The financial crisis of 2008 and its subsequent evolution into economic and sovereign debt crises, especially in the European periphery, has reignited interest in litigation and arbitration as responses to unanticipated losses. What is the point of calling a lawyer, however, when losses have their source in changes in the regulatory environment or are due to measures taken in response to economic emergencies? This paper discusses the recent explosion in investor interest in litigation and arbitration, explaining where and how lawyers are attempting to counter policy responses to the crisis that have resulted in significant financial losses for their clients. The paper offers a reflection both on the chances for success for investors and on opportunities for further actions seeking to confront emergency measures in the European periphery.

In order to assess the opportunities legal actions can offer to aggrieved investors, we need to think separately about actions in the domestic context, and those taking place in Investor State Dispute Settlement (ISDS) such as the International Centre for the Settlement of Investment Disputes (ICSID). Let us consider first the domestic options for aggrieved investors. The primary example of nationals hurt by government responses to the crisis are holders of Greek bonds. A large number of these investors (private individuals who had invested small amounts and corporates that had placed some of their capital in what was perceived to be the most secure of investments) lost almost half the value of their investment when Greece implemented a haircut to its local debt stock in 2012.

Jan-Mar 2015 issue

University of Westminster