Selected Practical Examples
1 Between March 2001 and September 2003, the Permanent Court of Arbitration (PCA) administered arbitral proceedings between the Bank for International Settlements and former private shareholders of the Bank who contested the lawfulness of the compulsory recall and the adequacy of the compensation provided. In a Partial Award issued on 22 November 2002, the Tribunal found that the compulsory recall was lawful and established the appropriate method of calculating the compensation which was then applied in the Final Award of 19 September 2003 determining the amount owed to the shareholders for the compulsory purchase of their shares.
2 In 2007 and 2008 two identical LCIA tribunals awarded USD 10,4 million plus interest and USD 25,8 million plus interest in two arbitrations involving the repayment of sums due under two identical international loan agreements concluded between a European bank and an East European borrower.
3 After the bankruptcy of the investment bank Lehman Brothers on 15 September 2008, many disputes over "In the Money"-derivative contracts that had been concluded between Lehman Brothers and their investors were resolved through a multi-step ADR procedure, which was ordered by the Bankruptcy Court for the Southern District of New York under Section 105 (a) of the U.S. Bankruptcy Code. In addition, in Hong Kong, thousands of claims from investors who had purchased bonds of Lehman Brothers investment bank were resolved through arbitration or mediation under the rules of the Hong Kong International Arbitration Centre (HKIAC), pursuant to the "Lehman Brothers-Related Products Dispute Mediation and Arbitration Scheme" of 31 October 2008, and were, accordingly, not decided by state courts.
4 In 2009, a special tribunal ("Dubai World Tribunal") of the Dubai International Financial Centre (DIFC) was established by decree of the ruler of Dubai. Thereby, disputes related to the corporate debt restructuring of the Dubai World Group (DWG) – a restructuring made necessary by the financial crisis – were discretely removed from the state courts.
5 Also in 2009, an arbitral tribunal in New York ordered the Swiss bank Credit Suisse to pay damages for the purchase of worthless securities. Pursuant to the arbitral award, it had to pay over USD 400 million (310 million EUR) to the semi-conductor manufacturer STMicroelectronics in Geneva.
6 On March 1, 2010, ISDA published a modified version of the Islamic Finance-Version of its 2002 Master Agreement ("ISDA/IIFM Tahawwut Master Agreement"), which was jointly developed by ISDA and the global standard organization of Islamic money and financial market operations "International Islamic Financial Market" (IIFM). Its Section 13 (c) now offers parties the opportunity to have disputes arising out of this Tahawwut Master Agreement be decided not by a state court, but rather by a tribunal that operates under the ICC or any other arbitration rules agreed by the parties.
7 In 2011, a FINRA arbitration panel ruled against Société Générale SA ordering the bank to pay USD 61 million to a California-based fund manager for refusing to issue payment for expired warrants during the financial crisis.
8 In 2011, an ICC arbitral tribunal rejected claims raised by two European companies against a European bank and a payment service company arising out of a credit card service provider agreement in the "card-not-present business".
9 In an award dated August 4, 2011, an arbitral tribunal constituted under the rules of the International Center for Settlement of Investment Disputes (ICSID) declared itself competent to rule on the claims of nearly 60,000 Italian bondholders (Abaclat and others) against the Argentinean Republic. The claims were brought in connection with Argentina’s default and the related partial rescheduling of its debt in the context of the international financial crisis. The proceedings were brought to an end by consent award (29 December 2016).
10 On January 16, 2012, P.R.I.M.E. Finance, the first specialist forum for the settlement of international financial markets disputes, was opened in The Hague.
11 In February 2012, an ICC tribunal awarded USD 27,7 million plus interest as Early Termination Amount payable under an ISDA Master Agreement 2002 in a dispute between an international bank and its corporate customer located in South Asia.
12 In its February 28, 2012 decision, Solymar Investments, Ltd. v. Santander, the U.S. Court of Appeals for the 11th Circuit referred a damages claim against the Spanish bank, Santander, regarding the improper direction of customer funds into the fund of convicted fraud Bernard L. Madoff to an arbitral tribunal constituted under the Rules of the ICC. The parties had contractually agreed to ICC jurisdiction.
13 In September 2012, "Ping An Life Insurance Company", the second largest Chinese insurer, sued the Kingdom of Belgium before an ICSID tribunal for damages in the amount of USD 2.28 billion. In 2007, Ping An had acquired an interest in the Belgian bank, Fortis, which was subsequently nationalized due to great difficulties during the financial crisis, forcing the applicant to almost completely write off its investment.
14 In October 2012, an ICSID Tribunal ruled on Deutsche Bank's claim against the Republic of Sri Lanka. The claim concerned the possible violation of an investment treaty between Germany and Sri Lanka. The dispute involved a "Hedging Agreement" regarding oil transactions between Deutsche Bank and the state oil company. The tribunal found a violation of the investment treaty and awarded Deutsche Bank damages amounting to approximately USD 60 million, plus interest and attorney's fees.
15 In an award dated February 8, 2013, an arbitral tribunal constituted under the rules of the International Center for Settlement of Investment Disputes (ICSID) declared itself competent to rule on the claims of 74 Italian bondholders against the Argentinean Republic. The claims were brought in connection with Argentina's default and the related partial rescheduling of its debt in the context of the international financial crisis.
16 On March 15, 2013, the Conciliation and Arbitration Center of the Costa Rican Chamber of Commerce (Centro de Conciliación y Arbitraje de la Cámara de Comercio de Costa Rica) issued a decision in favour of the Lapis Lazuli S.A. Group in its proceedings against the National Bank of Costa Rica. The National Bank must reimburse Lapis Lazuli S.A. a total of USD 288.000 for an abusive floor clause contained in the credit agreements signed between the Group and the Bank. It is the first decision in Costa Rica that annuls an unfair term and compensates the client.
17 On May 20, 2013, the Slovak banks Postova banka a.s. and its shareholder Istrokapital S.E. filed a claim for damages with ICSID against the Hellenic Republic in relation to Greece's sovereign debt restructuring. Postova argues that it purchased Greek government bonds in 2010. Postova and Istrokapital alleged that Greece unilaterally amended the terms of outstanding bonds by inserting a "Collective Action Clause" through the Greek Bondholder Act in 2012. Postova said it held Greek government bonds that were forcibly restructured by Greece, which caused Postova and Istrokapital to suffer significant losses. Postova and Istrokapital allege that Greece destroyed their investment by taking measures that were never taken before in debt restructuring, including the passage of legislation to retroactively and unilaterally amend the terms of bonds. Postova and Istrokapital allege that Greece has violated bilateral investment treaties with Slovakia and Cyprus.
18 In August 2013, the Iranian Bank Mellat looked at settling a 780 million USD claim against Great Britain before an ad hoc arbitral tribunal instead of domestic courts after the UK Supreme Court had ruled in a judgement of June 19, 2013 that the decision of the British Treasury of October 2009 to ban the bank from business in the British financial markets for alleged connections of Bank Mellat with the Iranian nuclear programme was unlawful.
19 On September 6, 2013, the Athens-based Marfin Investment Group and twenty other Greek investors filed a claim with ICSID against Cyprus for damages in the amount of 1,05 billion EUR in the context of losses of its investnment in Cyprus Popular Bank in the course of Greece's debt restructuring caused by the financial crisis which is alleged to be in violation of certain provisions of the Cyprus-Greece Bilateral Investment Treaty.
20 On September 9, 2013, the International Swaps & Derivatives Association (ISDA) published its "2013 ISDA Arbitration Guide" in which it recommends the use of a number of alternative model arbitration clauses for its 2002 and 1992 ISDA Master Agreements for OTC derivatives in lieu of the choice of forum clause which had hitherto been used exclusively in these Agreements.
21 In 2014, the CIETAC Shanghai sub-commission issued an arbitral award in favour of Deutsche Bank (China) Limited, Shanghai Branch, in its proceedings against Shandong Century Sunshine Paper Group Co., Ltd., after Shandong refused to make a payment under a US dollar-denominated swap (incl. a NAFMII Master Agreement providing for arbitration). However, the Shandong Weifang Intermediate People’s Court refused to enforce the award and held that Deutsche Bank concealed evidence impairing the arbitral tribunal’s ability to issue a fair award. See case summary in Whitepaper: China’s Derivatives Market And Judicial Trends, p. 92.
22 In 2015, a FINRA arbitration panel ruled against BNP Paribas ordering the bank to pay USD 16.6 million in compensatory damages for gross negligence and civil fraud in a dispute arising from an investment product advised by BNP.
23 In April 2015, Capital Financial Holdings Luxembourg (CFHL) filed a claim for damages of over 100 million EUR against Cameroon at ICSID under the Luxembourg-Cameroon bilateral investment treaty. The claim is based on an alleged expropriation of its 47 per cent stake in the Commercial Bank of Cameroon following a state-imposed capital restructuring of the bank, which CFHL says was against its will and that of other shareholders. CFHL argues that because the bank was placed under a regime of "provisional administration" in 2009, CFHL and the other shareholders lost control over the management of the bank, with a provisional administrator exercising executive powers instead of the bank’s CEO and board of directors. CFHL maintains that the imposition of the provisional administration regime amounted to an expropriation leading to the loss of its shares in the bank.
24 In November 2016, the CIETAC Shanghai sub-commission issued its award in DBS Bank (China) Ltd., Shanghai Branch, v Foodchem International Corporation in favour of DBS Bank after Foodchem refused to pay for an FX options trade (USD/Chinese renminbi cap option incl. a NAFMII Master Agreement providing for arbitration). Foodchem’s request to set aside the arbitral award was then rejected by the Beijing Intermediate People’s Court in June 2017. See case summary in Whitepaper: China’s Derivatives Market And Judicial Trends, pp. 73 et seqq.
25 In 2018, an ICC Tribunal rejected the claims brought by the Royal Bank of Scotland ('RBS') against Ageas SA/NV ('Ageas'), an international insurance group, relating to an alleged indemnification promise made by Fortis (now Ageas) to RBS back in 2007, in the context of the takeover of the former ABN AMRO group. Press release by Ageas available here.
26 In December 2018, the Brasilian Câmara do Mercado ("Market Chamber"), which offers a specialized forum for the resolution of disputes related to capital markets and corporate law, initiated a yearly updated report on arbitral awards rendered by the Chamber. It serves the purpose to provide greater transparency to the Chamber's arbitration proceedings and to reflect a specialized understanding on the application of business law in specific areas of law. The recent report, including a number of practical examples of disputes related to capital markets (pp. 34 et seqq.), is retrievable in Portuguese here.
27 In an award dated 20 August 2020 (Portigon v Kingdom of Spain), an ICSID tribunal held that project finance in the form of long-term loans and interest rate hedging instruments constitutes a protected investment under the Energy Charter Treaty (ECT) and the ICSID Convention. The award opens opportunities for financial institutions, as lenders, for directly resorting to international arbitration against State measures affecting their project finance investments.
28 On 16 October 2020, the Hungarian Bank, OTP Bank Plc, initiated a claim under the rules of ICSID against Croatia stemming from a mandatory loan conversion of Swiss Francs-denominated loans to Euros in 2015. Before, the same measure has spawned several cases under the ICSID rules (e.g. UniCredit et al v Croatia, Raiffeisen v Croatia, Erste Group et al v Croatia, Addiko v Croatia). None of these cases has been concluded on the merits yet, but several tribunals have issued their decision on the alleged incompatibility of the intra-EU BITs and EU law as confirmed by CJEU’s Achmea decision.