Adamakopoulos and Others v. Cyprus: Mass Claims Between No Longer and Not Yet

Introduction

Unlike previous decisions dealing with mass claims in investment treaty arbitration, the Decision on Jurisdiction and Admissibility of 7 February 2020 in Theodoros Adamakopoulos and others v. Republic of Cyprus, ICSID Case No. ARB/15/49 (hereinafter ‘Decision’), has not attracted much attention. The majority (Donald M. McRae and Alejandro Escobar) accepted jurisdiction over a mass claim filed by a large number of Greek natural persons and companies as well as a Luxembourgish company regarding the measures taken by Cyprus in the context of the Greek economic crisis that allegedly affected the investors’ financial instruments and bank deposits. The majority also considered the mass claim admissible from the procedural point of view. The dissenting arbitrator (Marcelo G. Kohen) focused on the intra-EU objection and did not address the issue of mass claims extensively. The arbitration was initiated under Cyprus’ BITs with Greece and the Belgium-Luxembourg Economic Union.

This is the fourth case known to the public dealing with mass claims in investment treaty arbitration and within the ICSID framework. It involves around 950 claimants, in contrast to previous cases which faced both larger (Abaclat – some 60.000) and smaller (Allemani and Ambiente – some 100 each) numbers of claimants. While the Decision addresses several usual jurisdictional questions, including the intra-EU objection, the protection of indirect investments, the qualification of investments and investors, and the compliance with waiting periods, this post focuses on the questions surrounding mass claims. Specifically, despite the attempt to avoid the controversial approach to mass claims taken in Abaclat, the Tribunal in Adamakopoulos preserved the possibility of deciding investment treaty claims en masse in the future.

The descriptive nature of the term ‘mass claim’

At the outset, the Tribunal noted that the term ‘mass claim’ referred to a claim brought by a large number of claimants in a single case, and it did not imply a representative or class action or a consolidation of claims (Decision, para. 190). This purely descriptive meaning of the term did not have any implications regarding jurisdiction and admissibility (Decision, para. 191).

This was an important opening remark, because the biggest controversy surrounding mass claims in investment treaty arbitration concerns their nature. The Tribunal in Abaclat qualified the proceedings as ‘hybrid’, admitting that the claims were brought as aggregate but that the process contained a representative element because the interests of the claimants could not be considered individually (Abaclat and others v. The Argentine Republic, ICSID Case No. ARB/07/5, Decision on Jurisdiction and Admissibility (4 August 2011) (hereinafter ‘Abaclat’), paras. 486-488). The two other decisions in the context of the Argentine bondholder cases took a different approach, and considered the cases before them as simple multiparty proceedings (Ambiente Ufficio S.P.A. and others v. The Argentine Republic, ICSID Case No. ARB/08/9, Decision on Jurisdiction and Admissibility (8 February 2013), para. 122; Giovanni Alemanni and others v. The Argentine Republic, ICSID Case No. ARB/07/8, Decision on Jurisdiction and Admissibility (17 November 2014), para. 267). In my opinion, the main feature of the Abaclat-type of mass claims concerns the ability of tribunals to decide claims en masse. While this possibility seems disqualified in Adamakopoulos by the Tribunal’s opening remark about the descriptive nature of the term ‘mass claim’, other aspects of the Tribunal’s reasoning might lead towards a different conclusion.

No special consent

The Tribunal started its jurisdictional analysis by addressing the argument that the use of singular terms such as ‘investor’ and ‘dispute’ in the BITs and the ICSID Convention implied a lack of consent regarding mass or multiple claims, which the Tribunal considered inconclusive (Decision, paras. 197-200). The Tribunal also rejected the argument that mass claims required special consent, in addition to the one expressed in the BITs (Decision, para. 201). Crucially, the Tribunal agreed with the Alemanni decision that what mattered was whether the claims constituted one single dispute (Decision, paras. 205, 209), which it answered in the affirmative on the facts (Decision, paras. 210-219). This is the only point regarding the mass claim aspect where arbitrator Kohen explicitly disagreed with the majority, arguing that the claims were not sufficiently homogeneous, specifically due to the differences between the banks concerned and the different timing of investments (Statement of Dissent, para. 72).

No special procedure

The Tribunal then turned to admissibility. It considered these issues to require balancing the rights of the claimants to have their claims heard, the manageability of the process under the ICSID framework, and the due process rights of the respondent (Decision, para. 224). Because there was no specific right of the claimants to bring their claims together as a mass claim, the central issue was the manageability of the process (Decision, para. 225).

The Tribunal approached the manageability of the mass claim under the ICSID framework in reverse: it first analysed whether it could establish a new procedure, and second whether the mass claim could be processed under the existing rules (Decision, para. 236). The Tribunal criticized the Abaclat decision, which had considered that a tribunal has the power to adapt the process (Abaclat, paras. 521-551). According to the Tribunal in Adamakopoulos, it was wrong to assume that a new procedure was required in order to avoid a denial of justice to claimants, because there was no specific right to bring a mass claim (as opposed to individual claims) (Decision, para. 242). It was also wrong to assume that one mass claim would be better for the respondent than many individual claims, because it was not clear that all claimants would submit individual claims (Decision, para. 244). The Tribunal concluded that Article 44 of the ICSID Convention allows tribunals to deal with unregulated procedural questions only within the limits of the existing procedural rules, and that there was no mandate for the creation of new procedures (Decision, paras. 245-246). After reviewing several procedural issues, including the verification of claims, document discovery, the length of the proceedings, and the quantification of individual damages, the Tribunal concluded that the case was manageable under the ICSID framework in terms of securing the procedural rights of both parties, and therefore the mass claim was admissible (Decision, paras. 247-259).

The case could proceed, however, only under certain conditions. First, the Tribunal fixed a pool of the 956 claimants, which means that these claimants cannot withdraw from the process without consent of the respondent (Decision, paras. 260-261). Second, it appears that the Tribunal would prefer to bifurcate the liability and damages phases, and it invited the parties to make submissions on that issue (Decision, paras. 262-263). Third, because it would be difficult to pursue the recovery of costs against such a large number of claimants, the Tribunal invited the respondent to make an application for security for costs (Decision, paras. 264-266).

Deciding claims en masse

I have argued elsewhere that Abaclat resembled a representative or class action process. The Tribunal in that case decided the questions of jurisdiction and admissibility in abstracto, specifying their parameters and creating a special procedure for the review of facts concerning individual claimants by an expert. The Tribunal in Adamakopoulos refrained from creating a special procedure, but parts of its reasoning imply that it attempted to preserve the possibility of deciding the claims en masse through the existing procedure.

It thus appears that the Tribunal would prefer to bifurcate liability and damages into separate phases of the process. Throughout its analysis, the Tribunal repeated that it would not need to determine liability regarding each claimant and that it can address liability as a common issue, leaving the examination of individual claims for a later stage (Decision, paras. 212, 253, 254, 256, 257, 258). From this point, the process starts to resemble a class action. The Tribunal might rule on liability in abstracto, without the consideration of concrete claims, and hence set the parameters for the examination of individual claims. The pool of claimants is fixed at 956, primarily in consideration of the respondent’s rights, although the same consequence stems from the consensual jurisdictional basis. A definite number of claimants is often relied on to distinguish aggregate from class actions. However, what is usually being overlooked is that class action proceedings also fix the pool of plaintiffs on a certain date, which is important for the consequences of an unsuccessful class action (see Debra Lyn Bassett, ‘Implied “Consent” to Personal Jurisdiction in Transnational Class Litigation’ [2004] Mich. St. L. Rev. 619, 635-637). In a similar vein, besides announcing its willingness to rule in part on a mass basis, the Tribunal took the necessary measures of limiting the circle of claimants which must bear the potential risks of the process.

In addition, one can note the terminology employed by the Tribunal. The Decision refers to a ‘single claim’ (para. 215), a ‘single dispute’ (paras. 213, 219), and to the claimants as a ‘single claimant party’ (paras. 269, 311). The Tribunal found the claims ‘admissible as a mass claim’ (para. 259). These are additional indicators of the grouping of the claimants in a class that is meant to justify their common treatment.

Conclusion

The Decision distinguished itself by promising not to involve a representative element, yet indicating that such an element might be injected in the future. It remains to be seen whether that will indeed be the case. The Decision fully engaged in the discourse about mass claims in investment treaty arbitration and offered some practical solutions. At the same time, the Tribunal could have appreciated more extensively its ability to decide claims en masse, even if limited to the question of liability. It could have investigated whether a general pronouncement on liability would affect the existing procedural framework and thereafter draw conclusions about the need for special consent regarding mass claims.