector: Banking; bank resolution and bail-in
Outcome: Decision on Jurisdiction (7 February 2020), by majority: jurisdiction upheld and the mass claim admissible. According to Cyprus's press release of 23 May 2024, the Tribunal's Decision on Liability unanimously dismissed all claims except the claim of one claimant.
Amount: According to Cyprus's press release: claimed about USD 570 million including interest, plus about USD 30 million in costs. The claimants were ordered to pay Cyprus about USD 6 million in costs.

The dispute

The claimants held bonds and deposits in Laiki Bank and the Bank of Cyprus. In March 2013, Cyprus agreed an adjustment plan with the EC, the ECB and the IMF (the "Troika"). Under it, Laiki Bank was merged into the Bank of Cyprus, and shareholders, bondholders and depositors were bailed in: bonds were converted into equity or became worthless, and uninsured deposits were "haircut". The claimants argued that the measures ("Plan B") were an expropriation, were discriminatory and arbitrary, and breached fair and equitable treatment under the Cyprus–Greece and Cyprus–BLEU BITs. Cyprus raised nine objections to jurisdiction. The main one was that EU law, as applied by the CJEU in Achmea, made the arbitration clauses of the intra-EU BITs inapplicable. The others included that a mass claim is outside its consent or is inadmissible, unilateral consolidation of claims under two BITs, indirect investments, the absence of qualifying investments, failure to give notice, nationality, and the fork-in-the-road clause. The European Commission took part as a non-disputing party and supported the intra-EU objection.

Key holdings

The intra-EU objection fails. The Tribunal's jurisdiction is governed by the BITs and the ICSID Convention under international law, not by EU law. Achmea is a valid statement of EU law, but it does not decide the question under international law. Decision on Jurisdiction ¶¶ 156–162
The BITs were not terminated under VCLT Article 59, and their arbitration clauses were not displaced under Article 30(3). The BITs and the EU Treaties do not deal with the same subject matter, there was no intention to replace the BITs, and the two can be applied at the same time. The January 2019 Member State Declarations and the Cyprus–Greece Joint Information Note did not withdraw Cyprus's consent to arbitration. Decision on Jurisdiction ¶¶ 168–187
The claims of the 956 claimants form a single "dispute" under Article 9 of the Cyprus–Greece BIT and Article 10 of the Cyprus–BLEU BIT. They concern the same measures against two banks, allege the same breaches and seek essentially the same relief. Only the amounts of damages differ. The Tribunal declined to apply the Abaclat "homogeneity" test as decisive. Decision on Jurisdiction ¶¶ 205–220
The mass claim is admissible. Article 44 of the ICSID Convention does not let a tribunal invent a new procedural framework, as the Abaclat tribunal did, but this case can be managed within the existing ICSID rules. To that end, the claimant pool is fixed as at 17 May 2019, no claimant may withdraw without Cyprus's consent, the parties are invited to address bifurcation into liability and damages phases, and Cyprus is invited to apply for security for costs. Decision on Jurisdiction ¶¶ 236–266, 342
The Tribunal rejected the remaining objections. Proceeding jointly under two BITs is not a consolidation that needs further consent. The Cyprus–Greece BIT covers indirect, beneficial and minority holdings. Bonds and deposits are investments, including the life-insurance-linked bonds and the Egnatia Finance bonds guaranteed by Laiki. Notice given by the first 21 claimants was enough for the claimants who joined later. For the Luxembourg claimant, the six-month waiting period ran until ICSID registered the request, so it was met. Corporate nationality follows incorporation, not control. Claimants No. 2 and No. 417 lacked the required nationality and were excluded, but remain liable for costs of the jurisdictional phase. Decision on Jurisdiction ¶¶ 269–340
Marcelo Kohen dissented. In his view, the arbitration clauses are incompatible with the later EU Treaties under VCLT Article 30 and TFEU Article 351, and the Declarations and Joint Information Note are an authentic interpretation by the treaty parties. He would have declined jurisdiction. Statement of Dissent ¶¶ 1, 61–70
According to Cyprus's press release, the Decision on Liability found that the March 2013 measures were a legitimate exercise of regulatory power in the public interest and were not arbitrary, disproportionate, expropriatory or discriminatory. It found a breach for one claimant only, because the State did not treat him like other exceptional cases at a later stage. The claimants must pay Cyprus about USD 6 million in costs. Press release, 23 May 2024

Procedural history

25 September 2015Request for arbitration filed by Theodoros Adamakopoulos and 676 other requesting parties.
18 November 2015Amended request filed, covering 947 Greek natural persons, six Greek companies and one Luxembourg company.
17 December 2015ICSID registers the request.
28 September 2016Tribunal constituted. Donald M. McRae is appointed President by the Chairman of the ICSID Administrative Council.
13 February 2017Procedural Order No. 2: the claimants are to file a Memorial on the Merits first; the proceeding is then bifurcated for jurisdiction.
October–November 2018Francisco Orrego Vicuña dies and the proceeding is suspended. Alejandro Escobar accepts his appointment on 9 November 2018 and the proceeding resumes.
9 January 2019Procedural Order No. 5: the European Commission is granted leave to file an amicus curiae submission on the intra-EU issue. It files it on 13 February 2019.
17–18 May 2019Hearing on jurisdiction in Washington, DC.
7 February 2020Decision on Jurisdiction: by majority, jurisdiction is upheld and the mass claim is admissible. Marcelo Kohen files a Statement of Dissent.
21 May 2024Decision on Liability received by Cyprus. According to its press release of 23 May 2024, all claims but one were dismissed unanimously.