The financial crisis and the resulting increase of disputes between banks (for example, in the context of OTC derivatives transactions) and between banks and their commercial customers (for example, in the context of currency futures hedging transactions) have led to a greater acceptance of arbitration and other forms of alternative dispute resolution, since 2008. Some examples may serve to illustrate this trend towards a greater accceptance of arbitration in finance.
Many disputes over "In the Money"-derivative contracts that had been concluded between the bankrupt investment bank - 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 banks 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", and were, accordingly, not decided by state courts.
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 by decree of the ruler of Dubai and were instead decided by a special tribunal ("Dubai World Tribunal") of the Dubai International Financial Centre (DIFC).
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 Euros) to the semi-conductor manufacturer STMicroelectronics in Geneva.
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.
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 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.
On January 16, 2012, P.R.I.M.E. Finance, the first arbitral institution for the settlement of international financial markets disputes, was opened in The Hague.
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.
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.
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.
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.
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.
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.
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 Euros in the context of losses of its investnment in Cyprus Popular Bank in the course of Greece's debt restructruring caused by the financial crisis which is alleged to be in violation of certain provisions of the Cyprus-Greece Bilateral Investment Treaty.
On September 9, 2013, the International Swaps & Derivatives Association (ISDA) has 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.
In April 2015, Capital Financial Holdings Luxembourg (CFHL) filed a claim for damages of over €100 million 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.